Real Estate Question...

Discussion in 'Homesteading Questions' started by Snugglebunny, Apr 27, 2006.

  1. Snugglebunny

    Snugglebunny Well-Known Member

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    Okay. DH & I declared bankruptcy 3 1/2 or 4 yrs ago. We bought a house this past November.

    Circumstances have us wondering if we ought to try selling and finding something better financially, as well as for kids, work, etc.

    We have made no improvements on the house or anything.

    What would it take to sell? What are the chance we could just turn around and sell this house so soon after buying?

    My Mom seems to think there's no point in selling if we haven't paid the mortgage off completely.
     
  2. Pink_Carnation

    Pink_Carnation Well-Known Member

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    First you need to find out if you could get another place with the bankruptcy. Then it also depends on the value of your house versus what you owe on it. The kicker is if you only bought in November the value has to have gone up enough to cover the cost of selling also.

    That said if you did an intrest only, or variable rate, or less than intrest I would try to get out.
     

  3. Obser

    Obser "Mobile Homesteaders"

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    Are there things that you could do to increase the appeal of the house and land without spending much money?

    Are there major defects in the house? Are there factors about the house or its setting that reduce its value?

    What caused you to buy that particular house last November and to wish to sell it now?

    Waiting until a mortage is paid off to sell a house is not valid reasoning.
     
  4. Dutchie

    Dutchie Well-Known Member Supporter

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    Obviously, since you got a mortgage (I assume you did) 3 years after your bankrupcy, your bankrupcy is irrelevant to this.

    Much depends on where it is located and how the real estate market is doing where you are. It may very well be that you can get your purchase price for your property.

    If you'd like, PM me with some more information and I will try and help you sort through this.
     
  5. Snugglebunny

    Snugglebunny Well-Known Member

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    Well, our bankruptcy was discharged for over a year when we bought it.

    There is absolutely nothing wrong with the house, and the location and neighborhood are great, schools great, etc.

    But it's a bit far from DH's work - he's driving an hour to and from.

    Besides, we would really like something a bit more in the country. Right now we're on a quarter acre in town, we'd prefer something with more land and fewer neighbors, you know?

    When we bought it, we bought it for $154900, but the insurance company valued it at 185000.

    As far as market, there doesn't seem to be a lot for sale around here.
     
  6. Dutchie

    Dutchie Well-Known Member Supporter

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    Just keep in mind that insurance value can be very different from market value.

    If you can, have an appraisal done. If not, talk to a realtor. They will be able to guide you ...............
     
  7. homebirtha

    homebirtha Well-Known Member

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    Two major factors to consider:
    1) The expense of selling it. You will most likely have to pay a 6% commission. Plus, you will have eaten the costs of your first mortgage (closing costs, points, etc.) and will have to pay those again on your new mortgage.

    2) Even more important. Capital gains taxes. You will have to pay cap. gains on the sale of the house, so factor that in as well. It depends on your tax bracket, of course, but it could be a substantial chunk if you can sell for more then you bought for. You have to own and live the house for two years before you can sell and be exempt from capital gains.

    The best thing to do is talk to a realtor. Find out exactly what it's going to cost you to sell, buy, and move. How much more mortgage can you afford? How much house can you get in the country for that amount of money?

    Oh, and you asked what the chances are of selling it. Well, anything will sell, if you price it low enough. The question is how low are you able to price it and still get what you want in your next house.

    Personally, I would hold out for the two years at least. But if you're really miserable and can afford it, you may find a different answer.
     
  8. Dutchie

    Dutchie Well-Known Member Supporter

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    1. Those fees can be negotiated and if you sell it yourself there is no fee.

    2. Capital Gains Tax only applies if the money is not re-invested within a certain amount of time ... I believe it is 18 months.
     
  9. Kith and Kin

    Kith and Kin Active Member

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    Not much for sale near you could be to your advantage too! :dance:
    A realtor will price the home in a price range that it will sell quickly. Talking to one is free, just dont let them hook you before you're ready.
    Look for more land to see if there is even anything available too, before listing.
     
  10. Wolf mom

    Wolf mom Well-Known Member

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    CREDIT - in order to show up on a credit report as a "viable" loan that is being paid back on time, etc. you need to pay on it for at lease 6 months minimum.

    Different mortgage companies will look at payback history differently after a bankruptcy. They can deny you a loan up to 7 years. Sometimes it's harder to get a rural loan also.

    I think that needs to be a major factor in your thinking about selling your current house.

    I'd look around about where I want to move, talk to a realtor - see who makes a lot of rural loans in that area & go talk to them.

    :cowboy:
     
  11. homebirtha

    homebirtha Well-Known Member

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    #1 - True. It's still going to cost you to sell though.

    #2 - You're wrong. That's the old rule. It was changed several years ago. There is no cap gains on the first $250,000 gain, ONLY IF you own and live in the house for 2 years. I'm 100% positive on this. Just went through it 18 months ago when we moved.
     
  12. Dutchie

    Dutchie Well-Known Member Supporter

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    #1 .... it doesn't matter ..... it is a tax deduction. I don't know about you but I can use every bit of deductable expense I can get.

    So ...... they need to figure out what the best return on their money is in the long run.

    #2 ..... they will have been in their house for 2 years by the time they sell. If I read the original post correctly.

    Edited to say: nope ... I didn't read that right. However ..... it is very doubtful they will have a significant gain and with all other expenses it may very well be that it won't cost them a dime in tax.

    Furthermore .... the bankrupcy doesn't seem to be an issue anymore as far as the loan is concerned. She has a mortgage now. And there are quite a few lenders that loan on rural properties, just keep the amount of land under 20 acres. There are even lenders that will loan on properties one day out of bankrupcy.
     
  13. citilivin

    citilivin Well-Known Member

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    Capital gains requires you to live 2 out of 5 years. If your value has not increased much, this may not be an issue. You can deduct your costs to sell the home. I would not pay for an appraisal at this time. I would interview three agents with knowledge in your specifc market. They will each provide a market analysis. This will provide you with comparables in your area. From these three agents, you should get a picture. I would also get preapproved for your loan.
     
  14. rambler

    rambler Well-Known Member Supporter

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    Anything is possible.

    However, in less than 5 years time, (and you are less than a year...) you haven't paid off any principle worth noting. You haven't done any improvements. Not enough time for land values to go up much, unless you are in a special case. Interest is creeping up, slowing house buying a bit.

    Costs money to sell, costs money to buy something else, costs money to move, costs taxes should you make some small gain on the sale, and so on.

    Can't see how you will do anything but lose money selling so soon.

    But anything is possible.

    The odds are against you.

    --->Paul
     
  15. Selena

    Selena proud to be pro-choice

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    Points paid on the original mortgage were probably written off during the in which they were incurred. If not, then they can be captured in the tax year in which you sell. The IRS does allow some deferral of capital gains ($500K if married, $250K if single) under certain circumstances (job related, medical, aging parents) - a CPA can assist in this area if need be.
    You can do some homework by looking at recent sales in your area (which an appraiser will also do). Usually this is public record. You can take a look at your HUD statement (received at closing) and see what costs were incurred. Interest rates are creeping up so IMHO, fish or cut bait. Get a copy of your credit report post haste to make sure all is well. If you can afford it, get your credit score too - this factors into your loan rate. You can make an offer on the new place contigent on: getting a loan for no more than X, for Y years, at a rate of not more than Z AND selling your old place for no less than A by a date of B. Realtors like 3% earnest money in my area as they think people are less likely to back out of a sale (easy for some folks to lose $1000). We've never given more than $1000 in earnest money and never required more than $2K from any buyers. I'd take a look at what is closer to husband's job and any other jobs in that area, if any, in case he loses his job. No sense moving closer for today but being even farther away tomorrow given the not-so-stable job market these days. Crunch your numbers and see what works for you. It may be that deciding to save X amount of money over the next year then buying works out best.
     
  16. Snugglebunny

    Snugglebunny Well-Known Member

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    Yeah I think we'll probably hang here for awhile and keep our eyes open. It could be we decide to buy land and build - which would take time anyway, and DH says he'd rather stay here for a few more years.

    Thanks for all the advice, though!