Putting the Stereotypical Notion of a Tightwad on its Tush

I Can’t Afford To Sell My House

If you’re looking to buy a new house, I’ve got the perfect family home for you. It’s got three bedrooms, two and a half baths, a beautiful shade tree in the backyard and upgraded surfaces in the kitchen. There’s just one problem…

I can’t afford to sell it.

When we bought this house almost six years ago, we planned to be in it for about five to seven years. Of course, that was before we had children, which was before we put on an $18,000 addition, which – it goes without saying – was before the housing market went from an American dream to an American joke.

2011 was the worst year for American home sales on record. Now, to be fair, those records only date back to 1963, but the numbers are still bleak: just 302,000 properties sold all year.

We’re Not Underwater, But…

I’m going to give you some honest numbers about my home, my neighborhood and where we fit into the larger real estate market. My husband and I bought this house for $146,000 in the summer of 2006. At the time, it was a good – but not a great – price in what was undoubtedly a seller’s market. At just over 1700 square feet on a .23 acre plot of land, our house was right in the middle of our neighbors when it came to house size, lot size and appraised value.

To steal a line from “A Tale of Two Cities,” the pre-recession housing market was indeed the best of times and the worst of times. It was fabulous for a young couple like us, who had the fiscal wherewithal to buy a home but lacked the large cash reserves to put down a hefty down payment. We put down five percent – a percentage our realtor didn’t even think was necessary – and financed the rest on a 6.75% mortgage.

Three years, one child and a 140-square foot addition later, the market had tanked. Our North Carolina neighborhood had suffered greatly, with many of the 113 property owners facing foreclosure or short sales. Because of the addition – for which we paid cash – we weren’t “underwater” with our mortgage. In fact, rates were so low at the time that we decided to refinance down to a rate of 4.75%. But we made a crucial error: we chose to roll our closing costs into the new loan, adding roughly $4,000 to the principle.

Even though we’ve put down roughly one extra mortgage payment a year since then, we still owe $137,000 on a home that’s valued at $161,800.

Why We Can’t Sell

If you do some simple subtraction, it looks like we’re about $25,000 on the positive side. But that fails to factor in several key elements of selling a home – particularly, selling a home in today’s market:

  1. Homes in our neighborhood are selling for well below their appraised tax value. This is thanks mostly to several short sales and foreclosures that finally sold in the last six months, the period which banks, lenders and underwriters look at for comparable sales. In fact, a home with the exact same floor plan – save our addition – just sold two months ago for $132,900. Ouch.
  2. When we bought our home, it was a seller’s market. Today, things have flipped 180 degrees – it’s a buyer’s market now. That means a seller is likely to pay three percent in closing costs and foot the bill for a home warranty in addition to selling their home for at or below market value.
  3. The realtor who sold us this home crunched some numbers for us, and figured that if we sold our home for $159,000 – a price which I think is high given the comparable sales in our neighborhood recently – we would walk away with less than $7,000 after you factor in closing costs, title transfer, home warranty and realtor fees for both the buyer’s and seller’s agents.

$7,000. That’s not a lot for a home we’ve lived in for almost six years, on which we’ve made several substantial upgrades. And in my opinion, it’s not worth putting our house on the market right now if that’s all we’re going to get out of it.

What Are The Options?

Despite the grim reality of housing prices and the current real estate market, my husband and I still have the house hunting bug and are determined to make the American dream of upward mobility work for us. We know there are several options available to us: renting our house, doing a rent-to-own arrangement, cutting our losses and moving on, wait for the market to improve, or simply selling our house without the aid of an agent.

We’d like to maximize the amount of money we get out of it, though, so we’ve ruled out the first three of those options. There have been a few glimmers of hope on our real estate horizon, however. The first came last week, when some (insane) person put in a $164,900 offer on a house down the street. That home, which has a less desirable lot and floor plan than mine, has a tax value of just $159,000 – an indication that things could be turning around in our neighborhood. So right now, we’re playing a waiting (and watching) game.

Who would have thought that owning a part of the American dream would feel more like living in an American prison?

One Response to I Can’t Afford To Sell My House

  1. I agree. I am in a very similar situation in another part of the country, and feel trapped in my home, as I can’t quite afford to sell it. It’s sad. I tried for sale by owner, but it didn’t work for me. Most of the people that travelled through my home did not qualify to purchase it. Best wishes. . .

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