Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
You all have echoed the many conversation hubby and I have re: our situation. We HAVE thought about renting it, and it may come to that but it wouldnt be ideal, being so far away. As far as the price, our house is very competitively priced with similar houses in our area. Our realtor doesnt recommend lowering it now, although we will consider lowering the price in Jan if nothing happens before then. My mom lives in Taylor ranch and her neighbor sold in 3 days. There are buyers out there, and this time of year, if they're looking, at least they're serious and not just looky loos. I guess we'll hope for the best and prepare for the worst!
Another way of looking at it is a basic tenet of investing:
If you are holding on to a losing investment, like a stock, (or a piece of real estate), would you buy that investment today knowing everything you know about it now?
(1) If yes, keep it. (Wait for the price to rise.)
(2) If no. Sell it. Take your loss and get on with your life.
Holding on to a house that has lost value from where you purchased it makes the case even worse since most people are not in the business of investing in houses to 'flip' them. If this isn't something that you do (a lot) then hanging on to the depreciating home is nuts.
Renting the house out here might make sense if ABQ is a strong rental market. Report the rental income (and related expenses) on your Schedule E and it becomes investment property. Any reportable loss you have from rental can offset taxes due from other income. Likewise, any profit for the year is taxable. When you do sell it later, IF you sell at a loss, you can claim the loss on your taxes. You can't claim a loss on a sale of a personal residence.
I sold my home in Albuquerque in July (house market wasn't much better then) for a price $20K higher than some realtors thought I could get for it. Sold it within a week. It wasn't anything spectacular by any means...1300 sf, 30+ years old, single car garage, etc.
But the housing market - despite some other influences - essentially boils down to basic economic principle: supply v. demand. If weeks have passed with no nibbles, as others have said, like you have two options: 1) lower the price and try new / aggressive methods of marketing it, or 2) be content to possibly wait 1 month, 4 months, 12 months, etc., before selling at the price where you are...you never know, that buyer may be out there right around the corner. Or, that buyer may be around the corner 12 months from now. Timing is big.
> Renting the house ... make sense if ABQ is a strong rental market.
They have a $270,000 house (maybe). A good rule of thumb for rental income is that you need 1% of value for rental income per month. That's a 12% gross return. From that, you have to deduct your costs which will probably be in the 6-8% range. You can buy a safe, high-grade corporate bond that already pays that. In order to make money renting, the property must appreciate. Are you willing to gamble while you are paying two whole mortgages?
If I had a $500,000 house, I doubt I could rent it for $2,700 per month.
What if your tenents are scumbags? They will damage your place. Instead of a gain, you end up paying $20,000 to repair the damages after they shaft you for several months rent.
If your not already a professional landlord and you go through with this then your brain is very tiny.
> When you do sell it ... can claim the loss on your taxes.
Maybe. You have to convert the property to rental property at fair market value. Any property converted from primary residence to rental would be subject to scrutiny if later sold at a loss. If the property was later sold for $220,000, for example, you would need to prove that at the time of conversion you had a $270,000 property. If, say the housing market remains flat for the next five years and it is sold in that time, it would be hard to prove you had a $270,000 asset at the beginning of the rental period.
You still have a (in this example) $50,000 loss. See my earlier comments about being in denial.
Even if you can write it off it's very possible that the IRS will make you take the loss over several years.
Even if you can write it off it's still a loss.
The MLS is #176, listed with CBL on Tree Line Ave. Check it out...come see it... make an offer...haha. Hopefully it will pick up in the new year. Either way, were moving out next week and hoping for the best.
All I can say is your agent did a nice job. You are in competition with the new construction (hence the reluctance for many to look). Many, if not most, of the builders are offering "incentives" to buy. With a good talking agent, those incentives look like a fantastic deal but cost the buyer more in the long run (short lived items financed into a 30 year loan).
One negative aspect that I see that might be hindering any viewings is that you a 3 digit MLS # (I looked it up by address). Most MLS numbers are in the 500000 range now for active - you might suggest you agent contact the board about reassigning a new number to the listing. It is one of the flukes of the new MLS system. This might have gotten under the radar after the change - the guys at the board are really helpful and understanding. A MLS # in the same range as the others might get it more attention rather than thinking (My guess) that it's a test listing.
I reviewed the listing. Very similar Centex floorplan/elevation was offered in Rancho Sereno (near Paseo and Golf Course) for around $179K in 2002. The "boom" hit right after that. The price would be reasonable for the style and quality of home in most markets at $108 per foot. Your home is in an area with lots of new construction. Likewise, the market is in a large, nationwide downturn. Many of the homes in your area were purchased by equity transplants from other states. That pool of buyers has dried up. DR Horton (just west of you) is offering incentives up to $40k to sell homes. More importantly, lenders are really cracking down.
Lets look at the numbers:
Assuming your buyers put down the minimum (5%), they are looking at a payment of $1900 inclusive of taxes at 7.5%. Lenders are slowing moving back to the "28% of gross" rule, which was the norm for years. Also, many buyers are now re-evaluating how much they can afford as they have seen the effects of the sub-prime meltdown. Your buyer will need a gross income of $82K to qualify at 28%. The median income for your zip code is $62K. $82k is not terribly high - it is only two $20/hour jobs. But for Albuquerque, as well as the area in Albuquerque, you are in a tough bind. Higher income buyers tend to move to the Far NE heights to avoid the commute, as well as the better schools. The number of equity swappers has dwindled, and the credit market is tight. Homes in the heights are sitting for months - my next door neighbor has dropped his price to $500k from $619k this spring, and still has not sold. Another home near us was listed at $650K, and the owners finally took $519k to get out of it.
This is just my honest assesment. Good luck to you!
trappedinNM performed a nice service in two posts:
> I reviewed the listing. ...
> Many, ... builders are offering "incentives" to buy.
You left out incentives to realtors. I don't know about here, but where we are still trying to sell a house, the buyer's realtor gets an incentive also.
Therefore, if I was a buyer's realtor, I would, at least, show them what they can get in new construction.
The actual buyer only has so much time and patience to look at house after house ...
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
