Should I re-list or sell this house at auction? (foreclosures, agent, price)

[shonner]

I really am in need of some good advice. I have come into possession of a house that has been in my family over fifty years. For the last seven years, it sat empty, so time and neglect have taken a toll. My husband and I had the exterior, the kitchen, and back porch painted and some repairs done to the roof over the porch. We also had some plumbing work done. Long story short, we listed it and it sat on the market for two years and two months - during which time I've been paying insurance, taxes, utilities and lawn care. To make matters worse, we live sixty miles away. The house was listed at $72,500. Over the time it's been on the market, we dropped it to $57,500 and still nothing. I've recently ended my contract with the agent I had and am looking at other options. I do not want to rent the house, but it's really becoming a financial burden.

I don't know if I should try to list it again with another agent or sell it at auction. Honestly, we've spent so much money on it, I'm getting concerned about breaking even. It's paid for, but is an old home with no first floor bedroom, no central air, and only one bathroom. The neighborhood is in decline, but is still safe and has many modest homes that are well maintained.

We also thought about owner financing as a way to sell it, but I am at loss about what would be the best option. Any advice would be greatly appreciated!

[MrRational]

Originally Posted by shonner

I have come into possession of a house that has been in my family over fifty years.
...old home with no first floor bedroom, no central air, and only one bathroom.

For the last seven years, it sat empty, so time and neglect have taken a toll.
...sat on the market for two years and two months
I've been paying insurance, taxes, utilities and lawn care.

The house was listed at $72,500.
Over the time it's been on the market, we dropped it to $57,500 and still nothing.

You have a "wholesale property" that only an investor w/should buy.
Maybe a VERY skilled young couple with more time than money... but no one else.

Your real problem has been trying to sell one of these at the same time that the market
was flooded with all those foreclosures... many of which needed far less work.
No one needed to even consider this address.

My husband and I had the exterior, the kitchen, and back porch painted and some repairs done
to the roof over the porch. We also had some plumbing work done.
...we've spent so much money on it, I'm getting concerned about breaking even.
I do not want to rent the house, but it's really becoming a financial burden.

Break even? That train left town 5 years ago.

The neighborhood is in decline, but is still safe and has many modest homes that are well maintained.
...but I am at loss about what would be the best option. Any advice would be greatly appreciated!

You need one of those investor types to make it into a rental... or to fix and flip it.
An auction will get them out of the woodwork and looking at the house.
The issue is price.

They have to buy it low enough to make putting another $50-75,000 into it worthwhile.
This means that if the auction cost them $50,000...
that $125,000 invested would have to yield $1500-2000 per month in rent.
Will the neighborhood support that?

[manderly6]

How much money have you put in to the house?

[shonner]

The painting and repairs cost around $9-10,000. Unfortunately, the insurance, taxes, utilities and lawn care are about $3,300 a year. We're in a real predicament - the county has the house valued at $72,000, so we really can't add another bathroom or invest much more into upgrading the place.

[2bindenver]

What is market value? What about the current absorption rate? What else has sold recently and what is one the market like yours now?

[manderly6]

Originally Posted by shonner

The painting and repairs cost around $9-10,000. Unfortunately, the insurance, taxes, utilities and lawn care are about $3,300 a year. We're in a real predicament - the county has the house valued at $72,000, so we really can't add another bathroom or invest much more into upgrading the place.

So list it for 40K and see what happens. You will still make a few bucks.

[shonner]

Houses on the same block have been very slow to sell, and have only sold at after several price reductions. I think I'll lower the price to around the 40k (thanks manderly6) and see what happens.

I notice no one recommends selling at auction. I was hesitant to go that route, so looks like I'll re-list. Thanks so much for the suggestions.

[MrRational]

Originally Posted by shonner

I notice no one recommends selling at auction.

Huh... I thought that I did.

The issue is the nature of the buyer you NEED.
As your post reads it sounds like the house won't qualify for conventional financing.
(that doesn't mean you should volunteer to be the lender)

If your agent after all this time has been unable to get you an offer from a local investor type...
or to explain all these factors working against you...
and you're 60 miles away with a whole other life...
then if you do sign up with an agent make sure it's someone who knows the investors in that town.

[shonner]

Thanks, MrRational. Sorry I missed that. I do plan to interview several agents this time and will make sure they know the local investors, and can address whether a prospective buyer can get financing for this particular kind of property. Last time I just went with the first agent who met with me. I checked him out on the internet, and he had a good track record, but I should have had some concerns when he showed up and already had the paperwork filled out. He had decided on a price before he even toured the house. This is the first time I have ever sold a property, and I am learning as I go along. Unfortunately, it appears I've made a lot of mistakes.

[rational1]

Start at a price significantly below the last offering price and drop it 5K every couple weeks. It's virtually certain it will sell before it gets to the 20K or so you have in it. And it's equivalent to a reverse auction.