We have a family home that is nearly 100 years old. My partner and I bought the home from our family for a discounted price, thinking we would build a new home on the property.
We started the new build process in early 2020 and then the pandemic hit. We were able to secure a loan in early 2020 for the build. But we did not receive our permits until about 18 months later and when we sat down with our builder at the time to review the updated costs, the original price had gone up at least 20%.
We can no longer afford to build, and we were forced to withdraw from the process. We lost over $50,000 in deposits we paid out in fees to get drawings and surveys.
“‘We can no longer afford to build, and we were forced to withdraw from the process. We lost over $50,000 in deposits we paid out in fees to get drawings and surveys.’”
Now we have to figure out what to do with the property. As our property is so old, it needed a full gut or a demolition. We decided to do a minor renovation, sell it, and take the money to buy a newer home, but then things took a turn.
Renovations took longer than expected (no surprise) and by the time we were ready to list, interest rates had gone up. The newly renovated house sat on the market for about two months with a few offers, but nothing went through. We decided to move in for the time being while we wait things out to see how the housing market goes.
We are able to cover the mortgage, but we are afraid of any maintenance or repair costs. If we sell (now or later) we will still have to get another mortgage to purchase a new home. The interest rates make it tricky to buy in this kind of market, so we would have to downsize if we sold.
What’s our best option at this point?
‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.
Why are you in such a rush and possibly risking selling at a loss? Unless there’s some major issue with the house that makes it unlivable, you should wait. If you get a decent offer that helps you make some money off the sale, sell and move on. You’ve already made the effort to renovate the home.
I’m surprised you’re having such a hard time selling your home, given how tight inventory is and how eager buyers are to purchase a home. If there’s ever a time to sell, it’s now. Look at the chart below: the number of housing units on the market for sale is still pretty low over a five-year period.
Your main problem is the age of the home. With a century-old house, there may be structural problems, issues from plumbing to painting, that potential buyers may find unappealing. But it’s not as though there’s zero interest as you said the newly renovated house sat on the market for two months, and even got a few offers, and nothing went through.
Perhaps you can try listing it once again. Work with a real-estate agent to make the home more attractive to a potential buyer. Highlight some of its historic features, perhaps even play up the generous space in this house. If it’s possible with regulations and zoning, the real-estate agent could help you sell it to a developer, who may be able to offer you cash.
Buying again will be hard. You said you can’t use proceeds from the sale because you want to give it to family members who want to make a down payment on another home. So you’re stuck with trying to get a mortgage with a 30-year fixed mortgage rate of over 7% in addition to paying a high price for a new home.
If you do sell, find a smaller single-family home, or even a condo — something that’s a little less expensive that allows you to take on a smaller mortgage. Alternatively, look at homes in more affordable areas. Some builders are offering concessions on brand-new homes, including lower mortgage rates. That way, you won’t not need to worry about repairs.
Don’t make any hasty decisions. If you don’t find a buyer, stay put. For better or for worse, the market will dictate your next step.
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