Seeking housing decision advice

[cindycindy]

We are empty nesters living in a 2300 sq ft house waiting for the real estate market to improve so that we can downsize to a smaller and easier (and cheaper) to maintain home. The house is paid for; we have tried to keep maintenance and running the house costs low. A few years ago, we invested in a wood stove to save on the high cost of oil; I'd estimate we have saved 4,000 a year. We have been supplementing our retirement savings with that savings. Also, we had our hot water heated by the water heater tank rather than the oil burner using electricity (on a timer) rather than oil. One year, we only used 17 gallons of oil (before the woodstove, we would use about 1,200 gal per year). Therefore, our oil burner was hardly used. It's almost 30 years old. I suppose the oil burner would have to be replaced eventually. Anyway, our oil burner maintenance person just left. By not using the oil burner that much, it has started to rust from within. To replace it would cost 8-10,000 plus our heating costs will go up because we feel we have to go back to using oil a bit so our monthly heating costs will go up. Plus, we'll probably need a new roof in a few years, etc. etc.

But if we sell, and then the value of the house goes up...

Anyone else in this conundrum?

[iris lily]

But if we sell, and then the value of the house goes up...



So what?

I guarantee that it will go up at some point in the future. How exactly will you time that maximum profit?

One of my financial gurus said: Don't be a hog. It's ok to be a pig and make money, but don't try to hog each and every dime that can be made on any real estate deal, you'll kill yourself with unhappiness.

[SteveinMN]

I definitely would get more than one estimate for this. I also would ask about good/better/best options; no idea if the estimate you got was top-of-the-line or not.

Since you seem to be comfortable with your alternate heating setup now, maybe you just need to find out how often you need to use the burner to keep it in good condition. Or maybe just wait until you're ready to put the house on the market. But do it before you put the house on the market; if prospective buyers see that they need to replace the furnace themselves, they'll likely subtract way more than your best estimate for doing it.

[awakenedsoul]

I've been sort of in a similiar situation. I almost sold my house over the weekend. (I had just taken it off the market, due to problems with realtors.) Anyway, I made a contingency offer on a cabin in the mountains that was an REO. A realtor had left a note in my mailbox asking me to call her when I wanted to sell. I found out the price on the cabin had dropped to $75,000. It's on a 13,000 square foot lot in a wealthy neighborhood, so I jumped on the opportunity. I made a contingency offer. Someone else snatched it up. Such a great price, and such a gorgeous area! I'm just going to keep doing all the repairs on my home and keep fixing it up. This realtor kept trying to find things wrong so that she could knock off five grand. I finally told her, "Look, the land alone is worth $100,000. It's on the property tax statement. I added up all the work I've done on the house and subtracted that and your commission. I would basically be giving you the house for free at that price." (She wanted it for $120,000.) I was willing to go low, since I could make the money back on the front end of the cabin, and my property taxes would be lower. Real estate is intense! It reminds me of show business. My goal is to save enough cash to be able to pick up a deal with cash. You have to swoop in there right away.
If I were you, I would just fix everything. There's something powerful about having all the repairs done in your home. It will also give you the advantage when you sell. When I had mine on the market a few years ago as a fixer upper, I got a lot of negativity and criticism. (And no offers.) After making the repairs to code, decorating it in vintage style, an spending the money on a lovely bathroom, 1940's style, the realtors acted like they would like to live here!

[Miss Cellane]

To me, things like replacing the oil burner and the roof are the costs of owning a house. You (general you, not the OP in particular) need to budget for them. Because at some point, a lot of things in your house will need replacing--furnaces, roofs, appliances, plumbing. You can keep these things going longer by buying quality and keeping them maintained, but in the end, they have a certain lifespan.

A 30 year old oil burner is going to be a sticking point when you go to sell, whether or not it is rusty. Just the age is going to concern a lot of buyers. If you get lucky, you might find a buyer who wants to heat exclusively with wood, but that's a very small sub-section of all potential buyers. Another thing to consider is that if a buyer hears the burner is 30 years old and rusty, they are going to wonder about everything else in the house, how old it is and if it has been maintained properly. In general, you don't want buyers thinking along those lines. They will either walk away or make much lower offers.

If you are planning on selling in the future, my advice, which is worth exactly what you are paying for it, would be to start fixing up the house now. Set aside a yearly budget (maybe the amount you save by heating with wood), and use it to gradually upgrade the aging systems in the house. Get the new oil burner and find out how often you have to run it to keep it maintained. Or maybe newer oil burners won't have the rusting problem at all. And it's possible that a new burner will be more energy efficient, so that even if you do have to run it more than your current one, it won't use as much oil.

Work out a plan to gradually replace the roof and do other necessary updates. Then when it comes time to sell, you won't be faced with spending money and time on lots of expensive things, but just a few coats of paint to freshen up the rooms.

In my area, having two different working heating systems is a plus, due to winter storms and power outages, so I'm biased towards having both in good working order.

[shadowmoss]

Also, look at other systems. I don't know where you are but in some areas heat pumps make as much or more sense than oil. They are heating as well as airconditioning. I think I paid around $3-5K for one for my 1900f2 modular 5 or so years ago. Just because that is what is there doesn't mean that is what you need to put back in. Or maybe it does. But check into it anyway.

[citrine]

I would think about upgrading if it is feasible. One of the things we did not want was oil heat and only 2 of the 30 homes we saw had furnace heat which made our decision so much easier. I also agree that part of owning a house is to budget in repairs rather than having a "how much can I get out of the house" mentality. Our current house was a great shell, but we had to renovate almost everything....we also negotiated a much lower price because it was ignored in repairs for so long. I guess what I am trying to say is that you cannot have it both ways....minimum repairs/upgrades and a maximum sale price...you have to put some money into the house as well.

[pinkytoe]

We are in a similar situation except that thankfully we are in a hot market. The downside of that is that the valuation of our house has risen so much that our property tax payment is now higher than our mortgage payment. Our 1/3 acre is worth more than the house. So whether due to upcoming repairs or not being able to afford the taxes, we must make a decision. Since it is very likely that our house will just get scraped off by a developer when we sell, our choice is to keep things running but at a very basic level. I guess it all depends on what your future plans are but if you are "stuck" there a while, I would go ahead and fix things up but do get lots of estimates before doing so. As mentioned, having to replace basic things like furnaces will turn off many potential buyers.

[awakenedsoul]

Furnaces are very expensive. I had a very old gas furnace in this house until last year. It worked fine. The Gas Co. sent me a letter saying that I was eligible for their low income program and they came in and replaced it. They paid for the permits, did the work up to code, and gave me a fabulous heater! By living simply, I'm eligible for discounts on my utilities. Maybe your area has something similiar.

I've got to repipe in the next couple of years, so I'm planning and saving for that. It does really help with pricing to do those things first. I budget $3,000. a year for repairs, since I have an older home. I'm fortunate that where I live, property taxes can only go up 2% a year.

[Tussiemussies]

Think that fixing these items are very important. We just bought a house and these were my husband's concerns and then willingness to buy the house since most of these things were brand new. We do have to put on a roof though...people are not wanting fixer-uppers like they used to...


Good luck with your situation!

[Tussiemussies]

I've been sort of in a similiar situation. I almost sold my house over the weekend. (I had just taken it off the market, due to problems with realtors.) Anyway, I made a contingency offer on a cabin in the mountains that was an REO. A realtor had left a note in my mailbox asking me to call her when I wanted to sell. I found out the price on the cabin had dropped to $75,000. It's on a 13,000 square foot lot in a wealthy neighborhood, so I jumped on the opportunity. I made a contingency offer. Someone else snatched it up. Such a great price, and such a gorgeous area! I'm just going to keep doing all the repairs on my home and keep fixing it up. This realtor kept trying to find things wrong so that she could knock off five grand. I finally told her, "Look, the land alone is worth $100,000. It's on the property tax statement. I added up all the work I've done on the house and subtracted that and your commission. I would basically be giving you the house for free at that price." (She wanted it for $120,000.) I was willing to go low, since I could make the money back on the front end of the cabin, and my property taxes would be lower. Real estate is intense! It reminds me of show business. My goal is to save enough cash to be able to pick up a deal with cash. You have to swoop in there right away.
If I were you, I would just fix everything. There's something powerful about having all the repairs done in your home. It will also give you the advantage when you sell. When I had mine on the market a few years ago as a fixer upper, I got a lot of negativity and criticism. (And no offers.) After making the repairs to code, decorating it in vintage style, an spending the money on a lovely bathroom, 1940's style, the realtors acted like they would like to live here!


Sorry you lost out on what you would have liked to have...

[bunnys]

Get at least 3 more estimates and tell everyone you talk to the story and emphasize the fact that you do not want to spend 8-10k on a burner for a furnace you're not going to use in a house you're about to sell.

Ask each one of them if there isn't SOMETHING else that can be done to reduce this cost DRAMATICALLY--efficiency be damned!

This happened with me this summer when I had to buy a new central air conditioner. Quoted $4500. but only paid $1800.

That number sounds really high for what amounts to PART of a new furnace.

[awakenedsoul]

Thanks Tussiemussies. I love my cottage, so I feel okay about it. My main problem was the realtors. They want a steal of a deal, and I wasn't willing to play their game. (All the comps in my area are foreclosures.) It's such a relief to be able to fix things up now, since I couldn't afford to for the first 15 years I owned the home. There's a lot of critical timing in real estate transactions, unless you are an investor with cash. So, as a large goal, I'm working towards having $80,000-$120,000. set aside for a home in a safe, nice neighborhood. I'll probably hire a real estate lawyer and negotiate the sale of my cottage myself. I just saw too much fraudulent behavior with this last experience to sign on the dotted line...

[Tussiemussies]

Hi again awakened, that is just such a shame. My Mom worked in real estate part-time and stopped. She didn't say why but did say the people involved were cut-throat.

On the other hand we just bought a house and the realtor was so fantastic, we just loved her. She is going to come over to see the house once we make changes. My mother did the closing, that is what she does for a living and she wants to meet her too.

Think that it is so great that you have got your cottage to a happy place for you in terms of fixing it up an that you have the money to buy. If this house/cabin did not work out I truely believe the universe will provide something better. Just keep thinking about what you want and imagine pictures of it in your mind. It will be drawn to you by the law of attraction.

If anyone doesn't like my philosophy of thinking I would appreciate if you kept your opinions to yourself. Thank you...

[awakenedsoul]

Hi Tussiemussies,
I sent you a PM.

[cindycindy]

Steve, Awakenedsoul, Miss Celane, Shadow, Citrine, pinkytoe, tussie mussies & bunny&anyone I missed: Thank you all for your replies and suggestions. We do budget for maintenance but got hit with the water pump going, a new fridge and storms Irene & Sandy. We're going to have to look at our monthly budget and find a place to increase the maintenance reserve to catch up. We will definately go ahead and get more estimates, and, yes, do not need the "best". Wish we could convert to gas as oil is expensive but gas is not available in this semi rural area. I work for a local government and my job has become unstable (I just go year to year to see if I'm in the budget) as services get cut (in this case, mental health services). I guess I was trying to not invest yet more money in the house if we have to sell, but I have to get over that mind set. My husband has worked so hard in dealing with stacking and moving wood and we were both so proud of our "frugal ness" that I guess the thought that these efforts possiby resulted in shortening the life of the furnace felt like a slap in the face. But, it's true, the thing is 30 years old and it's just part of the cost of living in the house and the cost of getting a good price when we're ready to sell. Thanks again for all of your input!


(Awakend Soul: Good luck: I'm sure another good deal will come about and, next time, you'll be ready.
soul - good luck; hope another good deal comes your way
Miss Cellane


a

[jp1]

The other thing to consider is that if you're looking to sell and move within your same area it shouldn't really matter if the market is up or down. After all if it's down and you sell down, you can also buy in the down market. Exceptions to this would be things like if larger houses are way more popular in your area, etc, which would affect either the house you're selling or the house you're buying much more.

[Minz]

Cindycindy,
Keep in mind that even if you sell your home for less than you want to in today's market....the smaller house you end up buying in today's market will be less expensive than a few years down the road. Make sense? I may not have explained that well but you probably get the idea. :)

[Minz]

Cindycindy,
Another thought....instead of making some of the repairs, you could offer to pay for a one year home warranty for the buyer (usually $300-400)...it doesn't cover everything but gives buyers some peace of mind.

I was able to use my home warranty to pay for part of the replacement of my 40 year old furnace.

I should disclose I'm a realtor - if you'd like me to find a good realtor in your area just send me a private message and I can find a couple in your area who you can interview.

[MelFallen]

Have you considered moving out, but using your home as an investment property? Sure, initially the cost would be high due to the upgrades you need to do. But if you rented it to college students or something you could ultimately make a profit on it rather quickly! Just a thought!

[Zoebird]

personally, I would do some good enough repairs, prepare the house for the market, and sell it.

it seems obvious to me that what you have is becoming too much for you (my parents were in the same position), and as such, moving is the right idea. you might not make the ultimate, best profit ever, but you'll be out from under the burdens of the too-big house -- and that has value in itself.

get the oil thingy repaired, have an inspector come in and have a look (get a price evaluation/etc), and then start talking to agents.

[iris lily]

personally, I would do some good enough repairs, prepare the house for the market, and sell it.

it seems obvious to me that what you have is becoming too much for you (my parents were in the same position), and as such, moving is the right idea. you might not make the ultimate, best profit ever, but you'll be out from under the burdens of the too-big house -- and that has value in itself.

get the oil thingy repaired, have an inspector come in and have a look (get a price evaluation/etc), and then start talking to agents.

The is VERY good advice.

Some of the best real estate advice I got was from a radio financial guru and he's say: Don't be a hog when it comes to selling your property. Be a pig, sell it when the market is up, but don't try to time the market so that you get every last little cent, this is being a hog and you will lose.