Home Buying in Pennsburg>Question Details

repent711, Home Buyer in Phillipsburg, NJ

Take a loss on selling my house now or wait 4 years and see what happens?

Asked by repent711, Phillipsburg, NJ Fri Jul 19, 2013

In '09 I bought my new condo for $235,000 and put $35,000 down. I'm trying to sell it now for $225,000 for the last 3 months in hopes to take advantage of new construction and the low rates on a single family. My wife and I are happy where we are but want a yard and garage when my son gets older. Nobody knows what the rates or home prices will be but I can say savings wise I won't have anything more than I have today so any extra money to cover higher home prices would come from more equity in my existing home. I also have the ability now to stay with parrents for a few months to wait for the construction. I'm unsure about putting $35k down 4 years ago and walking away with $20k or less now.

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Thought provoking!
But you assume that if they Short now, that they will be able to buy now.
1 vote Thank Flag Link Fri Jul 19, 2013
I'd take the loss now and move on. The future is uncertain, and you want to buy a new house with a yard and garage while your son is young enough to enjoy it.
0 votes Thank Flag Link Fri Jul 19, 2013
I disagree with Ron on this. If taking the loss enables you to go buy a new home, which costs more today then it may be strategic to take the loss.

$235,000, sell at $200,000, paper loss of $35,000.

If the $200,000 condo appreciates at 12% a year for the next 5 years it will be worth $352,000.

If you instead take the $35,000 loss in order to purchase a $300,000 house and that house also appreciates at 12% a year for the next 5 years it will be worth $529,000. So taking the $35000 loss now, will allow you to make another $141,000 in 5 years.

The numbers work best if: the new house is much more expensive than the existing property, and you plan to be in the new house for several years. Also, I expect appreciation to be much more moderate in the next few years - using 8% would probably be more realistic, but it will depend on your particular neighborhood as well.
0 votes Thank Flag Link Fri Jul 19, 2013
If you less for less now, you'll either have to come up with some money, or do a Shortsale and ruin your credit:
You as so close to break-even, and maybe even a profit; selling now could cost you more than if you waited a while.
Most good areas have seen 12% + increases.
Consider also what RENT would be for a place, as opposed to what you're paying for the mortgage.

Good luck and may God bless
0 votes Thank Flag Link Fri Jul 19, 2013
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