Sara, Both Buyer and Seller in Oxford, AL

Is it financially smart to sell a home in this market? We would potentially be losing over 10k in the current market. We own a two bedroom one bath.

Asked by Sara, Oxford, AL Wed Sep 28, 2011

Down the street two houses there is a house (smaller/not as updated; but two bed one bath like ours) for sale for 46k that has been on the market for over two years and hasnt sold, there is a foreclosure (very outdated/badly in need of repair) a few blocks down for 37k and the house behind ours (one more bed&bath, very nice/updated) is listed for 79k for about 4 months. We bought our home when the market was WAY up and we still owe 58k. We really want to relocate, but can't afford to take that big of a loss. What should we do? What would be a smart way to market our house?

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Sara, Both Buyer And Seller, Oxford, AL
Mon Oct 3, 2011
Thanks guys! To answer a few of the questions, we purchased in 2005, for full asking price. Not our best moment in real estate. We had a CMA done almost a year ago. They recomended putting it on the market for 64k and we would probably sell for around 59k. But that was before the house behind us went up and before the foreclosure down the street.
We are looking to relocate about 20 miles away. Close enough we could be a landlord, far enough away it would be a hassle to go out to the potential rental property on short notice if we decide to rent instead of sell. I am not sure we are ready to take on the task of being landlords though. We are young and have a child and are looking to maybe have another in the future and I'm not sure how being a landlord would fit into our busy lives.
I know the Oxford school district is a huge plus for our house. But these other houses are in the Oxford school district as well, which makes me nervous about not being able to sell again.
The reason I really want to sell would be so we can afford a higher payment on the potential house we buy. The amount of house we could purchase would increase greatly if we did not have to make sure there was still room in our budget for the current house payment too. I refuse to over buy and not be able to afford all of our monthly bills (including the mortage payment on our current home) if the potential rental house sits empty for a few months.
The amount the houses around the area are renting for are close to our monthly payment (maybe one or two hundred above depending on the condition of the house). We will have to refinance if we decide to keep the house and rent it. Which adds more bills and outgoing money for a few months as we save closing costs for that loan.
I know that I will be getting an amazing deal on the potential house we buy in this market. The houses we are looking at are way more than we would have ever dreamed of before the housing market fell.
What would we do if we sold for less than what we owe? Could we roll that into the mortage for the new home? Would we be left making payments on a personal loan?
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J, Agent, Greensboro, NC
Thu Sep 29, 2011
Hi Sara,

It sounds as though you already have an idea of what your current home will bring once it is sold and you want to hold on to your 10K. Many home owners are in a similar situation and would like to relocate but are waiting until they sock away more funds. The great news is that the housing market will probably remain in its current pattern for years to come. Regardless of how your property is marketed, fair market value will be a prime factor---I think you've already answered your own question. Good luck!
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Liz Spiller, Agent, McCalla, AL
Wed Sep 28, 2011
Sara, first of all you need to contact a Realtor in your area; there are many reasons homes sell or don't sell and I understand what you are dealing with. However, even tho you may loose $10,000 on your sale, you will gain more than that on your new purchase, not to mention the $$$ you will save on interest rates. If you don't know a Realtor, please contact me and I will be happy to refer you to one. You can get me at 205-229-1407
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Frank Diaz, Agent, Honolulu, HI
Wed Sep 28, 2011
Hi Sara,

Unfortunately it is a buyer's market. If they can get a loan, of course. Unless you have a good amount of equity, it makes sense to wait it out right now. Even talking a loss of $500 a month on a rental may be preferable to selling and taking a large loss. Buyers are being picky now.
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Julie Nettle…, Agent, Homewood, AL
Wed Sep 28, 2011
I guess my first question is are you wanting to relocate in the same city, or are you wanting to leave the community altogether, and are you looking for a bigger house for your family or downsizing. Each situation is different and really calls for a different approach. Yes, you are in the same situation as alot of home owners who bought homes between 2005 and 2007, in that you owe more than the house is worth in todays market.
If you are staying in the community and looking to buy a larger home for your family,in this market you will also be buying at a great price, so the $10,000 loss you feel on one side is a $10,000 or better gain on the other. If you weigh them out it makes it not hurt so bad, If you can buy a house that 2 years ago was worth $100,000 but now you can buy it for $80,000, you have actually gained $10,000 as an investment.
Like I stated earlier, every situation is different and I would be happy to sit down with you and go over these scenerials with you to see what works best for you.
If you are having to sell because of financial issues, there is always that option to do a short sale, which means the Lender would agree to accept what you sell the house for to satisfy the loan and forgive the difference.

If you have any other questions, just let me know, I would be happy to help you., Julie
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Richard Garza, Agent, Anniston, AL
Wed Sep 28, 2011
Has a Comparative Market Analysis of the home been done? It sounds like you have done alot of that research yourself. I am in agreement with all the answers in saying that the market in Oxford AL has been better. One has to ask the question: " Why are we moving" do you want to relocate to a different area of the country, will you be moving to get a better job, and so on.
A big part of reaching that decision on whether to sale or not is gathering the information. Get your Realtor to do a CMA of homes that have sold within the last 6 months, and those that you would be competing against.
Being familiar with the Calhoun County Market, I can tell you that Oxford is a very desirable location due to their good schools.
Smart Way to Market your home - You will have to get your home exposed to as many people as possible. Dont get a Realtor that will only put a sign up in the yard. The best way for this is the Internet. 87% of buyers start their search on the internet. Get a company that is Technological savy and has high internet exposure.
Bottom Line: You need information to make a informed decision. Find out what the market value of your home is, compared to what you owe and then make an informed decision.
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Alex Pereira…, Agent, Farmington Hills, MI
Wed Sep 28, 2011
I agree with both answers and they both are correct. I have been advising clients however to take the rental route if they can muster being a landlord. Renting properties is not the big boogey monster most folks will have you believe. Sure there are periodic issues that come up but everything is resolvable. I had a client willing to take an 18K loss because he did not want to think about renting and worrying about that. Once I explained that it would be better to set aside the 18K in a reserve account to compensate for potential issues and ride the market out it made sense to him. 18k is a lot of repairs, 10k is a lot of repairs. Some people worry about evictions and damages but few people realize you can get insurance in case your tenant damages your property at eviction from your homeowners insurance. Often time the cost is neutral because when you rent your home you stop insuring the internal contents reducing the insurance costs. If you reinvest the insurance deduction to buy a eviction policy you safeguard your property against catastrophic loss. food for thought.
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Ron Thomas, Agent, Fresno, CA
Wed Sep 28, 2011
If I were in your shoes, I would hold on to it and rent it out.
It sounds like you should be able to have positive cash flow, or close to it.
The Banks would look at it as an asset as long as you didn't have a big negative.
It is an asset and you want to accumulate assets.

Good luck and may Giod bless
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Scott Godzyk, Agent, Manchester, NH
Wed Sep 28, 2011
Sara it depends on a couple of things, if you are buying a home after the sale of your home, you will get at least as much back in savings if not more so the loss on the sale is more than covered by the gain on the purchase. If you dont have to sell, prices will only go up but so will teh cost to buy a new home in a few years. So ye sit is smart if you can find a great deal on your new home.
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