What? I have to pay $10,000 to sell my house?
I have heard this more than once. I, personally, don’t think it is a good idea to sell a house if you have to come to the closing table with $10,000. This is happening more and more to people who bought their houses a few years prior to the market crash in 2008. They bought high and now may have to sell for lower. They may have only put down 3.5% for a down payment, or 0%, if they did a VA or a USDA loan. Now they may be selling for the amount they bought or a bit less and they have to pay a 6% or 7% commission. They are stunned when they realize how much they will have to pay to sell.
I had a case like this last year. I advised the couple to rent the house out instead of selling. They did not want the headache of being landlords and decided to list to sell, in spite of having to pay the whopping $10,000. As the weeks went by and the house was not selling, I advised that we drop the price. This was going to put them even more in the hole. They decided they would try listing it for rent and to sell simultaneously. The house rented in a week’s time for the same amount they pay on the mortgage. One positive aspect of the stricter lending practices and many people not qualifying for mortgage loans is that these people have to rent. The rental market is strong. It is a great time to move, rent your house, keep it as an investment and buy elsewhere. For the couple I mentioned, they will be able to be a bit ahead on what they receive in rent vs. what they pay the bank on their mortgage in another year. Any repairs they may potentially have to do to the house within the next year cannot come close to the $10,000 plus they would have had to spend to sell. Once they start having positive cash flow, they can put that towards repairs.