Are you kidding? In this market? Of course not. We managed to sell it for around $5k more than we bought it for back in 2006 (in “the bubble”) and it doesn’t take a genius to figure out that we spent more than five grand on improvements (we estimate that we spent around $35K on new bathrooms, a new kitchen, new flooring, new windows, a new roof, a new patio, a paved driveway, and upgraded details like crown molding and wider doorways). This is where a “womp-womp” sound effect would come in handy.
But we’re sleeping like babies and are downright giddy about the sale of our house and the purchase of our new one. Why? We’re 100% convinced that the time was right and everything happened the way it was meant to. Are we crazy? Maybe. But here’s our thought process:
- Our monthly payment for the new house is $200 less than what we’ve been sending in for our old much smaller house thanks to historically low mortgage rates and a great deal on the new house (which we never could have afforded in a better market). More house in a better neighborhood for less money each month? Yes please.
- The unimproved houses in our old neighborhood (which look a lot like ours looked back when we purchased it) are selling for 30K, 40K, even 50K less than ours sold for. So not only were our projects fun and fun to enjoy while we lived there, they seemed to help our house retain its value and even improve upon it (even though we bought it when the market was amazing and we sold when the market was, uh, not).
- We got an offer within just a few days of being on MLS, so that’s a lot to be grateful for in this housing market.
Want more details? Sure. You know we like to talk…
We’re not house flippers, we’re house lovers (hence the blog name). We never moved into our old house intending to flip it or upgrade it for any other reason than to enjoy it and make it the perfect home for ourselves in the time that we spent there. And it was. So the fact that by doing those updates we were also able to keep the house from dropping a lot lower into a price range that actually may have made us cry ourselves to sleep at night really does feel like a blessing. And we can’t forget the inexpensive backyard wedding that we were able to host thanks to diverting our venue rental budget into a new paved driveway and cobblestone patio that were around long after our big day ended. Or the kitchen renovation that spawned a blog that spawned a business that now affords us the opportunity to both work at home with our spawn by our side (sorry for calling you “spawn” Clara- it’s a terribly un-ladylike word).
Plus, it’s easy for us to see the rewards that the new house holds. After all, we’re not just sellers in this buyers’ market – we’re buyers too. And boy is it a sweet time to buy. We’ve scored our new larger house in a nicer neighborhood at a serious discount (we paid over 40K less than it was valued five years ago). Plus since interest rates are awesomely low we’re potentially saving tens of thousands of dollars in interest over the term of the loan. And since we had some nice equity in our old house to roll over into the purchase of the new one (and thanks to that lower interest rate) that’s how we got to that lower monthly mortgage payment that we mentioned above.
Plus we figure that when/if the market recovers in who-knows-how-long, there are greater rewards to be had on our new house than if we had waited around to sell our old one (which might have gone for more money in a few years, but at that point our new house might have been waaaay out of our price range just like it was five years ago when the market was doing gangbusters). And of course we can’t ignore the most important facts: that this new house satisfies our passion for DIY, offers more room for our family to grow, and helps fuel our business. Which is really the day to day stuff that helps with the whole sleeping at night thing.
But let’s revisit that whole 35K spent on improvements, only 5K of which we actually made back in the sale price. The good news is that it’s not like our improvements didn’t serve us at all. Similar houses in our old neighborhood are now selling for muuuuuch less than ours did because they don’t have any of the updates that ours has. In fact a similar ranch on our old street (only about three houses away) that’s notably bigger than ours sold this summer for 50K less (!!!) than our house did. Which makes us feel incredibly good about the improvements that we made to set our former casa apart so that it would not only hold its value but would even creep up 5K since the good ol’ days of the bubble. So although on paper it might look like we lost 30K based on what we paid, how much we put into it, and how much we sold it for- we like to look at it like this: by making the improvements that we did, not only did our old house not drop 50K in value in this bum economy, it also slightly improved by 5K. Call it looking through rose colored glasses if you’d like, but thinking about it that way really helps keep things in perspective.
Oh and here’s another interesting house-for-sale point that our lender made. He has noticed that what homeowners aren’t getting back financially from their improvements, they’re getting back in sale speed. For example, a buyer might not pay much more for your house because it has granite counters, but you’ll get an offer a lot faster than a similar house down the street that’s sporting laminate. And that has certainly been our experience. We were on MLS for 2 days before getting an offer while a similar larger house down the road is going on four months without a bite. And it’s listed for $30k less!
Do we wish the market were better? Sure. But we’ve got zero regrets. Some may accuse us of seeing the glass as half full (and we definitely don’t think everyone would make the choice to sell at this time), but these are just a few reasons why we’re so glad to be in our new house just in time for Clara’s first Christmas. Speaking of which, we’ve got some boxes to unpack…
Kasey at Thrifty Little Blog says
I’ve been talking to friends about selling in the next year and they think I’m crazy, but I always say that I’d rather take 10% less on my current home than to wait it out and pay 10% more on a more expensive home. If you can afford a move and it will improve the lifestyle of your family, why not?
Nicole says
Requested Wop-Wop noise: http://www.sadtrombone.com (i keep this website up at work always just so i never miss an opportunity for special effects!)
In other news, congrats on the move, I’m sure this house will be just as lovely as the old one when you 2 are done with it.
christy says
I dont see how you could have stayed at the old house? It’s your livelihood, your income. What would you two have done if you didnt buy another fixer upper?? Blog about crafts, or sales at drugstores? I mean really. You have a following, because of what you do. People all over, are genuinely interested. And although the thought of all the work your new house needs makes my skin crawl (eeeek pergo flooring stuff!), you need your new home to be like that. And assuming this one is about twice as big … plan to move again in another 6-10 years when you are done remodeling this one… or return to work. Profit or no profit, without the sale, you would have been ‘unemployed’, and that profit is priceless. Take it from someone who can’t land any job in this economy. I hope to sell my home in 2 years, and move to the country. After all improvements, I hope I just break even! Congrats on a quick sale, and being able to sleep at night!
Keeley says
Thanks for keeping it real about this entire process. As a matter of fact, thanks for keeping it real in general. I don’t see that a lot in blog world.
I’m so happy that this blog enabled the two of you to work from home and I agree with others that this decision makes complete sense. I wish I could say the same for my situation! Moving up is complicated!
Please keep sharing financial posts… I love ’em.
Lauren says
I think you guys should be thrilled. We bought our rowhome (fully rehabbed) five years ago and made about $3500 in additional improvements. It’s now been sitting on the market since September and we are asking for over $10K less than we paid. We had to let a house go that we had under contract which was also disappointing. The bright side is, as you mentioned, that the houses we are looking to buy (when ours eventually does sell) were WAY out of our range the first time around.
Jennifer says
YOU GUYS MADE THE PERFECT DECISION!
Paige says
We’re trying to move up from a condo into a house, and it’s tough. Nobody wants a condo right now (at least not around here), but we’re trying to keep our chins up about it. When the time is right, the time will be right!
The new house looks great and I can’t wait to see what you do with it!
LittleMissEclectic says
I understand you completely. We are in the same boat with our house- only we bought it in the slump too, just last year. We will just be happy to get rid of that payment since we aren’t even living in the same state anymore!
Treci says
This may be too personal, and I apologize if it is, but I was curious if you took out another 15 year mortgage? I remember when you refinanced your last mortgage and I believe opted for the 15 year. I am just curious especially when you talk about your lower monthly payment on the new home.
I also love the new house and think you made a great choice. The two-sided fireplace idea is my favorite. That will be awesome!
YoungHouseLove says
Hey Traci,
Alas, we appealed for a 15 year mortgage but the bank thought we were too risky since we’re both self employed. Boo! We are just planning to try to overpay it when we can to shorten the term of the loan. Hope it helps!
xo,
s
Karen says
Loved this post. It is making me wonder why we haven’t bought a house already- oh right, we live in California. Still working on that dream, but love living through you guys. And your half full approach.
Lora says
I love your thoughts on this whole process. We sold our house 7 months ago – in an area of the country that has been among the hardest hit by the foreclosure mess. We were on the market for 13 days. The two biggest factors in our quick sale were the upgrades we had done and the fact that we were not under water on our mortgage. Did we sell for less than we bought? OMG, yes. How does $176,000 less sound? And that does not factor in the roughly $40,000 in improvements we made. We took a bath on it but my husband was being transferred out of state for his job so we really had no choice. On the flip-side, we are trying to buy a house in our new state that will up our mortgage considerably but thanks to the low interest rates will only mean about $100 more per month in our payment. And we are getting a screaming deal on this house. In the end, I think it all happens for a reason.
Andrea says
John and Sherry, I want to say CONGRATULATIONS on the new house! I’m so happy for you two(four)! I’m a fairly new reader to this blog, and I’m HOOKED! Your posts are interesting, informative, and creative. Keep em coming! I’m thrilled that I will be able to “see” the cool stuff you guys come up with to fix this house. I have no doubt you two will do great things there! Thanks so much for sharing so much about yourselves and your lives, I really think this is what makes your blog so awesome and keeps me coming back (sometimes 2 or 3 times) every day!
kitliz@DIYdiva says
You know I had almost the exact same scenario. I actually sold the house for $2k less than I bought it for, and I estimate that I put about $20k of improvements in, but I considered it a great sale. The timing was perfect, it allowed me to use all that equity from a 15 year mortgage on tearing down and rebuilding the new place, it was fun, and if you consider how much money was “lost” over the length of time I lived there, I would have been paying way more in renting a place.
I think this is just the new reality of the housing market… anyone who isn’t foreclosing on their house should feel lucky.
You guys did great, congrats on the new place!
Noelle says
Thanks for taking the time to update-
I am so excited to learn about your site now and watch the process as you make this house a home! The house has such great bones. I can see why you left your old wonderful home for this place. Congrats-
kathy says
And hats off for selling your home during the usually slow 4th quarter. I’m curious, did you consider waiting until late winter/early spring (after Superbowl) to put your home on the market? In fact, when your first blogged about it, I wondered about October… Doesn’t matter since the outcome is absolutely great! I have those agent must-do’s in my head. Good to know those rules can be successfully broken.
YoungHouseLove says
Hey Kathy,
We actually talked to a few experts (realtors and loan agents) who said we may have been worse off selling in the spring (there’s more inventory then, which can result in a slower sale or a lower offer since there’s so much to choose from). Real estate prices are still dropping in Richmond, so we figured the sooner we could sell, the better…
xo,
s
adria says
i love this post. as a semi-new (bought for the first time in feb. 2009) homeowner, i’ve been having days of regretting making my first purchase mixed in with days of being excited that i can turn my little town house into something nice during my time spent inside of it. i have fear that i won’t make a dime, but a sense of giddiness about the fact that i can enjoy what money i put into it while i live in it.
you’ve helped me feel more comfortable with all of that…if any of it made sense.
Melissa Arlena says
I think you guys are right on the money about it being a glass half full. My husband and I also bought at the top of the market and even though the value of our house has dropped tremendously I feel like we made smart decisions. We bought the lowest priced house in the neighborhood and have taken it room by room to revamp it. When we gutted the kitchen we did it all ourselves and we realized that while we might not get back the exact dollar amount we put into it we know that when it comes time to sell it will help us sell sooner. This economy has definitely forced us to think about what we and our house really need and not think what would add value.
Congratulations on the new digs and I can’t wait to see all the new projects you guys are going to tackle!!
Michelle C says
In an earlier comment you mentioned you guys have a high yield savings account. If you don’t mind sharing, which company is it with and have you had a good experience with them?
Can’t wait to see what’s in store with the new house!!!!
YoungHouseLove says
Hey Michelle,
Our accountant made us promise we wouldn’t disclose our bank info (he doesn’t think it’s safe to do on a website for all to see) but it’s an online company and we have been happy with it. We like the discipline of having an account that we dont touch until we save up for something).
xo,
s
Adriane says
Thanks so much for this great post! My Mom has had her house on the market for almost a year…yep, a year! She has only had a couple offers and one was embarrassingly insulting and the other fell through because they wanted to do things (pave the entire back yard for a boat and RV garage) that the HOA wouldn’t allow. Soooo, naturally my Mom doesn’t want to spend any money that she won’t get back on improvements. However, that could be the oomph it needs to at least sell! Four real estate agents and 11 months and I get that gem of perspective from you guys! I should’ve known… :) Keep up the great work and congrats again!
Fran says
I am so happy for you and your family and the decision you made! There are so many opportunities in the real estate market, and you took a wonderful risk that will pay off for many years to come.
One thing I’m kind of confused about that I thought I’d ask. Why did the buyers offer more than your sale price? I don’t quite understand that – could you please shed some light on that?
YoungHouseLove says
Hey Fran,
We had a ton of showings kind of all on top of each other right when we hit MLS, and the agent/buyers knew we were showing the house a lot (since we had to clear a time with them because we were so booked) so they must have worried about a multiple bidding situation (which might explain why they offered a few thousand over asking price).
xo,
s
Tracy Napper says
You guys obviously made a well-thought-out decision, and it’s amazing how quickly your house sold in this market. I’m curious (sorry if I missed a post about this) – can you share what type of buyers bought your old house? ie, young couple, retired couple, single parent? They’re definitely lucky that they can enjoy the fruits of all your hard labor!
YoungHouseLove says
Hey Tracy,
A couple around our age (no kids yet, but they have a big dog) bought it. Hope they take care of our baby- ‘er house!
xo,
s
Cate says
We’re trying to sell our house in this tough market too. Hoping we can break even or worst case lose only a small amount. While we have put money in that we won’t recover, bankers and real estate agents agree that what we may lose on this house we will gain (plus some) in a new house.
Amy E. says
i love the stance you’re taking on the price/cost of your houses! to me, that’s the only way to think of it: your improvements kept the price more steady. and YOU enjoyed them! and they looked DARN GOOD!
pessimism doesn’t pay, so why worry?! wahoo to you two (well, four)!
AnaLisa says
Lots of wisdom in this post. All so true!
Hayley says
All that really matters is the “cost to change”. You sold for less, but you bought for less too. And since the prices will have fallen by similar percentages, but the larger house was worth more, you have STILL benefitted from a falling market.
And anyway, to me a home is somewhere for you to live and enjoy, and I know you’ll do that wherever you are!
Theresa says
I love how you guys think. I concur completely with your decision. Congrats! I can’t wait to see what you do with your new home.
Liz says
You’d mentioned before that the hardware/ lighting/ curtains/ appliances were sold to your old home’s new owners. I’m assuming the hardware and lighting were included in the value of the house, but were the appliances, curtains, and bed a separate transaction or does that count towards the house value too? I’ve never sold before, but the house I’d bought they’d thrown in the fridge as part of the price of the house.
YoungHouseLove says
Hey Liz,
They all factored in as part of the value of the house since they were all written into the sale price (no separate transaction or anything). Hope it helps!
xo,
s
Amy says
so with all of this speedy posting and replies, does this mean you now have internet up and running?
congrats again on the great big exciting changes.
YoungHouseLove says
Ack! No internet yet! Trying to do some work on the ol’ iPhone and of course hitting up Panera. Haven’t had much time to unpack though, so we’ll have to get down to business and do that so we can tackle some projects soon!
xo,
s
Shannon says
Congratulations on the new house! And, thanks for sharing your thought process with us.
nicole @ our three reasons says
We are getting the opportunity to build a brand new house that we probably wouldn’t have been able to afford if the interest rates weren’t so great right now. We got some other great deals from the builder and it’s all worked out well but the low rates which are dropping our monthly payment is innnncredible. :)
brandt @ New House on the Blog says
@ Michelle C:
There’s a bunch of great high yield savings accounts out there, the 2 most popular being ING Direct and HSBC. I’ve had both (first HSBC, and now ING), and ING is paying only 1.10% right now (the economy really brought the savings rates down).
The best part about ING is that it’s got great automatic savings plans, and you can have almost as many savings accounts as you want. We’ve got about 7 different savings accounts for all our different goals, and its WONDERFUL!
Tiffany says
Love that you still are so happy about the sale
XOXO,
http://outfitidentifier.com/
Blog is the New Black says
Congrats on a well thought out decision!
MS says
We did something similar to you guys, but not nearly as big of swings in price, on either end. We sold and lost only about $10,000 of what we put in through improvements. But we enjoyed them while we lived there, so it wasn’t terrible. And the neighborhood we bought into hadn’t (and still hasn’t) come down in price nearly as much as the rest of the market. We found the horrible market helpful in that we were really one of the few qualified buyers out there with 30% to put down and ready to go NOW. Made it easier for use to demand improvements on things that weren’t to code, etc.
Our thinking was basically the same as yours. Sell before this house becomes an albatross we can’t get rid of, buy where we want to be long term. Just a word of caution to all out there, this scenario is not a smart move for everyone! Be thoughtful and clear about how this impacts you financially long term! We’re not in this housing mess for no reason!
Brooke says
Congrats on your decision! We had the exact same thought process when we put our house up for sale in May (2 weeks after the 8K buyer program ended, yikes!).
jbhat says
I am not a numbers person, but I guess I understand that “worth” and “value” are too very different things. There is a ton of value in proceeding the way you did, in so many different ways. Well done, Youngsters.
jbhat
Liz says
You only spent 35K on ALL of your remodeling? Seriously? I’m amazed!
Amanda says
Hey John and Sherry,
If you’re going to over pay on your mortgage you can use this nifty calculator to show you how much you’ll save and when you’ll pay it off.
http://www.daveramsey.com/tools/mortgage-calculator/
YoungHouseLove says
Hey Amanda,
Love it! Seriously, so much fun.
xo,
s
Stacy says
i’m just gonna cut and paste your response in answer to those asking us the same question, k? just kidding. but, really, we went through nearly the same scenario. minus the getting a bite after three days on mls. for us it was a long time in a saturated area. and, in order to sell we had to drop 20k! but because we got such a great deal on our new home, great int. rate, etc. we also have a mortgage about 200 less. the difference for us is that we got less house, but we moved into an intown neighborhood that we thought was unattainable for us!
anyway. . . psyched about watching you love on your new home!
Aimee says
My house is sporting laminate counters because that’s all I could afford. I would love marble or even faux marble, but the old yellow laminate had to go, and the new laminate is much better than before. It stinks to think that instead of thinking “new counters! yay!” a potential buyer would just think “laminate counters- PASS!” :(
Legacy Farms and Ranches says
What a great way to look at it and some excellent advice for those seeking to buy and sell! First of all, sounds like you had some awesome improvements done for only 35k. Have to get your money’s worth in all places!
I especially liked how you pointed out that if you did not make your improvements, take care of your investments, and sell now that your dream home may not be available to you when the market picks back up…whenever that may be.
For most people, you have to sell in order to buy. You said it right, Now is the time to buy! So manage the best you can with improvements (increase your offer rate) and make another sound investment. Discounted homes and rates = money saved…if you’re smart. There is no harm in thinking glass half full, as long as you are wise with other financial decisions (cars, extra spending, investing elsewhere). Sounds like it all worked out for you too and we’re glad to see it.
Time to buy is now! Check out Legacy Farms and Ranches of North Carolina to see featured property videos of listings in your area.
smashley says
Thank you, thank you, thank you. It’s so refreshing to hear of someone remodelling, selling, buying, etc. without looking to make a fortune. I get so uncomfortable listening to friends grand investment plans because while I am happy for them, I just want to enjoy our house then move on when we feel it’s time to another HOME, whether it’s the wisest investment or not. I know we all appreciate such candid looks into your financial life so thank you again.
Sheena says
I love how you guys see the bright side of everything! :) My husband & I started the steps towards buying our first home, but then a health emergency hit us & put everything back into perspective. I just started blogging (you guys inspired me), so if you care to do a little reading, visit my new favorite hobby (URL above)! :) xoxo, Sheena
Claudie says
The way I look at it is that if someone bought their house just a few years ago and doesn’t have to bring money to the closing table, then they are very lucky!
I wouldn’t worry about the numbers saying you didn’t make a profit. You would have lost a lot of money had you just been renting. Plus you have been able to turn your home into a business, basically. I think if someone had told you how it all would have worked out, you would have gladly taken that “loss.”
Sassy Mommy says
Thank you for the info… it is a nice way to see it. My husband and I kick ourselves for buying a year to soon and being one of “those people” with the house they are under on. Good to hear a story of hope.
So my burning question is- now that you are in the new digs- What is the first big project you want to do/plan to do?
YoungHouseLove says
We’re all over the place! Will post soon about our to-do list and what we’re already starting to tackle…
xo,
s
Carl says
Can I say that I’m LOOOOVING the new (well, old but resurected?) format of “real time” blogging? I eager look forward to every entry, while previously for the past couple of months I was only actually reading about 1/2 the entries. These posts are such quality. You guys are awesome.
And I’m so excited about the new house, although I have to say (this is crazy) I’m going to miss the old one! Weird to be so attached to someone elses house…
Jeannine @ Small & Chic says
This is exactly the plan I had in mind when I started improving my condo. I didn’t do it to make money. I did it to a) make myself happy and comfortable and b) ensure that I’d beat the competition in my complex if and when I decide to sell.
I don’t want to make money when I sell. I just want to sell
claire says
Aimee, my husband and I just bought a brick ranch with laminate counters. We didn’t mind a bit! Don’t worry!
RM says
It’s a fantastic point that basically spending the money on improvements saved you from losing more money now (which is basically the same as a positive ROI…your money put in still made you money, just not enough to offset the economy).
The only other thing not mentioned is the money you put in was effectively funding your business. It’s mentioned relative to the new house, and so I guess it’s implied. But I think it’s also important to note that spending the money on the house was partially an investment in the blog. Every project brings potential of new visitors and keeping the old ones interested.
So financially what you did still technically made sense on its own (since you were able to combat the loss you would have had), but it’s also important for people who are just renovating for themselves (and not to help support a business) to note that you were also benefiting from it in other ways. And that if you’re renovating in a bad economy and might be selling in the same economy, to think about it and make sure you’re getting other benefits (whatever they may be) and not just assuming your renovations will be able to combat any decline in property value you experience.
Sarah K says
In the end, you guys are happy and a have a great new house! What more could you ask for?
Are you going to put the Christmas tree up at the new house too?
YoungHouseLove says
Yes! We’re actually working on that…
xo,
s