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…
Jessica says
Awesome! I know you said you guys don’t hold debt for these projects so thats HUGE! You aren’t continuing to pay on something that you aren’t getting money back on. You already kissed the cash goodbye and enjoyed the improvements, so its not like you have to kiss the money goodbye again by carrying the debt with you.
PS. I love that you said you are house lovers, not house flippers! Thats so true!
Tracey says
Thank you for this post. I learned so much and as someone who’s about to start looking for their first home the information you provided is extremely valuable to me.
bfish says
Great post and lots of wisdom here on the sorrows and (mostly) joys of home ownership — thanks so much!
Making money on a house sale is, of course, wonderful, but it’s so dependent on timing and the economy. You learn more with each house you buy and sell. For example, you fell in love at first sight with your first house; accordingly you may have paid more than it was worth (I realize the market was different then and perhaps you had to go high to be competitive with other potential buyers).
From working on your house you’ve honed your understanding of what aspects of a house for sale are actual deal-breakers vs. issues that can be fixed for a reasonable cost/effort. In my younger days (shopping for second house we bought) I was turned off by wall-to-wall red carpet (over hardwood) throughout in one house and a funky nest of new and old wiring in another. I know now that these did not have to be deal-breakers but at the time they seemed so, causing us to pass up two lovely homes that could have been brought around without spending a fortune. Your recent purchase taught you that a carport rather than garage didn’t have to be the kiss of death.
You’ve also learned a lot about home improvement/DIY and what you’re capable of — with every successful project you can imagine that those you haven’t tackled yet don’t have to be too daunting.
One can’t place a value on making improvements that benefit and please YOUR family. Remodeling/decorating with only an eye toward selling is just UGH! to me. There is no universal standard of “good taste” that will entice every buyer so homeowners might as well put a priority on how they want their home to function and look. That said, you made a lot of positive changes to your home that have broad appeal, which was borne out by the marketplace (fast sale in tough times). And, from your blog entries, it’s clear you enjoyed all of the improvements — both doing them and living with the results.
As long as folks can afford where they live and like their house, it’s best to let bygones be bygones re: agonizing over lack of adequate profit on the last sale.
Ana says
As I walk around my neighborhood, I see incredible deals, even better than the deal I got last year when I moved. And I wish I could’ve waited just one more year. But honestly being able to sleep at night is priceless. The whole reason I left my first house (which I thought would be my forever house) was that the deteriorating area and scary neighbors were making me so stressed that I *couldn’t* sleep well. My current house (in an awesome central neighborhood) is the right place for me right now and I didn’t go into it looking to make a profit someday. I just wanted to make a safe, happy home.
Not everything can be measured in money. You did the right thing for your family, and that’s the important thing. Your new house is awesome and will be even more amazing when you work your magic. :)
Natalie says
All very good points!! Very smart move, I was wondering are you going to send your mortgage the additional $200 a month since you are adapted to doing so? Of course this would take a tremendous time off the back end of the loan? Just curious, as I recently paid off my car, and was considering do just the same, sending my car payment amount to my mortgage… just curious, I know how thrifty and wise you two are with your money, which is just another aspect of the blogs that impresses us!! Way to go guys!
bravo!
~nat
p.s. I love the point you made too, that the money you “lost” on improvements where essentially the same improvements that led to this business/blog… so, not really a loss at all!! again, round of applause!!!! :)
YoungHouseLove says
Hey Natalie,
Yes, that’s definitely the plan! We actually used to overpay our last mortgage whenever we could, so it’s a good habit that we’d love to keep up!
xo,
s
Alondra says
I’m so glad everything went well for you guys and see what positive and great attitude you always sport.
I feel bad asking a question when I know you have SO much to do but, are you thinking of deleting your Amazon Store Favorites List? I check in on that once in a while to see which things are YHL approved :) so here’s hoping you decide to keep it (maybe as an “First House” products list?).
YoungHouseLove says
Not to worry, that’ll stay! We’d like to update it with things in the new house that we acquire too- assuming we love them enough to endorse them!
xo,
s
Corinne says
That’s a great way to look at it! I hope the previous owners of my house looked at it that way. I can’t wait to see what you guys do with this new home!
Houses in my neighborhood have been selling at rates and prices all over the place. One house sold in two weeks, well above the asking price (which I thought was a completely ridiculous, way-too-high price when I looked at it). Mine sold in seven months after two asking price reductions. I was lucky enough to get mine at a price lower than the appraised value too. While it hasn’t had significant upgrades in the past few years, I was more content to pay for a house that needs some love and attention than a house with lots of upgrades that was going to cost me more in the long run because of the higher payments.
Claire @ LTR says
I really enjoyed this post. Thank you for being candid about your experience with selling your home. We had a hell of a time selling ours because it didn’t stand out from the dozens of other houses for sale. Sure, we had a new bathroom but it didn’t overshadow the grim kitchen. I’m glad to hear you came out relatively unscathed.
Rebekah says
Kudos to you for selling your home in record time IMHO!! I am leaving this post up for my hubby to read. We’ve been slowing making living improvements for our home so it’s move-ready when the time is right. We were/are dead set on staying in our town home for 5-7 years. We just hit the 5yr mark and feel fortunate since the housing in our area so far as not been as hard hit. We’d love to move for a yard, a growing family etc. Our biggest issue is that we won’t have a lot of money to put down – at least not the amount realtors have been mentioning in this market. Do you mind me asking if you had a year savings plan or something for money down??
Excited to see your latest improvements! Cheers, Rebekah
YoungHouseLove says
Hey Rebekah,
We were lucky to score our first house for a major deal (the number started with a 1) so we earned a lot of equity in the 4.5 years that we owned it (we had a 15 year mortgage and overpaid whenever we could). This helped us pay down over 50% of the house by the time we sold it, so we had a lot of equity to roll over into our next house. Of course we also used some money from savings at closing and stuff like that, but having the equity in our house that we could roll over really helped to bring our new mortgage way down and allowed us to put down a nice chunk just for peace of mind and all that. As for how we save, we don’t try to aim for a certain number each month, we just try to do everything as affordably as possible (from food shopping and DIY fixes to at home haircuts and homemade lunches) – the savings really seem to add up that way. Hope it helps!
xo,
s
Katy B says
I didn’t take the time to read the comments, so if this has been said before, my apologies. Lets face it, you guys made way more than $5000 on the house. You made enough off it to support a family of 4 (gotta count Burger, I am a dog lover as well).
Anywho, you made the perfect choice. I can not wait to see what you do with the new homestead!!!
Stephanie Phillips says
I think you all made an incredibly smart decision on many levels. As previous commenters (and John) said, this is your trade! You have to continually improve upon it and expand your experience with it. Plus, the supposed loss of $30k is nonexistent when compared to the income/investment of your business. And, lucky for you, it’s your HOME. Which trumps all other rationale. ;)
My burning question is: Do you use any DIY sites or forums to research or develop plans, or is the legwork all your own? Ex: I’m weighing the pros and cons of matching my pine hardwoods exactly through the kitchen and addition versus coordinating, as you did. Who would you refer to for that sort of research?
My burning question
YoungHouseLove says
Hey Stephanie,
We google the heck out of things, talk to contractors at Home Depot, and chat up handy friends and family members. Basically we try to learn as we go and research what we can’t thanks to others who know way more than us! Here’s a post that might help. Good luck!
xo,
s
Erica says
This isn’t a comment but a compliment! Great find. Loads of potential. Excited to see what you will do with it!
JoDi says
I couldn’t agree more with your glass half full viewpoint! It’s awesome to do that well selling your house in this market. You won on all counts as far as I can see!
Jay says
Here at down-sizingboomer, we had the same experience. Even though we are in a different price bracket, we sold our 4000 square feet home in three weeks because all of the upgrades (kitchen, baths, basement, garage) had been done. Other houses in the neighborhood with similar square footage are still sitting and will probably need to drop the price after the holidays. We made a cool profit but have been here 15 years. Now, we movin’ to our down-sized 2700 square feet townhouse.
Destiny says
Thrilled for you …
kerri says
I haven’t read all of the above comments so forgive me if this has been said. But you also need to think about how much rent you would have paid over 4.5 years in an apartment. If your rent was $500/month (which is a LOW estimate compared to my rent in Burlington, VT) you would have spent $27k. I know that generally houses are a good investment but if you had lived in an apartment, that money would be gone with nothing to show for it. And you never would have been able to enjoy all the fun DIY stuff you got to do with your house. :) Enjoy your new house. Clara is a lucky girl to have have both parents home with her!
jeanna says
So, basically, you sold your house on “sale” to buy a another house on SALE!!!
YoungHouseLove says
Haha, love it. Yes!
xo,
s
Allison says
I feel your bought-in-the-bubble pain. But I agree with your outlook. I’m chalking our current condo up to a learning experience and we’re working to save a bit to help with a down payment on the next one in case the profits from this cozy estate-ette don’t wow us. When all is said and done, it’s wonderful to have a place to call your own!
Handy Man, Crafty Woman says
Yeah, unfortunately we bought our house at the Height of the bubble (UGH, but we were scared it would just keep going up; prices were going up every 2-3 weeks!) We’ve also paid cash for improvements as we went along. Hopefully, the improvements will help the house to be worth more “eventually” when house prices go back up.
Pink Sun Drops says
Oh my gosh, this just made me so incredibly excited to follow along your renovations with your new home! I’m not sure why, but maybe it’s because I just realized with this post that it’s your passion which makes it all the more exciting.
I just started reading riiight before you decided to announce the moving process. I wasn’t sure what to think, except I realized you needed more room. I was excited to follow then, but now even more so because I realized you four (including Burger!) would’ve moved even if you didn’t need the extra room solely because it’s your passion. How exciting!
Meghan, Bristol, UK says
Thanks for putting things in perspective – very few people over this side of the pond see things like this and it gets depressing! There’s always an upside to buying and selling in a down-market, and it’s great to see you found it (and them!) x
Susan says
About 15 years ago, we had a wise real estate agent tell us that its worth it to take a loss on a house in a bad market if YOU are moving up market. When we made that move, in 7 years, we doubled our money! Wahoo!
susan says
Points listed selling your house………….it’s all good and we had fun watching it unfold on your blog. Thanks guys! susan
heyruthie says
also, as you may have already mentioned, it’s kind of like you *didn’t* lose $$10-20K or so, since you probably bought the house with 2 realtors (buyer and seller agents) but sold “FSBO.” that “diy” element of the sale was make or break, actually, between you selling for more, vs. less than your actual purchase price. if you tacked on the realtor fees for a selling agent, it would have tipped the scale. so that’s a really good way to recoup some “loss,” AS LONG AS you know how much work it is, how to price the house, and whether or not the house is “marketable” as it is, and looks really good.
Sarah says
Houses are for living in. Do what improvements you want and can afford to make them work for you & family. During the boom people forgot that house are essentially a roof over your head during the boom. If you make $$ on it – great, but the reality is that housing is shelter. So glad you sharing this philosophy so people return to making their living space a great place to live – not just make money.
Ana Silva says
Good stuff! I just recently bough my second home too and am remodeling little by little…except my husband and I arent very patient and we do too much very quickly. Love your blog and your new home is really nice. I can’t wait to see what you all do to it.
Jayme (The Random Blogette) says
Also you didn’t have to share any money with your realtor since you sold the house yourselves! Congrats on that! I used to work in real estate and the commissions that the realtors made were kinda ridiculous.
Cynthia says
A fantastic post (perhaps my favorite yet!). My husband and I have this same conversation all the time. We live in a 70-year-old house that needed a lot of TLC when we bought it 4 years ago. We’ve put a lot of money (that we’ll probably never see again) into it, but those changes have helped make that house our home for these past 4 years. It’s impossible to put a monetary value on that!
drew says
How long a term is your mortgage? Have you ever done any of the Dave Ramsey financial classes? Your philosophy seems very much like his.
YoungHouseLove says
We used to have a 15 year mortgage but now that we’re both self employed the bank would only give us a 30-year one (grrrr!) but we’re planning to overpay it whenever we can to treat it like a 15 year one since we’re used that anyway. We haven’t done any Dave classes but we’ve heard great things about them!
xo,
s
Nichole Palmer says
Everything you said makes perfect sense and gives me a new outlook on the money we just put into brand new windows in our colonial. Thanks for such a great blog…you are the only blog I follow.
Nichole
Anne says
You guys have a terrific attitude! Props to you! I love to hear anyone say that their house is first and foremost their HOME … a place that makes you happy and you love to be in. For too long folks had thought of homes as money-makers, and while it’s nice to gain equity and pull money out at the sale, making a killing is NOT the big goal. Yay for you all, I hope more home buyers will embrace this attitude. It’ll be a lot healthier for the economy and for everyone personally.
Lacey (Laptops to Lullabies) says
This makes me feel SO MUCH BETTER about our own situation! We are selling our condo now, and had to put $18,000 into it (against our will, via a special assessment). When we do sell, we know we’re barely going to break even, and it’s depressing — since we’ve put work and money into it, you would *think* you would at least make a tiny profit. Knowing you guys didn’t make a crazy profit — especially considering how gorgeous your place is! — makes me feel better. Thanks for posting!
Sam says
You are SO RIGHT in the way you are looking at this. I see people get so caught up in the numbers when you really have to look at the market not the numbers. You didn’t sell in the same market in which you bought it last time. But you did buy your new one in the same market in which you sold. So you totally SAVED your house from losing value like others have lost and you were able to scoop up much more house and your payments are lower. It is totally a great deal and huge success. Congratulations!!!! Now get that house unpacked! We can’t wait to see what you do with it. :-) Oh, and thanks for this post. I hope it helps people who are trying to sell have a better perspective and to feel better about their selling prices.
Rebecca @ the lil house that could says
This was our exact mentality when we sold as well. We had just bought new flooring, new appliances, painted the place, yadda yadda yadda, 2 years before we put it on the market. We never expected to see a penny of those renovations back. A lot of people thought we were crazy, but my husband always said, we did this for us. We enjoyed it while we were there and didn’t do it as an investment. The updated interior helped us sell within 30 days, while other units (it was a condo) with the same exact floor plan sat on the market for months and months. The deal we got on our new house was something we couldn’t pass up and we knew the down market wouldn’t last forever. We consider ourselves lucky in that our mortgage wasn’t underwater as so many are now!
Randi says
insert sad trombone http://www.sadtrombone.com/widget/
Nicole Jenkins says
Out of curiosity… are the owners of your old house also readers of your blog?
YoungHouseLove says
Hey Nicole,
We know they are aware of the blog, but only because we disclosed it to everyone who toured the house – not because they were previous readers of it. We actually don’t know if they’ve started checking back with any regularity or not. Most likely they’re too busy unpacking!
-John
Janell Beals says
I completely agree with all your points, “profit” comes in many forms. We sold our house as the market was beginning to decline a few years ago and sold very quickly with multiple offers…due to how great the house looked because of the work I had done on it.
All the best in your new home!!
Steph @ BirdHouse Family says
I totally agree with you! So many people view houses as an investment rather than a home. I think that this was in part responsible for the real estate crash, and is one of the main reasons people are being advised against buying houses now. I think it’s worth paying a bit of extra money to have a place you love and enjoy spending time as a family in, including having access to a yard and being able to make changes as you see fit.
maggie says
Thanks so much for this post. We live in Canada, and although our real estate situation isn’t as hard hit as the US, we still bought our current home at the very height of the market in an up and coming area of the City. After we sell, we’re looking at losing about $50000 in renovations that we put into it, not to mention all those real estate fees. With the move however, we’ll have a smaller mortgage allowing me to work part time so I can be with my kids more, we will be in an already established suburban neighborhood that I enjoy living in, we’ll have more space and we’ll be closer to my family.
Even with all the pluses, its been hard for me to swallow that $50000 we’ll be losing. That’s why I am so happy for your post. Its really helped me to try and put things in a better perspective.
Casey says
Great attitude! I love your perspective and your insistence that your house is an investment in something beyond financial fitness – in your family.
However, to offer some perspective/counterpoint to those saying “we lost some money too, but at least I’m not throwing my money away on rent,” consider the market you purchased in. I live in south Louisiana and work in south Mississippi. Yep, Hurricane Katrina ground zero. Most of my co-workers have monthly homeowner’s insurance premiums equal to their monthly mortgage payment, if they can even get private insurance (one is insured by Lloyd’s of London, some are insured by the state – very few are still insured by State Farm or Allstate). One co-worker’s note has MORE than doubled in the last ten years, because his insurance is escrowed in. This means his premium has more than doubled and now is actually MORE than his mortgage payment.
I personally can’t see this situation as anything other than “throwing your money away on a house.” My renter’s insurance premium hasn’t gone up much since the storm – it’s still only about $400 a year (I think it was $350/year before K.) Last year, we were even able to negotiate a decrease in our rent by comparing our rent and square footage to going rates on other similar area apartments. We’ve been able to keep our housing costs reasonable by renting. But we DO want to purchase a home. We’d like to pay cash for it, which I think we’ll be able to do because of our aggressive stance on keeping our housing costs low.
For this reason (among others), my boyfriend and I are actively working our plan to move back to the midwest where we’re from, and where it’s not such a crazy proposition to buy a house. We’d like to sink roots, but we’d like to do it somewhere that feels more like “home” and offers us a better value.
Both our story and John and Sherry’s are proof that decisions about purchasing homes are NOT one-size-fits-all. I wish all readers luck in making the right choices in these difficult times!
Stephanie says
I love your new house. You two are going to make it so beautiful, I just know. If you think about the 30k you’ve paid for the house over the past 4 years, that only comes out to $650 a month – which is probably cheaper than rent in your area (it’s definitely a LOT cheaper than rent in DC), so you definitely came out ahead. Good luck with settling into the new place.
Jane@ The Borrowed Abode says
Really glad you wrote about this, especially in such an up-front and sensible way. So many people seem to take financial risks because they see homes as an investment that is “guaranteed” to pay off, and quick . . . and that’s not really the case. You can’t count on it. However, it’s nice when it does. Sort of like the extra icing on the cake.
I just think it’s important to remember that it’s not guaranteed. But I think it’s also totally awesome that you were able to make the home yours, and have a blast (and develop a new job!) along the way. That’s the real icing on the cake.
Rachel says
This sounds almost identical to our house selling story. We put about $40k into our house over the past for years and sold it for $18k more than we bought it for in six weeks. We got our new house for $40k less than the previous owner paid for it three years ago and it has twice the space. I’m excited about renovating this house as it has more potential to hold the value of the changes.
Anna says
Quick question. How did you manage the timing of selling your house and finding the perfect house at the same time. We are looking to sell, but scared that there won’t be a house we like when we need it. Tx!
YoungHouseLove says
I’m not going to lie, it was really stressful! The best tactic for us was to look for a house we liked for a few months, and then once we found the area/a few potential contenders we put our house on the market and then kept looking and picked the one we loved and put in an offer for a 60 day closing so that gave us more time to sell. It was still really crazy to pack all of our stuff into a truck on the morning the other folks moved into our first house and drive directly to our current house and just sit in the driveaway until we closed on that one and got the keys and could move in. Talk about a crazy day!
xo
s
Anna says
Thanks for replying even though I asked a question on a old post! That’s why you are so great! Good advice. Yeah, that must have felt so strange to just pack up your things and switch houses. Surreal! Houses have started going quickly here, like within a couple days, which is totally scary to me. I’m a “look and think” person, so maybe I’ll wait until there’s more inventory and go the route that you did. Can’t believe we’re still in our “starter” home after 9 1/2 years! Oh,btw, I forgot to chime in with my info for the stats you were collecting, so add another person in the 40+ category! Thanks again!
Kathy S says
Only a 30k loss in the recession! I wish I was that lucky — I’m finally selling my moneypit that I’ve been renting out for 7 years and I have to accept a much bigger loss.
YoungHouseLove says
Oh no Kathy! Hope 2014 is awesome!
xo
s
Kathy S says
Thanks! I’m doing a few strategic upgrades before I put it on the market to try to bump up the price a bit.
YoungHouseLove says
Good luck Kathy!
xo
s