Choose the form of the (real estate / finance) Destructor!
April 12, 2010 10:35 AM Subscribe
Our house in the Chicago suburbs has been on the market for a year, and isn't selling. Should we drop the price till it hurts even more, or try to rent it out and hope the housing market doesn't fall even more?
posted by anonymous to Work & Money (15 answers total) 1 user marked this as a favorite
Last year, we bought a house on the east coast after I got what sounded like a great new job. Overly optimistic, my family bought a new house before we sold our old house, which we now realize was a huge mistake. Our Chicago suburb house has been on the market for over a year. We have it staged and have received comments that it "shows well" but that our price is too high.
Unfortunately for us, we purchased near the height of the market. Our current listing price is $90,000 under our own purchase price, so we are looking at having to bring significant amounts of cash to the closing table if the house sells. We have enough savings that this won't totally wipe us out, but it comes uncomfortably close.
For the past year, we've been able to pay both mortgages without cutting into our savings, but my "new great job" is not that stable any more. My salary was just cut and I may be laid off soon. Further cuts to our listing price would likely require us to have almost no cushion left on our savings. We aren't in financial distress -- yet. But I am really reluctant to drop the price on our house so far that our savings would be totally wiped out.
I think our alternative is to try to find a renter which would slow down the bleeding a little bit. (Looking at Craigslist, comparable houses are renting out at around $1,500 per month below our costs.) It seems by renting the house out, the benefits are better short-term liquidity and postponing a painful cash outlay, versus bearing the risk that the suburban Chicago housing market will drop further.
(I have prior experience with being a residential landlord.)
Is the greater liquidity / postponing the inevitable worth it? Or are there any other options available to us?