How do I factor a lousy housing market into a job offer?
May 30, 2007 10:23 AM Subscribe
An opening for my possible dream job has come out of the blue (I'm currently employed). How do I factor in a lousy housing market and the fact that I would have to sell my townhouse when evaluating this job offer (which would require relocation)?
A friend and mentor that I've known for several years has offered me what could very well be my dream job. The offer is unexpected, as I'm currently employed and haven't been actively looking for a job. Nonetheless, it's a great offer that could be very hard to find in the future so I'm going to look into it. The main problem I have right now is that the job would require relocating to South Carolina from the D.C. area, and right now the housing market is (as we all know) not so good for sellers. I just bought my townhouse last year, and currently the places in my area are selling for at least $20K less than what I paid for mine.
So, the question I have is this: how do I factor this into weighing the pros and cons of the official job offer when I receive it? I've already researched a salary range, and I know to take other benefits into consideration (health care, vacation time, bonuses, 401K, etc.). I'm hoping that the new company would be able to offer some sort of relocation assistance, but I doubt they'd be willing to cover any loss on the sale of my townhouse! The area in South Carolina is about 40% less expensive than where I live now, so that should help some, but I'm trying to figure out how much of a hit I could take on selling my current place and still be able to recover when buying a new place. I know that I'll be able to get more house for my money in SC, but I want to be careful so that I don't end up what would essentially be a parallel move if I had to take too big of a hit on my current house. As long as the salary is good (I'm aiming for at least equal to my current pay, knowing that the cost of living is less in SC) and the benefits are comparable, this would be a no-brainer, but the housing situation adds a big twist. I don't really have a problem moving for the right job (I actually moved across the country for my current job, which I've had for two years), but this is the first time I have to look at it from the perspective of a (new) homeowner.
Any thoughts or advice on this sticky situation would be greatly appreciated!
A friend and mentor that I've known for several years has offered me what could very well be my dream job. The offer is unexpected, as I'm currently employed and haven't been actively looking for a job. Nonetheless, it's a great offer that could be very hard to find in the future so I'm going to look into it. The main problem I have right now is that the job would require relocating to South Carolina from the D.C. area, and right now the housing market is (as we all know) not so good for sellers. I just bought my townhouse last year, and currently the places in my area are selling for at least $20K less than what I paid for mine.
So, the question I have is this: how do I factor this into weighing the pros and cons of the official job offer when I receive it? I've already researched a salary range, and I know to take other benefits into consideration (health care, vacation time, bonuses, 401K, etc.). I'm hoping that the new company would be able to offer some sort of relocation assistance, but I doubt they'd be willing to cover any loss on the sale of my townhouse! The area in South Carolina is about 40% less expensive than where I live now, so that should help some, but I'm trying to figure out how much of a hit I could take on selling my current place and still be able to recover when buying a new place. I know that I'll be able to get more house for my money in SC, but I want to be careful so that I don't end up what would essentially be a parallel move if I had to take too big of a hit on my current house. As long as the salary is good (I'm aiming for at least equal to my current pay, knowing that the cost of living is less in SC) and the benefits are comparable, this would be a no-brainer, but the housing situation adds a big twist. I don't really have a problem moving for the right job (I actually moved across the country for my current job, which I've had for two years), but this is the first time I have to look at it from the perspective of a (new) homeowner.
Any thoughts or advice on this sticky situation would be greatly appreciated!
Would it be impossible to keep the townhouse as a rental?
posted by dr_dank at 10:35 AM on May 30, 2007
posted by dr_dank at 10:35 AM on May 30, 2007
If you take a loss on the townhouse you won't get dingged for capital gains taxes.
posted by Pollomacho at 10:39 AM on May 30, 2007
posted by Pollomacho at 10:39 AM on May 30, 2007
Response by poster: It would be a little tough to come up with a good down payment on a new house without selling my current one, but I'll crunch the numbers. I put 20% down on my current place, so was counting on getting most of that back if I sold it. I guess I'd be a little wary of having to be an out-of-state landlord as well, but I've never had experience with that (being a landlord).
posted by karmagirl at 10:39 AM on May 30, 2007
posted by karmagirl at 10:39 AM on May 30, 2007
Take the job. You will live/work a long time, and if you amortize the loss (if any, see below) over your life, it will add up to nothing. Particularly compared to the job satisfaction you are going to get. I'm in a similar situation. I just took a job in another city and need to do something with my house. I figure I got two choices: 1) sell at a loss; 2) hold, rent and wait for the market to recover. I live in a college area, meaning it won't be hard to rent my house. So I'm opting for #2 for the time being. If it were hard to rent, though, I'd sell and just take the loss. That's life!
posted by MarshallPoe at 10:42 AM on May 30, 2007
posted by MarshallPoe at 10:42 AM on May 30, 2007
Nthing renting out the townhouse and taking the job. Call around to some local and reputable real estate agencies. Many of them also do rental management. A good agency will have it set up so that it's hands-off for you - they deal with the tenant, and make repairs as needed, and the funds come out of their monthly check to you (less management fees). If the market turns around, you can use the same company to sell the townhouse!
posted by odi.et.amo at 10:52 AM on May 30, 2007
posted by odi.et.amo at 10:52 AM on May 30, 2007
Being a landlord can be a huge pain in the ass, and can be a financial wallop if the house goes vacant between tenants for a couple of months (could you pay both mortgages with no rent income coming in?).
If it is your dream job, why not take the hit? You're only losing potential money anyway, it's not like you are taking food off your table or anything. As you said, you will get more house for your money, so it will feel like an upgrade even if it is not technically one.
It is very tempting to always think of real estate in investment terms, but if it is your house, you should mainly think of it as your home, with any investment advantages/disadvantages as secondary.
In 20 years, you will want to strangle yourself for passing up this job, especially if the market keeps tanking and you never make money on selling the place.
posted by Rock Steady at 11:01 AM on May 30, 2007
If it is your dream job, why not take the hit? You're only losing potential money anyway, it's not like you are taking food off your table or anything. As you said, you will get more house for your money, so it will feel like an upgrade even if it is not technically one.
It is very tempting to always think of real estate in investment terms, but if it is your house, you should mainly think of it as your home, with any investment advantages/disadvantages as secondary.
In 20 years, you will want to strangle yourself for passing up this job, especially if the market keeps tanking and you never make money on selling the place.
posted by Rock Steady at 11:01 AM on May 30, 2007
Are there relocation benefits with the new job? Larger companies often pick up the tab on the real estate commission and even sometimes have an agreement with a real estate firm to buy your home at a fair price if it doesn't sell within some time frame.
At a minimum, I'd ask them to cover the real estate commission on the sale. A DC area townhouse I'm guessing is at least $300K - 6% of that is not pocket change. Selling at a slight loss will be much more palatable if you aren't eating the commission too.
posted by COD at 12:13 PM on May 30, 2007
At a minimum, I'd ask them to cover the real estate commission on the sale. A DC area townhouse I'm guessing is at least $300K - 6% of that is not pocket change. Selling at a slight loss will be much more palatable if you aren't eating the commission too.
posted by COD at 12:13 PM on May 30, 2007
What is the housing market doing in the South Carolina? The real estate market is cyclical and when it recovers it usually recovers in most areas so the odds are good that the loss you've taken in Washington is also factored in SC and will be partially or totally recovered when the real estate cycle goes back on the upswing in SC.
posted by any major dude at 12:58 PM on May 30, 2007
posted by any major dude at 12:58 PM on May 30, 2007
SC housing is CHEAP compared to DC. You could keep the townhouse and rent in SC while you save up the capital for a down payment on a new place. As long as you are charging your renters a healthy amount to cover the mortgage and additional costs and your new rent is less than your existing mortgage (shouldn't be hard), you would be fine I think (particularly if you're at the same salary).
posted by ml98tu at 4:05 PM on May 30, 2007
posted by ml98tu at 4:05 PM on May 30, 2007
This thread is closed to new comments.
Also, don't be afraid to ask for a signing bonus- they don't need to know what it's for.
posted by mkultra at 10:34 AM on May 30, 2007