Overpay for the home we love?

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Topic Author
redfan11
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Overpay for the home we love?

Post by redfan11 » Thu May 28, 2020 8:02 pm

First up, I apologize for what may seem a fickle question in these uncertain times, but would appreciate the views of the wise.
I live in rural Arizona and have been renting a home that we have come to love. The zestimate for the home is 435K, other valuations suggest 465k. The landlord is willing to sell for 475 but isn’t willing to budge on the price. Given how much we like the home and factoring in the hassle of moving, should I just pay the 475 and be done with it?
The problems I see are: homes in this price range don’t sell quickly in this town, however I should be able to rent it out when we move.
Financially we are capable of owning this home, and the mortgage is not an issue.
If anyone has any worldly advice it would be a balm to me.
Thanks..

Yukon
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Re: Overpay for the home we love?

Post by Yukon » Thu May 28, 2020 8:04 pm

What's your monthly rent?
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anonsdca
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Re: Overpay for the home we love?

Post by anonsdca » Thu May 28, 2020 8:05 pm

"...however I should be able to rent it out when we move..."

Not sure why you buy at all if you are already planning to move? I would not overpay for it, it would just eat at me the rest of the time I spent there.

PaunchyPirate
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Re: Overpay for the home we love?

Post by PaunchyPirate » Thu May 28, 2020 8:06 pm

I wouldn't give too much value to a Zillow valuation. I don't find them to be overly accurate to real-world pricing. Look for actual recent sales of comparable properties in the same neighborhood.

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bengal22
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Re: Overpay for the home we love?

Post by bengal22 » Thu May 28, 2020 8:08 pm

I make a point of never falling in love with something I want to buy. The threat of walking away helps in negotiations. In this case you know exactly what you are getting so there won't be any surprises and that has to be worth something. So if you really love it... Buy it. Or
Keep renting. Either way you live your home.
...
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greg24
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Re: Overpay for the home we love?

Post by greg24 » Thu May 28, 2020 8:10 pm

You're debating 465 or 475. A 2.1% difference.

If you want the house, buy it.

Kookaburra
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Re: Overpay for the home we love?

Post by Kookaburra » Thu May 28, 2020 8:12 pm

Rent it for a few more years. Then buy it at 475.

dukeblue219
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Re: Overpay for the home we love?

Post by dukeblue219 » Thu May 28, 2020 8:13 pm

I'm going to be an outlier in Bogle-land but DO IT. If you can afford it (legitimately) who cares whether you bought it at market price or not? You'll spend more time in your house than anywhere else in your adult life. If you plan to stay in the area (or are truly OK being a landlord) just buy the house and enjoy your life. Look at it as a blessing - now you can live in the same place but with more security and freedom than before.

We save money so we can USE IT to enjoy life, not for the sake of winning a contest to see who can live most fiscally responsibly.

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Watty
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Re: Overpay for the home we love?

Post by Watty » Thu May 28, 2020 8:13 pm

redfan11 wrote:
Thu May 28, 2020 8:02 pm
The zestimate for the home is 435K, other valuations suggest 465k.
Zestimates are pretty worthless so I would ignore that.
redfan11 wrote:
Thu May 28, 2020 8:02 pm
...however I should be able to rent it out when we move.
It sounds like moving is a pretty certain thing. Is so then buying, even at a fair price is likely a bad idea.

If $475k is the high end of your local market then it might be harder to rent than you think since people could buy something like a $400K house for the same price.

If you are in the military and this is near a military base then be very careful. The problem is that if the staffing at that base is reduced the local housing market may be slammed.
redfan11 wrote:
Thu May 28, 2020 8:02 pm
...rural Arizona....
I would think that selling a house in Arizona in the summer is pretty hard. If it is unlikely to sell in the summer then you might just wait a few months to see if they will take a lower offer then.

Be sure to read your lease to see what it say about you needing to let people in to see the house. If you do not need to let prospective buyers into the house then it will be almost impossible to sell until you are out of the house.

barnburner4444
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Re: Overpay for the home we love?

Post by barnburner4444 » Thu May 28, 2020 8:16 pm

Forget Zillow. You should point out to the landlord that you are saving him 6% realtor fees, assuming your not using one.

Lalamimi
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Re: Overpay for the home we love?

Post by Lalamimi » Thu May 28, 2020 8:18 pm

How long have you rented? Could you get some updates from the Owner - carpet, paint, etc. to make up some of the difference?

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JoeRetire
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Re: Overpay for the home we love?

Post by JoeRetire » Thu May 28, 2020 8:26 pm

redfan11 wrote:
Thu May 28, 2020 8:02 pm
should I just pay the 475 and be done with it?
If it's worth 475 to you, then pay it. Otherwise don't.
The problems I see are: homes in this price range don’t sell quickly in this town, however I should be able to rent it out when we move.
When do you plan to move? How much do you think you can rent it for? Do you want to be a landlord?
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LittleMaggieMae
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Re: Overpay for the home we love?

Post by LittleMaggieMae » Thu May 28, 2020 8:41 pm

barnburner4444 wrote:
Thu May 28, 2020 8:16 pm
Forget Zillow. You should point out to the landlord that you are saving him 6% realtor fees, assuming your not using one.
You are also saving the landlord reconditioning costs - painting, carpet cleaning at a minimum before he offers the house for sale.
And then there's the cost of utilities, lawn service, any mortgage payment (or property taxes/insurance) while the house is empty waiting for a buyer to close on it.

LittleMaggieMae
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Re: Overpay for the home we love?

Post by LittleMaggieMae » Thu May 28, 2020 8:43 pm

I don't find zillow estimates very accurate. You can find out sale prices of other houses though. You could look for sales on houses like yours and then extrapolate what a fair value for the house is.

Topic Author
redfan11
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Re: Overpay for the home we love?

Post by redfan11 » Thu May 28, 2020 8:47 pm

Current rent: 2500
Expected time in this town:3-4 more years
Do I want to be a landlord: Yes
There is a nearby military base, yes.
Unfortunately I am going through the rental agent so she is charging a 4% fee rather than the 3%. Maybe I can request her to reduce it to 3%.
The home is new built in 2016. I can’t find any fair in it.
The current owner isn’t interested in selling, I am requesting he sell it since we like the home. He has the upper hand here for sure.
The home is rentable I think. It has fantastic sunset views that adds $$$ to my life. But I don’t know if I will surely find renters who can afford a 2500 rent since this is generally considered a poorer county. Few doctors/dentists/military but most of them would buy rather than rent. So I am taking a risk.
The current owner will return to this home in 2 years, so we will be forced to move in 2 years unless we buy. Market here appears to be crazy! Homes are flying off the market in a week or so. In general homes that sell for 300-400 take 2 months to sell, 400-500 take 3-4 months to sell.
Thanks again to the community for your input.

Topic Author
redfan11
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Re: Overpay for the home we love?

Post by redfan11 » Thu May 28, 2020 9:25 pm

Lalamimi wrote:
Thu May 28, 2020 8:18 pm
How long have you rented? Could you get some updates from the Owner - carpet, paint, etc. to make up some of the difference?
Rented for just under a year. The home is pretty new so unfortunately I can’t say it’s ages any. Looks great actually.

Nowizard
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Re: Overpay for the home we love?

Post by Nowizard » Thu May 28, 2020 9:34 pm

Love is an emotional word, and you know what people say about avoiding making emotional investment decisions. Love is also a word that describes perhaps the most wonderful circumstance in life. Figure how these two intersect and decide.

Tim

annu
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Re: Overpay for the home we love?

Post by annu » Thu May 28, 2020 9:53 pm

Looks like your first home. Many people weresaying zillow is off but where I am, homes are sold pretty close to zillow/ redfin estimates. So for assuming that is correct, you are being asked to pay 10% more that what home is worth, since you are willing to pay, forget about any repairs or fixes either.

If I was going to live in this home for 10+ years, I might think of buying, otherwise, you are paying your landlord premium to upgrade their next home, this in top of paying their mortgage so far whole you have been renting. Also around 5 years when you need to plan for appliances as well.

The fact he is willing to sell you at high price, to get even more money from you is not something I think is right thing to do.
I personally would just not sell, instead of trying to get even more money out of my renter if I really was going to live in the home.
If I were to not buy the home, I would also move as soon as possible. With how things are right now, there will be some impact to housing pretty much everywhere as well. No one is immune.

Also 4% is insane, the agents are cutting prices right now, is she related to landlord as well. If you share zipcode, folks can help more on options including housing trends.

Goal33
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Re: Overpay for the home we love?

Post by Goal33 » Thu May 28, 2020 9:57 pm

Yes, 475 minus 5-6% real estate transaction fees that they won’t have to pay. It’s a win-win even though you are overpaying. And they get to collect rent until the day you take ownership. That’s awesome for them.
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GreenLantern2814
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Re: Overpay for the home we love?

Post by GreenLantern2814 » Thu May 28, 2020 10:06 pm

greg24 wrote:
Thu May 28, 2020 8:10 pm
You're debating 465 or 475. A 2.1% difference.

If you want the house, buy it.
:sharebeer

Love is worth money. You have to decide how much. But in the end, it's value that adds to the value of the property. Granted, only you are the "market" for that love, but someone else might come by one day who loves it even more and is willing to pay even more for that love.

e5116
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Re: Overpay for the home we love?

Post by e5116 » Thu May 28, 2020 10:17 pm

If you're only planning on living there 3-4 more years and can continue to rent it for two more years, I personally would just continue to rent and then find another place for 1-2 years. Not worth the trouble of ownership unless you've been looking for an investment property to rent out or something, then maybe.

Home ownership and buying is emotional sometimes and is lifestyle choice instead of financial one -- which is okay in my opinion. But sounds like you can have a similar outcome (staying in house 2 years) by renting still, so that's th safe choice but I also wouldn't think you're crazy to buy it either if you can easily afford it.

Grt2bOutdoors
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Re: Overpay for the home we love?

Post by Grt2bOutdoors » Thu May 28, 2020 10:24 pm

redfan11 wrote:
Thu May 28, 2020 8:02 pm
First up, I apologize for what may seem a fickle question in these uncertain times, but would appreciate the views of the wise.
I live in rural Arizona and have been renting a home that we have come to love. The zestimate for the home is 435K, other valuations suggest 465k. The landlord is willing to sell for 475 but isn’t willing to budge on the price. Given how much we like the home and factoring in the hassle of moving, should I just pay the 475 and be done with it?
The problems I see are: homes in this price range don’t sell quickly in this town, however I should be able to rent it out when we move.
Financially we are capable of owning this home, and the mortgage is not an issue.
If anyone has any worldly advice it would be a balm to me.
Thanks..
Zestimate is garbage ~ each house is unique, there are no 2 houses where the 3 bedrooms, 2 baths are alike or the interior condition is the same, the layout, the scenic view, etc. Take the half of the $40K spread (let's say Zillow is off by $20K) and amortize it over the time you plan on spending there then think whether paying that much is too much.
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oldmotos
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Re: Overpay for the home we love?

Post by oldmotos » Thu May 28, 2020 10:43 pm

$2500 rent for a 475K house is a bargain - the only way buying the house makes any sense is if you plan to live there for much longer than 3-4 years.

adam1712
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Re: Overpay for the home we love?

Post by adam1712 » Thu May 28, 2020 10:56 pm

It's really silly to make a decision based on the fact you get to live in a house you love for 1-2 more years. That's the only time period that love of the house matters. You have 2 more years of living there whether you buy or rent. Then after that, there's no reason to care whether you love the house, you definitely don't want to overpay to become a landlord.

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redfan11
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Re: Overpay for the home we love?

Post by redfan11 » Thu May 28, 2020 11:02 pm

annu wrote:
Thu May 28, 2020 9:53 pm
Looks like your first home. Many people weresaying zillow is off but where I am, homes are sold pretty close to zillow/ redfin estimates. So for assuming that is correct, you are being asked to pay 10% more that what home is worth, since you are willing to pay, forget about any repairs or fixes either.

If I was going to live in this home for 10+ years, I might think of buying, otherwise, you are paying your landlord premium to upgrade their next home, this in top of paying their mortgage so far whole you have been renting. Also around 5 years when you need to plan for appliances as well.

The fact he is willing to sell you at high price, to get even more money from you is not something I think is right thing to do.
I personally would just not sell, instead of trying to get even more money out of my renter if I really was going to live in the home.
If I were to not buy the home, I would also move as soon as possible. With how things are right now, there will be some impact to housing pretty much everywhere as well. No one is immune.

Also 4% is insane, the agents are cutting prices right now, is she related to landlord as well. If you share zipcode, folks can help more on options including housing trends.
Thank you for your thoughtful reply. Homes are going off the market like hot cakes over the past month.
oldmotos wrote:
Thu May 28, 2020 10:43 pm
$2500 rent for a 475K house is a bargain - the only way buying the house makes any sense is if you plan to live there for much longer than 3-4 years.
This is true. You have given me some food for thought. I was looking for investment properties and that is how I came about to considering buying the home we are renting. I was expecting the market to drop but if anything proves have gone up here..don’t know if that is just coincidental.
Last edited by redfan11 on Sun May 31, 2020 3:45 pm, edited 1 time in total.

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sergeant
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Re: Overpay for the home we love?

Post by sergeant » Thu May 28, 2020 11:02 pm

I wouldn't buy if I was planning on leaving in a few years. Being a long distance landlord can be terrible and transaction costs are too high.
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J295
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Re: Overpay for the home we love?

Post by J295 » Thu May 28, 2020 11:08 pm

From a financial perspective rental appears to be the rational decision.

I would gladly pay $10,000 or $20,000 more for a home I planned to live in for an extended period of time. I probably wouldn’t even consider buying a home to live in for three or four years, especially when I could rent the same home. Moreover, I don’t find owning such a home to rent it out as an absentee landlord attractive, especially for someone without experience as a landlord.

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jabberwockOG
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Re: Overpay for the home we love?

Post by jabberwockOG » Thu May 28, 2020 11:08 pm

oldmotos wrote:
Thu May 28, 2020 10:43 pm
$2500 rent for a 475K house is a bargain - the only way buying the house makes any sense is if you plan to live there for much longer than 3-4 years.
Agree - if you are not planning on staying at least 5+ years it is better to rent especially since you are being asked to pay a premium price for the house. You are paying "make me sell price" not market cost. If you really want a home in the area and plan to stay long term start looking at other houses.

Monsterflockster
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Re: Overpay for the home we love?

Post by Monsterflockster » Thu May 28, 2020 11:14 pm

adam1712 wrote:
Thu May 28, 2020 10:56 pm
It's really silly to make a decision based on the fact you get to live in a house you love for 1-2 more years. That's the only time period that love of the house matters. You have 2 more years of living there whether you buy or rent. Then after that, there's no reason to care whether you love the house, you definitely don't want to overpay to become a landlord.
I second this. If you love the house and the area why would you move in a couple years? Buy it if you plan to stay, otherwise just keep renting.

One thing to consider is the cost of moving (literal cost, plus inevitable damage, plus time & hassle). That’s worth 10k right there.

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Cubicle
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Re: Overpay for the home we love?

Post by Cubicle » Thu May 28, 2020 11:29 pm

Right now, how much is another home you that has >90% of what you currently love & have, house-wise.

I'm conflicted. I think a 5% discount wouldn't be outrageous since you are saving the current owner commissions.

I don't like your (short) projected time left in it.

Continued renting is $2,500 * 24 months = $60,000.

Including taxes, insurance, mortgage, (all ownership costs), what would your monthly expenditures would be?
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kimura king
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Re: Overpay for the home we love?

Post by kimura king » Thu May 28, 2020 11:48 pm

I'd just keep renting. You could get an appraisal done for about $500 and show it to the owner to try and bring them down, but doesn't sound like it would work in this case. Or your could overpay. No right or wrong answer.

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unclescrooge
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Re: Overpay for the home we love?

Post by unclescrooge » Fri May 29, 2020 12:13 am

Cubicle wrote:
Thu May 28, 2020 11:29 pm
Right now, how much is another home you that has >90% of what you currently love & have, house-wise.

I'm conflicted. I think a 5% discount wouldn't be outrageous since you are saving the current owner commissions.

I don't like your (short) projected time left in it.

Continued renting is $2,500 * 24 months = $60,000.

Including taxes, insurance, mortgage, (all ownership costs), what would your monthly expenditures would be?
Based on OPs post, an agent is involved. She will take 4%.

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unclescrooge
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Re: Overpay for the home we love?

Post by unclescrooge » Fri May 29, 2020 12:21 am

If you love the home you should be willing to offer pay for it.

Heck, people pay millions of dollars for "art" a blind wombat could paint just because they're supposed to love it.

However, if you are planning on moving in less than 7 years, why are you even looking to buy? Unless you plan on retiring here, you're opening yourself up to unnecessary headache. Do you have kids? Are you planning on starting a family? If so, would you rather spend time dealing with real estate issues from afar or your kids?

Long distance land lording is definitely possible. Once done it for 15+ years. But as your wealth and income grows, the juice is no longer with the squeeze.

As an investment, real estate has been incredibly good to me. I've made ridiculous rates of return on invested capital (thanks to leverage, timing the market, and shady loan officers) but I would sell my 2 rentals today if there wasn't for the taxes.

newyorker
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Re: Overpay for the home we love?

Post by newyorker » Fri May 29, 2020 12:40 am

Go for it. With only 10k from valuation and the moving cost and etc all included. I'd say ask 5k discount from landlord and he may take it.

I actually almost bought a house myself but the seller wouldn't even budge on 5k. I told him to eff off though.

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redfan11
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Re: Overpay for the home we love?

Post by redfan11 » Fri May 29, 2020 12:42 am

unclescrooge wrote:
Fri May 29, 2020 12:21 am
If you love the home you should be willing to offer pay for it.

Heck, people pay millions of dollars for "art" a blind wombat could paint just because they're supposed to love it.

However, if you are planning on moving in less than 7 years, why are you even looking to buy? Unless you plan on retiring here, you're opening yourself up to unnecessary headache. Do you have kids? Are you planning on starting a family? If so, would you rather spend time dealing with real estate issues from afar or your kids?

Long distance land lording is definitely possible. Once done it for 15+ years. But as your wealth and income grows, the juice is no longer with the squeeze.

As an investment, real estate has been incredibly good to me. I've made ridiculous rates of return on invested capital (thanks to leverage, timing the market, and shady loan officers) but I would sell my 2 rentals today if there wasn't for the taxes.
Don’t have kids yet, but plan on having 2 in the next 2-4 years. We don’t plan to retire here. However the possibility of a rental interest me, though I’m not getting a great deal on this home by any means so I’m already starting with 30K-40k down the drain. Listening to all of you, I feel the right decision would be to just rent the place. Then again, we don’t dislike the town we are in..so MAY stay longer than 3 years..say 5/6..

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Watty
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Re: Overpay for the home we love?

Post by Watty » Fri May 29, 2020 1:00 am

It sounds like a great house but a horrible rental property.

The only way I can see that it would make sense would be if you are near retirement and plan on returning in a few years.

You have two years until the owner plans on returning and a lot can change in that time. The owner may very well decide not to return, the housing market could crash, or you could decide to buy it a year from now.

Not that I think it would be a good idea but you might be able to find an even better lot and have a home build that is identical to that house, or even better than that house. That could be what the current owner is planning on doing if they return to the area which may by why they are willing to sell it.

If there is a big recession then there might be lots of builders who are hungry for work that would give good prices.

I get that you love that house but there was a post a while back by someone who had inherited the family home that they were raised in and they loved that house. They kept it as a rental and only had the normal hassles of being a landlord and did OK financially but they posted that they really regretted keeping the house as a rental since all their great memories of the house from when they were a kid were replace by all the bad memories of dealing with a rental property and the occasional bad tenant.

annu
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Re: Overpay for the home we love?

Post by annu » Fri May 29, 2020 1:24 am

redfan11 wrote:
Thu May 28, 2020 11:02 pm
annu wrote:
Thu May 28, 2020 9:53 pm
Looks like your first home. Many people weresaying zillow is off but where I am, homes are sold pretty close to zillow/ redfin estimates. So for assuming that is correct, you are being asked to pay 10% more that what home is worth, since you are willing to pay, forget about any repairs or fixes either.

If I was going to live in this home for 10+ years, I might think of buying, otherwise, you are paying your landlord premium to upgrade their next home, this in top of paying their mortgage so far whole you have been renting. Also around 5 years when you need to plan for appliances as well.

The fact he is willing to sell you at high price, to get even more money from you is not something I think is right thing to do.
I personally would just not sell, instead of trying to get even more money out of my renter if I really was going to live in the home.
If I were to not buy the home, I would also move as soon as possible. With how things are right now, there will be some impact to housing pretty much everywhere as well. No one is immune.

Also 4% is insane, the agents are cutting prices right now, is she related to landlord as well. If you share zipcode, folks can help more on options including housing trends.
Thank you for your thoughtful reply.
The zip code is 85364. Homes are going off the market like hot cakes over the past month.
oldmotos wrote:
Thu May 28, 2020 10:43 pm
$2500 rent for a 475K house is a bargain - the only way buying the house makes any sense is if you plan to live there for much longer than 3-4 years.
This is true. You have given me some food for thought. I was looking for investment properties and that is how I came about to considering buying the home we are renting. I was expecting the market to drop but if anything proves have gone up here..don’t know if that is just coincidental.
go to https://www.zillow.com/research/data/ you can find lots of useful info, some example below
Some data for your zipcode

Number of homes available(showing data for last few months)
2019-10 2019-11 2019-12 2020-01 2020-02 2020-03
217 209 206 217 187 171


Average price of 3 bedroom homes(an example), am not sure what your home zie etc is buy you can find that info as well
2020-01-31 2020-02-29 2020-03-31 2020-04-30
149689.0 150432.0 150186.0 150227.0

Number of days homes are on zillow(this is one is good to know about, increasing umber means homes taking longer to be sold)
2019-11 2019-12 2020-01 2020-02
71 78.5 80 84

There is also data on rentals, prices for Single family homes etc as well as prices cutes trends.
Also what is missing in the data right now the data from April/May, which might have some impact from covid.
I am not sure besides the base you mentioned what other options are there, but don't rely on RE folks to tell you what is going, there is enough free data accessible to decide on your own.

Cyanide123
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Re: Overpay for the home we love?

Post by Cyanide123 » Fri May 29, 2020 1:53 am

redfan11 wrote:
Thu May 28, 2020 8:47 pm
Current rent: 2500
Expected time in this town:3-4 more years
Do I want to be a landlord: Yes
There is a nearby military base, yes.
Unfortunately I am going through the rental agent so she is charging a 4% fee rather than the 3%. Maybe I can request her to reduce it to 3%.
The home is new built in 2016. I can’t find any fair in it.
The current owner isn’t interested in selling, I am requesting he sell it since we like the home. He has the upper hand here for sure.
The home is rentable I think. It has fantastic sunset views that adds $$$ to my life. But I don’t know if I will surely find renters who can afford a 2500 rent since this is generally considered a poorer county. Few doctors/dentists/military but most of them would buy rather than rent. So I am taking a risk.
The current owner will return to this home in 2 years, so we will be forced to move in 2 years unless we buy. Market here appears to be crazy! Homes are flying off the market in a week or so. In general homes that sell for 300-400 take 2 months to sell, 400-500 take 3-4 months to sell.
Thanks again to the community for your input.
You only plan to live the for 3-4 years? Ouch you hardly break even with the costs of the purchase. Do you think you will be cash flow positive after you leave and find a tenant?

Also curious to see if you can use redfin and their 1% fee for sale instead of 4 percent.

mortfree
Posts: 2330
Joined: Mon Sep 12, 2016 7:06 pm

Re: Overpay for the home we love?

Post by mortfree » Fri May 29, 2020 2:44 am

Will you still love the house if:

Buy for 475k

Then:

Rent to someone else for $2500 or less.

Or:
End up selling for say 450k minus 6% realtor fees?

Lafder
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Joined: Sat Aug 03, 2013 7:56 pm
Location: East of the Rio Grande

Re: Overpay for the home we love?

Post by Lafder » Fri May 29, 2020 8:54 am

I would look around to see what else 475k would buy in your current town. That will remind you if the house you are in is worth the price and if you love it as much as you think you do.

Overall it will cost you less to keep renting. No property tax, insurance, repairs.

There is freedom to owning a home and being able to make changes without asking anyone.

lafder

alfaspider
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Re: Overpay for the home we love?

Post by alfaspider » Fri May 29, 2020 9:11 am

I might consider it if there were no agent fees and you were refunded the difference. It's absolute robbery if the leasing agent is charging a full listing commission when there's no need to even show the house or put it up on the MLS. Moreover, the agent would be collecting both sides of the deal, which is an inherent conflict of interest. At full commission, they'd be paid over $20k to do essentially nothing other than fill out a 10-15 page form contract and hand it off to a title company :shock:

I doubt the owner has signed an exclusive listing agreement with the agent if the house is not on the MLS. Have an attorney draft the contract and it should cost you under 1%.

retiredjg
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Re: Overpay for the home we love?

Post by retiredjg » Fri May 29, 2020 9:19 am

redfan11 wrote:
Thu May 28, 2020 8:02 pm
The landlord is willing to sell for 475 but isn’t willing to budge on the price.
Point out that the landlord is saving a 6%ish real estate commission by selling directly to you?

Have you decided to buy regardless of whether you can get this home? If yes, moving is easily worth $10k unless you plan to do it all yourself. Even that will cost more than a few hundred.

Zestimate is not reliable. Ignore it. Where are the other estimations coming from? If not from an actual appraisal or two, you might want to ignore them too.

runner540
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Re: Overpay for the home we love?

Post by runner540 » Fri May 29, 2020 9:42 am

redfan11 wrote:
Fri May 29, 2020 12:42 am
unclescrooge wrote:
Fri May 29, 2020 12:21 am
If you love the home you should be willing to offer pay for it.

Heck, people pay millions of dollars for "art" a blind wombat could paint just because they're supposed to love it.

However, if you are planning on moving in less than 7 years, why are you even looking to buy? Unless you plan on retiring here, you're opening yourself up to unnecessary headache. Do you have kids? Are you planning on starting a family? If so, would you rather spend time dealing with real estate issues from afar or your kids?

Long distance land lording is definitely possible. Once done it for 15+ years. But as your wealth and income grows, the juice is no longer with the squeeze.

As an investment, real estate has been incredibly good to me. I've made ridiculous rates of return on invested capital (thanks to leverage, timing the market, and shady loan officers) but I would sell my 2 rentals today if there wasn't for the taxes.
Don’t have kids yet, but plan on having 2 in the next 2-4 years. We don’t plan to retire here. However the possibility of a rental interest me, though I’m not getting a great deal on this home by any means so I’m already starting with 30K-40k down the drain. Listening to all of you, I feel the right decision would be to just rent the place. Then again, we don’t dislike the town we are in..so MAY stay longer than 3 years..say 5/6..

Lots of good points on this thread. I may have overpaid for a house that checked all our boxes in a neighborhood we really wanted, where homes do not go on the market often. I am happy I did, but planning to be here a couple of decades, not just 3-4 years. Told my realtor I did not want to try to “save” $10-20k and lose the house. Similar price point to you. Less risk for you since you know the property and neighborhood extremely well!

HEDGEFUNDIE
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Re: Overpay for the home we love?

Post by HEDGEFUNDIE » Fri May 29, 2020 9:58 am

When I bought my house two years ago I was certain I overpaid by $100-200k.

I just got it appraised for a refi; it came in 2% higher than my purchase price. 🤷🏻‍♂️

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galawdawg
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Location: Georgia

Re: Overpay for the home we love?

Post by galawdawg » Fri May 29, 2020 10:23 am

I'd submit that it would not be wise to purchase the house you are currently renting as either your primary residence or as rental property. You only plan to live in the house for a few more years and then move to another state. And as a rental property, the cap rate would likely be quite low if market rent is $2,500/month. If you are interested in becoming a landlord, I'd suggest that you read up on how to evaluate residential real estate as income producing property and consider whether you plan to be an active or passive investor.

Since you have mentioned that you plan to have children soon, you may find the amount of time you have now changing drastically once you have children. So be careful about purchasing an overpriced rental house in a location you intend to leave in a few years as you may have neither the time nor interest in the future to be a landlord. You may want to stick with low-cost index funds until you complete your contemplated out-of-state move, your life is a little more settled and you can realistically assess whether such an investment is right for you and your family for the long-haul.

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ruralavalon
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Location: Illinois

Re: Overpay for the home we love?

Post by ruralavalon » Fri May 29, 2020 4:46 pm

redfan11 wrote:
Thu May 28, 2020 8:02 pm
First up, I apologize for what may seem a fickle question in these uncertain times, but would appreciate the views of the wise.
I live in rural Arizona and have been renting a home that we have come to love. The zestimate for the home is 435K, other valuations suggest 465k. The landlord is willing to sell for 475 but isn’t willing to budge on the price. Given how much we like the home and factoring in the hassle of moving, should I just pay the 475 and be done with it?
The problems I see are: homes in this price range don’t sell quickly in this town, however I should be able to rent it out when we move.
Financially we are capable of owning this home, and the mortgage is not an issue.
If anyone has any worldly advice it would be a balm to me.
Thanks..
If you believe that you will be moving from this area in 3 - 4 years, then don't buy the house.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
redfan11
Posts: 61
Joined: Sat Oct 26, 2019 7:02 pm

Re: Overpay for the home we love?

Post by redfan11 » Fri May 29, 2020 5:42 pm

mortfree wrote:
Fri May 29, 2020 2:44 am
Will you still love the house if:

Buy for 475k

Then:

Rent to someone else for $2500 or less.

Or:
End up selling for say 450k minus 6% realtor fees?
Wouldn’t enjoy selling for less but feel it’s not a high price to pay.
runner540 wrote:
Fri May 29, 2020 9:42 am
redfan11 wrote:
Fri May 29, 2020 12:42 am
unclescrooge wrote:
Fri May 29, 2020 12:21 am
If you love the home you should be willing to offer pay for it.

Heck, people pay millions of dollars for "art" a blind wombat could paint just because they're supposed to love it.

However, if you are planning on moving in less than 7 years, why are you even looking to buy? Unless you plan on retiring here, you're opening yourself up to unnecessary headache. Do you have kids? Are you planning on starting a family? If so, would you rather spend time dealing with real estate issues from afar or your kids?

Long distance land lording is definitely possible. Once done it for 15+ years. But as your wealth and income grows, the juice is no longer with the squeeze.

As an investment, real estate has been incredibly good to me. I've made ridiculous rates of return on invested capital (thanks to leverage, timing the market, and shady loan officers) but I would sell my 2 rentals today if there wasn't for the taxes.
Don’t have kids yet, but plan on having 2 in the next 2-4 years. We don’t plan to retire here. However the possibility of a rental interest me, though I’m not getting a great deal on this home by any means so I’m already starting with 30K-40k down the drain. Listening to all of you, I feel the right decision would be to just rent the place. Then again, we don’t dislike the town we are in..so MAY stay longer than 3 years..say 5/6..

Lots of good points on this thread. I may have overpaid for a house that checked all our boxes in a neighborhood we really wanted, where homes do not go on the market often. I am happy I did, but planning to be here a couple of decades, not just 3-4 years. Told my realtor I did not want to try to “save” $10-20k and lose the house. Similar price point to you. Less risk for you since you know the property and neighborhood extremely well!
If we are going to stay here for 10 year I would definitely buy.but after listening to the comments , I’m leaning towards continuing to rent and enjoy the home we love without the hassle of selling it later.

NewMoneyMustBeSmart
Posts: 262
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Location: Midwest

Re: Overpay for the home we love?

Post by NewMoneyMustBeSmart » Fri May 29, 2020 5:44 pm

"Never love something that can't love you back." -Bruce Williams
-- | Few are those who see with their own eyes and feel with their own hearts - Einstein

User avatar
ram
Posts: 1594
Joined: Tue Jan 01, 2008 10:47 pm
Location: Midwest

Re: Overpay for the home we love?

Post by ram » Fri May 29, 2020 7:27 pm

Yes..
Ram

Helo80
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Re: Overpay for the home we love?

Post by Helo80 » Fri May 29, 2020 9:16 pm

Rural Arizona.... I take it that you're not competing for prized real estate like SF, LA, NYC, etc.

Can you buy a similar plot of land to what you have now and build a like home?

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