Behind the Scenes: One South Bend House Sale

by Nick Molnar on June 24, 2009

5309 Larkspur in Hermitage Estates was my family’s last home. We sold it in April 2009 after 180 days on the market. In that time, we went through a series of price reductions from a hopeful $175,000 to a more realistic $160,000. We had 20+ showings with almost uniformly positive feedback. But offers didn’t come and most of the potential buyers had to sell their house first, desired a larger backyard, or didn’t see the third bedroom as true bedroom space – it had French doors and was furnished as a home office. One couple came to the house three or four times but finally decided to pursue a distressed sale in a nearby neighborhood of newly built homes.

But we prepped and cleaned for each showing, polished our online photos, put out hundreds of flyers, made periodic price cuts and decorated the third bedroom as a bedroom and in the warmer Spring market received an offer and came to terms with the buyers.

We didn’t get the price we hoped, or the price we would have commanded in 2007, but we did sell our house. Hermitage Estates has both houses and villas – which is a term used locally to define ranch homes with mandatory monthly fees for lawn care and snow removal. The villas sell more quickly than the houses in this neighborhood. This year there have been two sales in the neighborhood – our former house and one villa. There are two pending sales, both villas. There are three active listings, two houses and one villa. The houses still on the market have been listed for sale for eight and thirteen months. One is two doors down from 5309 Larkpsur.

We closed at $158,000 and we paid $3,000 towards the buyers closing costs. That’s a true purchase price of $155,000.

Of course there were expenses:

  • a 3% commission to a buyer’s agent: $4,740
  • closing fees at a local title company: $1,155
  • tax proration for taxes accrued but not billed: $2,800
  • repairs: ~$1500

By the time it was all said and done, we brought $3,435 to close. That’s right, we paid someone to take our house.

But we didn’t really. We bought the house in 2003 for $148,000 so we actually made a small profit. But we took a second mortgage a few years ago. The $21,587 balance on that loan, along with the $127,535 payoff on our first mortgage were more than covered by the purchase price. But factor in the expense to sell and the money we took out of the house as a second mortgage made it difficult to sell – it would have been impossible if we couldn’t come up with $3,435 the day of closing. And most commonly a seller would pay more – we paid just one commission and not two.

It’s a tough truth that many people are in a situation where they can’t sell their house for enough to payoff their mortgage/s and cover the costs to sell. In that case the decision to sell and bring money to close or to stay in the house when you want or need move is a personal one. No realtor can help you make that decision. But if you’d like an honest assesment of what your property might sell for in the current market, a good realtor can help you see what similar homes have sold for recently, and help you understand your options.


{ 5 comments… read them below or add one }

Bender June 24, 2009 at 12:40 pm

Nice honest post…..had a very similar experience selling an existing home in a very established but newer neighborhood in the area. Shouldn’t have put it on the market in August since the fall hit with the credit crisis and holidays. Great showings, just no offer for a long time. The market is what it is….

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B. Nolan June 24, 2009 at 4:02 pm

You have some incomplete, fuzzy math in there at the end, when you say “We bought the house in 2003 for $148,000 so we actually made a small profit”. In addition to the money you paid at closing, you forgot to mention the costs of ownership that usually make ownership a money loser, as realtors often do. I am sure you paid homeowners insurance, property taxes, maintenance & repairs and association ‘villa’ dues for each of the last 6 years that totaled more than $7,000 (or $1,167 per year). Regardless of the money you paid at closing, there is no way you would have profited from owning this house.

The idea that home ownership is always a good idea is one that is primarily responsible for the current financial meltdown.

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Nick Molnar June 24, 2009 at 6:16 pm

You’re likely right that the owning the house wasn’t a “profit” if you account for money spent during occupancy. We never considered that house an investment since it was our home. I’m not going to get in CPA type math here, but I’d guess it was pretty close to a wash owning since our mortgage included an escrow for insurance and property taxes, and was a bit less than the house would rent for. Maintenance was minimal on a 17 year old home and we weren’t a villa so our association fee was $60 annually.

For a house we owned that made money, I’d tell you about the 1920s home we bought out of foreclosure for $104,000 that lacked a kitchen and furnace. We put about $50,000 into it, worked on it for three months and sold it for $245,000. When we finished it was less expensive and in better condition than the homes for sale around it.

The homes most people live in are not investments. If you’re reading that and you can’t dispute your case with hard numbers, it’s likely not an investment. The days of expecting windfalls simply by owning a house are gone. But you can make money owning property. Most commonly I see it with rentals and rehabs, but it can even be the house you live in. For an example of that hybrid strategy, keep coming back to read about the house we bought and our strategy for rehab and resale in a few years.

Even for those who don’t want to buy a house that needs renovation, moving when you have to take some cash to close can make sense if you cut your debt and monthly expense dramatically. It depends on the amounts involved, the situation you are in, and the decisions you make.

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Dean June 24, 2009 at 7:06 pm

I would have gladly traded places with you Nick. We sold our house in April and had to bring $15357.97 to closing.

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ND Tom June 30, 2009 at 2:28 pm

Looking forward to see the June sales numbers….always interesting and appreciated! Especially the ND related properties and actual closed units for Ivy Quad, Irish Crossings, Stadium Village, and Eddy Street Commons to name a few. Also, any update on the North Douglas Condo situation and Woodbridge Villas?

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