An Advisor's Story: Selling our House to Travel Abroad!
Dear Advisors,
Every now and then in life, you realize that something’s got to give. For my husband and I, that moment was when we realized that it was time to sell our house. It felt insane, and while navigating the process we felt a whole cocktail of emotions– scared, excited, optimistic, and much more.
Why are we selling our house now? In essence, it’s a big step toward our mutual life goals. But it’s a unique housing market (understatement of the year), and we had no idea what to expect. That’s why I want to share my story about selling my house in 2022. I hope it inspires you to do whatever it takes to achieve your dreams! You can enjoy our "Goodbye to our First Home" video and tour of the house here!
Listing Our Home
We started with the attitude that we don’t have to sell, we’re choosing to sell. We couldn’t adopt the strategies we would have several years ago. Our realtor wisely advised us to price our home just below the appraisal value we expected. We bought our house 5 years ago for about $156,500 and listed it at $239,000. We figured that $250,000 was the most we could hope for.
How did we quantify that price? Firstly, we considered all the renovations we had done over the years, including:
Redoing the kitchen
Redoing the pantry/laundry room
Replacing the roof after a tornado
Replacing the air conditioning
Replacing the furnace
Replacing the water heater
The new kitchen and pantry added a lot of value to the house and were attractive to buyers. The housing shortage linked to the pandemic is raising home prices across the board. Finding out that such vital elements of a home are brand new makes a potential buyer’s heart beat faster.
Another reason we priced our house the way we did is that a mortgage is only approved up to appraisal value. Anyone who wants to put in an offer needs to have ready cash to cover any “appraisal gap.” If we listed our house higher than the expected appraisal value, the negotiation process could easily turn messy and ruin the offer.
We got lucky when we listed our house. We took some glamour shots on Wednesday and posted the listing on Thursday, right before Memorial Day weekend. Our realtor said we might have fewer viewings, but the people checking out the house are the ones who are serious, and we thought that was fine. Surprisingly, as soon as our listing went live on Thursday, we had 10 showings booked for that evening alone. Friday got 10 more, and then 12 on Saturday. We held an open house Saturday that drew 25 people. Over 50 people viewed our house in 3 days!
Examining Offers
Our realtor recommended that we stop accepting offers on Saturday night. On Sunday, we reviewed our offers. We were blessed to receive 10 offers, all above our listing price. 9 out of the 10 had mortgages and the last was a cash offer.
But numbers can be tricky. The highest offer was for $278,000, but the appraisal gap was only $8,000. That means that even if the appraisal value came in around $250,000, the offer was capped at $258,000. On the other hand, the cash offer was for $271,000 with no appraisal necessary. Score!
We accepted that offer and set a closing date of July 7th. The only other thing to work out was any issues that turned up during the inspection. We had told the buyer that the house needed a little piering, also called underpinning, on one corner of the foundation. The repair companies we consulted had a 6-month delay, so having it fixed before selling wasn’t an option. We gathered some estimates, and the buyer consented to have the piering done on their dime. We also offered to cover $1,000 of what it would take to fix any issues found during the inspection.
And then, a week before closing our buyer became completely unresponsive. Disaster! We don’t know why, but they decided not to move forward. According to the terms in the agreement, we were forced to relinquish the earnest money the unresponsive buyers put down in order to move forward with a new offer. That was a bitter pill to swallow because we had spent money fixing things that came up during their inspection. However, we went back to the list of offers and found a couple who loved our house and were still interested.
The new buyers offered $260,000 with an appraisal gap of $2,500 if the appraisal came in lower than that. We asked if they would increase the appraisal gap to $5,000 and they said they couldn’t but their realtor offered to reduce her commission by that amount if needed because she could see they loved the house so much! At the end of the day, we don’t know what the appraisal came in at because we got the full $260,000. It could have been higher than that, but we’re happy with the price we got! Selling at that price gave us a return of over 60% from when we bought the house 5 years ago!
The “Why” behind Selling
So, why are we selling? With the help of our own financial advisor, we found that if we could get $100,000 in equity from the house as well as save the $20,000 a year that we would have spent on a mortgage and maintenance, we could have between $750,000 and $1,000,000 by the time we’re 40 years old. Plenty to buy our French dream home!
In France, international real estate buyers have to put down at least 50% of the purchase price. With inflation over the next decade driving prices up and we could be looking at costs of around $1,000,000 just for the down payment. I’d love an apartment in or near Paris big enough for our family by then. My husband would prefer a villa in the South of France. Either way, our million should cover a property that suits us.
Even if we decide to use the money for something else, this decision would give us options in the future. We also plan to buy my grandparents’ home in Tulsa after they pass, and adopt several children from the Philippines, which is expensive. Money doesn’t buy happiness, but it does bring us closer to achieving our dreams and fulfilling our values.
Where We’re going to Live Now
That futuristic planning all sounds great, but at the same time, where are we going to live now? My grandparents have invited us several times over the years to live in their mother-in-law suite as they get older. I lived there before marrying Aron, so it already feels familiar, and we know they’d love for us to move in and take care of their home as they age. We’re more than happy to do so, and there’s nowhere else we’d rather spend the next years of our lives before we start the next generation of our family. Their little dog passed away a few years ago, and they love having our puppy Theo around. We’re also going to spend more time living in France every year! In fact, we’re already planning to go back to spend Christmas in Paris this year!
My grandma’s last surviving sister passed away from cancer a few months ago. She lived in a tiny cabin in the mountains of Colorado and opened her home to us for a week when I ran the Pike’s Peak Marathon. We shared a love of France and a dream of buying a house in France one day, though she was already in her 80s. When we buy our place in France one day, she will be in my heart.
Her passing made it clear that we don’t have time to wait. I would deeply regret it if I didn’t do all I could to achieve my dream of a home in France. It might sound corny, but we don’t have to live like characters in someone else’s story when we can write our own. Are you procrastinating on a dream? Is there anything else in the way other than your self-doubt? We’ll help you find out and create a financial plan to grow and evolve with you. These are my dreams, and I’d love to hear yours!
Warm regards,
Brooklyn
P.S. At Ellevate Advisors, we believe that advisors deserve to retire too. What does that look like for you, your family, and your business? Let’s figure it out together! Check out our services here, get to know me on my bio here, or schedule your free consultation call here.