Talking to a Millennial Homeowner Who Wants to Sell Her Home

Michelle (not her real name) is a 28-year-old living with her 35-year-old husband in Rockland County, New York.

ND: So, Michelle, you and your husband currently own a home, yes?

Michelle: Yep! Its in his name, and his mom co-signed on the mortgage. He bought it five years ago before we even met, and we just got married this past August. Part of the reason we haven’t changed the title and the mortgage to reflect my name is because we’re thinking of selling soon.

For Billfolders who don’t know a lot about these things (like me!), how does not having your name on the title/mortgage affect things? If your husband got abducted by space aliens tomorrow, would you have any claim to the home? Would you be required to pay the mortgage?

Technically, I think his mom would be on the hook for the payments should he not be here tomorrow, although I certainly wouldn’t expect her to pay them. Also, we haven’t changed it because I have student loans and I think it would adversely affect the interest rate we’re locked in at right now.

Got it. That sounds like a financially savvy decision. But you’re thinking about selling soon!

Yes! We’re kind of the opposite of all of our just-married friends who are looking to purchase a home!

What’s prompting that decision?

Honestly, we make good money and we can afford the house, taxes, and utilities, but if something should happen to one of us and we had to live on one income it would be tough to swing it. Also, we live in a three-bedroom house and we don’t have kids yet (and aren’t planning on having kids in the next 2–4 years), so we’re paying mortgage and taxes on what we kind of consider “wasted space.” I’ve gotten really into the idea of minimalism as well, and it’s prompted us to have some serious discussions about what we need versus what we want, and how that will impact our financial “freedom,” so to speak.

So are you looking to purchase a different home, or rent? Is this associated with a move to another city?

We’d be looking to either buy something smaller, or rent in our current county.

Eventually, we want to move further north. We’re in NY and the prices are cheaper, and also we’re all about being outdoors and in nature as much as possible. Ulster County is where we’d eventually like to end up in the “forever” house. Part of the reason for moving is also so we can either pay less in rent or mortgage and bank the difference to help us get more financially secure before kids, and also have a larger down payment for the forever house.

I love that you all have a plan and are thinking ahead to your forever home and family.

I do want to ask, because you mentioned it in your initial email to The Billfold: when you first moved into your then-boyfriend’s home, it was a roommate situation. Did your husband initially buy a three-bedroom house with the idea of becoming a landlord to roommates? Was that part of the plan too?

Yeah. They were renting a house (also in the same county), and he and his roommates thought, you know, “why pay rent when we can buy something?” My husband actually had all the money saved for a down payment and the market was relatively bottomed out, and he got the first time homebuyer credit, so it seemed like a smart move at the time.

Then, slowly, everyone started coupling off and wanting their own places and own spaces and moving out. When I moved in with him, he still had one roommate, downstairs, and it worked out for a little while — but then it got a little awkward because we all worked opposite hours. So, we could have had less of a financial burden on our shoulders, so to speak, if we were comfortable with having roommates, but I think once we got married we realized we were more comfortable with it just being the two of us.

Judging from the last interview I did about millennial home buying, our readers will want to know: how’d he get the down payment saved? Is that something you feel comfortable sharing?

I’m not 100% clear on the details, but I think his mom put any birthday gifts, communion gifts, etc in a separate bank account, and he added small amounts periodically.

Oh, that is cool. That is so cool. Saving birthday gifts for years. I love it.

Haha yeah. It was never specifically with the goal of having a house (for him at least, I have a feeling his mom always kind of thought of that), but when the market bottomed out and he had the money, he figured “Why not?”

So this past weekend you had a real estate agent come to appraise your home, yes? Is “appraise” the right word? Like jewelry?

Yeah! Nothing makes you really wake up and smell the financial coffee like having to plan and save for a wedding. We had a realtor come by because we had been planning the wedding and money was tight and we were really like “Oh crap, if something really expensive went on the house tomorrow we would be screwed,” so we started realizing there was some benefit to be had in downsizing.

The realtor came and just gave us a list of what we would have to do to make the house market ready (luckily mostly cosmetic), and the price she would list it for, which was more than we both thought!

Why did you decide to work with an agent instead of selling the house on your own?

We haven’t signed any agreements with her yet. I used to intern at a real estate company so I know a bit about the industry, so we’re thinking about interviewing another agent from my old company just to compare. We figured it was worth our time to have someone come in who had knowledge of how the market looked, though, and who also knew what buyers are looking for when they come through a house. At the very least, we wanted to know what we had to fix up. Also, she listed and sold a friend’s house in under two weeks, so someone with experience in how to spin the positives of your property can help. It’s kind of the same idea as why you go to a tax accountant when you can technically do it yourself. It’s sometimes worth the added fee for the expertise.

So when you interview agents or meet with them in your home, what are you looking for? What separates good from bad, or good from great?

Honestly, this one was good. She came prepared with what was listed in our immediate area and an overall analysis of the market, had clients she could refer us to for testimonials, and seemed enthusiastic about the shape our house was in and her ability to sell it “as-is” with minor cosmetic work. We don’t live in a new construction; the house was actually built in the 1950s, so to find someone that can see the potential in the house even though it isn’t brand new, and convey that potential to the buyers, is super important.

How is the market right now? Is Rockland County in line with the rest of the country, or is it a little better/worse?

With the figures she showed us, we’re about on par with the county we live in for our square footage. The county overall has had increasing home values from Q3 2013 all the way through to Q4 2014. I think the average home value is somewhere near $414K as of the end of Q4 2014. She priced us out at $365K, but we’re on the smaller side with 1,300 sq ft.

Let’s say you sell your home for the suggested $365K. How much of that do you get to keep? Do you have a rough idea?

The realtor quoted us a 5 percent commission fee, so the buyer’s agent gets 2.5 percent and the seller’s agent gets 2.5 percent on the final price of the home when it sells. If our agent is the selling agent too, she gets the whole 5 percent. That’s pretty par for the course; I think NYS caps the commission fee at 6 percent.

Then you have to add in closing costs. Sometimes the buyer pays them as part of the agreement, but usually the seller pays them. I’m not 100 percent familiar with how much they are because I’ve never truly been through the home-buying process from start to finish. I think they’re in the area of $10–15K for our house though.

My husband bought the house at $320K, and we paid down the mortgage to about $260K, so we have some equity built up in the event of a sale. Best case, we’d get $360K for the house and make out with… maybe $60K after all the costs? That’s assuming I’m doing my math right on the closing costs and commission.

At that point, we’d have to figure out the best financial move that meshes what we want in the long term (buying the forever house in Ulster County) with what we want in the short term (getting more financially stable, paying off my student loans, and building a big down payment for that forever house).

Okay, so that fits right in with my next question: when you’re dealing with volatile pricing scenarios, the wisdom is Buy Low, Sell High — but with housing, you have to move right from one house into another (in most cases) so you get stuck with Buy High, Sell High, right? Is the extra money you’re likely to make from the sale going straight into the cost of the house you want next?

Technically, because we’re moving up a county, we’d be paying less for the same square footage in both mortgage and taxes. In the same area, we’d be paying about the same, unless we downsized into a smaller space. Because there’s so little listed on the market in our town (only 15 properties, and only one that’s of a comparable square footage), it makes it a real seller’s market. It’s kind of like what’s happening in San Francisco: little supply and large demand.

We’re also not opposed to the idea of purchasing land and building on it. I think all we’ve decided right now is that this house could be a ticking time bomb and we want out before that explosion happens, but we’re not quite 100 percent sure what the next, or best, move is.

Well, it sounds like the two of you are being very smart about it, and I bet you’ll find your best move. Do you have any other advice or thoughts you’d like to share with Billfold readers?

Just that everyone has a different situation, and that’s okay! We have friends that are struggling to save down payments because they want to buy, and we just don’t fit into the homeowner mold yet (we travel and work a lot), and we get judged a lot for that.

People think we have such a good thing, and I won’t argue and say that we don’t, but I think homeownership is a great investment if it makes sense for you, and might be more of a burden if you’re not ready for it yet — whether mentally or financially.

I am not ready — mentally or financially — for home ownership, but I’m glad that you and your husband are approaching it from such a financially savvy perspective! I hope your home sale goes well and that you get the forever home of your dreams someday.

This story is part of our Real Estate Month series.

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