Assignment 1.1 Using the five step decision making process
Step 1: Define the Decision Clearly
My husband and I would like to buy a smaller house on at least 3 acres of land in the country when our last daughter graduates high school in 2 years.
Step 2: Consider all the Possible Choices
1. Sell home and purchase land with home
2. Purchase land without a home on it and build a new home
3. Rent out current home and purchase new home on land
Step 3: Gather All Relevant Information and Evaluate the Pros and Cons of Each Choice
Possible Choices | Information Needed | Pros | Cons |
Sell home and purchase new home with land | · Need to review comparable value of others homes in the neighborhood to identify what current market value is Determine sell it on my own or use a realtor Hire a realtor to help us find the home of our dreams | Move to a new location with no neighbors and fresh air Using a realtor will increase marketing Using a realtor allows us to view more properties · | Our home has dropped in value Realtor fees will make us pay to sell the house Selling on own home means increased work and it takes longer to sell a home |
Rent out current home and purchase new home | Research Property Management companies Obtain copies of rental/lease agreements Meet with accountant | Investment property Possible additional income Hire property management company to manage rental Tax write-off when rented | Upkeep on rental Wear and tear on home Securing single family renters with good credit Additional house payment/insurance Renters default on rental payments leaving me with 2 house payments |
Rent out current home and purchase new home | Research Property Management companies Obtain copies of rental/lease agreements Meet with accountant | Investment property Possible additional income Hire property management company to manage rental Tax write-off when rented | Upkeep on rental Wear and tear on home Securing single family renters with good credit Additional house payment/insurance Renters default on rental payments leaving me with 2 house payments |
Step 4: Select the Choice that seems to best meet the Needs of the Situation
The best choice for us would be to find a realtor that will help sell current home and find property with a home already on it.
· A Realtor is familiar with market trends and can help with selling home and finding new home
· Obtain more peaceful surroundings in a smaller home since children will no longer be living at home. (I can dream… can’t I?)
· No fear of having 2 payments for housing if the house doesn’t rent or the renters do not pay.
Step 5: Implementation of a plan of action and monitor the results
· Agree upon a timeline to sell existing home and buy new home
· Down size our belongings to fit in a smaller home
· Contact bank and obtain a pre-approval for home loan
· Contact realtors to interview and place current home on market
· Have home staged and de-cluttered for a speedy sale
· Schedule appointments to view available homes in the country to buy
· Close on my old home and move into my new home
11 comments:
Analisa WOW! I love Love Love your Blogspot! The set up is awesome and it is so soothing to the eyes. Great JOB! I would love if you would share with me how you have us all linked to you. I believe you did share this in another DB but I did not copy the instructions. Please?????
Ok, now that I am done gushing, but it is way cool! I like the way you laid out the pro/cons to the decision your spouse and yourself are contemplating. I did not see a place to respond to your Blog post on the actual blog so I am responding in the DB.
I know here in the area I live in Pa we took an incredible beating in the housing market. I would suggest perhaps evaluating where you want to be financially in retirement and compare each of the options you discussed to its affect on retirement.
I hear it takes time to recoup closing, refinance, or buying up or downsizing, that most people have to weigh in the fact of how long they plan to stay in that location. I would gather since your daughter would be out your spouse and you would stay put in wherever you decide on is next.
Another option may be to purchase outside of our country to enable yourself, children and perhaps future grandchildren to embrace and experience another culture. Being able to be fully emerged in another culture and learn their way of living is exciting at least to me.
I wish you luck in all your future endeavors remember this exercise and I am sure it will help you every time! Happy adventures!-Karen
Tonia, Thanks for liking my blog. I actually like the design and am thinking of using if for a personal blog too.
I took the liberty of pasting your comment from the blackboard page and putting it on the blog.
I understand about the housing market in PA. I could sell my house for what we paid for it but then I loose out on all the money I have put into it. I live in a high military area and when people moved they sold cheap to get out and well I am stuck at least for awhile. At least that gives me time to make an educated decision for the future. The magic of life is that it can change in an instant, so I will go with the flow for now.
I would love to have a vacation home outside the country but the costs with flying and up keep would certainly keep me from purchasing one. Truthfully, if I go to another country, I would like room service and all the amenities.
I can see where you are coming from not wanting to worry about the renting out of your current home. I had to do that when the housing market dropped in the mid 90's and it was a constant headache worring about keeping the house rented, repaired, etc. When my final renters decided to quit paying the rent and I had to evict them it was even worse. Lawyer fees on top of no rent and two house payments was overwhelming! If your plan is to down size in order to make life less complicated then I would agree with your decision to sell your current home and not have the headaches of being a landlord.
Jennifer, I own a property that we rent and I really dislike being a landlord. I have had to evict a tenant and spend a fortune fixing up the disaster they left. We had actually had a pending sale on our place in Hamburg , Ia but alas the Missouri River is flooding and it may soon become a brick houseboat if the levy breaks. I am Leary about renting a larger place that has a mortgage on it. At least the other place had no house payment to worry about.
I have truly seen the bad side of renters and I am not knowing if I want to take that step.
Sorry Karen about using Tonia's name in the comment. I guess I mix you girls up because I know you are good friends. LOL That is my excuse and I am sticking to it. :)
Analisa,
I feel for you and like everyone else am experiencing the housing slump. My wife and I were on the fence about selling our house too. We met with a financial advisor and he gave us a lot of insight and direction. There are a lot of factors involved when taking a huge risk and in the long term keeping our existing house was the best decision. We also gave him two separate scenarios to look at, a five year plan and ten year plan. In five years it wouldn't be feasible to sell our house, but in a ten year plan we would be fine. Like every good action flick, always have a plan "B".
One other thing...your blog ROCKS!
Danny
Hi Analisa, the above post came from Karen Fogle. I don't know why it posted as Anonymous. Anyways, this is a tough decision to sell your home that sounds like you have developed a lot of memories with your children. I like the idea of a rental as an extra income. You would need to do your homework to make sure the people coming in are sound people, however a little bit of work could create a nice extra nest egg of an income if done correctly. You could set it up through a lawyer to include maintenance as part of the renters responsibility. You may loose a bit of the income, however it would be a pro on your part not to deal with the other place.
I also am in the middle of a huge decision to take a different job and one of my big things is getting rid of this huge house that has many memories of raising three kids. I would be okay with downsizing to city living, however I don't know how well my family would adjust to a huge country living life to living in the city with noise!
I agree with you logic except for knowing the housing market may not be strong enough for you to sell you existing home for the price that you would like. If you can accept the current market price, then go for it. It’s likely you will be able to buy something at deep discount. Are the market conditions in your area favorable for selling? Or, are you in a market with a high number of foreclosures. It’s something to consider before you act too quickly. (Good if you’re buying, bad if you’re selling.)
You have done a great job weighing the pros and cons!
We have bought and sold 4 homes (one home 2 times!) in our 20 years of marriage. We have lived in all 3: the first one for 10 years, second one for 5 years, and our current one for 5 years this summer.
The home I had the hardest time leaving was our first home. We had a little going away party at the house and said goodbye with a picnic supper on the floor. (Our kids were 3 & 7 so they loved it!)
Take pictures of both homes. I love going back and looking at the pictures! Good Memories!
Best of luck with your decision.
Kattie
aka Lucy
Dear Analisa,
I would like to offer a few suggestions to you about your decision on buying a home. I think when buying a home take your time and look at many different types. I think that renting your home would be a great decision because that would extra income to help you pay off your new home.The last piece of advice that I can offer to you would be to make sure that the decision that you make will be one that you can live with.
Analisa,
I am also planning on selling my home and downsizing when my youngest graduates from school. My wait is a little longer than yours, but the same as well, but that move in not as immediately pending as yours is. You have a good timeline to get moving in the right direction. Where are you looking to move? Somewhere close to your current home or further away? Where are your other girls settling down to when they move out? I know they are still in school, but are they intending on staying in the area, or venturing out? That always has to be an influence on where you want to move to. Do you still have family in Italy, and were you thinking of there to move? How about your daycare here in town? Just some additional fuel for the thoughts I am sure are already spinning in your mind.
Ron
Post a Comment