Kissing the House Good-Bye

Posted by: Monica Gagnier on August 24

Last month, my BusinessWeek colleague Chris Palmeri blogged about withdrawing an all-cash offer for a home in Pomona, Calif., after learning that BW was being put up for sale by the McGraw-Hill Companies.

I’m also feeling jittery about the prospect of losing my job, so jittery in fact that I’ve decided to put our house up for sale. My husband and I paid $268,000 for a circa 1920 brick bungalow in Beacon, N.Y., in August 2005, a period that many real estate types now refer to as “the top of the market.”

In the four years that we’ve lived in our two-bedroom home, we’ve spent $21,000 on improvements such as thermal-paned windows, two new sets of outdoor stairs, insulation, and a deck that replaced a falling-down “mud room” attached to the rear of the house.

That $21,000 figure includes labor for my handyman extraordinaire and the cost of materials.

I redid the kitchen on the cheap, keeping the existing cabinets and installing tile (much cheaper than granite!) to replace 1970s-era Formica counters and linoleum flooring.

The renovation project that I’m proudest of? Finding a solid oak door at an antiques store on Beacon’s Main Street that I bought for $75. I paid my handyman $150 to paint, trim, and hang the door. It looks much better than the plastic doors from China that are for sale at the Home Depot.

We currently owe $260,000 on our house. The City of Beacon recently lowered our assessed value from $256,000 to $238,000. Local governments are known for inflating the value of properties on their tax rolls in order to maximize revenues, so our house may actually be worth less than $238,000.

Our Realtor at Beacon’s Manor House Realty has advised us to list the house for $229,000. Yes, the bank has agreed to accept a short sale.

I’m sure many people will think I’m making a mistake by selling when we’re $30,000 or more “under water” and that I’m walking away from an investment that will eventually come back. But I see things differently.

We will not be able to stay in our house if my income is interrupted or reduced, and the $8,000 tax credit for first-time homebuyers that the Obama Administration has in place until Dec. 1 is giving us a window of opportunity to sell our home.

Also weighing on my mind is the upcoming auction of my neighbor’s house two doors down. The neighborhood gossips say that he paid $359,000 about five years ago and that the bank has set the opening bid for his house, which is in foreclosure, at $125,000.

I haven’t confirmed that, but I assume that if my neighbor’s house sells for a fire-sale price, it won’t help the already depressed value of our property.

Our story is the mirror image of the previous owners, an architect and his landscaper wife who bought the house in 2000 for $90,000. They rewired, knocked down walls to open up the downstairs, and poured a new basement. Of course, they put in a lot of sweat equity to make their $178,000 profit in five years.

I don’t begrudge the “flippers” their profit. However, I envy their sense of timing.