Expert: Jessica Bryan - 3/5/2009

Question
Hi Jessica-

I live in a small town in Texas and the real estate market is not too terribly bad.  My uncle bought a house for us on a lake at a great deal. The owners were being forced out and sold it to my uncle for the payoff amount of $25,000.  It's a cozy 3 bedroom, 2 bath home and it was in horrible shape when we got it.  We put about $10,000 into it, and while it still needs a little work, it's so much better.  My uncle transferred the deed into our name and we're financing it through a local bank on a 10 year note.  We've had it for about 5 years and owe $22,000.  We've not had it appraised, but my uncle (who's a property developer) estimates it could sell for about $70,000.  (In this area, a very nice, 2200 square foot new home goes for about $140,000.)  Our house is 1300 square-feet. While there are no major problems with the house, there are a few cosmetic ones.  The entire house needs to be painted, there is hardwood flooring in every room but the master bedroom, which has old carpet and needs to be replaced.  These problems are mostly minor, but we don't have the money to complete any home improvement projects.  My husband is a police officer and I'm a stay-at-home mom with 2 children, so money is always tight.  Our current house is just too small for us at this point and we have found a larger, newer brick home in great condition for $91,000 in the neighborhood we want.  Since we have a nice built-in equity, our plan is to sell our home, and put $20,000 down on a new one to keep our payments low.  The problem we are facing is no knowledge of selling a home and no money to to fix it up.  What would you suggest in this situation?  Should we just bide our time and wait until the house is paid for in 5 years and then do home improvements?  Or is there any hope of selling it now?  Your advice would be greatly appreciated!

Thanks,
Holly

Answer
Dear Holly;
It seems that what you should do is talk to a real estate broker in the area who could evaluate the home and the situation.  This is a good time for buyers to look at homes and with some of the incentives for first time buyers as well as low cost loans this is an excellent time!  I would advertise the home "as is" and list it for a little lower than what it would go for if fixed up.  The market in the Spring is always a little more active so this would be a very good time to sell your home.  If you are worried about spending any cash out of pocket it would be a good idea to arrange for the proceeds from the sale to pay for all additional costs.

Good luck and best wishes,
Jessica Bryan