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Making a profit by downsizing – Round 2

If you recall, a few months ago we got a flyer in the mail that made us seriously consider downsizing our SUV, but after running the numbers we came to the conclusion it was more expensive to downsize… Earlier this month we got another flyer in the mail, but this time for our home. The flyer stated that if we wanted, we could let this team of realtors

1. Sell our home for free (no closing costs)

2. No buying fees on a new house, and

3. Get $20k in upgrades in said new house.

Dude, now that sounds like a bargain!! Actually, it sounds too good to be true, especially since this development is just up the road from us, and we think it’s the prettiest, best designed “new neighborhood” going in around here. 

You too can own this home! Free Upgrades!!

You too can own this home! Free Upgrades!! (names and numbers are blanked out)

Our area is one of the last to vomit suburban spew all over this nice rural-esque suburban landscape we currently live in. I can run to a state park less than 2 miles away, and we have another state park and nature center 3 miles away, loads of mature trees, and lots of nearby 2 lane roads to take Sunday afternoon drives on. That doesn’t mean that the developers haven’t noticed this and they are racing to deforest this little oasis and re-plant it with McMansions and lollipop trees, as is the norm around here.

However, the development we’re interested in left all the trees they could and just carved out little spots to put the roads and each house. They even have an amazing splash pad and playground area that we frequent with the kids. Yes, our neighborhood also has these amenities, however, this one is really shaded and has new stuff for the kids to experience. At least until they put up a fence to keep riff-raff like us out, umm, I mean non-residents. We like the community and think the overall neighborhood is really pretty, but how would the numbers work out?

We bought our house for ~$300k back in 2013. Since then we’ve upgraded the front landscaping and expanded the back porch which we think are good value adds to the property. We just replaced one of the AC units, and the market around here is really hot, even in the O&G downturn, because of all the new construction going in North of us. A realtor appraisal showed comps for our house to be in the neighborhood of $360k. Not too shabby, especially considering smaller houses than ours have sold for that same price. We can price high and let them haggle us down to ~$350k, and everyone wins! We currently have about $225k left on the mortgage, so we could “make” ~$125k on the deal, remember no closing costs going out of pocket.

So, then what about the new house prices? We looked online first and found most are in the upper $400’s… Booo… However, with this being a new development, we found a nice model house that is 3,100 sq. ft. 4 br/4bath, 2 car garage, and a little smaller lot, but it would be $350k. That’s a lot closer to being doable for us. When we worked out the details with the developer, adding in the $20k of upgrades, and us choosing real options versus assumptions with the model, it actually came out to $320k. That was almost an immediate sell there for us. Because we’re in a smaller home in the development, but still getting a good lot location, with it being not fully built up yet, we think it should hold its’ value. Plus we stay close to the daycare for the kids – huge win for us there – because they just built a new daycare right across from this development and it’s still taking kids! We would even still be close to the new elementary school, so we could still walk them to both places.

The downside is an increase in commuting time by about 15 minutes. Double boo… BUT, this is only for 2-3 years right? I mean we’re not talking about this being our “forever home” and we’ll be making this commute for 10-15 more years. Plus, we paid almost $12k in home repairs last year, so we shouldn’t have that out of pocket expense for these next 2 years, another win. If we put 20% down on the house, and invested the rest it even moves up our FFLC (Fully Funded Lifestyle Change) date by close to 7 months. We could be done by the end of 2017 and not have to worry about working instead of pushing it back to Summer 2018!

We decided we’re going to do it! Don’t worry, we’ll keep you informed as this process moves forward, and since they’re building it, we will still be in this house for another 4 months, provided construction doesn’t move slowly. Come Monday, we’ll be finalizing the paperwork and thinking about our new neighborhood. Now we can even use their splash pad and parks and not feel badly about it. :)

Have you guys ever come across something like this before? A great deal that actually turns out to be a great deal?! Especially, around the first of April each year? 

Happy Friday!

11 thoughts on “Making a profit by downsizing – Round 2

  1. Maggie @ Northern Expenditure

    Wow. Fascinating! I can’t wait to hear more about it. “New” neighborhoods in Anchorage don’t really exist – except on the bad side of town – there’s no other space in which to build! So I sometimes pine for those actual neighborhoods rather than a spattering of houses and chainlinked fences… Alaska is weird.

      1. Mr SSC Post author

        yes, yes you did… However, it was all true except for seeing how much we could reduce the price of the $350k house. :) This post made me wonder if I should’ve looked into it more. :)

    1. Mr SSC Post author

      Actually, we already have 4 bathrooms…. It does suck keeping up with them, which is why we have maids every other week. Yet another expense gone when we downsize and have more free time and less bathrooms. However, every other part of that post is pretty true, except that we didn’t look into how “cheap” we could get the $350k house. Most houses around that neighborhood are upper $400’s and I’m sure the stipulation would’ve been we had to buy bigger than their smallest house. :)
      Even if it worked out as described, I wouldn’t want to make that extra 15-20 minute drive at each end of my commute every day even for just another year and a half. Ugh…

  2. Our Next Life

    Hahhaahaha — Nice! And don’t think I didn’t notice that you’re now just talking about casually running six miles to the state park and back. :-) Hope your half marathon is great! Have fun with it and don’t worry about your time — everyone is faster on race day from the excitement of running with the crowd.

    1. Mr SSC Post author

      You know, after writing this post, it had me thinking we should have looked into it for real, you never know… I now actually do run to the park, run a loop and come back. The one thing that training has done is make me realize that I like running. Now a “short run” is 3 miles and a typical run is 4.5 – 6 miles and I like the 5 mile or longer runs because after about 30 minutes my body flips an “easy” switch and it’s like it quits working as hard to keep the same pace. I’m planning 1 more 6 mile run tomorrow before I stop before the race, but it’s just to reassure myself that the “easy” feeling still exists, lol.

  3. Laurie @thefrugalfarmer

    Very interesting! Can’t wait to hear more about it! I’m amazed that the realtors are doing no fees deals there. What is the benefit to them? Just getting more sales under their belts? Or does the commission come from somewhere else?

    1. Mr. SSC

      We didn’t look into all the details, but since it’s a fairly new neighborhood, they may have had some other incentives from the builder or worked out something to still get their cut. I’d guess their commission comes from somewhere else.

      Since the offer on their flyer was for a smaller house, that still cost $75k more than ours, with a half sized lot than what we have, we didn’t look much further into it. :)

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