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!