Property Values
Part 4 in the on-going series of posts about selling our home in Virginia with an underwater mortgage. See the other parts by clicking the My Short Sale tag.
When we bought our house in March 2006, it appraised for $310,000. We were pretty happy with that considering we were paying $303,000. We figured we had $7,000 of built-in equity.
What we didn’t know was we were at the very top of the market.
When we first moved to the area in 2004, the market was screaming! I went to look at houses to buy before my family moved out from Texas and I was absolutely shell shocked.
First, I couldn’t believe that I’d have to pay $280,000 or more to get a 4 bedroom home in a neighborhood I felt safe to have my family in. And second, I’d never been in such a seller’s market. I looked at about 15 houses in one day…and none of them were in what I considered saleable condition. I saw threadbare carpets, houses that reeked of cat urine, holes in walls, interior walls that hadn’t been painted in at least 15 years, and kitchens that hadn’t been updated in 30 or 40 years.
It was ridiculous! Especially considering the fact that my family had just spent the last several months prepping our home in Texas to put it on the market. We painted several rooms, moved clutter into a storage unit, and did several other projects to make the home more appealing to buyers.
Needless to say, it was frustrating to move from a buyer’s market to a seller’s market. Even without doing anything to their homes, sellers expected to only have their home on the market for a week or 2 max and if you didn’t put in a bid ABOVE asking price, you didn’t have a hope of getting your offer looked at.
Anyway, after that one day of house shopping, I decided to go in to a rental house instead and we put our plans to buy on hold until I got a raise and the market cooled a little.
By 2006 when I got my big raise, the market had slowed. We thought we could get in and then hold on for a continued rise. I didn’t care that the financing I got was border-line sub-prime (I didn’t even know what that meant then)…all I cared about was that we got into the house. I told the mortgage broker I wanted an interest-only mortgage because I wanted to keep my monthly cost as low as possible. Plus, I knew we’d be moving again in less than 2 years and I wanted to keep the place as a rental and the lower monthly payment would help with cashflow.
Besides…I KNEW we’d be able to refinance before the interest rate reset anyway.
But for the 18 months or so we lived in the house, the market continued to slow and the house maintained its value. Then, after we left, the market slowed considerably and it began to fall in value.
We’re guessing its worth about $275 – 285,000, but we won’t really know until we get a buyer. We’re not nearly as bad off as some owners in California, Florida, Arizona, or even the Washington D.C. area, but still far enough underwater we can’t afford to sell it in a traditional sale.
Next week, I’ll talk about how we decided to short sell rather than just keeping it.
Tags: My Short Sale
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