I find myself in the interesting position of owning 3 residential properties: 1) Our new “dream” house, 2) Our “old” starter home, 3) our rental property.
My wife and I decided to do things differently. Most homeowners looking to upgrade either make an offer contingent on the sale of the first home, or sell first and buy later. I decided that was not the optimal strategy for us. I decided it was best to buy in the upgraded segment before the higher-end markets heated up, and to sell our starter home in a seller’s market. Part one was buying and moving in to the new house.
The strategy worked very well. Our “old” home resides in a market where contracts are signed in days, not weeks, and multiple competing offers were becoming common. Our plan also allowed us to stage the old house without occupying it. We laid down fresh mulch and 12 tons of rock. This gave the house tremendous curb appeal. We also put days of effort into making sure the house was “white glove” clean from floor to ceiling — even the basement. We left some furniture and most of the artwork behind (temporarily) for staging. The place looked spectacular inside and out.
We listed it on a Thursday night, and by Friday night we had had 13 showings and multiple offers. Saturday morning we discussed the pros and cons of each offer, and made a decision. We accepted the offer that was $9000 over our asking price.
Before we started the whole process we negotiated a deal with our real-estate agent. She’d receive the standard 3% on our new home purchase, but only 2% on the old home sale. This meant paying 5% on the sale, rather than 6%. This saved us over $2500 in commissions.
So far we are pleased with our new home. It appraised for more than our negotiated price. And even though it is about 50% larger than our previous home, our first month’s utility bills are significantly cheaper than our old home built in the 1970s. Our new home is “high-efficiency”, with a HERS Index of 60. We anticipate saving $800 to $1000 per year on utilities. Moreover, we obtained a 3 percent, 15-year mortgage with a negative 1.65 points, which even after 0.5 points of origination, resulted in less than $1000 of closing costs.
All the while, the rental property continues to provide monthly “dividends”.