Recovering from a real estate mistake

[Anonymous]

Anonymous wrote:Golly. OP is a troll, probably part of the recent flurry of anti home ownership posts we've had in the last few days over on the money forum.

The only properties OP could be genuinely 200-300k underwater around DC is a super expensive property. As in pay $4M and now worth 3.7. But it doesn't make sense given everything else she alleges. And people who can afford $4M aren't worried like she is.

The story also changed. First post said $300K loss, then later it changed to a $100K loss.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Golly. OP is a troll, probably part of the recent flurry of anti home ownership posts we've had in the last few days over on the money forum.

The only properties OP could be genuinely 200-300k underwater around DC is a super expensive property. As in pay $4M and now worth 3.7. But it doesn't make sense given everything else she alleges. And people who can afford $4M aren't worried like she is.

The story also changed. First post said $300K loss, then later it changed to a $100K loss.

No the $100K loss was another poster (me)

[Anonymous]

Do not renovate. Rent it out and rent somewhere else.

[Anonymous]

Anonymous wrote:We moved to the area and purchased a home in a close in suburb in 2023. After getting wildly outbid 6 times we re-calibrated our expectations and put in an offer on a house that did not check all our boxes. We won the escalation that time and purchased the house. We realized we had made a big mistake almost immediately but realtor convinced us to go through with the deal using lots of scare tactics. (I could write a whole separate post of how terrible our realtor was and definitely took advantage of our lack of knowledge of the area, questionable comps in retrospect, etc).

We have since realized it was a horrible mistake and we are miserable in this house. The problem is that we cannot sell the house for anywhere close to what we bought it for. After watching over 2 years of comps we think we would lose 250k-300k selling the house, if not more. It is horrifying and SO embarrassing. I would consider selling at a 100k loss worth it just to get out of the house but think that’s too optimistic. We’ve mapped out our options as follows:

— sell the house at a loss. This essentially locks in our loss, and while I doubt we will recover much value in appreciation any time soon it just seems foolish.
— continue to live in the house and consider putting on an addition and reno to give our family much needed extra space/better layout. This feels like sinking more money into an already underwater investment and I’m not sure we’d even increase the value of the home that much. We’d also have to live through construction.
— tear down the house and build new. This might make some sense but we don’t have the capital for this.
— rent out the house and rent elsewhere. I calculated that this would increase our annual housing costs by $25k a year. This probably makes the most sense but I worry that this still leaves the house question hanging over us. Also there are almost no rentals in our kids elementary zone so very slim pickings.

Advice welcome and please be kind and constructive.

Nowhere in the DC metro area have we seen large home price decreases. I think you need to speak with a professional realtor. Keep in mind that nearly 74% of Realtors sold 1 or less properties last year. Hope yours wasn’t one of them.

[Anonymous]

If this were me, I'd recalibrate and make a plan to move in 1-3 years, with hopes to wait out some of the recent dips in the housing market in some locations. The loss of federal jobs is reducing local housing demand (in some locations around the DMV - not all though) and the recent economy/tariffs/uncertainty have probably kept mortgage interest rates higher than they have been. If demand picked back up and mortgage interest rates came down the real estate market and prices would be off and increasing again.

I would also research what types of home improvement projects would be most likely to increase the value of the house. Just to make a point - we had a rowhouse in Petworth that had 2 fundamental flaws: no offstreet parking and no powder room on the main floor. We couldn't do a thing about the parking because the back yard was raised above the alley enough there was no way to fit in a parking space. But adding a powder room was doable - we wedged in a small one off the foyer. That removed one of the "no go" criteria buyers might have about the property. Is there something similar you could do? Even better would be a lower cost cosmetic fix, like replacing terrible flooring, painting, replacing outdated light fixtures, modest landscaping. It would also make the wait to sell more bearable for you.

Once it looks like a better time to sell, timing is everything. Aim for the spring market and look for a realtor willing to negotiate their commission. FWIW, if you can wait out the current administration or at least see what happens with the midterm elections there may be changes that would improve the outlook for federal jobs and other factors that might increase demand. Best of luck to you.

[Anonymous]

Anonymous wrote:If this were me, I'd recalibrate and make a plan to move in 1-3 years, with hopes to wait out some of the recent dips in the housing market in some locations. The loss of federal jobs is reducing local housing demand (in some locations around the DMV - not all though) and the recent economy/tariffs/uncertainty have probably kept mortgage interest rates higher than they have been. If demand picked back up and mortgage interest rates came down the real estate market and prices would be off and increasing again.

I would also research what types of home improvement projects would be most likely to increase the value of the house. Just to make a point - we had a rowhouse in Petworth that had 2 fundamental flaws: no offstreet parking and no powder room on the main floor. We couldn't do a thing about the parking because the back yard was raised above the alley enough there was no way to fit in a parking space. But adding a powder room was doable - we wedged in a small one off the foyer. That removed one of the "no go" criteria buyers might have about the property. Is there something similar you could do? Even better would be a lower cost cosmetic fix, like replacing terrible flooring, painting, replacing outdated light fixtures, modest landscaping. It would also make the wait to sell more bearable for you.

Once it looks like a better time to sell, timing is everything. Aim for the spring market and look for a realtor willing to negotiate their commission. FWIW, if you can wait out the current administration or at least see what happens with the midterm elections there may be changes that would improve the outlook for federal jobs and other factors that might increase demand. Best of luck to you.

Agreed. If a Dem wins in 2028 you’ll want to catch the wave of politicos and wonks moving back here from NYC and SF.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If this were me, I'd recalibrate and make a plan to move in 1-3 years, with hopes to wait out some of the recent dips in the housing market in some locations. The loss of federal jobs is reducing local housing demand (in some locations around the DMV - not all though) and the recent economy/tariffs/uncertainty have probably kept mortgage interest rates higher than they have been. If demand picked back up and mortgage interest rates came down the real estate market and prices would be off and increasing again.

I would also research what types of home improvement projects would be most likely to increase the value of the house. Just to make a point - we had a rowhouse in Petworth that had 2 fundamental flaws: no offstreet parking and no powder room on the main floor. We couldn't do a thing about the parking because the back yard was raised above the alley enough there was no way to fit in a parking space. But adding a powder room was doable - we wedged in a small one off the foyer. That removed one of the "no go" criteria buyers might have about the property. Is there something similar you could do? Even better would be a lower cost cosmetic fix, like replacing terrible flooring, painting, replacing outdated light fixtures, modest landscaping. It would also make the wait to sell more bearable for you.

Once it looks like a better time to sell, timing is everything. Aim for the spring market and look for a realtor willing to negotiate their commission. FWIW, if you can wait out the current administration or at least see what happens with the midterm elections there may be changes that would improve the outlook for federal jobs and other factors that might increase demand. Best of luck to you.

Agreed. If a Dem wins in 2028 you’ll want to catch the wave of politicos and wonks moving back here from NYC and SF.

That’s overrated. Most rent…the ultra wealthy purchase what they want.

[Anonymous]

I don't think the political appointees from either party are enough to sway the housing market, but if federal jobs would stabilize that would be an incredible help to the housing market. It's not just the jobs being lost, but also the wild instability that drives the market to hell. I think for every federal job lost that caused people to sell homes and moves there are probably 5 more feds that are just frozen in place, canceling plans to sell a starter home and move up, or buy a first home. And probably 10 more people who don't work for the feds, but have jobs that at least partially depend either on federal funding or the spending of these employees on homes, vacations, schools, etc.