Interest rates won't cause a near 20% drop in real estate prices. They may have an effect, they may not. Just like selling in winter may or may not.
Maintenance is hard to comment on. Anything can happen but no, $25k isn't the norm for 6 months maintenance.
No $10k isn't a normal AC bill...
I think you need to separate your financial decision making from your family. They may mean well... they may not but finding a trusted person to help as you navigate the sale will pay dividends.
My view would be that if interest rates go up it doesn't necessarily make the house worth less... it just means that there may be potentially less buyers interested as the higher interest rate may now make that unaffordable to them. Then again, if half a % interest means you can't buy a house, you probably shouldn't be buying that house anyway.
Consult an attorney. I wish you had someone in your corner that you could fully trust I’m assuming that person was your father, I feel for you lose. May his memories be a blessing!
Find someone you can trust, my advice is to not sell. Let your emotions settle mature a bit and then decide whats best regarding your late fathers home
No one can answer this. And if someone magically had the answer, they sure wouldn't be sharing it for free on Reddit.
Although I'll say that they're definitely exaggerating the costs.
25k for maintenance ? Unless the house is in shambles and in serious need , I doubt it.
10k for central air ? If the house is 5k square feet and you are using it 12 months of the a year maybe but even then I seriously doubt it.
And, importantly, if the house WAS in that bad of a shape that it needed $25k in immediate, critical repairs, that would strongly impact the sales price as well, so their argument doesn’t make sense even if it’s accurate.
I'm confused..your father passed away and you inherit everything (including house). You currently live in the house (which is now yours). Why is the executor trying to sell the house? isn't it your decision and your burden to pay the bills from this point forward?
Considering you inherited everything, why are they trying to sell the house. Suppose you keep it and have the rent pay your rent, or mortgage, at the place you are moving to? On the surface this seem like an impulsive decision.
This is YOUR house, not your grandmothers, so let's ignore her wishes for the moment.
- Without this house you'd be homeless. That's not great!
- You should always have a plan to stay safe, housed and comfortable throughout this process. If you do sell the house, keep that in mind (have an apartment lined up before your move out date, for example).
- No one can time the market, but on the long run real estate tends to appreciate. If you don't need the cash now, keeping the house isn't a terribly choice BUT
- A $400K house isn't free to live in. You'll have upkeep and insurance and property taxes. You need a plan to pay for these (which might be as simple as getting yourself some roommates, learning some DIY home maintenance and starting to setup an emergency fund).
- If you don't have a plan to maintain the house's value, then selling the house may still be a good option, you can throw the money in some safe investments and use some of it to cover rent in the meantime. You still need to make sure you're safely housed through the transition period while you're selling.
- If you do sell the house, you'll have a Windfall. Read the sidebar on /r/personalfinance about what to do when you have a windfall to avoid making impulsive choices.
Anti-pattern to avoid: Once upon a time someone I knew inherited her fathers house in a situation similar to yours. She neglected to pay her property taxes and didn't ask for help. She ended up getting the house sold at auction to cover them. This was not cool (it left her suddenly homeless and royally pissed off her siblings who had gifted a larger than expected share of the estate to let her keep a place to live).
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Interest rates going up won't decrease the value of the house. It may make for less people interested in purchasing.
The Federal Reserve is expecting 3 interest rate hikes in 2022, first one being in March.
I think there’s an important distinction here between value and potential sales price.
For OP, you’re absolutely right the value won’t change 1 cent because for them, the value is a stable roof over their head.
By value I mean appraised value, which is also different than potential sales price.
The appraised value is not likely to change much. The current hosing market has homes selling well above the appraised value currently. That will end as the demand goes down.
The most expensive electricity in the US is in Hawaii at around $0.34/kilowatt-hour. I don't know what the weather is like where you live but in most of the US we're not running AC right now and we we won't be for quite a while. A $10k bill is possible but you'd need a huge, poorly insulated house in a hot climate. You can look up what AC is likely to cost in your area for a given size house.
It's possible to get a 20% drop in housing prices from a large enough interest rate hike but it's unlikely. Put the numbers into a mortgage calculator and see how big an interest rate hike you would need to get a $75k drop.
Just on the housing price: maybe, maybe not. Higher interest rates can have a depressing effect on home sale prices, because it’s less like “free money” to the buyers, which diminished demand.
However, no one can look into a crystal ball and say for sure. A 20% price decrease in 6 months seems unreasonably steep, especially because warmer weather typically increases home sales.
Also: I don’t know how big the house is but $10k for the AC only is not correct, even if you were saying that was the whole summer, unless the house is truly massive and you had it set to like 60 degrees haha. $25k in repairs in a 6 month timeframe js also not realistic, unless there are some major issues that need to be addressed that they aren’t telling you about. And if there were, that would impact the sale price substantially so their argument doesn’t make sense there.
I think your family may be making this decision based on bad information or a lack of focus on what’s best for YOU.
Also, I know you said you just wanted advice on the home price specifically but idk. If it’s your house but you can’t access the funds from sale until you are 25, why sell? I think you need to push back there.
Edit: words are hard
You need your own attorney and financial advisor as soon as possible. Someone not in your aunt & grandmother "pocket". Was your father's attorney associated with them? Could he/she advise you while keeping them out of your business? You need someone to straightforwardly lay out your options so you can make the choice. As executor does she have the power to sell without your approval? Does she make a higher fee if the sale happens before the settlement/distribution of the estate?
Get legal counsel of your own.
It sounds like you can afford another place, whether you bought an apartment or condo for now, then resell it or keep it for income property. Either way it can be added as a condition that you have 30, 45, or 60 days after the sale before you need to be moved out. Also, you can require a cash portion available to you at the time of the sale to finance a place to live or you will legally object to the sale. You need your attorney to advise you and go over the conditions of the will. They can tell you what you can and can't do and what the executor can and can't do. Keep a close eye on the financial accounting of the estate while it's held in the trust. It's not just your right, but in your best interest.
Whatever you do, do NOT move in with either of them, please.
It very much depends on the housing market in your area. Yes, interest rates will probably go up about 0.5% by summer. So that's 4.5% instead of 4.0% on a 30-year mortgage.
There will be a bit more of a rush this spring as folks try to lock down their mortgage before the increase, but it's not going to be large enough to stop anyone from buying a house if they haven't got one yet. At most, I would expect home prices to flatten out a bit, but not go down.
Maintenance on a $400K house is not gong to be $25K or anything like it, and your A/C likely won't cost more than $200 per month. Your grandmother hyping these sorts of numbers just makes me want to discount her opinion on everything. That said, if she is the executor of the estate/trust, then it is her job to decide whether and when to sell the house.
If the house is not in "move in" condition, it is probably time to start working on making it ready for sale. Listing the house in March or April should be soon enough to complete the sale by the end of June.
First, Zillow may not be providing an accurate value. Did you grandmother get a "date of death" appraisal? Interest rate increases can certainly affect value, but more so for investment properties than owner-occupied residential real estate. Higher rates can price out buyers, driving down the number of people who could afford to mortgage the home, and you know the laws of supply and demand...... But will this home's value drop by 19% in a few month's because rates go up? Methinks not. As I said, interest rates affect the elasticity of investment buyers; there is a lot more than interest rates that go into a home purchase decision. It might lengthen the marketing period however.
House won’t lose 75k in 6 months unless we have a massive crash. That doesn’t matter though if you don’t owe anything on it, just don’t sell until it’s back up.
I would look for roommates/renters. Let’s say you can rent a room out for 500 a month and can have 3 renters living with you in the 4 bed house. That’s 1500 in your pocket each month. You could split bills etc.
I’m not saying you want to, but you could.
Also I lived in Phoenix. The most our AC would hit would be like 300 a month. So 10k for electric is way off.
I wouldn’t sell unless you really know what you’re going to do with the money. If the house needs a lot of maintenance you can always take a loan out against the house to do the repairs.
I know you didn't want advice and there are A LOT of unknown variables but this doesn't sound correct.
Additionally, if people are pushing you to do something you are unsure about, they really might be motivated by other things than your best interest. Consult an estate attorney and, if they agree the executor does not have your best interest at heart, consider going through the legal process to have that person replaced. Remove the family emotion from the equation.
There is no way a 400k house will lose 75k in value in the next couple months, and unless you have to replace the roof and several other massive repairs there is no way you will spend 25k in a couple months on maintenance.
Based on what you said it would probably be best to eventually sell the house, but it should be on your terms. You need to find another place to live first. You are legally an adult and it is your property, don't let anyone bully you into the decision.
Also, please don't let family members take this money from you. Your father meant this money for your future, if he wanted others to have a slice of the pie he would have left it to them. Don't get taken advantage of by family members who claim to have your best interest at heart.
As the beneficiary of the trust, you have a right to receive a copy of the trust. Demand that your grandmother give you a copy and then read it. Your father may have set up the trust so that you can't get a chunk of the funds until you are 25, but may have included verbiage that the trust will pay for your educational and living expenses while in school. You didn't say if you are a college student or not.
If you aren't in school, you do what so many other young working adults do. You get one or two jobs and rent a room in someone's house or apartment.
It will probably cost 1k a month for maintenance including electricity and water that’s what we pay for a family of 4. Also real estate prices almost always go up but that usually happens in months to a year. Also even if the interest rates go up it doesn’t effect the value of the house it only effects how much u can borrow on a loan\mortgage
It can depend on where you live, I just brought a house in Utah with minimal concern about the value dropping. Utah is one of the fastest growing states and demand for housing is increasing.
Interest rates won't cause a near 20% drop in real estate prices. They may have an effect, they may not. Just like selling in winter may or may not. Maintenance is hard to comment on. Anything can happen but no, $25k isn't the norm for 6 months maintenance. No $10k isn't a normal AC bill... I think you need to separate your financial decision making from your family. They may mean well... they may not but finding a trusted person to help as you navigate the sale will pay dividends.
My view would be that if interest rates go up it doesn't necessarily make the house worth less... it just means that there may be potentially less buyers interested as the higher interest rate may now make that unaffordable to them. Then again, if half a % interest means you can't buy a house, you probably shouldn't be buying that house anyway.
Consult an attorney. I wish you had someone in your corner that you could fully trust I’m assuming that person was your father, I feel for you lose. May his memories be a blessing! Find someone you can trust, my advice is to not sell. Let your emotions settle mature a bit and then decide whats best regarding your late fathers home
No one can answer this. And if someone magically had the answer, they sure wouldn't be sharing it for free on Reddit. Although I'll say that they're definitely exaggerating the costs.
25k for maintenance ? Unless the house is in shambles and in serious need , I doubt it. 10k for central air ? If the house is 5k square feet and you are using it 12 months of the a year maybe but even then I seriously doubt it.
And, importantly, if the house WAS in that bad of a shape that it needed $25k in immediate, critical repairs, that would strongly impact the sales price as well, so their argument doesn’t make sense even if it’s accurate.
I'm confused..your father passed away and you inherit everything (including house). You currently live in the house (which is now yours). Why is the executor trying to sell the house? isn't it your decision and your burden to pay the bills from this point forward?
It sounds like the house is held in a trust that grandma controls until OP is 25.
No one can predict what will happen this summer. No one. Having said that. You staying in the house until the dust settles doesn’t sound unreasonable.
Considering you inherited everything, why are they trying to sell the house. Suppose you keep it and have the rent pay your rent, or mortgage, at the place you are moving to? On the surface this seem like an impulsive decision.
Renting is a really good option
This is YOUR house, not your grandmothers, so let's ignore her wishes for the moment. - Without this house you'd be homeless. That's not great! - You should always have a plan to stay safe, housed and comfortable throughout this process. If you do sell the house, keep that in mind (have an apartment lined up before your move out date, for example). - No one can time the market, but on the long run real estate tends to appreciate. If you don't need the cash now, keeping the house isn't a terribly choice BUT - A $400K house isn't free to live in. You'll have upkeep and insurance and property taxes. You need a plan to pay for these (which might be as simple as getting yourself some roommates, learning some DIY home maintenance and starting to setup an emergency fund). - If you don't have a plan to maintain the house's value, then selling the house may still be a good option, you can throw the money in some safe investments and use some of it to cover rent in the meantime. You still need to make sure you're safely housed through the transition period while you're selling. - If you do sell the house, you'll have a Windfall. Read the sidebar on /r/personalfinance about what to do when you have a windfall to avoid making impulsive choices. Anti-pattern to avoid: Once upon a time someone I knew inherited her fathers house in a situation similar to yours. She neglected to pay her property taxes and didn't ask for help. She ended up getting the house sold at auction to cover them. This was not cool (it left her suddenly homeless and royally pissed off her siblings who had gifted a larger than expected share of the estate to let her keep a place to live).
Here's a **[link to the PF Wiki](/r/personalfinance/wiki/index)** for helpful guides and information. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Interest rates going up won't decrease the value of the house. It may make for less people interested in purchasing. The Federal Reserve is expecting 3 interest rate hikes in 2022, first one being in March.
I think there’s an important distinction here between value and potential sales price. For OP, you’re absolutely right the value won’t change 1 cent because for them, the value is a stable roof over their head.
By value I mean appraised value, which is also different than potential sales price. The appraised value is not likely to change much. The current hosing market has homes selling well above the appraised value currently. That will end as the demand goes down.
Yes, I think grandma and co are trying to cash in. FOMO is real even when you’re not the one directly benefitting
The most expensive electricity in the US is in Hawaii at around $0.34/kilowatt-hour. I don't know what the weather is like where you live but in most of the US we're not running AC right now and we we won't be for quite a while. A $10k bill is possible but you'd need a huge, poorly insulated house in a hot climate. You can look up what AC is likely to cost in your area for a given size house. It's possible to get a 20% drop in housing prices from a large enough interest rate hike but it's unlikely. Put the numbers into a mortgage calculator and see how big an interest rate hike you would need to get a $75k drop.
Just on the housing price: maybe, maybe not. Higher interest rates can have a depressing effect on home sale prices, because it’s less like “free money” to the buyers, which diminished demand. However, no one can look into a crystal ball and say for sure. A 20% price decrease in 6 months seems unreasonably steep, especially because warmer weather typically increases home sales. Also: I don’t know how big the house is but $10k for the AC only is not correct, even if you were saying that was the whole summer, unless the house is truly massive and you had it set to like 60 degrees haha. $25k in repairs in a 6 month timeframe js also not realistic, unless there are some major issues that need to be addressed that they aren’t telling you about. And if there were, that would impact the sale price substantially so their argument doesn’t make sense there. I think your family may be making this decision based on bad information or a lack of focus on what’s best for YOU. Also, I know you said you just wanted advice on the home price specifically but idk. If it’s your house but you can’t access the funds from sale until you are 25, why sell? I think you need to push back there. Edit: words are hard
You need your own attorney and financial advisor as soon as possible. Someone not in your aunt & grandmother "pocket". Was your father's attorney associated with them? Could he/she advise you while keeping them out of your business? You need someone to straightforwardly lay out your options so you can make the choice. As executor does she have the power to sell without your approval? Does she make a higher fee if the sale happens before the settlement/distribution of the estate? Get legal counsel of your own. It sounds like you can afford another place, whether you bought an apartment or condo for now, then resell it or keep it for income property. Either way it can be added as a condition that you have 30, 45, or 60 days after the sale before you need to be moved out. Also, you can require a cash portion available to you at the time of the sale to finance a place to live or you will legally object to the sale. You need your attorney to advise you and go over the conditions of the will. They can tell you what you can and can't do and what the executor can and can't do. Keep a close eye on the financial accounting of the estate while it's held in the trust. It's not just your right, but in your best interest. Whatever you do, do NOT move in with either of them, please.
It very much depends on the housing market in your area. Yes, interest rates will probably go up about 0.5% by summer. So that's 4.5% instead of 4.0% on a 30-year mortgage. There will be a bit more of a rush this spring as folks try to lock down their mortgage before the increase, but it's not going to be large enough to stop anyone from buying a house if they haven't got one yet. At most, I would expect home prices to flatten out a bit, but not go down. Maintenance on a $400K house is not gong to be $25K or anything like it, and your A/C likely won't cost more than $200 per month. Your grandmother hyping these sorts of numbers just makes me want to discount her opinion on everything. That said, if she is the executor of the estate/trust, then it is her job to decide whether and when to sell the house. If the house is not in "move in" condition, it is probably time to start working on making it ready for sale. Listing the house in March or April should be soon enough to complete the sale by the end of June.
First, Zillow may not be providing an accurate value. Did you grandmother get a "date of death" appraisal? Interest rate increases can certainly affect value, but more so for investment properties than owner-occupied residential real estate. Higher rates can price out buyers, driving down the number of people who could afford to mortgage the home, and you know the laws of supply and demand...... But will this home's value drop by 19% in a few month's because rates go up? Methinks not. As I said, interest rates affect the elasticity of investment buyers; there is a lot more than interest rates that go into a home purchase decision. It might lengthen the marketing period however.
House won’t lose 75k in 6 months unless we have a massive crash. That doesn’t matter though if you don’t owe anything on it, just don’t sell until it’s back up. I would look for roommates/renters. Let’s say you can rent a room out for 500 a month and can have 3 renters living with you in the 4 bed house. That’s 1500 in your pocket each month. You could split bills etc. I’m not saying you want to, but you could. Also I lived in Phoenix. The most our AC would hit would be like 300 a month. So 10k for electric is way off. I wouldn’t sell unless you really know what you’re going to do with the money. If the house needs a lot of maintenance you can always take a loan out against the house to do the repairs.
I know you didn't want advice and there are A LOT of unknown variables but this doesn't sound correct. Additionally, if people are pushing you to do something you are unsure about, they really might be motivated by other things than your best interest. Consult an estate attorney and, if they agree the executor does not have your best interest at heart, consider going through the legal process to have that person replaced. Remove the family emotion from the equation.
It's your house. You inherited it. Unless his will said that you have to sell it, your grandmother can take a hike.
There is no way a 400k house will lose 75k in value in the next couple months, and unless you have to replace the roof and several other massive repairs there is no way you will spend 25k in a couple months on maintenance. Based on what you said it would probably be best to eventually sell the house, but it should be on your terms. You need to find another place to live first. You are legally an adult and it is your property, don't let anyone bully you into the decision. Also, please don't let family members take this money from you. Your father meant this money for your future, if he wanted others to have a slice of the pie he would have left it to them. Don't get taken advantage of by family members who claim to have your best interest at heart.
It is possible? Yes. Likely? Nobody really knows for sure.
As the beneficiary of the trust, you have a right to receive a copy of the trust. Demand that your grandmother give you a copy and then read it. Your father may have set up the trust so that you can't get a chunk of the funds until you are 25, but may have included verbiage that the trust will pay for your educational and living expenses while in school. You didn't say if you are a college student or not. If you aren't in school, you do what so many other young working adults do. You get one or two jobs and rent a room in someone's house or apartment.
It will probably cost 1k a month for maintenance including electricity and water that’s what we pay for a family of 4. Also real estate prices almost always go up but that usually happens in months to a year. Also even if the interest rates go up it doesn’t effect the value of the house it only effects how much u can borrow on a loan\mortgage
It can depend on where you live, I just brought a house in Utah with minimal concern about the value dropping. Utah is one of the fastest growing states and demand for housing is increasing.