It is located in Silver Spring, MD which is an inner suburb of Washington, DC. Previously it was listed at 519,00 but had not sold for a month. Now it is listed at 489,000., which represents about a 6% price reduction. The house is located on a quite street in a desirable neighborhood. The schools are pretty decent, it is 1 mile from the Beltway and 4 blocks from the train station ( metro). It is the cheapest single family house (SFH) in the neighborhood. It features:
- "Charming Exterior and Interior""
- "Three Bedrooms"
- "One Bath (room for more)
- "Quiet Neighborhood"
- "Three level living"
- "Central Air Conditioning"
- "Original six panel wood doors interior"
So will it sell at this reduced price in a reasonable time frame? Possibly.
I ended up chatting with the realtor.
Me: "Well at 489,000 your monthly payments on a fixed 30yr loan would be about 3,000 a month."
Realtor: "A bit less maybe 2,800. Or you could take out a crazy ARM."
A Women "We have a friend who is looking to buy but is concerned that when she may sell in five years the price won't be good because of the bubble"
Realtor: "She'll do just fine if she holds for five years."
Realtor: "This house is cheap. I might make an offer on the house if it doesn't sell soon"
Me: "What would you do with it?"
Realtor: "Rent it out for a while"
Me: "But the rent would not cover the mortgage."
Realtor: "How much do you think I could rent it out for?"
Me: "About 1800 a month."
Realtor: "More. It used to be rent out at 1850 a month about 1.5 years ago."
Me: "Okay you could rent it out at 2000 a month. That still does not cover the mortgage, taxes and maintenance costs. You would be losing hundreds of dollars a month hoping for future price appreciation"
Realtor: "There are ways to make it work."
Me: "Like what?"
Realtor: "I could split it into two and rent out the basement."
Me: "Is that even legal?"
Realtor: "I probably could get a permit. Or perhaps I could get one of those 1% ARM loans."
Me: "But then it would be a negative amortization loan."
Realtor: "Perhaps. Maybe I could renovate it and sell it for more."
Me: "Well it does need major work."
We chatted about other things as well. A pleasant individual. Many potential buyers walked through, but there was very little interest in the house due to the high price for a house in a poor condition.