Financial gurus inside please??

[David in FL]

Can you not just advertise as currently x, but with potential to be y.

Yep, and that's the job of the realtor. If they're not willing/able to work through that little bit of marketing, they're either not worth a damn and need to be replaced, or they're just concerned with tuning a quick sale to their own benefit and once again, need to be replaced.

[TN94z]

Can you not just advertise as currently x, but with potential to be y.

You can put that in the description but you can't "advertise" a house with more "heated" square feet than it actually has. The problem is this is a huge turn off. Most people that want a house like I have are older couples that don't want to mess with any construction or remodeling or families that have the same request. You might find someone that would be willing to wait until you get the issues taken care of, but that is rare and something that would have to be dealt with on the side. Then you take a chance of them finding another house pretty close to yours that needs no "fixing." That is a crap shoot.

If you have high interest debt then getting the equity loan to pay off the debt makes sense as long as the interest rate on the loan is lower which most times it is. As mentioned earlier the danger lies in people that get the equity loan, pay off the high interest debt but don't stop spending therefore accumulating more high interest debt. Can become a vicious cycle.

Exactly and I think that is where most people get in trouble when they do a loan like this. They build the original debt right back and then they have quickly doubled the debt they had....very bad!!! Have you noticed all of the in ground pools that get installed? How do you think the majority of those people pay for the pools? My dad has a construction company that gets contracted by a pool company to dig the holes for the pools. I would say that 75% of the inground pools that are installed are financed by equity loans. The pool companies are usually affiliated with banks that give the people equity loans to get them installed. It is very rare for a pool to be paid for with cash.

Yep, and that's the job of the realtor. If they're not willing/able to work through that little bit of marketing, they're either not worth a damn and need to be replaced, or they're just concerned with tuning a quick sale to their own benefit and once again, need to be replaced.

This statement is untrue! The realtor can not advertise a house with more heated square foot than it actually has. If they do this then they are not worth a damn. You can put whatever you want in the comments, but when you search for a 3600 square foot house, you aren't going to find a 2800 sqaure foot house that has "ability to have 3600 square foot once air is installed upstairs that can be done before closing" in the description. Any realtor will try and sell the house to anyone that "asks" about it. But the realtor can't sell a house to a person that has not contacted him about looking at it. The amount of people looking at the house comes from the individuals search preference when they are looking for a house. The first thing they look at is square footage/bedroom and then they look at price. If you can't list the square footage they are looking for, they won't even get a chance to see the description

[David in FL]

This statement is untrue! The realtor can not advertise a house with more heated square foot than it actually has. If they do this then they are not worth a damn. You can put whatever you want in the comments, but when you search for a 3600 square foot house, you aren't going to find a 2800 sqaure foot house that has "ability to have 3600 square foot once air is installed upstairs that can be done before closing" in the description. Any realtor will try and sell the house to anyone that "asks" about it. But the realtor can't sell a house to a person that has not contacted him about looking at it. The amount of people looking at the house comes from the individuals search preference when they are looking for a house. The first thing they look at is square footage/bedroom and then they look at price. If you can't list the square footage they are looking for, they won't even get a chance to see the description

The realtors job is to

market the house. That's what they do for a living. They do that through a variety of means. MLS listings, local real estate publications, on-line listings, open houses, and especially through their relationships with other realtors. There are many ways that your home could be properly, accurately, and positively represented in the market, with or without the HVAC work done. I'm just responding to your request for advice based on having done this type of thing many times, over many years. If you don't believe me, or like what I'm telling you, that's fine. You won't hurt my feelings even a little bit.

[Surefire]

I agree with the above. I would think there is a lot the realtor can do without directly getting in trouble.

If someone contacts them about a similar property in an area not as nice as yours, they could easily say "ah, we have something that can be as big as this in a better area" or something similar.

If you have high interest debt then getting the equity loan to pay off the debt makes sense as long as the interest rate on the loan is lower which most times it is. As mentioned earlier the danger lies in people that get the equity loan, pay off the high interest debt but don't stop spending therefore accumulating more high interest debt. Can become a vicious cycle.

With the debt situation, I disagree that switching to a lower interest rate is always best. If the loan is short term the arrangement and early settlement fees can be more significant than the interest accrued.

[alf174]

This statement is untrue! The realtor can not advertise a house with more heated square foot than it actually has. If they do this then they are not worth a damn. You can put whatever you want in the comments, but when you search for a 3600 square foot house, you aren't going to find a 2800 sqaure foot house that has "ability to have 3600 square foot once air is installed upstairs that can be done before closing" in the description. Any realtor will try and sell the house to anyone that "asks" about it. But the realtor can't sell a house to a person that has not contacted him about looking at it. The amount of people looking at the house comes from the individuals search preference when they are looking for a house. The first thing they look at is square footage/bedroom and then they look at price. If you can't list the square footage they are looking for, they won't even get a chance to see the description

Actually, I have seen realtors put potential additional living space in the descriptions; almost always with unfinished walk-out levels/basements.

[GDWindowpane]

With the debt situation, I disagree that switching to a lower interest rate is always best. If the loan is short term the arrangement and early settlement fees can be more significant than the interest accrued.

I agree and assumed that the debt might be more along the lines of high interest, revolving credit type of debt.

[Mr3Putt]

What did you say the cost of the upgrade was? $4,500?

Cripe, finance that through the heating company or put it on your Visa and be done with it.

If it will really make that huge of a difference in the sales price and selling time, it's a no brainer. I mean why go through the hassle of an equity loan if all you need is less than $5,000?

If your sales agent is right, it will be a very short term loan.

(note the big "if")

[TN94z]

The realtors job is to

That is correct but many people look for listings on the internet now. They search for particular sqaure footage and rooms and price before ever getting to the point of looking at descriptions. I have a VERY good realtor who sells houses all of the time and is actually a friend of mine. He does a very good marketing. MLS, local publications, on-line, etc...still have the same stipulations as far as posting square footage. You can put anything you want in the description that is true, but the search and main listing details are not the description. Those HAVE to be accurate....that's just the way it is. I see what you are saying and I agree with most of it, but you are referring to things that come after someone sees what the square footage is accurately listed at and then are interested in looking at the house. Two different things. Open houses are completely a waste of time and have a low selling rate on a house.

I agree with the above. I would think there is a lot the realtor can do without directly getting in trouble.

They do that...all realtors do. But they can only do that when people call them looking for a house in that general range. This is different than it actually being advertised. When I was looking to buy a house, I would search for say 2500 square foot house and that is what hits I would get.

Actually, I have seen realtors put potential additional living space in the descriptions; almost always with unfinished walk-out levels/basements.

You can put anything you want in a description, I agree. But that doesn't shot up on most searches.

What did you say the cost of the upgrade was? $4,500?

That is the cost of the heating and air...not everything that needs to be done.

Listen guys, I am not trying to argue with anyone and I don't think anyone is wrong. I knew there would be varying opinions on this subject and that is why I made the post. I really appreciate everyone's advice on this topic and if I sounded like a butthole about anything, I apologize.

[alf174]

Yep, its a lot cheaper to thrash it out now than after the fact. Good luck with whatever you decide to do.

[Surefire]

Just curious, and remember I am a foreigner so excuse my ignorance!

What qualifies the sqft as heated?

Can you not put electric heaters\oil heaters\a bonfire! in the area and advertise the space as "heated"?

[Fraser]

At 7%-8% for your buddy's deal I'd run a mile.

You mentioned you have a lot of equity in your property so consider refinancing and taking cash out. I work in the mortgage business and even though rates have gone up quite a bit over the last few weeks they are still far below the 'deal' your buddy is offering you through the bank.

[TN94z]

At 7%-8% for your buddy's deal I'd run a mile.

The rates were close to 6. A refinance with a cash out is really a bad deal. My current mortgage interest rate is 5.6. I have checked and the rates are already above that. The rule is if you can't get 1-1.5% lower than your current rate then it doesn't make financial sense to re-fi. Also, you are looking at 3000-4500 in closing costs to maybe save 50.00 on a monthly payment. Think of how long you would have to make payments at 50.00 a month to cover the amount of the closing costs. If I am selling the house, the house would probably be sold before I could ever get that money back. An equity loan will cost me 145.00. This is a loan and not a house loan. The 6% rate on the loan is fairly consistent for my area. A 401k loan is only at 4.x%. I understand that the "mortgage" rates are lower than the 6-8% rates but if you go to the bank to borrow money, not on a mortgage, you aren't going to find rates any better. Remember, this is not a mortgage loan. It sounds like many people are confusing the fact that this is an equity loan and that the mortgage has nothing to do with it.

I spoke with 2 different financial advisers this week not affiliated with the mortgage company or the bank in any way, and both said that with the plan I had in mind and being disciplined enough not to build that debt back up that I used the loan to payoff, getting an equity loan is a really smart idea. They basically said that the equity in the house is my money and told me I should make it work for me. They said that equity loans have gotten a bad rep because people get them and then have the feeling that they are debt free and build the original debt back leaving them with twice the amount of debt they had in the first place. I expressed my only concern being that if I lost my job that I might lose everything. They told me that if I have a balance on a credit card or a loan on a car or anything and didn't pay it back, that those companies have the right to sue you over a breach of contract and can take everything anyway. So, this loan puts me at no more risk than what I am at anyway. My debt level stays the same and that I am just moving it around in a fashion that will get it paid off quicker....now this may not make sense to some without knowing my detailed situation and my plan, but it works. I have ran the numbers and ran the numbers. My step dad who is a financial genius ran the numbers. The 2 financial advisers ran the numbers. Everyone has said the same thing.....the reward far outweighs the risk. This plan will save me around 800+ a month within 3 months. This 800 a month will set a snowball in motion of paying off the loan. I have a steady union job with great seniority and a good job to fall back on. In the case that I happen to lose my job, I will have enough in my 401k to pretty much pay the loan off if need be. My wife has a good stable job. I really don't see any reason at all not to do it after talking with several people and doing some research. Not to mention that the house stays on the market and I have so much equity built up that I can drop the price pretty good for any offers and still make enough to pay off the house, whatever is left on the equity loan, and still have over 20% left to put down on my next property. Once again, thanks for all of the advice guys.

[Fraser]

The rates were close to 6. A refinance with a cash out is really a bad deal. My current mortgage interest rate is 5.6. I have checked and the rates are already above that. The rule is if you can't get 1-1.5% lower than your current rate then it doesn't make financial sense to re-fi. Also, you are looking at 3000-4500 in closing costs to maybe save 50.00 on a monthly payment. Think of how long you would have to make payments at 50.00 a month to cover the amount of the closing costs.

The company I work for does zero closing cost refinances and with rates comparable, if not better than all the major lenders. We don't do loans in TN but see if there are any lenders who do the same in your area.

I am slightly confused though, if you spoke to several unaffiliated FAs, and your father who is a financial genius why did you stop by here?

[TN94z]

The company I work for does zero closing cost refinances and with rates comparable, if not better than all the major lenders. We don't do loans in TN but see if there are any lenders who do the same in your area.

I have checked all of the places around here. Another thing about the re-fi that I have found is that I would have to take my house off of the market to re-fi. With the equity loan I can keep it on the market.

Not so confusing...I posted on here well before talking with any of those people. I think I posted the question Wed maybe and I didn't talk to the other people until yesterday. They are all very busy people (my step dad stays out of town a lot with his business) and I have to make appointments. I like to get a vast amount of opinions on stuff like this. The more opinions the better on these types of question. You know, 20 people from around the country may think of things or have experiences in these exact matters where my FAs and step father may not think about the same types of things. Now I am confused about your last question...do you think I would lie about something like that? I feel like that was a bad attempt at a call out or something. I could be wrong though.

[Fraser]

Now I am confused about your last question...do you think I would lie about something like that? I feel like that was a bad attempt at a call out or something. I could be wrong though.

Not at all! Just seems like you've been talking to all the right people already (if not since posting the initial question).

Personally there are several things I would never seek the advice of internet forums for and financial advice is one of those

[Surefire]

Personally there are several things I would never seek the advice of internet forums for and financial advice is one of those

But you'd give it?

Does that mean we shouldn't trust you? Of course I am just kidding!

[Fraser]

But you'd give it?

Actually I think you've got a point

[TN94z]

Not at all! Just seems like you've been talking to all the right people already (if not since posting the initial question).

I completely agree and I would never use a message board to make my decision on something like this. I just like hearing other people's opinions and experiences. There are some forums I am a member of where there are some guys that really know what they are doing on the financial side of things and I have just grown accustom to asking the questions. Ultimately I will take the correct steps in making the decision on my own.