I Want To Buy A New Home

[The Rick]

I'm ready for a new home and am looking for some advice.

Our current home is/was our first, and we've lived in it for about 4 years now. It was something to get us started at the time, but I'm ready to move on to something bigger and better.

First of all, my income situation is much better than it was 4 years ago. A nice promotion a couple of years ago has bumped my income up by over 40%. We've added one new child to the mix with another on the way.

In addition to the increases in income and children, there are other reasons. This house feels too small now. Now that I'm older and wiser, there are things I want like a bigger garage, an attached garage, a bigger yard, bedrooms all on the same floor, etc. My oldest child will be starting kindergarten in fall 2009, so I want to be in a better school system.

We bought our house for $167,000 and currently owe about $153,000 on it. Our tax bill for last year showed an assessed value of $180,000.

My first question is, does this mean that we should be able to sell our house for $180,000 if not more since that's what the city assessed it at? What's typically the correlation between assessed tax value and actual value?

Also, we've remodeled one bathroom and finished off the basement since that assessment, which means the value should be even higher, correct?

Finally, the last part of my post is this:

I'm trying to figure out a gameplan.

I think for the type of house I'd like to have in the area I'd like to be in, we'll probably be looking in the $250,000 range. I'd like to put 20% down to avoid PMI, so $50,000.

We just bought a vehicle, so our savings account is down right now. I figure we could save up at least $20,000 over the next year. That combined with the equity in our current home would hopefully provide us with that 20% down I'm looking for. That would mean that we'd wait another year to start shopping around. At least, that's kind of what I'm thinking.

I guess the purpose behind this post would be to ask the following:

1. What's the correlation between assessed tax value and what we could actually get out of it (with the remodeled bathroom and newly finished basement)?

2. Would it be better to simply save that $20,000 over the next year, or put it towards improvements on the home (new windows, remodel kitchen, etc.) to increase the value?

3. What does the current housing market mean to me and my situation? I'm thinking it's a good time to buy, but in the same regard, it's not necessarily a good time to sell. What about when you take in to consideration the $20,000 I think I could have at this time next year?

I'll be the first to admit that I'm pretty elementary when it comes to housing, the housing market, etc. Like I said, our current home is our first, so I've never sold a house before. Any advice would be appreciated.

[bogey]

Thank you for this thread. I'm looking forward to hearing the diverse opinions you're about to get.

[Donger]

Have a realtor look up the comps in your area to get a feel for the price you could demand. Most will also gladly come in and give you their best guess.

Unless you think that without improvements, your house wouldn't sell, don't improve anything. Save the money to increase your down payment.

[The Rick]

Originally Posted by bogey

Thank you for this thread. I'm looking forward to hearing the diverse opinions you're about to get.

I'm having trouble adjusting my sarcasm meter. Are you genuinely interested in information, or are you simply viewing for entertainment value?

[The Rick]

Originally Posted by Donger

Have a realtor look up the comps in your area to get a feel for the price you could demand. Most will also gladly come in and give you their best guess.

Unless you think that without improvements, your house wouldn't sell, don't improve anything. Save the money to increase your down payment.

OK, so better to save and sell as is than to make improvements simply to try to increase the sale price?

[bogey]

Originally Posted by Donger

Have a realtor look up the comps in your area to get a feel for the price you could demand. Most will also gladly come in and give you their best guess.

Unless you think that without improvements, your house wouldn't sell, don't improve anything. Save the money to increase your down payment.

I'd agree with this. Don't do major improvements unless you're going to be able to live in the house a while (a few years) and enjoy them.

[Hog's Gone Fishin]

Dave Ramsey would tell you to pay cash.

[tyton75]

One quick thing is.. the "assessed value" for tax purposes is almost always higher than "actual" value... esp in the currently depressed market

[Bugeater]

I don't know about where you live, but assessed values usually run 80-90% of what houses normally sell for around here. Just keep in mind having a bigger house just means you'll likely accumulate more crap.

[The Rick]

Originally Posted by tyton75

One quick thing is.. the "assessed value" for tax purposes is almost always higher than "actual" value... esp in the currently depressed market

Really? I thought it was lower...

[bogey]

Originally Posted by The Rick

I'm having trouble adjusting my sarcasm meter. Are you genuinely interested in information, or are you simply viewing for entertainment value?

Not even an ounce of sarcasm. I'm considering a move myself within a year or so, and I truly appreciate the thread.

[Donger]

Originally Posted by The Rick

OK, so better to save and sell as is than to make improvements simply to try to increase the sale price?

Yes, IMO. You won't make the money back in the sales price. Unless, as I said, you have something (particularly a bathroom or the kitchen) that really needs updating or repairing which would preclude the sale.

[tyton75]

Without knowing much about your area, housing demand, growth area/not.. its hard to say, but if you are REALLY dead set on moving.. you will probably have to swallow some profit and possibly be ready to take a little loss on your house to get out of it.

Personally, I would try to wait at least 6months in hopes that the housing market would start to show signs of life so you can get more out of your house and still find a bargain on an upgrade

[The Rick]

Originally Posted by Donger

Yes, IMO. You won't make the money back in the sales price. Unless, as I said, you have something (particularly a bathroom or the kitchen) that really needs updating or repairing which would preclude the sale.

Nope, there really isn't anything that would keep the house from selling.

[Donger]

Originally Posted by The Rick

Really? I thought it was lower...

Nope. Three different values:

1) Assessed value. What the tax man thinks your property is worth.
2) Appraised value. What the appraiser thinks your house is worth.
3) Market value. What a potential buyer thinks your house is worth.