Question: I'm a 58-year-old widow and I have been paying on a 30-year mortgage for 28 years, so I am almost there. I think I owe about $8,000. I am contracted to a job that doesn't offer a pension, but I do have investments (which I think of as retirement money). All three of my daughters moved to Seattle and I want to move there this summer. Right now, I have a little cape cod, which hopefully I can sell for $200,000+. However, my daughters live in the Ballard neighborhood, where a house even a little smaller than mine would cost nearly $400,000. They have condos. I wouldn't mind a townhouse if I get a patch of land to garden.
I will be getting a job when I move, but should I just rent at this point? Should I leave the investment money alone? Should I for sure hire a real estate agent or try to sell on my own? Should I pay off my current mortgage now? All these decisions are driving me crazy. Laura, Ann Arbor, MI
Answer: You do have a lot to think about. I think it's wonderful you're moving closer to your daughters. I have a couple of suggestions for you to think about. Hopefully, my persepctive will help you decide what's right for you.
I would leave the retirement savings alone. I would stash the money you get from selling your home in a safe parking place for money, such as in FDIC-backed accounts. You'll want to preserve the value of the principal while you figure out what to do.
I would rent for now. I don't think renting means throwing money away. For one thing, there is a huge difference between looking for a home from long distance and during periodic visits and deciding where to live after you've spent time in a neighborhood. You may find that Ballard is the right place for you, but maybe off in one corner. It could be that a nearby community better fits your lifestyle and finances.
For another, once you've moved into the neighborhood, I would research homes while you're there, learn more about the differences between the condo market and single-family homes, visit open houses, and so on. I do believe the housing market will bottom out sometime in 2012 (although I thought that in 2011). The economy has upward momentum, although downside risks remain, such as the prospect of the European debt crisis spiraling out of control. But even if I'm right, prices won't zoom on you.
Perhaps most important, renting would give you time to make sure the job works out for you. And you could end up deciding that renting is financially preferable to buying in the Seattle area for the lifestyle you want.
A garden is nice. But do you have to own it? For example, I would check out the P-Patch Community Gardening Program in Seattle. There are 75 P-Patch community gardens throughout the city, equaling some 23 acres. You may decide that participating in a community garden gives you the green you need -- or not.
What else? Do you sell your home on your own or through an agent? Well, it partly depends on how much time you have to devote to selling. Fact is, some homes practically sell themselves even in tough times. You can do a lot more on your own these days compared to even a few years ago.
Nevertheless, sale by owner isn't always practical. Even though I was curious to go through the experience, I never did a sale by owner because of the time commitment, from showing the house to the paperwork. If that's the case for you -- it is for most people -- you'll want to focus on negotiating a good deal with a professional for yourself. The standard 6 percent commission is no longer in most markets. It should be history. Period. There are a lot of hungry real estate professionals out there looking for business and they are offering a variety of services. They're often willing to negotiate on fees and total costs -- the bottom line number that matters to you.
In sum, if it were me, I would move, rent, save my money and take my time researching any decision about shelter until I felt confident about my choices, my job and my finances.