# Should my parents sell?



## DayTek (Sep 26, 2013)

I'd like some advice on a situation with my parents:

My parents currently own my childhood home. About their home…

2-Storey, 1000-square feet, 3 Bedrooms, 1 bath (1.5 bath when purchased - Full bath is on the main floor and 1/2 bath was a water closet in master bedroom, which was removed after several leaks). Purchased in 1989 for $100,000. Age approaching 100 years. Basement not able to be finished. Main floor laundry. Laminate flooring (which is starting to show it's age) and carpeting. Large corner lot close to schools, parks and a grocery store. Detached shed. 3 car driveway. Newer roof and 10-year old furnace. 10-year old A/C unit. New windows installed in mid-90's. 

Mortgage owing is around $140,000 with 15-year amortization left. House last appraised 1.5 years ago at $180,000. Average home price in our city is around $240,000. As it stands now, the house might be appealing for someone who wants A) a cheap mortgage B) to gut the place (for the most part) and modernize it, or C) tear it down and take advantage of building a new house on the lot.

My parents are in their mid-50's and have made efforts to update and maintain this house. As you can see by the lean still on it, they have not done this in the best financial way. On top of the lean, they have a car loan and several credit card debts (together totaling probably $20,000-$30,000). They have always been spendthrifts…They don't budget, they _consolidate_. My Dad has done a lot of work himself to this place and, although I am proud of his efforts, he is _not_ the best handyman. He hates hiring professionals and thinks he can do everything himself. Most "upgrades" that have been done have been cheap, do-it-yourself projects. My Mom wants to downsize badly, but my Dad controls the finances. They are in a tough spot right now because they need to consolidate their debts, but the bank will not look at them this time because my Mom is still only working in a Temp position after loosing her job 2 years ago (she's trying to get hired on full-time). He keeps trying to sway my Mom into how great the house is, but she wants to move badly - She is starting to struggle doing the stairs, doesn't like that it costs so much to heat and cool, and is tired of the insect problem. He is obsessed right now with increasing the appraisal value of the house to $190,000. He wants to bulk up more equity so that the bank will give him a chance to consolidate at a cheaper interest rate. He now wants to throw a few thousand dollars into the house to update the kitchen counter, put in new flooring and new doors. He recently talked about putting another bathroom in again upstairs for appeal as well, even after multiple leaks in the past. He plans to do this within the next year.

My Dad just did new shingles on the roof this month above the kitchen and I told him that after it is done to not sink anymore money into the house. I asked if they sold it if that would cover all their debts and he said it would. I told him that given how inflated prices are now and with a possible correction looming, they should sell, pay off their debts and rent for a while (or into retirement, as they were thinking that as an option if they couldn't buy again after downsizing). My Dad is not seeing the house aiding to his retirement fund, he sees it as an opportunity to cash in on the equity to continue a spending and consolidating lifestyle. This is the same guy who, when I encouraged him to start an emergency fund replied, "I have one - My RRSPs". Not surprising as they've used those in the past to dig themselves out. 

What are your opinions? My Dad wants to talk about this stuff with me, but always ends up getting angry when I disagree with him. Am I wrong in thinking that they should sell now and not put any more money into the house? I loved growing up in that house as a kid...Lots of memories. But it's been exhausting as an adult to see it as a constant money pit for my parents. And I know it's my parents life, my parents finances and their decisions, not mine. But it's my Mom I'm feeling empathetic for because she working a crappy job right now to pay for a house she doesn't want to live in and she can't get through to him  Opinions appreciated.


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## james4beach (Nov 15, 2012)

You have to weigh the monetary cost/benefit versus the non dollar "cost" of having parents that are very upset with you or blame you for wrecking their finances.

As the years go by, I increasingly think it's a bad idea to tell friends or family what to do with their money, even when they're doing clearly stupid or crazy things

Basically, it's not fun to be blamed and it's especially not fun if something thinks you've ruined their retirement. I continue to tell people what I would do with my own money, but I suggest presenting your calculations and then letting them make their own decisions


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## Eclectic12 (Oct 20, 2010)

... Good point.




james4beach said:


> As the years go by, I increasingly think it's a bad idea to tell friends or family what to do with their money, even when they're doing clearly stupid or crazy things ...


For my family, it depends on who and whether I can diplomatically suggest it.

Some I say nothing as my suggestions in the past have been dismissed. Others I suggest but stop there.


Cheers


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## BC Eddie (Feb 2, 2014)

James4 makes good points.

re the enhancing/selling question. Not sure what the market is like where the house is but we owned a home in East York (Toronto) that we bought in 1989 as well, at the top of the market, and paid the full asking price of $259,000. It too was 1000 sq ft, corner lot, bungalow. In 2007 we decided to sell. As the house had been rented out from 1999 to 2007 we decided to put a good chunk of money into it (roof, new bathroom, full paint, etc. etc.) and we sold in a hot market for $485,000. One year later the new owners tore off the roof, gutted the new bathroom, put a second story on the house and basically tossed out aall the work we had just put into the house. 

My point? your folks should make sure any reno they do actually improves the sale-ability of the house. An inexpensive house on a big corner lot close to schools is attractive to young family buyers who want to expand. Putting money in it now may be a waste.


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## dubmac (Jan 9, 2011)

IMO the parents need a financial plan more than they need advice on selling the home. The house is just one piece of a larger puzzle.
Figuring out what their 5, 10, 20 year plan is may be more important, and a more suitable place to start a discussion.
Whether, and when, to sell the house is a matter that belongs within the bigger finanical plan.
Perhaps the best place to start is for mum and dad to collect all of the financial data (assets, liabilities etc), and have them reviewed by a fee-only planner. With the planner offering the advice, you would not be advising your parents on any matters, but they would be equipped with good information upon which to make any future decision(s).


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## yyz (Aug 11, 2013)

Being in this situation myself right now if there is one thing I suggest against it's doing a reverse mortgage on the house.
Now my parents are older (early 80's) but if you want to do a reverse mortgage then you should be prepared to live out your life in the house.After a few years the equity erodes and the choices get more limited in what you can do/afford.


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## Just a Guy (Mar 27, 2012)

If they sell, and continue their lifestyle, they could be in some serious trouble. From the looks of things, the only thing bailing them out is the fact that real estate is making them more money than they spend on paper. I stress the words "on paper". If housing corrects, or they choose to rent where they don't build equity, they could be in big trouble.


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## MrMatt (Dec 21, 2011)

It's a lifestyle question.
If they want to be in that area and homeowners, they should stay.

If they're willing to go to an apartment/condo, they should sell.

Financially, they've got to get their budget shorted out, which won't happen unless they change their habits. House or not, their decisions are probably behind the financial issues they have. Also having kids is expensive.


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## Daniel A. (Mar 20, 2011)

+ 1 



dubmac said:


> IMO the parents need a financial plan more than they need advice on selling the home. The house is just one piece of a larger puzzle.
> Figuring out what their 5, 10, 20 year plan is may be more important, and a more suitable place to start a discussion.
> Whether, and when, to sell the house is a matter that belongs within the bigger finanical plan.
> Perhaps the best place to start is for mum and dad to collect all of the financial data (assets, liabilities etc), and have them reviewed by a fee-only planner. With the planner offering the advice, you would not be advising your parents on any matters, but they would be equipped with good information upon which to make any future decision(s).


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## OhGreatGuru (May 24, 2009)

_My Dad wants to talk about this stuff with me, but always ends up getting angry when I disagree with him._

It's time for some tough love. Tell him "Dad, whenever you ask my opinion on what to do with the house (or for financial advice if applicable) you get angry because you don't like what I have to say. So the only advice I have is to ask someone you're willing to listen to."


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## cainvest (May 1, 2013)

james4beach said:


> As the years go by, I increasingly think it's a bad idea to tell friends or family what to do with their money, even when they're doing clearly stupid or crazy things


If someone I know asks my opinion, I generally give it to them and if they don't like the outcome .. well, it was "their choice" not mine.


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## DayTek (Sep 26, 2013)

Thanks for the responses. 

I believe my Dad is continuing with his plan to "upgrade" the house; He put new doors on the bedrooms and painted the garage a few weeks ago. 
I've decided that I won't talk to him about it anymore. He knows my opinion. The financial advice from banks he's sought out in the past has told him to either declare bankruptcy or build more equity to consolidate. He obviously is choosing the latter.

It's been peaceful to not discuss the topic. I love my Dad a lot and I don't like arguing with him. 

I have learned a lot from my parents about what _not_ to do with money. Granted, they taught me owning your own home is very rewarding (which it certainly has been for myself...I bought a new house when I was 20) and to always pay your bills on time. They faulted though in showing me good financial stewardship - They've always practiced instant gratification living: Buy what you want, when you want it, on credit. And worry about the repercussions later. If I had not gotten into banking at age 19 and actually saw the bank accounts of people who lived this way, I may have carried this mentality into adulthood.

All I can do now is hope that they get the appraisal they are looking for so all of the money and work they will be putting into the place will be worth it.


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## Just a Guy (Mar 27, 2012)

You can lead a horse to water...

Don't feel too bad, unfortunately they aren't unique.

How many people come to this forum even, looking for advice, only to think that somehow reality doesn't apply to them...

You've stated your opinion, now you can only hope you don't get to the point where you can say "I told you so", because at that point, you really won't want to.

On second thought, maybe they've got a good plan...if they get to the end without having to pay it back, maybe they'll have won.


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## Rusty O'Toole (Feb 1, 2012)

1) they are happy 2) they own their own home and have a roof over their head 3) they are not bankrupt yet.

I don't know how you are going to improve on that. O ya, you know a thousand ways but will they do them? They will end up as bad off or worst.

Leave them alone. The only thing that bothers me is that Mom has trouble with the stairs. It may make sense for them to move into an apartment or seniors facility eventually. But why not let them be happy for a while. It's not like they ever took your advice before. You can't help them with advice but you can visit them and make them happy other ways.


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## Taraz (Nov 24, 2013)

Assuming they have equity, do you think they'll just blow the profits when they sell the house? They may be better off keeping it if they can't (or are unwilling to) manage money.


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