In Arpil or May our daughter found a TownHouse she liked very much and put in an above asking price offer. Seller accepted offer, but a few days later Realtor called and said somebody else made a better offer on TownHouse #1. Daughter declined to outbid the other buyer and looked for another Townhouse. She found one, made an offer, and this one was accepted, this now being Townhouse #2. Things were going along quite well, mortgage had been preapproved etc. A little while later the deal of the outbidding buyer for Townhouse #1 fell thru because of home inspection/seller's concession issues.
Daughter rebids ( $6,000.00 less than originally) on Townhouse #1. Bid is accepted again, and Townhouse #1 goes to contract.
It now comes about that she now owns BOTH Townhouses, lives in #1 and cannot afford the extra $2,500 - 3,000 a month principal, interest, PMI, taxes, insurance etc that #2 is costing her. When she closed on #2 she put it on the market again on the same day. But no nibbles. Here is what I think will happen: Even though I do not hope this for her, I think she will eventually sell # 2 at a loss. I do not know the exact numbers but it is something like this: Purchase price 330,000, selling price 300,000. Down payment 33,000, brokers commission 6%, carrying cost for 6 months 15,000, closing costs 5,000.
Assuming these numbers are in the right ballpark, it looks like this little adventure costs her about $ 60,000 or so, hopefully a lot less! Can she offset her regular earned income (around $ 80,000 p. a.) in the year of the sale of #2? @ 3,000 per year? or all at once? No other capital gains or losses expected in 2005 or 2006.
Thanks,
MC1