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Dear MarketWatch,
My husband is 62, and I am 61. He is on medical disability after several heart attacks, a stroke and triple bypass. He receives long-term disability monthly of $3,300 that will expire when he turns 65 and Social Security disability of $2,300.
I am still employed full-time making $50,000 a year. We moved to Wichita, Kansas, in late 2017 to take a better-paying position for me after my company was bought out. We started by renting a house here as we were not sure yet about where to live in our new city. We really like the area we are renting in and now want to stay in this part of the city.
We are in a pickle. The homeowners’ association passed a no-rental-home policy, to be effective January 2022. That is also when our lease is up. Our landlord wants to sell his house, and he wants us to buy it. We would love to stay, as we love the area and definitely do NOT want to move again, but I am concerned about buying a house. Here are my concerns:
- Our age
- My husband’s health and whether I would be able to afford the house without his income.
- Our ability to pay for the house after his LTD is discontinued.
- Do we want to stay in Wichita, Kansas?
- After living in this house for 3+ years, we know what needs to be fixed in the house, and can we afford to do that?
Please advise what you think our options are. Is there something we are missing in all of this? Thank you for your guidance!
Sincerely,
Happy in Wichita
‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Jacob Passy at TheBigMove@marketwatch.com.
Dear Happy,
What a stressful situation this must be for you and your husband. Deciding whether to buy a home or not is already a momentous choice, and I can only imagine how much more difficult it is given the time crunch involved. The good news is that whatever decision you do end up making, you’ve got advanced notice and can prepare, mentally and financially.
You’re right to be approaching this offer cautiously and skeptically. It seems you have two distinct concerns: Should you buy a home? And if so, should you buy this home?
When it comes to the latter question: Your landlord likely needs you more than you need him. If you agreed to buy from him, he wouldn’t need to worry about hiring an agent to list the home. He could save money on the repairs he’d likely need to do to get it in tip-top shape for selling. And because there would be no gap in occupancy, he wouldn’t facing losing rental income from the home sitting vacant.
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‘Your landlord likely needs you more than you need him.’
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There could be benefits to you from buying the home you’re renting — though some depend on how motivated your landlord is. You have the inside scoop on this home. You know how good the shower’s water pressure is and where there’s a creaky floorboard. You’ve got a good rapport with the neighbors on the block. These are all the little details that a home buyer typically doesn’t have at their disposal when they make an offer.
Plus, when a renter buys directly from the landlord, there may be other opportunities to save money, and not just by eliminating moving costs. You already have a set relationship with him, which could make negotiating easier. If he’s really interested in getting out quickly, he may be motivated to reduce the price if you ask or split some of the costs typically associated with a home purchase.
Landlords could have the upper hand in a sale
Of course, there can be disadvantages to buying the home you’re renting. You will be limiting yourself. Sure, you like your neighborhood, but what’s to say there isn’t a better home for you out there?
Your landlord could also pressure you to come to an agreement without the advice of a real-estate agent or attorney. I would recommend hiring one anyway — a Realtor’s fee likely would come out of the money your landlord would earn from selling the home, so it might reduce what he makes out of the deal. Having an agent and an attorney represent you will mean that there are professionals protecting your interests and ensuring you get the best possible deal.
Similarly, your landlord might ask you to forego the home inspection. While you have familiarity with the home and its potential flaws, I take it neither you nor your husband are trained contractors. A home inspector might find issues that you wouldn’t notice.
Approach buying a home before retirement with caution
As for your other, over-arching question: You’ll need to do some soul-searching and number-crunching to determine if buying a home is right for you. You and your husband are fast approaching retirement. You say you like your neighborhood and don’t want to move, but also question whether you want to stay in Wichita. If you think you’ll want to move elsewhere upon retirement, buying a home likely wouldn’t make financial sense.
Let’s say you’re of the mind that you’re going to stay in Wichita. From a financial perspective, you’re only a few years away from living on a fixed income. The cost of your monthly mortgage payments would be set if you buy, but other costs will vary such as property taxes insurance and maintenance.
As a starting point, look at what you’re paying in rent — is it manageable? Then get an estimate of what your monthly mortgage payment would.
If you’re already worried about the cost of your current rent, and the mortgage payment is greater, you should hold off on buying. Moving is always a pain, but it might be a necessarily evil depending on your finances.
