You've had PCS orders for several months and put your house on the market, but it hasn't sold. This is not a new problem, but more military families face this very stressful situation in today's soft housing market. I have been there more than once during my career. While there is no definitive answer to this dilemma, we will offer some strategies for this issue.
Getting past the frustration of not selling your home is the first step. Once you clearly state and accept the problem for what it is, you will be free to develop strategies and select the best option for your family. Notice, I didn't say a "good option"... all of them are likely to come with difficulties.
Ok, let's look at the options. You may generate more but here are some starters. After each one, list the pros and cons of each. These will vary with personal circumstances:
- Drop your price. This means you may need to come to the settlement with money. Make sure you understand the total of settlement costs and Realtor fees and whether you have the cash to cover it. You may discuss a reduced commission rate with your listing agent to mitigate the financial bleeding. Now there is a real reluctance to sell a house for less than you paid and a greater reluctance to bring money to settlement as the seller. I get that. But you must consider every month's payment that the house sits vacant as part of the cost. If this becomes your best option ... just do it ... get on with it, and most importantly, don't blame yourself.
- Consider renting your home out. Do your homework on the rental market. Determine the appropriate amount of rent to charge tenants and factor into your cash flow. It could be that you're in a cash positive situation, and if so, great. If not, make sure you consider the depreciation and other write offs applicable to rentals by consulting a tax professional. Run a credit check and verify income for prospective renters. Call their previous landlord if possible to check their payment history. Do your due diligence for renters...making a mistake here can cost a lot of money. You can list your property on www.moresam.net (FREE), www.militarybyowner.com (nominal fee), or Craigslist (free).
- Leave your family behind, but just until the house sells. You or your spouse can do the geo-bachelor/bachelorette thing. I personally have done this and really dislike the concept of separating families, but it is an option. If you choose to go it alone, you should consider the bigger cost of the strain of your family living apart.
- Leave the service. If you're retirement eligible and have adequate employment opportunities in your current city, this may be a very plausible alternative. Is the next promotion really worth the financial cost or strain on your family? Even if you aren't retirement eligible, you must consider this option, especially if you live in an area where employment opportunities abound. By the way, as a veteran you have skills that are very desirable to the private sector ... and you probably have a veteran?s preference in federal service. Go to www.usajobs.com or www.military.com, to check out federal service opportunities in your area.
- Default on your payments. I left this for last because I firmly believe this is almost always a very bad alternative. As a U.S military member you probably have a clearance ... this can jeopardize that clearance. As one of America's finest, you undoubtedly have your personal pride ... don't give that up. There is a huge cost to defaults/bankruptcies that can follow you for years, to include a possible IRS bill for the forgiven debt at the end of the year.
None of the options are pleasant to be sure. I was in this situation no less than three times during my 25 years of service and can totally empathize with servicemembers struggling with selling property.
The above options merely treat the symptoms of a systematic problem with the military families PCS benefits -- or lack thereof. If you have read our articles in the past, you know that VR SAM strongly supports parity for servicemembers with other federal employees. We believe that you, the "citizen/defender on the pointy end of the spear," should enjoy home ownership benefits similar to your Fellow Federal Employees. Career military personnel should have a"?guaranteed buyout program" and reimbursement for settlement costs as do some other federal employees.
Planning for 2014? Then you will want to know that the contribution limits for Thrift Savings Plan (TSP) and Individual Retirement Arrangement (IRA) account has not changed from the 2013 limits. Thrift Savings Plan The regular 2014 contribution limit for TSP will remain $17,500. That’s great for those of us who have automatic deductions set [...]