The real estate bubble has popped everywhere, with only a few places now starting to come back to modest growth.

between folks selling paid off houses and the foreclosures the market is pretty messed up.

One of the changes to try an prevent a repeat has included 'arms length' appraisals.
Banks do not have any say in the individual doing the appraisal, but must hire an intermediary who then assigns an appraiser.

Unless you see the market in your area recovering, taking a loss may be the only option if you must move.

truffles, I think your assessment is correct. You are fortunate to have a buyer, and not to lose an even greater amount. You didn't say when you bought the property, but if it was in the last 10 years you are likely to see a loss. If it was me, I wouldn't gamble that the market will recover quickly and/or that an appraisal 6 months on will come out that much better.

We bought this house about 6 years ago when we were newly married. Two dogs and two kids later, this house is starting to feel very cramped! It is a great starter house, but I think it is time for us to move on.

I am like you, I would want to be DONE with it all. Have you talked to your DH about the potential upside of selling now, even at the reduced price?

Here are some things to consider using as points if you want to sway him:
1) if interest rates rise, it puts houses further out of reach for people because their payments rise. This can depress housing prices, and rates are crazy low right now. They probably won't increase soon, but they have to increase eventually.

2) how does your monthly budget look in the rental as opposed to the house? Will you save a couple hundred bucks a month on lower cost or lower utility bills?

3) if you take it off the market and relist in the Spring will you feel like all that prep work is looming in your future again? Every time you scuff a wall or scratch/stain the floor will you think, "Crap! Another thing we better fix before March when we list the house again!"

For me, the sense of relief that a difficult task is over is worth a lot, so I'd be inclined to go forward with this deal. How much of a seller assist are you looking at?

EngineerChic:
We have weighed the pros and cons of some of the things you have mentioned. This is an older house and if we wait, there will probably be a lot more things we will need to do in order to sell it. Even now, I get agitated if the children bump into the walls or slam doors!

Our rent and renter's insurance will be about $300 less than our current payment/taxes/insurance. Utilities will be about the same since we will be required to pay them in the rental, but the house is smaller so there may be some savings there.

I think we could recoup the money that we have to use to get out of this house in a timely manner as long as I stick to the savings plan that I came up with. DH is also trying to sign up for overtime at his job (which comes and goes in spurts) so we can put money back into our savings account.

EngineerChic:
I missed your other question. We were going to pay up to 6% which on the original offer would have been about $5,800. Our realtor contacted the LO at their bank and their closing costs now look to be about $3,500 based on the new price. Even though she wasn't supposed to, I guess the LO told our realtor what they have in savings and I guess they have about half that. DH doesn't want to give them any seller's assist. I'm willing to maybe give something. So, it looks like we would have roughly $1,700 to haggle over.

I would seriously move on. After 6 months you have a strong buyer. I am building a house right now, but before that I was looking to buy. When I saw a property delisted then relisted at a higher or lower price FSBO I stayed away. I just figured the buyers were hard to deal with and their realtor dropped them or there was a serious defect that cause the agent to walk away. You can see the pricing history on any property.

If you move to rental and penny pinch you could make that $1700 up in no time. And to be honest I think that is a minuscule amount of money to lose a buyer over in this market. You may regret not taking it. Also interest rates are so low right now. If you are looking to build you want to try to lock in right now.

We actually have to kick in a lot more than the $1700 based on what we still owe. That is just their closing portion. The buyers either need to come up with that or we have to assist them with it, but yeah, I would rather just give it to them than lose this whole thing. I'm hoping they can come up with it though.

If it was me I would take the loss and move on. (In fact we did do that last year, selling our house for 10% less than we paid for it about 5 years earlier...we have no regrets).

" So, it looks like we would have roughly $1,700 to haggle over. "

Unless that amount is a make-or-break to your budget, I'd just push this through and take the hit.

Frankly, if you get through as a sale of 1 house and the construction of another and this $1,700 bump is the biggest problem, you'll be doing better than 99% of people who try to build a house.

Take it and get on with your life.
I would do whatever I needed to do in order to not have to deal with it as an ongoing issue for another year.
That would be treading water IMO and it is worth something, at least to me, to be able to move on.

The closing costs were incorrectly calculated and we may have to kick in around $3200 to make this happen. Just today a house in the "good" part of town got listed very low so I don't see the market here getting any better any time soon. DH and I are going to find the money somewhere and finish this.

I think you are making a very wise decision. As hard as it is, it will be better in the long run.

Thanks! I feel like this really is the best choice.

I think it's very wise, too. You're better off this way.