Thursday

Holding Costs for Dummies- A slice of the Pie

It's math, but don't be scared! Holding costs = whatever it costs you to own your home for a month. (mortgage+taxes+insurance+utilities+lawn care+misc= holding cost) When sellers get ready to put a property on the market and begin a search or have already found their next dream home and are rushing to get the house listed-holding costs should immediately become part of the conversation. Ask your Realtor about how this can affect your transition into that Abfab new home. Here's why: Say Max and Caroline own HousetooSmall in the 145k range and holding costs for this house run around $1600 monthly. Assuming it falls into the normal range for days on market, roughly 100-140 days from list to sale, the holding costs could be $6400.00.
Circumstances surrounding the sale of Max and Caroline's house factor into whether they'll be able to hold onto an accepted offer of the Abfab house. If a bridge loan works for them great, but please exercise caution when considering this avenue. Keeping an eye on the prize, let's try an alternative point of view.

This $6400 expense is inevitable unless....at this point as a Realtor, I will begin a conversation about holding costs and how it can work for you in executing a quicker sale of your current property. Lowering the price by $3200 in this price range can increase the odds for a sale. Sellers initially see that as a cut in the bottom line, however-it should be seen as two months less in holding costs out of pocket-that's a good thing. Abfab house is worth $225,000, so the minute you close on Abfab, the equity clock starts ticking to the tune of roughly $562.00 a month. Multiply the equity x2= $1124.00. By smartly reducing the price of HousetooSmall, Max and Caroline accelerated the sale and beat the market. $3200-1124.00=$2076. What I am getting at is- lowering the price to trigger a quick sale is not as bad as you think. When time is of the essence, and it usually is-holding costs are a hidden slice of the pie to be considered. Did it put a dent in their pocketbook, not so much, but it kept the goal of getting into their new home priority one. You can imagine a whole bunch of factors that would lengthen the time of list to sale. How about relocation or challenges in the condition of HousetooSmall? The current list to sale climate in some price ranges are out 12-24 months. So be smart, know every aspect of the sale of your property. Class over- Now get out there and have a Great Day!