THE HIDDEN COSTS OF CARRYING A HOME
January 10, 2017 | Richard Sites
Understanding Hidden Costs
Hidden costs in a home are often misunderstood but when we take a minute to examine their effect on your net amount it can be quite surprising. Here are my thoughts on maximizing your net proceeds and getting the “big check”.
The Hidden Cost in a Business
There is a hidden cost in everything. Years ago, while visiting a very successful landscaper, as we stood watching his crew prepare for the day I made a comment about the hidden cost involved in the operation I was watching.
And although I considered him to be extremely shrewd, he had never considered the profit he was losing by doing things the way he was currently and changed methods that day.
Years later, I ran into him and he said he brought this up again and said he never forgot how insightful that comment was to him.
The Hidden Cost of Driving
Another perfect example is the hidden cost of driving a car. You may take the car out for normal driving and return to the garage with no apparent changes. But to the IRS, there have been changes.
The IRS says it costs $53.5 cents per driven mile in hidden costs. It is less if driven for medical or moving related driving, don’t ask me why, that’s a question for government bureaucrats.
In property management, there is always a sinking fund to cover upcoming repairs.
If you don’t take these costs into account on a home, you are seriously underestimating the financial situation.
Even if you don’t have a mortgage payment, there is the hidden opportunity cost of the equity in your home. This figure gets hidden when a seller says, “We don’t have to move”.
I was talking to a frustrated seller last week who made this comment. Well, his house is worth somewhere near a million dollars and has been on the market without selling for nearly 2 years. Do you think he has lost the hidden opportunity cost? Of course.
And with the prices of homes today, we are talking about a lot of money. The median price of a home sold in the Jupiter area last year, exclusive of new homes, was $340,000 and a large portion of our current real estate inventory is priced over $1 million.
Sellers like to pretend that this money is not serious, yet these same sellers go over the restaurant bill before paying and count their change at the grocery store. I once had a friend who at one time lived on Park Avenue and he was furious when the local bagel shop charged him 60 cents for butter on his bagel. So the money is important.
If you want to calculate your true costs of carrying a home that isn’t selling, you can download my worksheet below.
If you would like to have a no hassle conversation about getting your house sold quickly and smoothly, you can contact me directly at 561.762.4073 or use the form below. Remember, Hope is not an effective selling solution.