Have you checked your hidden holding costs?
Selling a house with the help of a real estate agent and listings method is the usual go-to approach for most home sellers. However, it isn’t necessarily the best method for sale for everyone. Besides the staging, marketing, and commission costs, certain costs slowly add up as owners wait for a deal to go through. Identifying these costs can help home sellers assess if sale via listings is a lucrative option for them in the long run. 911Houses.com dives into some of these holding costs that can ambush an owner.
What are holding costs?
In real estate, ‘holding costs’ entails all expenses incurred by an owner of an investment property of any type pending receipt of rental income from a tenant or the proceeds on the sale of the property to another party.
Home sellers must be aware of these costs so they can make better decisions regarding their home sales.
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Property price drop
The real estate market can be unpredictable. Home sellers may have posted a listing for a certain price, to begin with. But as time progresses, this price may not remain aligned with the market. A house that remains on the market for too long may force an agent to lower the price as a last resort. But while this may seem wise at that moment, the expenses made to hold the property may exceed the profits expected at the new sale price.
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Utility bills
When potential buyers come to view a property, they will always inspect the utilities such as heating and lighting. Therefore, home sellers with vacant houses must retain their utility services. The temptation to save money by disconnecting the services must be overlooked as the cost of losing a potential buyer will be higher.
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Property taxes
Besides the size, the location such as the township, city, or county determines the property taxes. The property owner is obligated to pay the tax to the government to avoid a penalty. This holding cost will continue until the property is legally signed over to a new owner. Home sellers must assess if they can afford to pay property taxes for vacant property and if their final sale price will be worth this holding cost.
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Maintenance and repair costs
Before the staging event, an owner may decide to invest in the repairs to receive a good offer. However, with or without the staging events, a home requires maintenance and may sometimes need an unexpected repair. From light fixtures, lawn maintenance, a/c filters, and other unexpected repairs like termites and mold, home sellers must be prepared to spend. They must also calculate if the expected sale price will compensate for these expenses. Is it worth it?
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Insurance coverage
Insurance is an expected expense. Often it is included in a homeowner’s mortgage payments. However, a homeowner’s insurance policy doesn’t cover everything. Homes in flood-prone areas or any water damage coverage requires owners to buy extra insurance. This can be expensive, especially if the home is lying vacant waiting for a buyer.
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Miscellaneous costs
Other costs such as HOA fees for homes in private communities and property management fees (to manage the home sale and maintain the house in an owner’s absence) can prove to be big expenses.
When a home seller can calculate these holding costs and compare them with the expected sale price, profits and losses are easy to surmise. In case of high holding costs and potential losses, a home seller may want to opt for a cash sale instead. This not only ensures a fair sale price but also takes away all the associated hassles of selling a property via listings.
Why 911Houses.com?
911Houses.com is a reputable real estate investment company that buys houses for cash in Tampa, FL, and the surrounding areas. Unlike regular real estate companies, with 911Houses.com, property owners don’t have to list their homes, pay for expensive repairs, or worry about a prospective buyer backing out due to lack of financing.
911Houses buys homes directly from owners and closes the deal within 7 days. Ready to get started with 911Houses to sell home fast for cash?
Visit www.911houses.com/ or call (813) 345-2660 for more information.
