I wish I could begin this post by telling you that my over-confidence when getting the house ready for sale was spot on.
But, I just can’t do it.
In fact, I now have to do the opposite. I’ve got to tell you the truth.
I was a naïve, overly-optimistic girl.
What I thought would be a walk in the park turned out to be far from it. And now I sit here not calculating how much money we made or how we broke even, but calculating how much we lost.
#IHateBeingWrong
3 Months, 20 Showings, Tons of Competition, One Offer
I’m not going to lie. I thought we would sell Jamie’s old house without a problem.
It’s a nice house, in a super established neighborhood and it’s on a large corner lot. It has good bones, a good roof, good heating and cooling. Other than the super ugly half bathroom and the outdated kitchen cabinets and appliances, it’s a solid home.
There had been a few other homes on our street go up for sale.
One right next door, which was listed at $140,000. (It was only listed for a few days when the owner changed her mind about selling.) There was also a house catty-corner from us listed at $160,000. Our house listed at $99,900 seemed like one hell of a deal.
Only the thing was, the houses that were priced that high………..they never sold. They just sit there with a for sale sign in their yards month after month.
And then a month or so into our house being listed another home, two houses up from us, went on the market for $93,000. Darn it!
Not only that, but there were SEVERAL more houses for sale on the next two streets over.
Why, oh why did everyone have to list their house for sale at the same time?
(I live in a small town. That is A LOT of houses for sale near each other.)
Buyers had their pickings.
In the three months that the house was listed we had around 20 showings. In this three months we also paid $1,500 in carrying costs, spent $1,000 replacing the carpet in the kitchen and half bath with vinyl after many complaints, and dropped the selling price by $5,000 to $94,900.
We also swallowed our pride and accepted our one and only offer for far less than we wanted, even after some back and forth negotiation.
Before we get to the actual numbers can I please talk about one of my biggest mistakes?
I Refused to Acknowledge Carrying Costs
Ignorance is not always bliss. (I wish it was.)
When we first put the house up for sale carrying costs weren’t even in my mind. My mind told me that we can afford to pay this extra house payment every month so we’ll wait out for the offer we wanted.
We wanted $90,000. That was the goal.
But do you know what happened each month? We lost $500 that we will NEVER see again.
That $500 per month went to mostly property tax, insurance, utilities, and mortgage interest. A very insignificant amount went to principal.
That $500 a month was money we’d never see again. Therefore every two months we lost $1,000 of potential profit. We had also spent $1,000 on new kitchen and bathroom floors which we’d never see again either.
Of course, this would’ve been a completely different story had we been living in the house – but we’re not. Paying $500 a month while living there isn’t so bad. It’s cheaper than rent and by living there it probably would’ve made sense to wait for a better offer. However, paying $500 per month while living in the new house doesn’t quite work out that way.
Here’s How it Worked Out
So, after 20 showings and no offers there came a day when we finally got one fairly low offer.
At this point the house was listed at $94,900 and had been listed for three months. The buyers offer was $80,000 cash, closing the following week, no contingencies.
We finally got them up to $84,000 cash, no contingencies, closing the following week.
We closed two Fridays ago.
We sold for $6,000 less than what we thought was a “good deal” and lost a bunch of money in the process. Quite frankly though, holding the house for longer seemed like a bit of a gamble.
For instance, had we held out for a year to get $90k we’d have spent at least $6,000 in carrying costs (probably more due to heating) and would be even farther in the hole.
Such is life.
The best-of-my-knowledge numbers:
- House Purchase Price (2006) – $86,500
- Carrying Costs (Approx.) – $1,500
- New Kitchen/Bathroom Floors – $1,000
- New Heat Pump – $4,000 (ish)
- Painter – $1,465
- Other Prep Costs – $179
- Completely Remodeled Bathroom – $4,500
- Realtor’s Fees/Closing Costs – $6,251
Total Costs/Home Improvements – $105,395
Buyer Purchase Price – $84,000
Amount of Money Lost – $21,395
There were other small cosmetic upgrades that I’m sure totaled a few thousand dollars. But those were for our/his enjoyment.
One could also argue that the bathroom remodel was for my enjoyment as well. While that bathroom absolutely needed gutted (it was bad…bad, bad) we could’ve done it for far less. The problem was, we didn’t plan on moving at that point and I picked out everything to my preferences. There were definitely some splurges. Had I been remodeling to sell there’s no way I would have spent that much money redoing a bathroom.
One more thing I left out was the closing costs when Jamie purchased the house. Honestly, I didn’t feel like digging those up. (Really, I just don’t know where those papers are.) With those you could conservatively add another couple grand to the amount we lost. After all, closing costs are a very real expense of buying a house.
Why Am I Sharing This?
Jamie wondered why in the world I’d want to share that we lost over $20,000 on a house? Isn’t that embarrassing?
Here’s why: the average person would look at two numbers. The purchase price and the sales price. They’d say we lost $2,500. But that is very creative accounting and doesn’t tell the whole story.
I’m willing to bet you are not average when it comes to money. You’re a personal finance nerd like me and you already know there’s a much bigger picture than the purchase price and the sales price.
(Plus I don’t like it when bloggers only share the good stuff. Nobody does well 100% of the time. It sucks, but it’s true.)
Another reason is that this house was not purchased with the intention of it being an investment property. It was purchased to live in. You know as well as I do that when you’re buying a home to live in you are not looking at it with the same eyes as you would to buy a house as investment. Nope, not at all.
Of course, that doesn’t mean you can’t make money selling a primary residence. It depends on the housing market in your area. In my area it’s obviously a buyer’s market.
I still very much love the idea of investing in real estate. However, there’s a HUGE difference between investing in a house and buying a house to live in.
I’m grateful that we are in a position where taking a loss on this house isn’t going to kill us. I mean, it sure doesn’t feel good but I am very grateful to no longer have to worry about this home. And as with everything in life I’m taking all kinds of valuable lessons with me.
I’m behind, Alexa! I’m sorry — is this the house from your last relationship? Last week I was commenting on your house in the woods that is amazing. I assume this is something different that you just want to get out of. Hopefully it’s worth the loss. :/ I appreciate you sharing the deets – it’s not all roses!
I love that you admitted this, because as you said we don’t all get it right 100% of the time. Even PF nerds like us make mistakes sometimes. Thanks for keepin’ it real! 🙂
Yes even PF Nerds like us. I had high hopes but unfortunately they just didn’t match reality!
Aww, your story brings back memories. sigh. You made excellent points. This is why I hate the TV real estate shows. They never seem to talk about these kinds of numbers.
The good news is that you got a great deal on your current place! You sold your place at a discount but you also bought at a discount. Those things kinda balance things out.
A question : If I sell my house at a $20k loss / discount but buy another house at a $40k discount , am I ahead or behind ?
LOL That’s a good question and I’m not quite sure! I do think we got a great price on this house but apparently it’s a buyer’s market in these parts.
I’m sorry for the loss (of income). I admire your transparency. There are some bloggers that only share the positives which eventually discourage other bloggers, like me, who think that I am doing something terribly wrong when I’m not as successful.
Thank you. Luckily the loss wasn’t all at once or I’m sure it would’ve hurt a lot more.
That sucks but I know that the weight off your shoulders is a big one. Also, the truth of it is that if you had even gotten your $90,000, you’d still have a loss, so one on hand you can look at it that a loss is a loss, and in reality, I don’t think you’d have been siting around feeling ecstatic even if your loss was ‘just’ $15k instead of the $21k. So I think for your peace of mind and shedding all the worries, the decision was an easy one.
Yeah, for sure. At first the low offer felt kind of offensive but we both got over that really fast. It was just way too big of a gamble having that many people look at it with only one offer in the three months. I am SO glad to have it sold. And you’re absolutely right – we would’ve lost money either way.
Yes, sorry for the loss of income. Thanks for sharing the bad and the ugly. I think that is why I like your blog so much. Question for you: What was your realtor experience like? Would you have considered doing this without one (do it yourself)?
I personally wouldn’t consider doing it without a realtor but that’s just because of my personality. I’m not a salesperson – at all! I don’t think it’s a bad idea to sell without a realtor depending on your personal strengths. (If it suits you, you could save a whole lot of money.) However, we did buy a house without a realtor and I can assure that’s something I will NEVER do again. We had a horrible experience.
Ugh we were recently in a similar position (I’m still trying to write the post on that – it’s so hard and makes me a tad angry haha). We sold our house recently and lost a lot of money. AHHH!
Yeah. I remember you saying it was a buyer’s market when you sold. It’s 100% a buyer’s market here too!
I keep seeing you mention Jamie but I can’t figure out who he is! Fill me in!
I got remarried earlier this year! https://singlemomsincome.com/im-not-single-mom-anymore/ This house we sold was his. The girls and I briefly moved in and then he and I bought a house together just a few months ago.
Ahhhh! CONGRATULATIONS!!! I don’t know how I missed that! I’ve been feeling lost when you have mentioned a Jamie lately…like where you are reading a novel and you missed something and you have to go back and read it. Except I couldn’t find it! Exciting mystery solved! Congrats again!
One of the most useful articles in the entire PF blogosphere.
It’s a pity you had to incur losses, but sharing your story was a great idea. We need such examples, since it will teach us to be more cautious. Selling a house is a HUGE deal and maybe in the future some of your readers will actually lose less money because they got such a great detailed process explanation from you.
Loved the article (not that you lost money), but, it’s a huge eyeopener.
Thanks for being so honest and sharing your experience. You are right, everyone talks about the good stuff but in reality bad things happen too. Sorry to hear about your loss of income. This is a great article that people can relate to and learn definitely learn from!
is true you lost money especially because you bought in 2006 (higher price moment ever) while now is lower than 2006, however is true there is difference between buy for investment and for live in however now you don’t need to per 500 per month for a house where you are going to live!!! thanks for sharing !
Thank you for your honesty. It can be hard losing money, esp. in the ballpark of $20K. However, not having the burden of this house hanging over you, should bring some relief. You’re right that if you continued to hang onto to the house by holding out for your asking price, you would’ve lost even more money on it. Unfortunately, that’s life.
Chalk it up to learning and living. 🙂
You are so right about people glossing over the little costs of things that can be substantial. I have a sister who does that. Her travel agent friend will take her on a trip real cheap. Only $80 for a cruise. Almost free, she says. I try to remind her, gas to airport, parking fees, overnight hotel, spending money, meals on excursion, cost of excursion. Sure its a great deal but all said and done, about $400-$500. I need to know ahead of time what the true cost of life is, even if its unpleasant. Thanks for the honest post. That’s why you’re my fav.
Valuable life lesson indeed! Now you know what to look for and what to avoid in future home purchases. As a first time home owner I certainly look at new details I would have never considered before.
Definitely a valuable life lesson!