“You’ve got to know when to hold’em…know when to fold’em…,” by Kenny Rogers.
Over the years, Helen and Richard made money buying and selling homes. After 15 years of living in their existing and 5th residence on North Crest Ave., they were informed of a listing that had just hit the market in Ferndale Estates. This was an upscale neighbourhood they had wanted to live in for some time. It was simply a matter of waiting for the right opportunity and this was it. After the owner of Ferndale Estates passed away, the property sat empty for over a year and now showed signs of wear due to neglect. At the price quick action was needed.
They also own an Ocean-Front Condo in Florida, however, and this complicated things a bit. They purchased it in 2007 for $385,000 in anticipation of retirement. A couple of years ago, the mortgage they assumed on the condo had become due and payable and because of the low appraisal, the lender would not remortgage. So they borrowed against their residence on North Crest and cashed in some investment certificates to pay out the mortgage. Until 2013, when they finally both retired, they used the condo sporadically and, when possible, managed to rent it for 2 to 3 months per year. By 2014 they were both retired and lived in the Florida condo through the winter months.
Their bank agreed to lend them the money to purchase the home in upscale Ferndale Estates. Needing to sell their existing residence on North Crest, they listed for $415,000. They firmly believed they could sell it for about as much as their new purchase at $395,000. To see which property would sell first and free up some of the costs of carrying 3 homes, the condo got listed as well. The real estate salesperson showed them that only two condos had recently sold in their complex: one for $250,000 and the other for $280,000. Regardless, they listed for $389,000. They wanted to get most of their money back; otherwise they would keep the condo.
They had the income to carry the homes. As an educator Richard had a good retirement income. As a successful business woman, Helen too had substantial retirement savings. Regardless, they were now on a fixed income, and the costs of carrying 3 properties approached $5,000 monthly, not to mention the interest they no longer received on the savings they cashed out.
Over the months they continued to live in the North Crest home, as they didn’t want to move and have an empty home to show prospective buyers. In the meantime they moved boxes over to the new home, repainted rooms, replaced flooring and generally restored the home back to life and to their liking.
Eight months, a couple of price drops later and close to $40,000 in totalcarrying costs, their North Crest home finally sold for $350,000. They even had to throw in the riding lawnmower and all the appliances, not to mention the baby grand piano.
Take a Lesson from The Gambler: “Know when to walk away…know when to run.” If you purchase before selling, minimize the gamble of protracted carrying costs and list your home to sell.