For Sale – Part 1

ForSaleI used to think selling a house was a near impossible task, always seeing the same homes for sale month after month, sometimes for sale year after year. As it turns out it is not hard to sell a house at all. I have sold four houses in my lifetime and the longest it took to sell any of them was one week. It does take longer with all the paper work, I’m talking about from the time I put the house up for sale until the time I had a hand shake that ultimately resulted in a sale.

The first house I had purchased for 70K. This was my first home and like all my homes and new cars I paid cash. That was the great gift my parents gave me and I repeat it often, they taught me to never buy anything on credit. On my own playing with amortization calculators I came to the conclusion that a 30-year mortgage meant that you pay between double and triple the price of a house over that 30-year span.

I didn’t move out of my parents house when I was 18. I lived in the basement and worked, paid my way through college with cash — I commuted — and when the time came and I had the money and a girl I wanted to marry I bought a house by writing a check at closing.

MosesHey banking industry: BITE ME.

Hey religious fanatics who hate gay people and blow up abortion clinics: read Deuteronomy 23:19 which states in a current plain-english translation, “Do not charge your brother interest, whether on money or food or anything else that may earn interest.” Why don’t you focus on that cause for the common good and let people exercise their God-given free will?

I retired from General Motors at age 49. I hired in at age 19 and the deal was as a UAW member that I would be able to retire with a full pension after 30 years.

At age 49 I knew a guy named Shelly who sold me on the idea of retiring to Thailand. Wonderful people, low standard of living, you’ll love it. I need to write a whole series of articles about Thailand. Bottom line, my wife Cathy and I visited Shelly who retired to Thailand before I retired and while he exaggerates and cannot really manage his own money, enough about The Land of Smiles was true and we decided to take the plunge.

Selling that first house was sinfully easy. Along with the Thailand notion — people thought I was nuts — Cathy had been saying that the housing bubble was going to burst. House prices had really been skyrocketing and she insisted that if we were really going to move out of country we should do it sooner rather than later. It had also been our hobby to drive around the neighborhood over the years and note that the same 20-some houses were for sale year after year.

Year after year.

This was going to be hard. We started doing research. Bottom line, we identified similar houses to our own that were for sale and not selling, visited them and wrote down the addresses and the asking prices. Then we researched what actually had sold within the last year or so and the prices of those houses. See where I’m going? This is not rocket science.

We put our house up for sale for 105K and our real estate person thought we were nuts and should ask for more. I said I wanted to sell the house in this lifetime and insisted I knew what I was doing. A day after we listed the house a single guy came and looked at the house, liked it, and left. Two days later a young couple came and the young wife fell in love with our kitchen.

Note to home sellers: Make the kitchen look like a dream come true. The husband does not make the decision. The wife falls in love with the kitchen and then sells the house to her husband. We had fixed up our kitchen — for my wife — with black pearl granite countertops and new cabinets, some with glass doors. In the little dining room we had one wall with floor to ceiling glass-door cabinets. We had nice appliances and they were not coming to Thailand. The couple was buying their first home and needed appliances.

The next day our young couple were back with their parents and two other older adult relatives. At the end of a week’s time we had asked for 105K for our home and they offered 108K. There was some banking nonsense where there was a maximum they could borrow on the mortgage and if we paid the closing costs everything was fine so they paid those closing costs to us up front rolled into the selling price.

Deal.

Let’s break down the numbers:

70K – my investment

105K – selling price into my pocket

35K – profit after ten years (ignoring maintenance and kitchen upgrade)

Fact: If I had not paid cash at the beginning I would have lost money on this sale, having made mortgage payments over 10 years. The first 10 years you are paying mostly interest.

Here’s the ugly truth for our young couple:

108K – purchase price in 2006.

27K – current market value in 2012

Not only did we make some money on our home sale but we dodged a bullet when the housing market went bust. We got out in the nick of time.

congratulations_champaign_fireworksCute little closing note: Right before we left we purchased a set of four cheap glass champaign flutes and a bottle of sparkling grape juice. The glasses we put prominently behind the glass door of a central kitchen cabinet and the “champagne” in the fridge. We figured our young couple and their two little ones could all celebrate moving in with a toast.

– – –

I’ll continue on tomorrow with our other three house sales and conclude with our current place where we intend to stay.

6 thoughts on “For Sale – Part 1

  1. I applaud your thrift and economic ethics. My wife and I have lived relatively debt-free since paying off our student loans (early), though we did make an exception in financing our current home.

    As for selling a home, we decided several years ago to invest 27K in a run-down seasonal cabin in the Adirondacks. We put about 40K in totally modernizing it (and making it a year-round home). It’s now on the market for 145K (and the realtor says we could probably have asked for more). This will allow us to pay off our mortgage and again become debt free once again.

    I agree with the Biblical principle of not charging usury (or excessive interest). I have sometimes loaned money myself to people at no interest. But, don’t fool yourself. Banks and lending institutions are not built on Biblical principles.

  2. We watch a lot of HGTV where they often show people wanting a more luxurious home than they can afford and then they go through the process of getting a fixer upper and end up with the home of their dreams. That is very much the story of your cabin. That sounds like a killing you are making on that, like flipping a house.

    I do know that banks are not built on biblical principles. But neither is the government and many people try to legislate their religious beliefs there. Given the banking meltdown I would like to see the fanatics go after them with the same zeal they show toward things that do not directly affect them.

    What saddens me about people who are forced to always buy things on credit, they have so much less than I and yet when we buy the same thing for the same price they end up paying more than I. Poor people pay more for the identical item than a rich person does. That simply isn’t right.

  3. Aww… come on, a cliffhanger?! That’s a nifty trick. I must try that. You have convinced me to change my stove, then my kitchen will be a humdinger! I didn’t change it because I never used it 🙂 I will start painting soon to get the house ready for sale next year. I called the insurance company. It looks like they will fix the waterlogged floor, so I am psyched.

    Question: Say you were a girl whose name started with T. And you had to take out a loan to buy your house on the home you currently own? Would you sell your house next year or would you hold on it until you could at least break even (whenever that is)?

    Can’t wait for the rest of the series. Me likey 😉 Cheers.

  4. Hi TB!

    I made out a long list of things I would want to know to make a guess at what you should do and showed it to my lesser better half and she whapped me upside the head with a rolling pin and said don’t you dare ask all that personal information.

    Here is our knee-jerk best guess for you, given that you are an unfit mother to a poor defenseless house:

    If you can take the hit, lightly fix the place up and get out. If you can’t take the hit then stay and hope the market moves in your favor.

    In general the housing market should improve but that is so very dependent on exactly where you live and how much it dropped over the last few years. It’s a crap shoot and you need to roll an easy seven, but things should have bottomed out unless your area is destined to become a slum.

    I do wish I could be of more help.

  5. Sounds like you should go into Real Estate!!! But don’t think your character could stand up to it… I could see you on an HGTV program doing something!!! I love that channel! Property Brothers is one of my favorites! And Love it or List It! You must not live in CA! My parents bought their first home for 69k and sold it for about 789k 18 years later… Same year I bought my first home for 112k and we sold that one about ten years later for about 400k right before the market took a dive. My hat’s off to ya for not being in debt! If I ever have a chance to do that one again… I’d do it your way!

    • We have HGTV on as our default TV station. The Property Brothers and Love it or List It are my favorites too! The rental property one is pretty good as well. Didn’t that channel used to be about, um . . . gardening?

      I am not a terribly good business man, my heart is too soft. That will all come out very soon, in another article or two.

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