Selling a home has become very difficult and expensive. Much has been written about the difficulties faced by prospective home buyers but very little about the problems on the other side of the transaction. I just experienced both. I sold one home and bought another in the last month. Selling was far more difficult and caused a lot of unexpected expenses I had not had in previous home sales many years ago. The reluctance of homeowners to sell is contributing significantly to the depressed level of home sales and hence the delayed construction recovery and then sluggish economic recovery.
We had to spend over $60,000 for real estate fees, transactions fees on both ends and moving costs. We minimized these expenses by foregoing lawyers at both ends and doing most of the household packing ourselves. A good share of these expenses had to be paid before the sale closing so the cash had to be on hand. The on hand cash also had to cover the escrow deposit on the new home, several home buying trips and repairs to the home being sold.
The mandatory repair expenses included a new alarm system and septic to meet building codes changed over the more than 30 years we lived in the house. The septic system cost as much as a very nice new car. Repairs ordered by our real estate broker to attract prospective buyers included a new furnace, the addition of air conditioning to a home with no air ducts, remodeling two bathrooms, a new roof earlier than otherwise needed, a new driveway to improve drainage and interior repainting. The total was considerably more than the real estate closing and moving costs. Then the buyers’ home inspector found ma hidden structural problem that needed to be fixed. The final surprise was failing the air quality test when ancient inert mold on the back of the finished basement wallboard produced spores when the dehumidifier failed when we were away for more than a week. A mold remediation contractor ordered by the buyer charged twice as much to remove suspected material as a remolding contractor charged to restore the basement.
Adding everything up, we had to have about a year’s pre-retirement, after tax income to finance the real estate transactions and moves. Fortunately we had it. Most people do not and will move only if they are forced out by their lender or reimbursed by an employer.
The finances are only part of the difficulty of selling a home. Our home took 13 months to sell. For 400 consecutive days we had to have the home cleaned up and uncluttered by 9AM. We had to leave the home for an hour, often on short notice, for many of the 100 plus real estate showings. And we had to clean out over 30 years of accumulated junk in a large home with a full basement, attic and large storage room.
The last two moves were much easier. The employer sent a moving company who packed everything in sight and instantly reimbursed us for real estate closing expenses. Few company paid transfers are now happening. Our home was shown to only one person with an employer paid move. Buyers are very fussy in this market, forcing sellers to spruce up their home or not get it shown to prospective buyers.
At the bottom of the market, entry level and neglected, financially distressed or foreclosed homes are selling to investors at a deep discount. The buyers do not walk away if they do not like the color of the tile on the kitchen floor. But the core of the housing market – well kept homes owned by financially stable households is very depressed in large part because homeowners will not make a voluntary move in a market environment that makes this both very frustrating and very expensive.
Selling a home will become easier and cheaper when the buyer/seller ratio improves in a stronger economy. This process will take several years. Until then, seller difficulties will persist along with buyer difficulties.