Sounds crazy, doesn’t it? How does a family lose money on a free house? We received a call this week from a homeowner that inherited a house. His spouse inherited the house from her mother about six years ago after she passed away. They were not sure what to do with the house so they kept it and used it as a large storage building. Since they inherited the house all utilities were kept on– water, gas, and electric. They maintained the yard with a lawn service company, paid homeowners insurance and property taxes.
Let’s take a look at the costs that this family paid to hold on to the free house:
$300/month Utilities (water, gas, & electric)
$250/month Property Taxes
$50/month Yard Service
$100/month Property owner’s Insurance
This family is paying $700/month to maintain a house that they do not live in. $700/month is a very expensive storage facility. In addition, they also paid $500/year in homeowner’s association dues. When you add up all of their expenses for the year, the owner paid over $8,900 over the six years they owned the “free house”. In conclusion, they spent $53,400 on maintaining a house that they never lived in.
They did this for six years before calling HouseHouseBuyers.com.
We visited the house and met with the owners. The sad part of the story is that since the house was so old that regular maintenance and repairs were not performed. The house needed substantial repairs and modernization to keep pace with the changes in the neighborhood. The house was in poor mechanical and structural condition. Because it was not lived in, the yard began to dry up and the foundation moved. Plumbing under the slab dried and cracked and small leaks from the roof and HVAC were unnoticed which ruined sheetrock and carpet. Aesthetically, the house was dated; the kitchen and bathrooms required significant updating. The house was appraised and we offered $45,000. Note that they spent $53,400 holding onto the house for six years.
$45,000 Current market price and CapitolCityHouseBuyers.com’s cash offer
-$53,400 Total cost for holding onto the house
-$8,400 loss when sold
A free house actually cost them $8,400.
When they took our offer, after waiting six years, they lost $8,400. The good news is that house owners can learn from this costly mistake. If you inherit a house you have two choices, either occupy the house or sell it. If the house owners had called Austin House Buyers when they inherited the house we could have saved them $53,400 in expenses and put $45,000 into their pockets.
In fact, if they saved what they spent in expenses for six years and took our offer six years ago, they would have had $98,400. What could your family do with $98,400 in cash?
If you have a house that you inherited or own a house you want to sell it, check us out at CapitolCityHouseBuyers.com or call us at (214) 785-6121. You can also visit our website and fill out our easy web form.