3 Hidden Expenses of Owning the Wrong House
Purchasing a house is a huge commitment. There are a lot of factors that go into the process of finding a new one. You’ve selected a house with the must-haves and might have made some compromises, but how do you know you’ve made the right choice?
When you pull into your driveway, do you have a tiny sinking feeling that you wish you didn’t buy this house? Did you have a high-pressure deadline when you made your decision?
Did you explore different areas and keep an open mind, or did you only look in one location? Do you find that your house is really too small to be functional? Or do you think, why do I have so much space?
What’s worse than buyer’s remorse are the hidden expenses of owning the wrong house?
1. You Underestimated The Budget
Having to make sacrifices in your life every day in order to afford to pay the mortgage was surely not what you had planned when you dreamed of owning a home. If a significant life event has altered your ability to pay the mortgage it can be the beginning of an intensely stressful period of time for you.
Maybe you discovered something wrong with the property after you moved in you hadn’t budgeted for. Did you end up putting more money into house repairs than you planned on? This happens despite inspections and disclosures, sometimes appliances break and sometimes larger items such as a roof or the foundation needs repair.
Nothing lasts forever and people typically spend as much as they can on the house without properly budgeting for capital expenditures, which is a real estate investing term for assumed expenses such as replacing a roof every 20 years, new appliances every 10, and so on.
If you have an HOA, maybe they levied a special assessment to redo the pool or repaint all the houses.
2. Issues with the Neighborhood
Even if the house does fit your budget, the neighborhood could be more than you were expecting. If you live further away from your place of work, not only are you spending more money on gas, your car is now depreciating quickly and you have to get it serviced quicker.
Maybe the stores you find closest to you are more expensive than you are used to and you hadn’t thought about this when you did a budget before you closed on the house.
Could be the sale of your home triggered a new insurance and tax assessment and now the taxes and insurance payments are way higher than you had thought.
3. Structural Issues
This is a big one that can quickly exhaust a bank account of its funds. Foundational issues are hard to diagnose correctly without experts but it can vary by thousands of dollars in repairs. In an area such as Tampa that has issues with sinkholes and generally saturated earth, it is common to have such issues.
The previous housing booms in the area were in the 1920s and 1950s. Homes this age can easily have foundational issues that aren’t evident immediately.
If the bank finds out the house has structural problems during the inspection they will almost certainly not approve the loan. This also goes for severe termite infestations where the integrity of the wood throughout the home has been compromised to the point the bank doesn’t consider it feasible to get their money back if they have to foreclose in the future.
If you list on the market and finally find a buyer, only to have the deal fall through, you have lost months of time and money in the holding costs.
These issues scare a lot of investors off but there are people out there that are experts in these situations and will be able to get you out of the property.
How to Get Out?
Pretty much every real estate market these days is going to have plenty of cash buyers for houses in any shape. These buyers such
They will save you a lot of time and hassle by taking the house off your hands. You might be able to restructure your mortgage or transfer the loan to another lender.
The option to get you the most money will always be selling on the market to someone who will be living in the house. This isn’t always realistic given there’s no way to predict how long your house will sell if you need to unlock the equity and don’t have a few months, or whatever the days on market average is in your market for the house to go under contract.
Even if you sell it the day after it goes live you will be responsible for the holding costs during the title search and waiting for the bank to approve the loan. In some cases that money never comes. Having a prequalified sounds great until the bank finds something during their due diligence that stops them from loaning to the potential buyer.
If now isn’t the right time to ditch the wrong house, perhaps renting a room/the house out might be a good idea and sell when the market is best.