How To Calculate The Costs To Hold A Property In Houston
Reviewed by Mark Lee
When you are thinking about selling your Houston house, be sure you know the costs to hold the property.
In the Houston real estate market, holding costs sit on top of the home’s sale price and can change with market conditions and the broader housing market.
Keeping the property might be costing you more than you think.
In our latest post, we take a look at the most common carrying costs home sellers face when trying to sell their homes in Houston and how those financial aspects affect market value and your net from the real estate transaction.
Holding costs can quickly eat away at the sale price you will eventually receive for the home.
As long as your house is on the market, there are a number of costs you will be responsible for.
When selling your house to a private buyer who requires financing, the closing process to sell your Houston home can take months, resulting in potentially thousands of dollars you will have to spend.
You’ll also be inching toward the closing date while accruing seller closing costs and various fees (think prorations, recording fees, and where applicable transfer tax, even though Texas typically relies more on recording fees).
However, when you sell your house directly to Absolute Properties, the holding costs can be eliminated in only a matter of days because there’s no waiting on Home Loans, mortgage lenders, or a title company timeline.
Mortgage Payments
The most obvious expense is the monthly mortgage payment.
If you own a home you’re not happy with or if you are paying a loan on an underperforming rental property, the hefty payment can be a lot to deal with each month.
Your mortgage loan (depending on loan type, mortgage rates, and loan amount) is undoubtedly at least a few hundred dollars a month.
This is money you could be putting toward a new home instead of the one that’s no longer working for you.
Also consider your remaining mortgage balance and any potential Mortgage Payoff at closing when estimating total carry time.
Utilities
Whether or not you are living in the home while it is up for sale, you will need to make sure the utilities are working for any potential buyers who may want to see the home.
They will likely check out the light switches and the water pressure things that can’t be done if you have turned off your utilities.
Plus, you can’t really show a home in the dark! In addition, inspectors will need the utilities on in order to do their job.
While your bills might be lowered if you are no longer living in the home, plan on paying a few hundred dollars each month to your bills during the real estate transaction window.
Property Taxes
Depending on where you live, the taxes can add up fast.
People living in states like New Jersey or California will see these costs eat away at their profits even faster due to high property taxes which must be paid.
You are responsible for the taxes up until the closing date.
When working with a traditional buyer, the closing can take months due to the lenders red-tape.
When selling directly to Absolute Properties, your financial obligations to the home can end in only a matter of days.
Homeowners Insurance
Homeowners insurance/Home Insurance is a necessary line item of homeownership.
Depending on your home and policy, your insurance premium can quickly eat away at profits.
As long as you are listed as the owner, you will be responsible for the premium.
Landlord policies for a rental property generally cost more than owner-occupied coverage, so factor that into your cost estimates.
Maintenance
If you decide to list your Houston house, your home will inevitably need maintenance while it is on the Multiple Listing Service.
A good rule of thumb is to set aside 1% of the house price/property values for routine upkeep and minor fixes each year.
This way you aren’t blindsided by unexpected costs while selling a home.
Some sellers offset surprise items with a home warranty, but that’s another monthly cost.
And remember, the faster you sell your house, the less maintenance you will be responsible for.
Repairs
In addition to routine maintenance, there’s always a chance a major repair will be needed while you’re waiting for a buyer roof leaks, HVAC issues, or plumbing failures can surface during showings or property appraisals and lead to buyer incentives or concessions.
You should always have an emergency fund set aside to deal with such expenses so you aren’t stuck with a damaged property while trying to sell it.
When you sell directly to Absolute Properties, all expenses are covered. Repairs and all, we buy as-is.
HOA Fees
If the property is located in a private community, you’ll be stuck with those homeowners association dues until you are no longer listed as the owner of the house.
Depending on your community, HOA fees can be high, and some can change rapidly.
Don’t forget to factor these costs in when it’s time to sell.
Things like this can often be overlooked when trying to sell the property.
As a homeowner in Houston who wants to sell, it’s important you keep all of your holding costs in mind additional costs like insurance, utilities, taxes, and HOA dues add up quickly.
When they are all added up, the amount can be thousands, which can severely alter how much you net from the selling price after real estate agent commissions and other fees.
If you want a quick way to estimate, use a simple spreadsheet or a Closing Costs
Calculator/Home Affordability Calculator to map your timeline and carry costs.
When selling your house in Houston, don’t forget to account for the holding costs and consider whether a direct, cash offer is the best way to minimize them.
To work with Absolute Properties or to simply learn more contact us by clicking here.