It’s a running joke with my clients that this email comes at 10:25am every Sunday. Give or take about 5 minutes. It’s my Sunday morning routine—feed the kids, pour coffee then send this newsletter. Today I’m about 10.5 hours late, but with good reason, and with some helpful lessons.
For the past week, almost all of my non-client time has been dedicated to helping my mother in law pack and move into a new home she purchased. Today we unpacked the kitchen (a major accomplishment), and I became familiar with gadgets I never knew existed, like a garlic roaster, a plantain masher, a single-slice citrus squeezer and a tiny serving plate only designed to hold about 12 olives.
Unpacking is the easy part. Buying a house is a big deal. Typically, it is a doctor’s largest assets unless they own their practice. It’s where we sleep, eat and make memories. Its home. Houses are also liabilities, and require dollars to upkeep the roof, repaint, replace appliances, etc. They are work. Yet most ODs I speak with talk about a new house—either downsizing, or a different destination, or to be close to kids— “someday”.
In case that someday is someday soon, here’s a refresher on best practices from a very fresh perspective:
1. Make a wish list before you start looking. Two car garage. Small (or large) yard. Updated kitchen. Number of bedrooms and bathrooms. Man Cave or She Shed. It’s easy to fall in love with homes that aren’t what you originally envisioned, and buyers remorse with a home is much more expensive than with a movie ticket or even a car. Having a wish list plus a non-negotiable all-in number can keep you on track and help take the emotion out of the process.
2. Know your numbers. Calculate your net sale price from your home (after real estate commissions) and an all-in purchase price on a new home (add in closing costs and any extra expenses). Get a mortgage estimate with payments. Find out what the property tax and homeowners insurance will be based on your purchase price. If it’s a bigger home than your current one, ask the seller for a printout on their 12 month electric and gas bill. For homeowners associations, in addition to dues, factor in potential assessments. Estimate annual maintenance to be between 1% and 3% of the home value. Bottom line: make sure your new home budget fits in with your long-term retirement plan.
3. Get bids on everything during due diligence. Don’t feel bad about making your realtor meet you at the house a few times. If you want to new paint, light fixtures (don’t forget to factor in the cost of the electrician), appliances, a fence, landscaping, tile work, or to address items your seller doesn’t agree to fix, get bids before your due diligence is over so you how much it’s going to cost before your escrow money is lost. And don’t forget to call the movers!- that can cost thousands of dollars. If it’s too much, walk away.
4. Invest in graph paper. Save yourself stress and headaches by measuring your new home, drawing each room out (including doors) on graph paper, then figuring out where each piece of furniture will go. Your movers and your back will thank you for this.
5. Negotiate. Selling and buying a home in the same city? Ask your realtor if they will cut their 3% commission to 2.5% or even 2% since they are getting two sales from one client. See what the movers are charging for, and if there’s anything practical you can do yourself to reduce the cost. Take the opportunity to shop out your cable and internet provider. Moving is expensive—save money where you can!
FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY.
The views expressed here are as of the date of publication and are subject to change. This information should not be construed as investment advice. It is presented for information purposes only and is not intended to be either a specific offer (or recommendation) Hayes Wealth Advisors to sell or provide, or a specific invitation for any investor. Information herein may have been obtained from sources believed to be reliable, Hayes Wealth Advisors is unable to warrant its accuracy.
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