Importance Of Calculating Holding Costs When Selling Your Crested Butte Home
It’s a great idea to go through the analysis of adding up all the fixed and variable costs associated with owning and operating your second home in Crested Butte. So, what are the holding costs and opportunity costs? Of course, if you are generating income from Short-Term rentals then you would also analyze that income against the real costs of the business expenses and the ownership costs below. A good rule of thumb would be to use a one-year time horizon. Adding up all of your expenses for the past twelve to twenty-four months can be helpful in projecting out your expenses for the next twelve months. Below is a list of expenses that may help you pull this information together! So, what is the importance of calculating holding costs when selling your Crested Butte Home?
Importance Of Calculating Holding Costs When Selling Your Crested Butte Home – Expenses
Fixed expenses include mortgage payments, homeowner’s insurance, property taxes, utilities (electric, gas or propane, water, sewer, trash, phone, Internet, cable or satellite TV, security system), hot tub service, homeowner association dues, and snow removal (plowing the driveway, shoveling the deck, walkways, shoveling the roof one to three times per year depending on the roof pitch and amount of snowfall).
Variable expenses can include property management fees, appliance repair or replacement, hot tub repair, landscaping, window washing, maid service, etc.
There are other expenses in Crested Butte to consider if you are still using the home, and while these are real expenses, most are probably exchangeable for other recreational expenses. Examples in the Winter would be Base area Locker Fees, Club Memberships, Ski Passes, ski lessons, gear… etc. Summer time expenses may include golf course greens fees, cart fees, guest fees, fly fishing guide fees, gear… etc. Of course there are travel costs and other vacation expenses that may actually be higher if you were to sell the home. You may also need to pay for lodging in another location.
If you have added up all of these expenses for a year, you will see what your opportunity cost of holding your Crested Butte home is. Once you have decided to sell it, you will have to evaluate any offers and negotiations against the possibility of delaying a sale and continuing to incur these holding costs.
Sometimes in a final negotiation when I have represented sellers and there is yet another counter from the buyer, the seller can get frustrated. It is not uncommon for a seller to want to throw in the towel, and say, “The heck with this buyer.”
I normally suggest my client to sleep on it. It can be helpful to put the small gap in the counters into perspective, and usually it represents a very small amount compared with the overall transaction. As well, when I have reminded my client to consider their holding costs and the backdrop of the market conditions, they usually thank me for giving them clarity, and the deal gets done and they can move on with their life.
Selling In A Falling Market
We saw a downturn starting in 2008 and it was a rough few years after that. It can be very tough for a seller in a down market to believe that their home is not worth what they think, or what an old appraisal says. I represented a client who got an offer that was $100,000 under the appraised value of their home from eighteen months prior. Against the facts and the market reality, the seller turned down the offer and did not even counter. The seller continued to believe that their home was better than the market, and so, against my recommendations and the market data, they followed the market down. Yes, they made price reductions, but never enough to get “ahead” of the falling market. Their property sold nearly $100,000 below that offer they received previously.
Nobody has a crystal ball, and that is the tough part of making pricing decisions for a seller. As a general rule, if you are a seller who wants to sell, can take your emotions off the table and look at the data your real estate agent provides to you, then you should be able to make an informed decision and get your property sold at the market averages and less than the average days on market.
Selling In A Rising Market
This is easier, but can be no less stressful for the seller. “Everything is funny when you are making lots of money…” but seller’s remorse is common when sellers think they left money on the table. Getting greedy is worse. As markets rise and fall, a greedy seller may miss the peak and start chasing the market down. It can be a mistake for sellers to get ahead of the market, especially if there are many competitive listings, and low absorption.
Holding Cost Considerations When Selling Your Crested Butte Home are just one piece of the larger puzzle. It can also be an emotional time, and sometimes emotions get in the way of making good business decisions. I try to be a voice of reason for my clients by providing them with information and data so they can make informed decisions. I tell my clients who are sellers “I do not want to be cavalier with your money – my goal as your agent is to help you sell your home for the highest price, and all things being equal – in the shortest amount of time.”
How can I help you?
I have over 30 years of business experience and am a top real estate agent in the mountain town of Crested Butte, Colorado representing affluent clients who are buying and selling their homes and properties. To see featured properties or search the MLS – visit chriskopf.com.
Are You Considering Buying or Selling a Home in the Crested Butte Area?
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The Crested Butte area offers a wide variety of properties including ski in/ski out single family homes, ski-in/ski-out condominiums, lake and river frontage properties, golf course property, quality homes in Downtown Crested Butte, and true fine mountain homes on acreage.
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