Sometimes I really wonder how people think they are 'thinking' things through. And then I wonder how on earth we are supposed to get through these financial storms when there are seriously so many idiotic people out there. But then it's no wonder we are in this mess eh?
This stems from a discussion with my mother when she talked about how our former neighbour made her feel like she made a bad decision about selling her house in 2003. You see, mom sold it for 142,000 but only 2-3 years later, it sold again for 240,000 ish. Not sure on the actual sale price, but it was listed at 250 so I am shooting a bit below that. Anyhow, my mom said 'Yeah I could have made another 100 grand on that thing' and she seemed sad. Her old neighbour, being the busy-body that she is, made mom feel like she missed out on a small fortune. My mom now lives on widow's pension and half my dad's work pension and is technically below poverty level so thinking about making another cool hundred grand had her down in the dumps.
That made me so angry! First off, the condo mom bought flat out was 113,000 in 2003, and after moving costs and other fees she made about 25,000 profit - but only two years later the exact same condos in her building were listing at 185,000 and up. So right off the bat I reminded mom that while she might have 'made' another 100 on top of her original sale price, she would have also dished out another 72,000 for the exact same condo. So that reduces her '100 grand profit' to only an extra 55,000. Far from 100 grand, it was only 30,000 more than what she did get as a profit.
Next - the guy who bought her house and then sold it did some work. Replaced the driveway, ripped out all the carpets and put in hardwood flooring, and tore down all the ugly 70s wallpaper and had it painted. My dad had only finished about half the basement so this guy did the rest. Tile flooring, drywalling, painting, etc. He did a lot of the work himself, but mom would have had to fork out at least $25,000 to get all that done. At LEAST. In 2003, they said she needed to do at least 20 grand worth of work and that did not include finishing the basement. So that leaves her with about 30 grand potential profit instead of 100.
That was the easy stuff to figure out. Then I reminded mom that by moving into the condo, she saved herself about $450/month in fees for utilities, property tax, home insurance, snow removal, lawn care, property tax, etc. So 2 years at 450/month is over $10,000 in fees that she would have paid to run the house as opposed to the condo.That reduces her potential profit to$20,000 instead of $100,000 as her old neighbour claimed. She would instead have only given herself 2 more years in a 5 bedroom house with a huge lawn and driveway that was way too much work for herself health and energy-wise. I asked mom if an extra 20 grand really would have been worth all the hassle - and that's IF the house sold for 240,00 and does not include the resulting higher fees for her real estate agent's cut. So drop that 20 grand by another few thousand. She actually made MORE money (25,000) by selling in 2003 than she would have by selling in 2005 (less than 20,000).
But there are a LOT of people who think like my neighbour and my mom do. My mom has seriously been depressed over what her old neighbour said, and they have discussed it several times since my mom moved in 2003. I hope that my mom will be better armed with information if she runs into her again and can let loose with REALITY and say 'actually miss noseypot, I would not have made any money at all on the sale of that house if I had waited another 2 or 3 years because the cost of the condos went up too, and I would have been paying 3 times as much in utilities and property taxes during that time. In fact, I would have LOST profit had I waited'. I really hope and pray mom is confident enough to let it rip.
Mom could have figured that out herself if she had 'thought outside the box' for 5 seconds, but she has never had to deal with stuff like this. Dad always looked after things like that but he died suddenly and mom was on her own. My brother and I lived out of town and could not help as much as we wanted. She did the best she could. But after our Boxing Day chat when I laid it all out for her, I told her that she should be pleased that she DID move at the right time. She moved when prices had gone up, but had not gone totally bonkers just yet. She moved when it was right for her, and she did the right thing. I just wish more people took the time to think outside the box because they are the ones causing all this crap, taking stupid chances while thinking they will make a profit, and down the tubes we all go.