The Business Pillar You Are Probably Overlooking
Q: Gerald, we just finished renovating a home we are going to now sell. It took a lot longer to do the renovation than we thought and ended up costing a lot more money than we planned for also. We put it on the market to sell and have received several offers, but I need to make more to make up for my losses, so I’m thinking about holding out for a higher offer. What do you think? Reggie, Orange, NJ
A: Reggie, I have done many fix and flips so I understand where you’re coming from, however, you don’t get to decide how much money a buyer is going to pay for a property that you sell. The market ALWAYS decides the price a buyer will pay and to an extent the bank that lends the buyer mortgage money to buy the home also has a big say in the matter. It sucks when your costs are higher than you anticipated which is why you should also leave slack in your pre-deal analysis for unexpected costs, however at the end of the day, all the costs are sunk and cannot be recovered. Also, every day you own a property that isn’t generating income, you are effectively losing money because you are always paying for property taxes and other ongoing costs like insurance and utilities. It’s a bitter pill to take but you need to accept the highest purchase offer that was made, sell the property and move on. Good luck. Thanks for your question, Reggie.
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