Posted by Ed Garcia on January 03, 2001 at 09:50:32:
Be careful when dealing with high dollar houses.
Asking Price: $500,000? No body will pay full price. They’ll want to offer less.
As the house sits on the market, you’ll feel the PRESSURE
of the monthly payment, and will start to cave in.
Sales Price $460,000
-6% commission $27,600
Now you’re down to $432,400. We haven’t plugged in loan cost, or holding cost.
If you bought the house lets say for $412,000. Your loan cost at just 2 points + closing would be $11,240. If you sold it after 3 months of being on the market, and it took 45 days to close. Your holding cost would be approximately $17,710. High dollar houses don’t sell right away.
Lets see $432,400
Loan cost - $11,240
Holding cost - $17,710
Balance $403,450? Cash Strapped, this is how I see your deal going.