The $13,000 Phone Call

I was just leaving for lunch when my agent called me. She checked out some active listings in the area and she thinks I can get more than $167,000 for the place. She suggested $180,000. There are 3 active listings in the subdivision and, even at $180,000, mine would still be the lowest priced one. I was a bit concerned because, although I did do a lot to improve the place, the bathroom showers are still a bit, well, not the best. But one house in the neighborhood is a pending sale for slightly more than $180,000 and it is tenant occupied, so you can be sure that house isn't in the best of shape either. So what the heck! I told her to list it for $180,000! She thinks it'll sell fairly quickly too. That was a great phone call!

Of course, this leads me to reassess my valuation skills. I had seen some higher priced homes show up on the comps list, including one that sold for $225,000. Some had pools. I figured a pool added $20,000 to the price. My agent said it only adds about $10,000. A two car garage adds a bit (my property just has a 2 car carport) too, but not a huge amount. I think, in my mind, I had assumed the higher priced homes were in immaculate condition or had some other features that I couldn't tell from looking at the comp list. I guess I need to change my thinking a bit.

House Is Listed!! (Updated)

Or it will be, as soon as my agent checks her email.

I went to the property this morning and everything looks good! The cabinets are finished!! Finally!!! I spent about 45 minutes cleaning up the place. There was a bunch of sawdust from the cabinet install to vacuum up, plus all the boxes for the cabinet doors had to be thrown out. I installed the bathroom light cover and the sink hole plug. The old kitchen countertop was on the back patio. It's too big to fit in my car as is and I didn't want to spend the time taking it apart, so I moved it under the kitchen window, where it is out of sight from inside the house. With all the boxes and wood cuttings, the two trash cans are filled again. I have not done anything with the dead weeds in the yard and one bathroom is missing a shower curtain, but I'm not going to do anything about those unless the buyer requests it.

I did take pictures of the cabinets and I was all set to include them in this post when I realized I forgot to bring the camera's USB cable to work with me. So pictures will have to wait until this evening. Sorry!

I'm listing the house at $167,000. We'll see if we get any bites. Hopefully, my agent will have it listed and a Realtor lockbox on the place in time for the weekend.

11:05 AM Update: Just heard back from my agent. The signpost for the For Sale sign is being ordered today and the house will be in the MLS by this evening. FYI, as I mentioned way back when, I instructed her to use some special words and to avoid using others in the listing to try to get a higher price.

Guess What?

The cabinet are not done!

Now, I know that probably comes as a surprise to many people. After all, this is just a simple little cabinet job. I mean, how long can it take, right? And the guy told me he would be done yesterday...

Ah. Nothing like some sarcasm to start the day off right. I ventured out to the house this morning and discovered the remaining two cabinet doors were still not installed. I was pissed and proceeded to give my lungs and vocal cords quite the workout. I left, forgetting to install the new bathroom light cover.

So I get to work and figure I'll wait until around 8:30 or so to call Keith. At 7:00, I get a call from him. He said he was wondering if he could meet up with me at the house this morning. When I told him I was already there and gone, he was taken aback. Yesterday, when I told him I was going to swing by before work, he assumed I worked the standard 8 AM to 5 PM hours. Actually, I work 6 AM to 3 PM, so when I visit somewhere before work, it's really early. I told him the doors weren't installed. He said he knew that and he didn't get over there last night because he wasn't done with another job until 10 PM. He said he was going to pick up some coffee and get over to the house this morning and finish. He'll call me when it's done.

It looks like things will be done today. At least I hope they will. If so, I'll email my agent the property details to get it listed, but I will still need to go back there for some work. The stove was still not put back in place and, although the debris from the cabinet install was swept up, it was still in a pile in the living room. Not sure if Keith will clean this up or if I have to. And of course, I still need to install the bathroom light cover and the sink plug.

Third Time's The Charm For The Hinges?

Keith called me just now and said he's picked up yet a third type of hinge for the corner cabinet doors. Man, I guess Joe didn't have a clue how to make the cabinets and must have done something really strange. Anyway, Keith said he'd get over there tonight after dinner to install them. I told him I was planning on stopping by tomorrow morning before work to check out the job. He said fine. I'm keeping my fingers crossed this will be done. If it is, I'll try to post some pictures.

Turns Out, It's More Than A One Day Delay

Why did I expect things to be done on time? I got a message from Keith on Thursday saying the cabinets would be done on Friday. So I went out to the property on Sunday afternoon and nothing was done. The parts that still need to be installed were there - the veneer and toekicks and such, but they weren't installed yet. The stove was still not put back in place either. So this morning I called Keith and asked what was up. He said his guy was out there Sunday and finished everything except for the doors on the upper corner cabinets - the hinges for those didn't work. I was at the house Sunday from about noon to 1 PM, so I asked Keith when his worker was there. He wasn't 100 percent sure, but said he'd find out. It must have been after I was there or someone is lying. So theoretically, there are just two cabinet doors to install that's it. Keith tells me he's getting hinges for those today.

It wasn't a totally wasted trip out there for me, though. I vacuumed the house and threw out some boxes that were left from the installation of the bathroom sinks and faucets. (By the way, these cordless vacuums are fantastic! Lightweight, cordless, and they pick up fairly well. They won't do heavy cleaning, but they are great for doing a final touch up.) I also did a tiny bit of painting. The new cabinets that go over the stove are shorter than the old ones. Since the place was painted before the new cabinets were installed (yeah, I know.. stupid move), I had about a 6 inch wide strip of old paint visible. So I painted over that. There were also some cardboard boxes laid down ages ago by the appliance delivery people to protect the carpet . I finally hauled those out. I also took the full trash cans out to the curb for garbage collection, which happens today.

While there, I noticed that the light fixture in the master bathroom was missing the glass that covers the light bulbs and that one hardware mounting hole in the new kitchen sink was not covered. So on the way home I stopped by Home Depot and picked up the light cover (around $11) and a hole plug ($1). After I bought the plug, I starting thinking that maybe that hole was for the dishwasher overflow drain, so I might not need the plug. I need to check that out. I still need to get an air conditioner filter, but I didn't have my tape measure with me, so I don't know what size I need. I'm just going to get one of those cheap $1 filters. I know if I don't, the home inspector will note it.

The yard still has weeds in it. Most are dead and I think I'm just going to leave them. The guy I spoke with last week did indeed blow me off. I even called him back and left a message, but he never returned my call. I tried calling someone else and he told me that he only does weed pulling in the spring. Apparently, he's got so much work he can turn jobs down. If the house is listed and doesn't sell for a month or so, I may revisit this and pretty up the yard at that time, but I'm reaching the point where I just want this to be done, so I'm willing to forgo some stuff I would ordinarily do.

Depending on what Keith tells me when he calls me back today, I am planning on heading out there tomorrow morning before work and finishing up these last details and then getting it listed for sale. I suspect I won't hear from Keith until towards the end of the day because he spent the weekend in Las Vegas at a bachelor party :-)

A Call To End Tax Free Gains On Real Estate

I came across an article on msn.com this morning by a Business Week writer who is complaining about the $250,000 to $500,000 tax free gains policy the IRS provides when selling a residence. (If you aren't aware, you can sell you house and keep up to $250,000 of gains tax free if you are single, or up to $500,000 of gains if you are married. You must have lived in the property for 2 of the last 5 years to qualify for this.) Basically, he is saying this skews investments away from businesses and into real estate and encourages people to move every 2 years. His complaint is that other investments, such as stocks, are subject to a 15% capital gains tax and he doesn't see why selling a home should be any different. The article sounds like sour grapes from a stock investor.

The author states "The powerful lure of tax-free profit is one reason that home prices have risen at a nearly 7% annual rate, vs. about 4% for the stock market since 1997." Although he mentions it briefly, he dismisses all-time low interest rates as a major factor (perhaps the major factor) in the real estate boom and instead seems to think everyone is buying a new home every 2 years solely for the tax benefit. He also misses the boat in assuming it is owner-occupants (the only ones eligible for this tax break) who are driving up the housing market. What I believe is really happening is investors are buying houses for rentals, not to live in. Turning a profit on these investments is pretty easy, given low interest rates. That is what is inflating the price of a house.

Had he really understood real estate investing, rather than railing against the tax break on the sale of a primary residence, he would instead be railing against the tax advantages of the 1031 exchange, which allows investors to defer capital gains tax on income property indefinitely.

Finally, he states "As much as possible, the tax code shouldn't bias investment decisions." On the contrary, the tax code is expressly designed to bias investments toward what the government believes people should be investing in. Take, for example, all the tax benefits of owning a small business. The government wants businesses created so that more jobs can be made, jobs from which the government collects payroll taxes. The tax code encourages investment in real estate so that a healthy housing market is maintained and the government does not have to provide shelter for millions of people.

One Day Delay

I was planning on heading out to the property today to take some pictures and see how things looked, but I just got a call from Keith and will postpone that trip one day. All the cabinets are hung and today they are installing the doors. They are missing one drawer box, so Keith has to pick that up and get it installed. The panels for the sides of the cabinet are still not done, but they should be done and installed tomorrow. (Keith says they are just veneer that is cut to fit and glued on, so installation time is minimal.) They also realized they needed toekicks, so they've got to get those. In short, all that's left is the little stuff that was overlooked because the job was half done when Keith got it.

The yard guy called this morning and said he could get the yard done today. He was a bit put off when I told him no one would be at the house. He said I needed to be there to tell him exactly what needed to be done. I explained the yard is all rock and I just need all the weeds pulled. There is really nothing ambiguous about it. He said he'd call me again when he gets there. This was about 2.5 hours ago and I haven't heard back, so I'm wondering if he just blew me off.

I got the invoice for the tree trimming, so that should be done. I'll check tomorrow when I go out there before I pay it.

I ran comps again and, as Scott alluded to in the comments to my previous post, the increased holding time I have encountered has worked to my benefit. Using the same source, comps for the property went from an average of $99.94 / square foot in March to $102.65 / square foot in May to $112.20 today. That's an increase of $12.26 per square foot, which translates to an extra $16,600 for this house. Yeah, that pretty much covers my holdings costs of $160 a month!