Fake House Flip

$150k minus commissions (6% = $84k)?  I frequently walk past this house, so when it first sold I thought how nice the new owners must have it.  It’s up for sale again!  What does that mean for the first buyer?

So we have $66k remaining to cover the costs of bringing the house to market, the risk of buying it in the first place (5.3% return max).  If somebody bought this house as a flip, it was a retarded financial move.  More likely, the person has been transferred to a new job, they are hosed with the mortgage, or they’ve lucked into an even huger fortune.  Mortgage stress is most likely.

Lesson:  Buying and selling homes is expensive.  It sucks up time and resources to move, to clean, to prepare for a sale, pay the loan origination fees, to pick out different decorations, renovate, improve, and show a home.  Buying a home that is a modest portion of your income / net worth can help you save on rent in the long run, but in the short run it is expensive for everybody, so don’t enter into it lightly, and count the costs.

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