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Sunday, June 22, 2014

Moving Expenses: Why is Moving So Expensive?

Moving Is Expensive!

Moving is Expensive!
Moving is Expensive!
Image Source: Dr. Penny Pincher

As I prepare to sell my house and move to another house, I am spending some time thinking about moving expenses and how to minimize them.  I think of moving expenses as an investment to a certain extent- you spend time selecting a place you want to live that will appreciate in value and then you spend money to buy it and move all of your stuff there in the most efficient way possible.  If you choose well and take care of your property, the appreciation will easily cover your moving expenses.  But as with other expenses, you are better off not spending money you don't need to spend.

Moving is expensive because it requires a lot of resources.  Some moving expenses can be reduced or eliminated if you are willing to put in extra time or call in favors from your friends.  However, the chaos of moving makes efficiency difficult.


There are lots of expenses associated with moving, and most of them are hard to avoid
There are lots of expenses associated with moving, and most of them are hard to avoid
Image Source: Dr. Penny Pincher

Closing costs

When you get a mortgage, you'll need to pay closing costs.  Typical closing costs are a couple thousand dollars, depending on the size of your loan and which bank you use.  The only way to avoid closing costs is to either pay cash, or rent instead of getting a mortgage.  The appreciation of real estate value has worked in my favor, and I like to fix up and improve properties, so buying has been a good option for me, even considering closing costs.

Real Estate Agent Commission

Most real estate agents, also known as Realtors, charge 6% or 7% commission to sell a property.  This amount comes off the top, so if your property sells for $200,000 and you have a 6% commission agreement, you'll pay $12,000 in real estate commission.  Your Realtor and the buyer's Realtor will split the commission.  You can avoid real estate commissions by selling the house yourself without a real estate agent.  Selling "For Sale By Owner" often takes much longer than selling with an agent, and most people who try to sell a house themselves end up getting a real estate agent eventually.

I once tried to sell a house myself, and I doubt that I will try that again.  It takes a lot of time, and you have very little information compared to professional real estate agents.  If you price your house too high, it won't sell.  If you price it too low, you are losing money.  When you sell your own home, it is hard to screen serious buyers from people just poking around who have no chance of actually buying your house.  Professional real estate agents have lots of leads and experience to sell a house as quickly as possible for the most money.  A good real estate agent is a good value.

You can find discount real estate brokers and agents- locally we have an agent who will sell a house for $990.  But if this agent is making 10 times less per house that he sells compared with a conventional real estate agent, he would need to sell 10 times more houses to make a living.  So how much time and energy do you think he would have available to spend working to sell your house?  For a big asset like my house, I am willing to spend some money to make the most money that I can from my investment.

Movers and Moving Trucks

On my last move, I paid about $1,000 for 3 movers and a moving truck for 6 hours to move my larger items.  I used my own pick-up truck to move boxes and smaller items.  This time, I no longer have a pick-up truck, so I'll probably rent a U-Haul truck.  You can avoid the expense of movers and a moving truck if you have lots of friends you can entice to help you move and if you can borrow a pick-up truck.  Sometimes a move needs to happen on a tight schedule, and recruiting friends may not be good enough.  If you are moving some distance, it may not be practical to recruit friends to help on both ends of the move.  Sometimes movers and moving trucks are necessary expenses.

Moving Boxes and Packing Materials

When I was younger, I would use free moving boxes- I would get banana boxes from grocery stores and liquor boxes from liquor stores.  The downside of using free boxes is that it takes time to find them, and they are various sizes, so they are harder to stack efficiently.  Plus, free moving boxes may be dirty or even have insects or insect eggs in them.

I have decided to spend a little money getting new moving boxes for about $1 each.  It is hard to pay for something you can get free, but being able to stack and move boxes more efficiently is worth something.  Other moving supplies include lots of packing tape and bubble wrap.  I save the bubble wrap for protecting expensive breakable items and use free newspapers that can be found at grocery stores to wrap most of the other items.  Buying moving boxes and packing supplies is a small fraction of the large expense of moving.

Postage Stamps for Change of Address Cards

Most change of address can be handled using a cell phone.  However it seems like some change of address is best handled by mailing a change of address card.  Last time I moved I bought a few sheets of stamps for this purpose and probably will again for this move.  I found it quicker and easier to drop a card in the mail rather than working through phone menus and trying to change my address via phone.

Several moves ago, I forgot to change my address with one of my credit card companies and actually missed a few payments while my bills were going to the wrong address.  This hurt my credit rating for years.  Make sure to change your address with all of your creditors.

Checks with your New Address

For an extra dollar of two, I doubled the number of checks I ordered when I moved to my current house.  Too bad I'll need to order new checks with my new address.  This is an unavoidable expense if you use checks.  I mostly use credit cards, debit cards, and on-line bill payer to pay bills, but there are still times when a personal check is needed.

Cleaning Supplies

As I prepare my house for showings and open house events, I am using a lot of cleaning supplies such as paper towels, Febreeze, cleaning chemicals, etc.  I also find that we run the dishwasher when it is not full to avoid having dirty dishes around at a showing.  If it helps sell the house, it is worth a bit of expense and inefficiency, but it is painful to watch if you are used to running very efficiently.

You'll use lots of cleaning supplies as you show and sell your house
You'll use lots of cleaning supplies as you show and sell your house
Image Source: Dr. Penny Pincher


Staging

There are things to prepare your house for showings that Realtors may suggest, such as packing some things, moving some of your furniture or clutter to storage, or painting and making minor repairs or updates.  These things cost money.  This may be a good investment if it helps your house sell for maximum value, but it feels like an expense as you spend the money.  As they say, "it takes money to make money".

Inspection Reports

You'll need to pay for inspection reports for the house you are buying.  I got a home inspection, a Radon report, and a wood destroying insect inspection.  The bank may require some inspections to get a mortgage.  Generally it is a good idea to find out what you are buying so you don't get surprised later.  My inspections on the house I am buying cost around $500.

Purchases for Your New House

You will likely find minor repairs that need to be done at your new house.  You may also want to buy or make curtains or window coverings.  You may find carpets or rugs that are dirty or smell bad and decide to replace them.  You may need to pay to dispose of trash or unwanted items after you move in.  Another example- you may decide to paint that pink bedroom a different color for you son.  You might find that the dishwasher is loud and barely works anymore.  Most people spend hundreds of dollars or more on purchases after moving to a new house.

Food Expenses: Pizza

As you pack up your food and pots and pans, you are more likely to eat out as your are getting ready to move.  It is difficult to plan and cook meals as the chaos of moving increases and also in the day or two following a move.  Another expense related to food is food that gets wasted during the move.  I try to pack my refrigerated and frozen foods in coolers on ice, but not everything fits, and the food can get warm if the move takes too long.  We had a period of 2 or 3 days between the time I sold my house and the time I bought my next house on my last move.  There was no good way to avoid losing some food.  We ate or gave away as much of it as we could.

You'll spend more eating out after your food and kitchen equipment is packed up
You'll spend more eating out after your food and kitchen equipment is packed up
Image Source: Dr. Penny Pincher

Time is Money

Moving takes up a lot of your time.  You spend time signing papers at the real estate office and at the bank.  You spend time house hunting and preparing your house to sell.  You spend time away from your home during open houses and showings.  Packing and unpacking takes a lot of time.  During your move, most of your possessions will not be available to you because they are packed up or in transit.  You may not be as effective at work during your move due to distraction and having less time available, and that could even cost you money with respect to raises or bonuses.

In my case, you may have noticed that I went nearly a month without posting to my blog.  You may have thought that I landed another book deal and was busy writing my second book, but the reason for my long absence from the Internet is that I have been so busy with moving-related activities that it has cut into my blogging time.

Moving is Expensive!

There are many positive things that can come with moving.  You have a chance for a fresh start with new neighbors in a new place.  You can take some time while packing to sort through your stuff and get rid of clutter.  I found a bunch of things I no longer needed and donated items to Goodwill, sold them at consignment shopssold them on Craigslist, gave them away, and sold them on eBay.

Moving almost always creates a life-long memory.  You can move somewhere that provides an opportunity to try new things or living in a different way.  I have lived in the city, in the country, and in the suburbs and have enjoyed the advantages of living in all of these environments.

But on the negative side, moving is expensive and it is hard to avoid most of the expenses of moving.  Even with good intentions, it is hard to avoid most moving expenses.  Try to think of moving as an investment.  Spend time picking a good property that will be a great home and that will appreciate in value with time and improvements that you can make.  Moving expenses are a step on the way to make a real estate investment that can help grow your happiness and net worth.  When you are making a decision to move, be sure to factor moving expenses into your decision.

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1 comment:

  1. Don't just assume that you should get a rental truck at U-Haul, by comparing prices of other companies you can save several hundred dollars. You can use the site www.iMovingRentals.com to instantly compare prices of rental trucks to get the best deal. They will even monitor your rental and alert you if the price ever drops.

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