The toughest part about my job is when things don’t make any sense.

You crunch the numbers, you look at a situation from the rational and logical viewpoints, and yet it still doesn’t add up.

A perfect example: when a seller carries a property for years at a time while absorbing the costs…

David Cross is one of my favourite comedians.

You may know him as “Tobias” on Arrested Development, but I’ve been following his stand-up comedy since before he was the headliner on Mr. Show.

David Cross does a routine about a restaurant in New York where you can get actual flakes of pure gold on your dessert.  Rich people come from near and far to eat chocolate cake, tiramisu, or ice cream with “pure, odorless gold” as a topping.

Cross says, “Well…..if that isn’t the ultimate screw you to poor people, then I don’t know what is.”

It makes me think about people that are so rich, they can waste money on things like gold ice cream.

But perhaps, this sheds some light on another situation that I’ve never understood: why people hold on to real estate and accumulate the associated carrying costs for extended periods of time, despite all logic against doing so.

A few years ago, a new agent started in my office and was the immediate recipient of “beginner’s luck.”

She was hosting an open house in an uptown condo for a colleague, and while standing in the lobby, a man approached and asked if she was a real estate agent.

Slightly shocked, and maybe a little flattered, she said, “Yes, yes I am,” and the man responded, “Great.  I’d like you to list my condo.”

This happens once in a while, but not every agent is so fortunate.

However, this case was contained more than your average share of good fortune, as the condo the man spoke of was a 2300 square foot unit, worth $1.5 Million.

The condo was in its infancy, and while sales were more than sporadic, the larger units had yet to change hands.

This would be anything but a quick sell, and the seller likely knew that….to some extent.

But what followed is something that I still don’t understand.

The condo was listed in February of 2008 for $1,475,000.

Maintenance fees on the condo were $917.15 per month, plus utilities, which likely ran another $100 per month.

I’m not sure whether the owner had a mortgage on the unit, but let’s come back to that in a minute.

Property taxes, I would estimate at roughly $9,500 per year, based on the last (and only unit to list taxes on all of MLS…) unit to sell in the building of the same approximate size.

After 209 days on the market, the condo was re-listed in September of 2008…..for the same price.

During the previous six months that the condo had been listed, the owner spent just over $6,000 on maintenance and utilities, and just under $5,000 on property taxes.

That’s a drop in the bucket when you’re dealing with a property worth $1.5 Million!

The property remained on the market throughout the Fall of 2008, and was then removed.

It was re-listed again in April of 2009, and to date in those 14 months since the owner first listed the condo, the owner had spent $14,000 on maintenance, and $11,000 on property tax.  Again – $25,000 isn’t that much money when you consider what the property was worth!

I’ll save you the rest of the story, which you can likely gather by now, and just shoot right to the ending.

This property just sold for $1,245,000.

It had been listed for twenty-five months.

Maintenance fees have likely risen in the first two years of the condominium’s existence, so I would think the owner paid just under $30,000 in maintenance fees since he first listed the property.

He also paid $21,000 in property taxes during that time.

But the BIG question is: did he have a mortgage on the property?

Assuming he owned this property in cash, maybe the $50,000 he paid to carry this property for over two years (only to sell it for 84.4%) of his initial asking price) isn’t that big a deal.

But let’s assume, just for argument’s sake, that he did have a mortgage on the property.

Further, let’s assume that he paid $900,000 for this property in pre-construction, and put down a whopping 50% when he registered a mortgage.

Using a “standard” 35-year amortization, five-year term, and 4.49% mortgage rate with regards to his $450,000 balance, the owner would incur a monthly interest payment of roughly $1,600 over the course of those twenty-five months.

That’s another $40,000.

And if he only put down, say, 30% on the property, his interest cost is around $60,000.

We’ve made a lot of assumptions, but the bottom line is this: the owner paid $50,000 to carry this property at the bare minimum, and could have paid closer to $100,000 if he had a mortgage on the property.

In the end, he waited two-and-a-half years to get $240,000 less than his asking price.

Could he have sold in 2008 for the price he received in 2010?  Maybe.  We’ll never know.

But how can people like this guy afford to carry a property for so long and incur all those monthly charges?

Maybe if you think the market is going up, up, and away, it makes sense.  But you’d better be sure!

Perhaps an even more illustrious example can be found in a listing that belongs to a colleague of mine in the Bayview area.

Listed at $2,700,000, the maintenance fees on this unit are $3,200 per month, plus utilities.

The property taxes are $20,000 per year.

It’s cost the owner $60,000 per year to sit on this property, as he has done for the past four years.

He’s lost $240,000 as the property has sit vacant.

Who has that kind of money?

Maybe the same people that eat flakes of gold on their chocolate mousse…