How I Saved $1,559.82 in 10 Minutes

Cabin in the Woods

We’re just past the one year anniversary of my switch to a less hectic lifestyle.  While that is a big milestone, it also coincides with another achievement that I’m particularly proud of.  I made (or saved, depending on your perspective) about $1500 for maybe 10 minutes worth of work.  On an hourly rate basis, that’s major league relief pitcher territory.

I’ll give you all the details to how it happened and some tips for how you can be on the lookout for similar situations.

The set up

As part of the big transition, we moved to a new state and into a new house.  That was my one splurge in that the house wasn’t just new to us, it was new new.  We bought it from a local builder that was putting up a couple houses a year on spec.  This one just happened to be in a good location with a completion date that worked with our timeframe.

Fast forward to a few weeks before closing and I get an email from the title company with the preliminary closing statement.  As I’m reviewing, one of the items caught my eye: a $24.80 credit from the seller to me for 5 months property taxes.

Property taxes?  I knew they were going to be cheaper than the big city we were moving from, but not this cheap.  No way whatsoever they were actually going to only be $59.32 a year.  But that’s how much the builder saying it would be.

Having just had to pay a king’s ransom in property tax credits to the buyer of my condo, I was especially sensitive to the back and forth of property taxes on closing documents.  I emailed the title company that there was obviously an error and to have it fixed before closing.  Then I went back to packing up boxes and didn’t think about it again.

Closing Day Comes

When we showed up at the closing to sign the final paperwork, I took one more spin through the documents.  There, staring back at me was the same $24.80 credit.  I was puzzled.  What was going on?  No one there had any idea.

It turns out the $59.32 annual property tax was based on the year before when it was just an empty lot.  The property hadn’t be reassessed to reflect a house being built on it, so that was actually the correct most recent tax bill.  The title company’s software simply input the value, then calculated how many days of credit I should get back.  Technically it was correct, but was it fair?

My Solution

With the whole closing hanging in the balance, I had a decision to make, let this go or try to negotiate a solution with the builder.  I chose the latter.

My argument was essentially this:

  • The tax the closing credit was based on wasn’t representative of the bill I would eventually receive
  • The seller would be unjustly enriched by such a low tax credit and I would be penalized

My solution was to base the credit on the new property taxes reflecting the addition of the house.  That way we both would be paying our equal share proportional to the value being taxed and the time of relative ownership.

Since no one knew what the new tax would be, we agreed to wait until after I got the first bill to do the calculation.  The credit stayed the same so the closing could move forward, but we drafted a quick side-agreement for the builder to pay me the difference once the correct amount became known.

I haven’t seen the actual bill just yet, but based on the notice of reassessment I received, my taxes should be about $3,780 per year going forward, which means I’ll be getting back more than $1,500 when all’s said and done.  Not too bad for 10 minutes of haggling.  I still had to wait almost a year to get it, but that’s better than nothing.

What If It Happens to You?

While I doubt you’ll encounter the exact same situation, you no doubt will find yourself a some sort of financial impasse with another party.  Here’s what you can, and should, do:

  • If you see something that doesn’t look right, say something.  The worst the other side can say is “no” in which case you’re in no worse position than if you didn’t say something.
  • Propose a solution.  Highlighting the issue isn’t enough to win the argument.  By proposing a solution yourself, you determine the initial terms and save the other side from coming up with a solution themselves.  By saving them time and energy, they’re more likely to acquiesce.
  • Be fair and reasonable.  Is the solution you’re proposing one that you would accept if the roles were reversed?  If not, then why would the other side?  A whole lot more can get done by being reasonable than by play games.  Car salespeople still have a few things to learn.
  • Leverage matters.  Know when you have it and when you don’t.  In my case, if they didn’t agree to my fair and reasonable solution, they weren’t selling a house.  Would have I really walked away over $1,600?  Probably not, but they didn’t know that.

Conclusion

What’s the take-away from all of this?  It pays to rock the boat a little.  In my case, it saved me some serious money which helped with a couple of moving expenses we hadn’t budgeted.  How would you have handled the situation if you were in my shoes?

John started Present Value Finance in 2017 to share his experiences and insights on personal finance to help people make better decisions and take control of their financial lives.  

He achieved financial independence in 2016 by walking away from the high stress world of corporate finance to focus on his family. He’s a husband, father, family CFO, and all around finance geek.

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