Great question. Sets me to thinking.

I guess my rationale is that the first closing has nothing to do with the
second so I'd keep the transactions completely separate. The rationale for
that is that it better reflects what's really going on and makes it possible
to match the settlement sheets more precisely. Finally, my rationale behind
that is that these transactions are hard enough to get right even if you
track the settlement sheets exactly.

You are surely correct that the net result after all is said and done is
converting the equity from one to part of the asset value of the other.
Whether that's a benefit is up to you. To me, based on past experience, I
think it would be. But as noted I've not sold/purchased a house in the Money
era. Is it a large benefit? no. It's just eliminating a simplification. It's
like showing all the steps in a math problem rather than just cutting to the
chase and writing down an answer. That may be a matter of personal style not
best practices.

"Mark Horn" <mark[at]hornclan.com> wrote in message
news:slrnem0kh2.9mr.mark[at]home.hornclan.com...
- quote -

On 2006-11-19, Dick Watson <littlegreengecko[at]mind-enufalready-spring.com> wrote:
- quote -

Why not credit it directly to the new house asset account? Did I
miss this detail in the FAQ or in this discussion? What's the
functional difference between posting a transfer to a holding
account and then posting a transfer from that holding account to
the new house asset account? Why not just skip the middle account?
Is there some benefit that I'm just not seeing?

- quote -

Thanks, again.

inline...

"Mark Horn" <mark[at]hornclan.com> wrote in message
news:slrnelvg63.23p.mark[at]home.hornclan.com...
- quote -

Yes, when all settle out, I agree these identities are probably good
starting places. The first one isn't quite that simple because of things
like closing costs. It's these little details (escrow settlement, pro-rated
utilities and taxes, etc., that will be a huge factor in sorting all of this
out.

- quote -

Sounds like a good going in premise.

- quote -

If you're like me, you will probably find it takes several tries to get all
of this right. Things like the sign of amounts in these splits are very
tedious to sort out. Also, the mechanics of Loan Payment/Principal Transfer
complicate life. This issue is discussed in the FAQ, but you'll find out
about it soon enough.

- quote -

Agreed. Looking back, I'm not sure what I was thinking in previous post
here. I had something in mind but am clueless now what it was.

- quote -

But I'd still follow the cash. No, it may not be in one of your real-world
accounts. Yes, between the transactions, it IS **your** cash. (It's sure not
the lawyer's.) It should be credited in one of your accounts.

- quote -

So put it in some virtual account like your pocket change account. Or create
a holding account just for this purpose. At any rate, it won't be there
long. And I'm guessing it will still be more straightforward doing it this
way than many of the alternatives. (Precisely because you can line up so
closely to the settlement sheets.) But you get my message by now. At any
rate, there is no one right solution.

- quote -

Good luck. Nothing is harder to model in Money. Let us know how things turn
out and how you end up setting it all up. Everybody can benefit.

On 2006-11-18, Chris Cowles <spam_magnet[at]remove-me-bellsouth.net> wrote:
- quote -

True. Hadn't thought of that. Thanks.

"Mark Horn" <mark[at]hornclan.com> wrote in message
news:slrnelu4ll.po4.mark[at]home.hornclan.com...
- quote -

Not necessarily. Loan closing costs may have an immediate net negative
effect, but should be comparatively small.
--
Chris Cowles
Gainesville, FL

First things first: the primary thing I'm trying to accomplish
is this:

new loan + old equity + down payment = price of new house
new house asset account value = price of new house
new loan account value = new loan amount

The part I can't figure out, is what to do with the old equity and
the down payment to make this work. I guess the simple way of doing
it is to set the initial account value of the new house asset to be:

price of new house - (old equity + down payment)

Then I can simply make a two transfers from the old house asset account:

Xfer 1: Payoff the old loan
then, adjust the old house asset value to match the equity derived
then, make a split w/drawal from the old house asset that includes:
realtor commissions
closing fees, etc
Finally, Xfer 2: the remaining balance from old house asset account
gets transferred to new house asset account
Second, transfer the remaining equit

I think this is what I'm going to do unless there's something
obvious that I'm missing.


On 2006-11-18, Dick Watson <littlegreengecko[at]mind-enufalready-spring.com> wrote:
- quote -

No. But it should still be net worth neutral. If the house costs
$100,000, I have $20,000 in equity from the old house and a $5000
deposit, I'm transferring $20k in equity from the old house to
the new house - that's a transfer which is net worth neutral.
I'm also transferring $5000 from my checking account to the new
house - again net worth neutral. Finally the remaining $75k value
of the house is balanced by the $75k loan which is net worth neutral.

- quote -

No. What happens is that the attorney for the closing of the old
house wires it to the attorney for the closing of the new house.
It never directly passes into my hands. The reason for this is that
banks have OCC pressure to be careful about anti-money laundering.
Large deposits have automatic holds put on them. If you're closing
on your old house on Monday, those funds won't be available for
your closing on Tuesday, much less so if you're closing on the new
the same day as the old house.

The offshoot: the equity from my old house never touched any of
my accounts.

- quote -

Thanks.

- quote -

Thanks for the tip.

- quote -

They do. Thanks.

comments inline.

"Mark Horn" <mark[at]hornclan.com> wrote in message
news:slrnelu4ll.po4.mark[at]home.hornclan.com...
- quote -

Maybe. Your liability will not be 100% of the new house's value, no?

- quote -

That's one way. No one right answer.

- quote -

The equity in the old house is the Asset value less the loan balance. So,
assuming the old house is tracked as an Asset, you need to get it down to
$0. Some of it should transfer to the old mortgage payoff. Remainder can
transfer to some cash account as part of the sell closing settlement. (Isn't
that what happened? I'm **assuming** that there were two closings here and
you had the equity from the old place in your hands, more or less, at some
point. This would likely have been true even if they were both closed the
same day at the same title company. Somewhere in there you had LOTS of
cash.) Me, I'd not worry about transferring money to the Asset accout just
yet. I'd account for the purchase first. This all should come straight off
the settlement sheet. In THAT transaction, one entry should be a transfer to
the new Asset account of the purchase price, assuming you want to set the
new asset value=purchase price. Follow the money. The settlement sheet(s)
are the roadmap.

- quote -

See the refinance FAQ for Chris Cowles' way around this and some reasons not
to do it. You can find this one and some others at
http://umpmfaq.info/faqdb.php?cat=23.

- quote -

I haven't bought/sold house since I've been using Money. But I have done
several refis/major remodels and bought several cars. (The cars are not
tracked as assets but the basic principles seem the same with only exception
that Automobile : Payments expense would be Transfer : [house as asset
account].) In several of these cases, I've had to go model the whole thing
in a temporary file, using the settlement sheets, etc., to figure out how to
get it right.

My most basic suggestion: follow the money. The settlement sheets balance
everything right out. You should be able to match these in Money.

Second suggestion: don't try to skip steps. I think your plan to try to move
money from one asset to the other is skipping the step that you settled on
selling the one first and than carried the bag of equity cash to the next
closing. I think you will find this easier if you try to track it that way.

Third suggestion: as obvious as it may seem to try to transfer the principal
from the new loan balance, don't worry it. Too hard. Money just doesn't want
to do it this way and trying to fight it is just too ugly to justify. Just
use some category to create the money from whole cloth in the new settlement
transaction. (I've created Other Income: Loan Proceeds Received just for
this purpose.) Yes, there will always be this big blip in your future
reports for this period. But you'll always be able to remember what was
unusual going on. The biggest issue is that it will screw up scaling the
graphs. Even that is lessened if you get all the activity in one day.

Those are my thoughts. I hope they help.

I'm having a hard time working out how to account for the sale of
our house and the purchase of a new house. I've got equity in the
old house that will be used as a down payment on the new house.
Additionally, I've got a deposit on the new house.

My overriding assumption is that the purchase of the new house should
be neutral on my net worth (at least initially). The liability
that I incur should be cancelled by the value of the house.

I have the asset account for the old house and I've created an asset
account for the new house. When I paid the deposit, I did it as a
transfer from my checking account to the new house asset account.
(That might be the wrong way to do it.) The question is what to do
with the equity in the old house. Somehow it should be transferred
into the new house. Let's use some pretend numbers to demonstrate
the problem.

New House sale price: $100,000
Old House equity: $ 20,000
New House deposit: $ 5,000
New House loan: $ 75,000

I could transfer the equity of the old house into the new house.
But when I do that, the new house's asset value is only $25000 when
it should be $100000. Additionally, I'll have a new house loan
of $75000. Doing it that way results in my net worth decreasing
by $50000. Whoops!

I can think of two solutions:

1) Make the new house loan initial balance $0 and then make
a transfer of $75000 from the loan to the new house asset account.
This gets me back to neutral impact on my net worth. But if
I do it this way I think that Money is going to calculate the
payments and loan length wrong. Because it's not a $0 loan,
it's a $75000 loan.

2) Make the loan initial balance $100000. Make the new asset value
$100000. Again, neutral impact to net worth. Then make the
deposit and equity transfers to the loan. After this, the house
value is $100000 and the remaining loan value is $75000. But if
I do it this way, I think that Money is going to calculate the
payment and loan length wrong. Because it's not a $100000 loan
it's a $75000 loan.

Have any of you accounted for the sale of an old house and purchase
of a new house in Money? How did you do it? Suggestions?

Thanks in advance!