"I Don't Want To Sell At A Loss"

In the U.S. and in much of the world, housing prices keep falling. But in some cases, when owners would be best off selling, they don't for fear of losing money, even though they still have equity in their homes. The following is a New York area example of a common dilemma:

"I don't want to sell at a loss," said a woman in her early 80's. But it turns out she bought this 2nd home many years ago for $275,000 and five years ago, the home was worth $700,000. Now it's worth $450,000 its price continuing to sink. But she won't sell at today's price even though it costs her $3,000 a month in overhead to own this home, which she no longer uses, because she wants the profit that existed five years ago, an emotionally driven bad decision.

By contrast, in the Los Angeles area, a home that sold for $700,000 five years ago, recently sold as a foreclosure or short sale to investors for $355,000. Those investors put an estimated $20,000 to $30,000 to improve and beautify the home and as of last week have it for sale for $495,000. They can make money even if they must under price other comparable homes for sale in the area. Sadly, this approach will become common once the lenders finally sell off their vast mountain of foreclosures and foreclosures to be, as the U.S. economy continues to crumble. But it is also the vehicle to put foreclosed homes back on the tax rolls so local governments can get tax revenue to help pay for schools, police and firefighters, while also improving neighborhood appearances as unmaintained homes often become eye sores.

These are examples of the U.S. housing market today. If you need to sell, consult with a local real estate professional, but get your home sold before prices drop further. If you want to buy but can wait, don't be in a hurry. Given the terrible job market and all the foreclosures, with more to come, prices are falling in most areas and if you are patient, you are likely to make a better buy.

Dick
Note: Thank you to my Uncle Gene Kazan for sharing these two examples with me.