Do you ever watch something on TV or overhear a conversation, and want to just smack the people and say “you brought all of this on yourself”?
Well, had I been Elvis, I would have shot the TV while walking on the treadmill Sunday morning.
I love to walk and watch HGTV. The show during this stroll was ‘My First Sale’. It featured a young married couple who was expecting their first child. The couple was trying to sell their home, and their new home was in the process of being built. THEY BORROWED AGAINST THE EQUITY OF THEIR CURRENT HOME TO PAY FOR THE DOWN PAYMENT ON THE HOME BEING BUILT. Can you say ‘possible bridge loan’? Can you say ‘very risky move’? Can you say ‘what were you thinking’?
So, this couple is in quite the predicament! They owe a bunch of money on their existing mortgage, $15,000 on the home equity loan, they have cruddy carpeting that is old and stained, and the housing market is a mess. As an added bonus, their neighbor has a bunch of random stuff piled up in the yard (beds, metal things, you name it), and prospective home buyers are not impressed with the possibility of staring at a view comprising of garbage.
As the show progresses, no offers are coming in, and the homeowners end up asking the neighbor to do something about his yard. Neighbor is actually willing to part with his stuff, and Homeowner Man ends up hauling it all to the dump. Time is passing, and the price is dropping, and dropping. Homeowner Man is flipping out because his house was an investment! The house was originally listed at $229,000, which would have given them a little extra money after expenses and mortgage payoff. However, the house apparently is not worth $229,000, and they do end up getting an offer for $199,000 (at this point, the house was listed at $209,000). Homeowner Man feels ripped off. They are offering $30,000 less than the original price, and he deserves more money! He doesn’t feel he should have to ‘give’ so much. Homeowner Wife is thinking “I am going to have this baby soon and I don’t want to scare away the only person that has been interested in our house. We need to have a reasonable counter-offer.” Homeowner Wife is smart (at least regarding the offer).
In the end, the buyer came up in price and paid $207,000 for the house, but the sellers had to contribute $6,000 toward the buyer’s closing costs. Since the price was much less than expected, the sellers had to bring $7500 to the table at closing to pay everything off. Very stressful.
So what is the lesson in all of this?
Well, what you think something is worth does not matter at all. The price that the market will bear is all that is important. You cannot say ‘but I have to get this amount out of the deal’ because it very well may not happen. If you do demand a certain price, then you have to be willing to wait for it. Nobody owes you anything, it is simple supply and demand. If you are going to sell something, you have to take your emotion out of it and be realistic. It always helps to get the thoughts of an objective third party. You may not like what you hear, but it is important to try and get the facts instead of basing a decision on just your own knowledge and feelings.