They Listed at $600,000 and Sold for $400,000 -- What Happened?

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Waiting for the Right Buyer
Three months after putting the house up for sale, Dave and his family moved out and into their new home. While they were off enjoying their first year in the new construction, they endured the niggling that came from having the old house sit vacant on the market. He says, "We were carrying two mortgages and we could afford it, but we weren't exactly excited about it."
Waiting for the Right Buyer

Three months after putting the house up for sale, Dave and his family moved out and into their new home. While they were off enjoying their first year in the new construction, they endured the niggling that came from having the old house sit vacant on the market. He says, "We were carrying two mortgages and we could afford it, but we weren't exactly excited about it."

He points to some flaws in the house that may have made the right buyer harder to find in the family-oriented neighborhood. He says, "We were at a disadvantage for not having a fourth bedroom, and we limited the market to people like ourselves when we bought it -- a couple with no kids, or someone divorced or single." The house also lacked a basement and a garage.

Eventually, they decided to take a breather from the relentless price reductions. "We looked at the comps and said, 'This is a nice house in a very nice neighborhood. We're going to leave it here for a while.' While we were at $450,000, the right buyer came along and the house fit her special situation."

Finally, an Offer

The initial offer came in at $375,000. Dave says, "When you wait that long to sell your house and this was the first offer that we got, you're in a difficult situation as a seller. You say, 'Gee, this is a lowball, and after this entire process of starting out so high and dropping the price so much, and now we get this offer.' It can be quite disheartening."

They settled at $395,000. Dave continues, "In the end, it worked out for both sides. We were eager to unload the house and move it fast. It was a huge relief, and it was a huge burden off our shoulders to settle right before the holidays."

Dave and his wife sold the house to a woman with a young son who was partial to the location. He says, "She went through a divorce and had to sell her house, which was in the same neighborhood. It was a long process, but we're probably lucky we sold it when we did sell it."

The Fatal Flaw

Still, Dave has plenty of regrets. "It's your biggest investment and every seller wants to get the most they can out of their home. Frankly, I think what we chose to do in selling our house was to be greedy and to see how much we could get. It's an emotional thing. It's really emotional. Whenever you're talking about that much money, sometimes it's hard to think straight."

Dave has gained perspective on his experience, and he's worried for sellers new to the market. He says that when sellers price their homes, greed, emotion and sweat equity can all affect the decision making process. Dave warns that selling your home should be, "a more emotionally detached financial decision. You have to just say, 'This is a transaction. It's an investment.' For a lot of us, our net worth and our retirement is tied up in our homes. So you just have to play it as unemotional as possible, and if you do, it seems you are unlikely to make a mistake."

As a seller, Dave says, "You keep thinking, 'I'll hang onto this a little bit longer, it'll sell.' That was ultimately the fatal flaw of our experience. In the process, the market gets worse and worse and worse and the sellers continue to be optimistic. But the smart thing to do is to tighten your belt and say, 'I'm going to lower this to a very aggressive price because I want to sell it now, because I don't know what’s going to happen with the market.' If you're a seller and there isn't a strong prognosis for a turnaround, then be aggressive and try to price under. Now we all have the benefit of hindsight of what this real estate market has been like nationwide. It’s always 20/20 in hindsight."

Also See: Tips on Buying Foreclosure Properties

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