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When Is The Best Time To Sell At A Loss

By
Real Estate Agent with First Team Real Estate Inc.

Selling at a lossWhile I truly wish no one ever had to ask this question, some of you are wrestling with it right now. Homes are staying on the market longer than in years past and many sellers are having to come down on their price more than once to get the deal done.

Other sellers are standing pat on their price, hoping that the market will rebound enough for them to turn a small profit or at least break even. The problem is (as shown on the chart I posted a few weeks back) that prices still have not bottomed out in some areas and many sellers are facing the reality that they’re better off selling at a loss now than selling at even more of a loss later.

Most first bids are low-ball bids and most sellers are put off by them. It’s important to assess your own situation and determine if you should come down on your asking price and meet them in the middle.

No one likes to come down on price, but consider this scenario. A friend of mine has a relative whose house has been on the market for just over a year. It is a married couple. Their mortgage note is $2,000 per month and they’ve had to lower their original asking price by $20,000. Recently they got an offer that is $10,000 lower than the current asking price (i.e. $30,000 lower than the original price).

The house is in that in-between price range that's not inexpensive enough for bargain hunters and not expensive enough for high-end house hunters, and this offer is only the 5th they've received. They countered with an offer to meet the buyers in the middle and, thus, only lose $5,000 more instead of $10,000. They're waiting for a reply.

The couple is facing the reality of losing $25,000 on the house and having to take out a loan for several thousand dollars just to close the deal. The temptation is there to wait for a better deal, but what you have to factor in is that they've paid over $24,000 in mortgage since the house was put on the market and now the financial and emotional pain are coming to a head. If they hold out for a better offer, how many more thousands of dollars will it cost them...and will the next offer be even lower than this one?

Every scenario is different, but once your home has been on the market for many months (especially a year), don't forget to look at both sides of the equation. A good real estate professional will work with you on the pros and cons of all sides of the decision.

 

For more help and hints, just call me...your Beach Areas Specialist at 562-244-8021, visit my webpage www.annstefanucci.com or visit me on Facebook.

Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Eighteen Years Experience in Brevard County

Tough decision on when to take a loss when selling but I think a couple of things to think about include the cost of alternative housing (buy more at less as replacement) and carrying cost (paying higher mortgage, utilities, insurance) if downsizing.  It is a tough call.

Jun 27, 2011 12:34 AM
Dave Halpern
Dave Halpern Real Estate Agent, Inc., Louisville, KY (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Values are still dropping. If the seller needs to move on with their life they should sell and move on.

If the payment is a burden, sell now, even if you have to do a short sale.

Jun 27, 2011 12:35 AM
David Burrows
Classic Realty - Fairfax, VA
No Pressure, Just Seriously Devoted to Real Estate

You are right that it is a difficult call as to when to sell at a loss. Thanks for the well thought out post!

Jun 27, 2011 12:37 AM
Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota/Wisconsin Real Estate Expert

If the prices are still dropping and you have a high payment it probably makes sense to sell now.  Good example.

Jun 27, 2011 12:49 AM
Gay E. Rosen
Julia B. Fee Sotheby's International Realty - Larchmont, NY
As Real as Real Estate Gets!

Ann - prices are still dropping, and people should realzie that. A great time to buy, and sellers shouldn't wait until next year.

Jun 27, 2011 12:55 AM
Ann Stefanucci
First Team Real Estate Inc. - Huntington Beach, CA

Appreciate your comments.  I had a listing appointment this week and the owner is on the "verge" of becoming a short sale.  He thinks he should wait for the upturn and as you know, the market trends indicate otherwise.  He's in that emotional state: should I? shouldn't I? what if?....  He's got the facts, the numbers, financing alternatives, etc., so how hard do you "push"?  It's a fine line that we walk on occasion!

Jul 01, 2011 04:25 AM