"It's a buyer's market. . .I can't sell my home now"

I frequently hear this statement from folks who are deciding not to sell their home.  They go on to explain that they would really like to sell. . .or they really need to sell. . .but they can't, because they don't want to "lose" money selling their home.  Yes, home sales are down as recently reported by the National Association of Realtors  but homes are still selling.  Home values are down in many areas. . .but homes are still selling. 

Consider the following :
1. Some folks are not selling because they don't want to "lose" money.
2. Some folks are not selling because they can't "lose" money.

My point is that nobody wants to lose money. . .but the real question is . . . are they really losing money?  No argument that there is probably a difference between the price someone can sell their home for in today's market as compared to 4-5 years ago. . .but is that really a loss?    

Does every person who invests in gold, diamonds, stocks, or bonds sell their investment at the absolute peak price? 

Of course not. . .some sell as true "loses" but others sell at prices that are still a profit . . . but less than the "best" price during their ownership.  Remember a home is not only an "investment" it is an investment that you can live in. . .try that with a municipal bond.  Let's look at a specific scenario of a couple who wanted to sell their home but did not want to "take a loss".  They purchased their cute 3 bedroom 2 bath ranch style home in 1998 for $135,000.  (I sold it to them by the way) Since that time, they have had 3 children and added an 80 lb brown lab. . . . they really NEED to sell their home so they can move up to a home that fits their new life style.  In 2005 they refinanced their mortgage to reduce the interest rate. . . and the mortgage company appraised their home for $185,000. (Sales prices and appraised values can be very different. . .but that is a different blog topic)  They called me last week when they found out that baby number four was on the way. . . .THEY NEED TO SELL.  

As aways, I spent a significant amount of time looking at the sales numbers and completing a detailed market analysis for their home.  Unfortunately, I had to deliver the news to them, that the "best" price we could expect in today's market is approximately $155,000.  I'll bet you can guess what their response was. . . . (I knew you were smart)  After reviewing the details of comparable home sales and my overall analysis. . .in unison they stated . . . "Oh no, we can't sell, because we can't afford to lose money."  Huh? . . . .  They paid $135,000 and can now sell for $155,000.  Even if they (and maybe you) want to consider this situation a LOSS.  Consider the following. . . the home that they are interested in purchasing is currently on the market for $300,000. . .and guess what. . .that home sold for $365,000 in 2005.  OK. . .get the picture?  If you deduce that the sale of their current home results in a "loss" of $30,000. . .(from the appraised value in 2005) then the purchase of the new home should be considered a "profit" of $65,000 right?   A net "profit" of $35,000 from selling and buying?

Regardless how you want to look at the numbers, it is a great time to "move-up" in properties if you need to. . . or just want to. . . .mortgage rates are incredibility low. . .and there are tremendous deals out there.