Tough talk for tough times…

I have had to have quite a few tough conversations with clients who are trying to sell their homes lately and sometimes I have to use fairly tough talk during those sessions. Let’s face it; we are in tough times. I, for one, have watched my retirement investments tank for the second time in the last decade and watched as my house lost a quarter of its “value” in the current market. I’m not happy about either one; but, they happened and I have to get on with life and try to survive as best as I can.

The last time my retirement accounts went into the pooper it took 5-6 years before they recovered to near what they were and I suspect that it will be that long, or longer this time, too, before they recover again. When that last happened, the bubble that burst and the recessions that followed weren’t keyed off housing, so my house at least retained most of its value. This time is different and the results have been different. The housing bubble burst this time and dragged everything else down with it. This time both my investments and my home are worth less – way less.

That is the point that I have to drive home with current home sellers. It is especially hard with older sellers – sellers who are not old enough to remember the great depression, but who have owned the same home for 20-30 years. For them (And indeed for all of us), this is the first time EVER that home values have declined like this and they just can’t seem to accept it and deal with it. These are people for whom their home was a major part of their retirement plan and likely their major “investment.” Sell the old homestead and retire on the profits was central to their plan.

Now I have to tell these folks that the $200-300-400,000 that they counted on getting for their homes is gone and that their homes are only worth about 3/4 to 1/3 of what they planned on having in hand from the sale. I’m not having a lot of happy meetings about that. The truth is that the market is cruelly efficient at any point in time. It just doesn’t care what you “need” for the house or what you “want” for the house or even what you owe on the house. The market just says, “Here is what other houses like yours are selling for, so that ‘s what yours is worth.”

In today’s market that also means, “here is what foreclosed houses just like yours are selling for, so that’s all you can get, too.” It may not be quite that bad, but it’s close and foreclosure prices are impacting what any seller can expect to get. So, as much as I hate the trite phrase,” It is what it is;” I end up using it myself more and more these days. (Pause for a big ironic sigh here). These are tough times that eventually require that I have those tough talks.