Homeowners whose properties will sell at a loss -- either real or on paper -- are commonplace in today's down real estate market. These sellers may have purchased at or since the 2007 market peak. Or they may have cut into the equity of homes purchased long ago to finance a renovation, cover living expenses during a period of unemployment or illness, or to fund college educations.
In Westport and Weston, few of these situations result in short sales or foreclosures and the disastrous consequences of ruined credit or even bankruptcy. Usually these sellers will simply walk away with lower-than-expected proceeds, or they will have to bring money to the closing and then move on with their lives.
Our communities are financially blessed in that most distressed sellers somehow find the money to buy their way out. But the process may still be devastating.
For many, the reality of selling your house at a price lower than you ever dreamed can be as stressful as a divorce, major illness or being without a job. As such, homeowners experiencing the unexpected decline in the value of their largest asset may experience the same five stages of loss. Denial. Anger. Bargaining. Depression. Acceptance. Not necessarily in a straight line or in that order.
Denial may manifest as early as during listing presentations, as real estate professionals run down market statistics and recent sale prices of homes comparable to yours. You acknowledge their recommended list price but insist it must be higher. Denial may recur upon receipt of the first offer, which comes in at the price predicted by your agent but not acceptable to you.
Anger may follow as the reality of your impending loss sets in. It may be directed at buyers who don't perceive value at your desired price. Or at your neighbors, who sold too low and now their houses are your best comps. Or it may be directed at your agent, who has told you as gently and professionally as s/he knows how, that your house is worth what it's worth. Once having made a deal, anger may resurface when a building inspection identifies items needing attention and the buyer asks you to pay for them.
Bargaining is expressed in various ways, including "Maybe we should wait `ill next year when prices may be better." Or "What if we rent the house instead, and wait for the market to recover?" Or "What if we put an ad in the New York Law Review? Their readers could afford our house." "If only we'd sold five years ago, when we had the chance..." and "If only we hadn't spent so much money redoing the yard..." are other examples of this stage of loss, which focuses on finding a logical solution to an unsolvable problem.
Depression: By the time it sets in, sellers have acknowledged the gravity of the situation and experience a deep sense of loss which may take time to resolve. Your motivation to sell evaporates at this juncture. Unfortunately, market time accumulates on your listing every day as you grieve.
Acceptance happens eventually, usually not happily. When you reach the point where moving forward takes precedence over holding on -- as all sellers ultimately do -- a deal will be struck.
Every disappointed seller's experience will include some or all of these stages. It's a normal process that can be expected and must be respected. Some sellers will move through the stages quickly, while others may list their homes two or three times at six months apiece before arriving at the point of acceptance.
Those sellers who are able to hasten the journey to acceptance will minimize their losses. The maxim that "the longer your house is on the market, the less you will get for it" is generally true. Work with an experienced real estate professional whom you respect and trust, and listen to that person's advice. We are in this together, and we want to help.
Evi Coghlan's "The Real Deal" appears every other Friday. She is a licensed real estate agent with the Riverside Avenue office of Coldwell Banker and a former marketing consultant to Fortune 100 companies. She may be reached at 203-247-6691, by emailing her at email@example.com or visiting www.evicoghlan.com.