I have a new favorite TV show--HGTV's "Real Estate Intervention."
It features totally deluded homeowners who have yet to face the fact that their homes are not worth what they want for them in what is decidely a buyer's market.
Mike Aubrey is the host. While he is a hulk-like presence (complete with bald head and Hitlerish moustache), he is gentle with these idiots as he takes them around to comparable homes that have sold for or are listed at many thousands less than the featured homeowners expect to get for their own houses.
In one case, he takes his charges to a home that is an exact duplicate of their house, except that it has a fireplace, which theirs does not. He points out the much lower selling price, at which point, they tell him, with straight faces, "Well, we think some buyers won't like the fireplace and will pay more not to have one."
Say what? Are they kidding? Personally, I never use my fireplace and wouldn't care if my home didn't have one, but even so, I'm aware that having the fireplace increases the value.
Some of the homeowners are just in sad situations fostered by a foundering economy. One older woman is selling her Georgetown home (which actually is NOT in Georgetown--something she keeps forgetting) because she lost her job and hasn't been able to find a new one. Unlike most of the featured sellers, she does wind up making about $100,000 on her eventual sale--I, for one, was happy that she did.
Which brings up another point. Several of the homeowners seemed to have been using their houses as their personal piggy bank. One family purchased their home for $120,000 but now owed over $200,000.
I purchased my home in 1993 for $95,300--a 1929 barn of a house in an iffy but thriving neighborhood. In 1999, I refinanced the home at a lower interest rate, reduced the term of the mortgage to 15 years, and pulled out $20,000 for some much-needed deferred maintainance. In 2006, I took out a second mortgage through my credit union in the amount of $30,000 to put on a new roof and add a basement waterproofing system (also much-needed in that each winter my basement doubled as a murky swimming pool!). Today, I owe a little over $45,000 on my mortgage and $28,000 on the second. The first mortgage will be fully paid off in 4.5 years. The second in 10 years, though my plan is to throw the first mortgage payments at it once I have those funds available, so it should be paid in 6 years.
The most important steps are the ones I didn't take--I did not get upside down with regard to my home. It is currently worth at least $300,000. So if push ever comes to shove, and I had to sell, I would make a considerable amount of money from the sale.
Oddly enough, since Zillow once valued my home at over $400,000 a couple of years ago, I often still feel as though I've LOST money on my house--one's personal feelings and reality are not always the same!
Reality is what most of the homeowners on "Real Estate Intervention" don't want to face. Sadly, by the end of each show, most of them are still hanging onto their dreams and refusing to price their homes in line with the market. In their minds, their homes are worth more, never mind that the comparable homes sold for less, have more amenities, more space, and better lay-outs. By the end of each show, most have failed to sell their homes, or have taken them off the market entirely.
Which, of course, allows viewers like Grace to write snarky posts like this one!