In the below post, James Barath of Benchmark Mortgage shares an article WORTH the read. Definitely a good reblog.
If you have a homeowner that feels their house is worth more than the market value, then this is the article for you.
Yesterday, I had the opportunity to provide a free mortgage consultation to a family in Northwest Indiana who had their home listed for sale. Many things were discussed as-is par for the mortgage planning process and it was refreshing to see a home buyer take the preliminary steps to see if they were actually qualified to buy the next home.
The focus of the mortgage consultation became awkward as the facts revealed that they needed to sell their existing home because they had to scale down due to financial hardship. Here was the real issue. The home had been on the market for well over 9 months and this family was fixated on getting a certain amount of money from the sale based on what they had invested into their home over the past 12 years.
In my analytical nature, I tried to explain to them why they needed to sell sooner as opposed to later. I highlighted the pros and cons of buying and selling in today's real estate market; illustrated the law of diminishing returns; examined the principle of carrying costs; and also expressed the potential credit nightmare ahead.
Guess what? This family just did not get it.
Later in the day following the consultation I stumbled upon an article on Bankrate.com titled "Are you the reason your home won't sell" by Marilyn Kennedy Melia. It had the answer to my clients reluctance.
In the article, Marilyn introduced a concept called Sunk Cost Fallacy which is at the heart of what behavioral finance experts declare is the irrational behavior that makes home owners hold onto a home when they know they really need to sell. Often times it results in a greater loss than is necessary.
It is hard to believe that this type of behavior is just limited to homeowners in Northwest Indiana.
Are You The Reason Your Home Won't Sell? Sunk Cost Fallacy.
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- Don't Buy Stuff You Can't Afford
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FEATURED Blog Posts on ActiveRain:
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Like what you see? Fantastic! I welcome your connection at any of these online communities.
Need more expert advice? Ask the team of Certified Mortgage Planners at Benchmark Mortgage.
I'll help you get pre-approved for your Texas home loan and even suggest some very knowledgeable and professional Real Estate Agents in your area of choice. If you are available to talk, I am available to listen. Give me a call or visit my website for more details.
Do you want to know all of your mortgage options? Call me today and let's discuss them further.
Always available for your Texas Mortgage and Home Loan needs!
John R Cannata P#214.728.0449
NMLS # 322646
The views expressed on this site are mine alone and do not reflect the views of my employer.