play money
Heard a story about a young couple who bought a house. Three years later, they put the house on the market. The listed price is $24,000 higher than what they paid for it. They should be making a $24,000 profit, if they sell for the listing price. But they won’t. Because even though they stayed in the house for only three years, they took out a big home equity loan. They only clear a $600 profit if they sell the house for the listing price. They initially had the house listed $45,000 higher than what they paid for it, but the house only lingered on the market, and they wound up having to cut the profit on their asking price by almost half. Wow. That is just so sad to me. To think, if they just hadn’t taken out the loan on the imagined equity in their home, they’d probably have a nice pretty check right now. Instead, their house is still on the market.
Unfortunately, I’ve seen several instances of this as well. A former coworker refi’ed and took all the equity out of her home. Then she got divorced and wanted to put the home on the market. Of course she couldn’t sell it for what she/they owed. Last I heard, she was renting it out at a loss.
Comment by savvy — December 8, 2008 @ 9:57 am
I can’t get past this statment, “The listed price is $24,000 higher than what they paid for it.” Wow. Nonetheless, the story is indeed very sad, and one that we’re hearing about far too often.
Comment by Ms. MoneyChat — December 8, 2008 @ 2:47 pm
wow, that’s harsh.
I hope to own my home in 4 years.
Comment by Dawn — December 9, 2008 @ 10:16 am
A $600 profit? That seems like nothing to think of all the money that is put into a house. Yikes.
Comment by S23 — December 9, 2008 @ 11:35 am