Every owner thinks that their house is special and worth more than the one next door, across the street or down the block. This healthy belief gets even sillier when it’s clear the houses were built by the same builder and have the same general floor plan, number of bedrooms/bathrooms and the only real difference is the exterior paint.
What's really surprising is that even today owners thinks their place is worth X because the houses across the street sold for X +/- a few dollars last month, but fail to account for the fact that the other house had updated bathrooms and kitchens. During the Boom you could get away with this because "prices could only go up" and "buy now or be priced out forever" mentality.
If you bought in the last 5 years and didn’t do anything to the property (I’m NOT talking about renovators here)- why do you think you will get more than what you paid?
It's really a quite simple formula:
Z = Price_Sale - Amount_You_Owe_Bank - Transaction_Costs
- Stage 1: My house/condo is worth so much more than everyone else’s on the block/in the building and I should get back every $1 I put into it;
- Stage 2: Okay I may not make any money, but perhaps I can have something for a Down Payment on the next house;
- Stage 3: Geez, at least let me sell for enough to break even;
- Stage 4: Yikes, I have to bring how much to the table?