Equity vs Real Money (Franklin TN Real Estate)

I've noticed an interesting "mindset" that has developed among home sellers in Franklin TN. I'm sure it's a mindset with most home sellers across the country. It's the concept of having "lost" equity.

"I've lost so much equity in my home over the last few years, I can't possibly sell it that low!"

Equity in a home only becomes money IF you were to sell your home for a certain price AT THAT TIME. It's not real money. You can't take it to the bank and deposit it. You can't throw it on your bed and roll in it. You can, however, take a loan against it. Only then does equity count as real money!

This mindset is kind of like looking at a Publisher's Clearinghouse Check and trying to deposit it in the bank. It only becomes REAL MONEY when something else happens (you win). It's the same with your house. Equity only becomes real money when you win (sell your house).

I try to remind my sellers that they need to look at the big picture. If you bought your house 10 years ago for $100,000 and are able to sell it now for $300,000. You have still made a hefty profit of $200,000 (that's $20,000 per year folks!!!). Yes, you may have been able to sell it for $450,000 2 years ago. BUT... life is full of COULDA, SHOULDA, WOULDA. You can't dwell on the "couldas" or "shouldas" in life.

The other thing I try to remind my sellers is the fact that EVERYONE has lost value. What would have cost you $500,000 two years ago, may only cost you $350,000 now. So, while you had to take a loss on your house, you'll be paying A LOT less than you would have a couple of years ago, should you decide to "move up."

Waiting to sell you home "when the market turns around" only serves to help your house sell for more later. BUT REMEMBER - the market turns around for everyone. So, while you'll be selling your home for more, you'll also be paying more for your new home.

This economy of ours is perfect to allow saavy home sellers/buyers to make A NICE EQUITY PROFIT (more than you would have gotten if you had sold your house 2 years ago). Yes, you had to sell your Franklin TN home for 33% below it's value 2 years ago. When you sell it, replace it with a "higher" home that's being sold at a 40-50% loss. You'll actually be MORE than 10-17% ahead when all is said and done. (Remember, 10% of a $500,000 house is A LOT more than 10% of a $100,000 house). You "lost" $150,000 in equity. BUT you gained $200,000 - 250,000 in equity when you bought your new house. There's a lot of short sales, foreclosures, distress sales out there where they are cutting loose and running. Take advantage of it and you can make a nice profit when the economy turns around.

OK, OK, so it won't be REAL MONEY. It'll just be equity. But that's what you were all excited about in the first place, right?