Mistake made, losses cut

Updated Feb 24, 2012

I learned today how to sell a vacant lot without a realtor. Learned by consulting an attorney.

Diane and I woke up this morning in our Florida vacation house where we have been since early January. We hope to wrap things up here and be back on the road soon.

A few years ago, after the 2008 housing crash happened, Diane and I bought two plots of vacant land. One was to be the eventual building site of our retirement dream home. The other was intended to be a store of value that would be liquidated to help fund the dream home when the time comes to build it. The idea at the time was to put money into land instead of the bank or other investments, and then sell the land and use the money to build the house. Ideally, we will have enough wealth built by then to pay cash for the house.

This strategy is not working. Land prices did not stabilize but continued to fall. While we bought the lot for a price far less than it sold for before the crash, it is worth less than that now. Seeing the trend, we abandoned the strategy but we are left now with one lot to dispose of (we are keeping the dream house site). It makes no sense to pay property tax each year on an idle asset that declines in value. It’s time to cut our losses.

The opportunity to do so fell into our laps yesterday when I received a phone call from someone who wants to buy the lot. We had not yet listed the property for sale. She approached us on her own. She did the same things a few months ago but nothing came of it. She seems ready to move now. We have agreed on a price and are now researching the best way to complete the sale.

Since a willing buyer and seller already exist, should we use a realtor or attorney? That is the question we are researching now. Neither we or the buyer are willing to do this transaction on our own. To get a clean deal and good sale, we want the legal guidance professionals professionals can provide. They are up on the relevant laws and procedures. We are not.

Many people have a difficult time taking a loss. They make a bad investment or business decision, but instead of getting out, they persist, hoping against hope that the value will go back up or things will turn around. They care less about preserving their capital than they care about being right or being a winner.

In today’s housing market there are people who did wanted t sell a few years ago but did not because doing so would have meant selling for less than they thought the property was worth at the time. Well, the market did not care what they thought. It continued to drop, leaving these people with even greater losses. Diane and I care about preserving our capital, so when we see an asset eroding it away it is an easy decision to cut our losses.

Regarding getting back on the road, today was a productive day. My head cold is fading and my energy is back. The real estate thing was a time-consuming distraction but worth doing. Nevertheless, it is embarrassing to still be here in our Florida house.

We can tell the freight is flowing strong. Agents are calling to say they need us and we keep telling them we have other things to do. That works for a while when you are on vacation but we have been here too long. I blew it by filling our vacation time with off-road projects that keep us anchored here.