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A Profit Shrivels Amid the Housing Blowup
The subprime mortgage crisis that dragged the country's housing market down this year hit our family's pocketbook in a big way.


How big?


We came up $140,000 short of our expectations. We had braced ourselves before listing our house in a sagging real estate market, knowing we'd have to lower our expectations about the sales price. That didn't stop our stomachs from churning, however, when we finally agreed to a sales price that was substantially lower than where we started.


Our perceptions of property values during 12 years as homeowners were guided by the unrealistic frenzy of a hot seller's market. We sold our first home for the full asking price in 1999, within days of posting the "for sale" sign. But a surprising development unfolded after listing our home in West Windsor Township, N.J., in April: nothing.


The sea of for-sale signs in our community should have been a warning sign. But our desirable town was a hub for corporate transferees, attracted by its top-rated schools and proximity to New York City commuter trains.


The nation's economy wouldn't affect us as much, we reasoned. Comparable homes we visited in order to price our own competitively had already been sitting for weeks. Our bathrooms were newer, however, and buyers would be more likely to choose our hardwood floors over wall-to-wall carpet.


So we thought.


Price proved to be what ultimately mattered in this market -- as perhaps in any market. The small upgrades that real estate experts suggest owners make to enhance a home's appeal were also irrelevant. Prospective buyers didn't seem to notice the shiny cabinet hardware or new ceiling fan.


Money was the real eye-catcher.


The most difficult part of selling was absorbing how quickly and drastically the market was falling -- from soft in April to historic lows within a few months.


Our home's value peaked at over $800,000 in 2006, nearly twice what we paid seven years ago (even we had commented on the absurdity of the home being worth so much). In that context, letting it go in the high $700,000s seemed fair. But we lowered the price another $25,000 after a few weeks passed with just a trickle of interest.


Our real estate agent from a local Prudential, Fox & Roach office, an affiliate of Prudential Financial (PRU) , held open houses almost every weekend, which attracted browsers, not buyers.


Keeping the house impeccably clean, despite three children and pets, was an exhausting task. We fled our home before each showing, often driving aimlessly around town in a minivan crammed with kids and dogs.


The process wore us down -- enough to tolerate a second price reduction, down to $749,900. But interest -- not offers -- was all we attracted as the "resale inventory" (other homes for sale in the same price range) ratcheted up to 15 in our community.


Some neighborhood houses, meanwhile, finally sold in the $680,000 range -- the first scary indication that we'd have to let the house go for less than we imagined. Our bottom line sales price of $725,000 was slowly slipping away, we realized, as we lowered the price yet again.


As the weeks passed from April into July without any offers, we stopped thinking of our home as a place with meaning that was worth more money 18 months ago. We now thought of it as an investment that we had to dump -- and one that could still yield a good profit, if only we could find a buyer.


The chance to unload our house -- for $650,000 -- finally arrived in August, during the same week that Countrywide (CFC) and Washington Mutual (WM) both announced concerns about their ability to raise money by selling mortgages in the secondary market. The housing and stock markets were in turmoil. Stock prices for homebuilder giants Hovnanian Enterprises (HOV) , Beazer Homes USA (BZH) , and Centex Corp. (CTX) , were quickly declining.


Even our buyers claimed to be hurting -- falling stock prices consumed a chunk of their anticipated down payment, necessitating a low offer, they said.


Selling a house for $140,000 less than the original asking price was sickening at first, but the upside was that we had a buyer, while other homeowners were still waiting. We also walked from the settlement with a respectable profit that we owe to the housing market's good years. Wishing for anything more, given the market conditions, would just be greedy.


The outcome would have been different, however, if we had lived extravagantly from our equity line -- a situation that seems to have caught up with many Americans as the housing market tumbled.


We've moved on, to a different state with lower property taxes and real estate values. Friends who asked if we bought a bigger house were surprised that we did not -- another choice that helped us make the most of the cash that we managed to net from the sale.


We've stopped following the housing market. The yard is too nice here to think about selling.

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