The Awfully Steep Price of Bad Timing

Successful real estate investment goes beyond the “location, location, location� verse. You must add one more line to the chorus: “timing, timing, timing.� A real estate expert recently told me, “You won’t lose money in real estate if you control the time of the sale.� Unfortunately, though--as I have lived it--controlling a sale means controlling life. Good luck.

To buy a house, we must believe that all things will remain as they are--or, if they must change, they will only improve. We believe our careers will go on forever, despite the layoffs and closures we’ve witnessed in virtually every business segment.

Sometimes our income--or part of it--comes from our spouse. So we must also believe that we will have a stable relationship, despite overwhelming statistics to the contrary.

Many forces--and not all of them bad--can prevent you from selling your house at the right time. I ought to know. I recently sold a house in Los Angeles and lost more than $100,000. My timing could not have been worse.

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After finishing graduate school in Boston and ending a miserable marriage, all I wanted was to come home--to have the memories that only your hometown can give. Like driving past my grandparents’ house or remembering lunches at the Brown Derby with my mother.

“Home is where the heart is and you need to be home,� I told myself, even though real estate prices were skyrocketing in Los Angeles. During my five years in Boston, housing prices had tripled. “Act now!� I cried as I leaped onto the real estate bandwagon. Thinking it was my last chance, I bought a hillside home in my childhood neighborhood of Hollywood-Los Feliz.

I sunk my inheritance into my new home. Although the payments were enormous, I loved my house with its fireplace, hardwood floors, privacy, fabulous views, patios with the smell of jasmine, and--of course--its location, location, location. “I’ll be here for the rest of my life,� I sighed, as I sat on my balcony and watched the L.A. lights.

True, my consulting business wasn’t earning enough yet to carry the mortgage completely, but fortunately I had some savings. Moving home had cost me a thriving business, but what could be done in Boston could certainly be done here. By the time the money would run out, my business would be profitable. Yup, that was my plan. Charting my destiny, a woman in control.

In stepped life, putting unforeseen turns in the road. One year after I bought my house, I met my future husband. Despite vowing never to remarry, I did, and my husband and I became the owners of two pieces of property, 45 miles apart.

My husband had grown up on the Jersey shore and had never lived anywhere but at the beach. He also worked only three miles from his condominium. In essence, he said, “Take me, take the beach.� Was I supposed to tell him to move to my house in town, 45 miles from his job, when I was the one who worked from home? After all, he was asking me to move to the beach, not Greenland.

Despite my attachment to my house and the neighborhood that my mother and I had grown up in, I heard life telling me, “It’s time to move on.� An old Jewish proverb advises that a person cannot have everything in life a the same time. We put my house on the market, and I moved to the beach.

It was late 1989. Real estate had not yet collapsed onto itself. At that time, there was no reason to think that the house wouldn’t sell, and for some profit, too. Or--in the worst scenario I could imagine then--I would at least get my money out.

But even the Ph.D real estate agent in the neighborhood wasn’t smart enough to move the house. While we made payments on our condo and the empty house, we watched the real estate market slow down and then stop. After nine months, we gave up, rented the house out for less than the payments, and hunkered down for what we hoped would be the duration. Two and a half years and thousands of dollars more passed by as we tried to wait out the slump.

Meanwhile, the same recession that fed the slump starved my consulting business. Finally, I was no longer the one making my house payments--my husband was, without complaint, month after month.

When interest rates dropped, we tried to refinance the house to bring the payments in line with the rent. “No dice,� said the banker. “Your house’s appraised value has dropped by one-third.� He said we were not any more “qualified� for having had made punctual payments for four years. “Actually,� he remarked, “a person starting out today could get a much better loan than yours.�

Now what? Now you try to sell at the wrong time.

*

Now you bury a St. Joseph statue upside down in the back yard near the lemon tree. Friends assured me that St. Joe--the patron saint of workers--would bring buyers in any market, and I needed all the help I could muster. I was embarrassed to be resorting to such action and briefly wondered if I should sneak through my tenants’ back yard at night dressed in dark clothes, ninja cat-burglar style.

We started our sacrificial offering to the real estate gods at $5,000 less than comparable homes. Profit was no longer a consideration. We hoped merely to pay back the loan. For seven months, we lowered the price until the house sold--for $41,000 less than what we owed. My down payment was irretrievable, as well, for a grand total approaching six figures, although I cannot bring myself to calculate it exactly because my right eye starts twitching uncontrollably.

While I had been setting this not-so-brilliant real estate deal into motion, my husband had been investing his money into Executive Life Insurance, the firm that went bankrupt last year. Between the two of us, it’s remarkable we didn’t also invest in a savings and loan.

Our credit record remains intact, though, a consolation prize in modern society’s Monopoly game--not that we are brave enough to play another hand of real estate just yet. Right now, we’re sitting tight in our (affordable) condo, grateful we are young enough to have time to make up the money we lost. Maybe that’s the price of love? More likely, I admit, it was overly ambitious planning on my part.

Another lesson learned the hard way: Try as you may, you can never predict what will happen in life. You can buy triple A-rated life insurance and then watch the firm go belly up, government ratings be damned. Or, you can sell your house in a recession, praying to St. Joseph that the end will be swift and merciful. Or, after a disappointing marriage, you can firmly believe you will always live alone--and then meet someone, fall in love and get married.

OK, OK . . . I’m not in control, but maybe it’s better that way. My timing was way off in real estate and on target in love. Some steep prices are worth every penny.