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I was thinking of the car example as I wrote my previous. I own a classic car, those values go up and down, now the market for classic cars is sort of down. But what irks me is those guys that have classic cars sitting in the field, you approach them to buy while it is still in salvageable condition, and, with crazy ideas of car values brought on by watching Barrett-Jackson they think they are sitting on a gold mine and won't sell.
So indeed the beautiful 69 Camaro sits in that field for years, while the owner visions his retirement fund, and it just rusts away....and yeah it will be worthless rusted scrap metal. Literally it is of no value. I don't car about the idiot losing his dream, but that beautiful car deserved a better life.
Yup, seen this many times. People think their rusty lawn ornament is worth big bucks and they'll let it sit until it's worth nothing rather than sell it at a realistic price. Pains me to see a classic rotting to the ground just because some DA either doesn't care or thinks he's sitting on a gold mine.
Can you hold out for the next cycle when the market turns you way? That's the real question IMO. I know someone that paid too much for their house in 2011 but they just sold it to someone at a higher price so it's all relative as they say.
Personally, unless I was completely broke and downright needed the money, I'd rather sit on something for years at a time than sell it and take a loss on it. I'm not about to sell something for less than I paid for it just to get rid of it, I'm not in the business of breaking even or taking a loss, I'm in it to make a profit.
Obviously I'm not talking about buying something brand new and expecting to get the same price for it used. But if I invest in an item with the intention of flipping it, I'm not going to sell it for less than I have in it, I'd rather it sit around collecting dust than to pay $100 for something and sell it for $50 just because I'm tired of it sitting around.
But seriously, I'm not one of those people that just has piles of random junk scattered everywhere. One of my friends called me "the neatest pack rat I've ever seen." HATE digging through things to find what I need, I'm hyper OCD about organization. Love those organizer bins with lots of draws, so I don't have to hunt for a screw, bolt, nut, etc. I do have a hard time throwing things away unless it's absolutely useless or garbage, though.
Also am not interested in selling the sorts of things that I "hoard", as lots of it is either personal to me or little odds and ends I've kept for fixing things around the house etc. It's not often that I sell something that I own, and I know when I'm buying whether my intention is to keep it or sell it. Not the type of guy that "gets tired of things" and is constantly selling and trading, I tend to get something and stick with it for as long as possible.
Stubbornness is one of the root causes for bankruptcy or failure
You should always ask yourself, would I invest in this right now if I didn't own it, if the answer is no, then why on Earth would you hold on to it... tying up money in the process and potentially losing it all. It's stupid.
I've never taken an Economics class, but isn't this what the "dismal scientists" call an opportunity cost? If you hang onto the depreciated object/property, you can't do anything else with the money that someone would give you for it. If you sell it, even for less than you paid, you suddenly have cash that can be invested elsewhere -- in something that will earn better if you choose well.
We used to use this as our benchmark for stocks that had not yielded a profit. If we sell this stock, where will we put the money? Is that a better idea?
My father is a case study in this sort of behavior. Everything he's ever owned in his life is worth ALL of the money until it's worth NONE of the money. He'll squeeze a penny until Lincoln cries and then throw it in the street...
Examples: The only 2 vehicles I have ever seen him sell in his life (and I'm almost 40) were, in his mind, worth at least an additional zero behind their final selling prices probably up to the month before he sold them. 1978 Suburban. RUUUUUUSTY. Running rough... But it's a Trailering Special truck, so it has a highly prized (in the mid-90s anyhow) 454 big block, turbo 400 transmission, and 14 bolt rear end. It's a one-stop shopping source to build a drag car in one rusty package. Dad decides it's finally time to let it go. Fixes all sorts of stupid crap in the interior before putting it up for sale (like even replaces some door speakers so the radio fulling works...)... I think he sells it for like $800 and is very proud of himself. Less than a day later the new owner has torched the drive train out of it and has the frame (which is still good) listed separately for sale for like $500. I believe his asking price for the rest of it was like 2 grand and I'm guessing the body was worth $100 when he hauled it off to the scrap yard.
He sold an '81 Olds 98 Diesel for 1/2 scrap value when scrap was through the roof. It had been sitting for at least 5 years at that point and some guy told him some sob story about how he was going to "restore" it (no one would ever restore one of these cars, and if they did, it wouldn't have been that one.. A-pillars and firewall rotted out... doors rotted out... and the worst V8 GM ever built). Dad is convinced it's still out there in motor heaven... I asked him which way the guy left the property (4 options) and sure enough, guy left in the direction of the metal recycler 10 miles up the road... That dude made $200 in about 25 minutes...
But it gets much much worse... Unbelievably, this is the condensed version (I guess the TLDR here is that greed, incompetence, and a hard line attitude of selling only on your terms can literally steal your life away):
Dad buys large section of land from HIS Dad in the mid-80s to open a small business on. Open business... Immediate area expands rapidly for a short period of time (probably until about 1994). Business goes well for awhile... HIS Dad dies in 1997. Dad and an uncle decide to buy my grandfather's property which adjoins the lot my Dad already owns and includes 2 other houses. Developer buys last remaining plot of otherwise totally undeveloped land across the street and installs massive amounts of utilities, roads, etc... A Walgreens goes in on the corner. Walgreens then competes with the strip mall on another adjacent corner and puts 1/2 of the stores out of business (circa 2000... they are still half empty today). Business starts going not so well... Dad decides NOW is the time to start considering selling his property... Neighbor next to Dad's property also has some land and doesn't want to live there anymore if he sells because then "something" will be built there (when she bought her house, this was "the sticks" and she doesn't want to be in "the city" anyhow)... So... Now there is a chunk of 3 properties for sale as a group of about 14 acres (previously developed area across the street is easily 3-4x this size, and vacant other than Walgreens to this day) and Dad decides to set a price that is just sky high AND refuses to hire a commercial realtor, so FSBO (literally puts a sign in the yard with his home phone number on it when he's asking for millions of dollars for this property). Price is so high that even the realtors that come sniffing after it never even call him about it again (Still... early 2000s at this point). This goes on exactly like that until around 2010 when he FINALLY hires a realtor, but the worst one on Earth because Dad will only agree to about 1/2 commission and won't be talked down on his price... NOTHING happens for the next 2 years. Not a call. Changes realtors with a slightly better deal for them and slightly lower price, a few tire kickers and lots of big stories, but no real interest.
Now... Dad is in his early '70s and his health is sliding more every month it seems (not illness, just old), his business has long ago fallen into disrepair and financial ruin because "it's for sale, I'm not putting any money in it" and my mother suspects he is actually using his social security checks to keep it open (WHY is it even open? who knows?).. Uncle he bought the rest of the property with is in his LATE '70s.. About 3 years ago the neighbor, who is also WELL into her '70s finally gave up and sold her land at market rate (literally a 0 less than Dad has been trying for almost 20 years to get) to buy a brand new house in a neighborhood where she could afford lawn care and such (her next stop in a few more years is the retirement home and she knows it, so she bought something nice, boring, and easy to sell).
Now my parents are hopelessly tied to his business and land (can't travel or do anything else) that my Dad just flat out is never going to sell until it's down to the fire sale price (like literally everything else he's ever sold) and has wasted 20 years of his life that he could have been modestly, but comfortably, retired if he had been realistic with his expectations. My mother retired from her job 2 years ago and just sits around the house and mopes as her health continues to diminish (my mother has ACTUAL illnesses in addition to just getting old. I seriously doubt she has another decade in her, and maybe not even another 5 years). and... to cap this off my father STILL owns MOST of my Grandfather's stuff, obviously including his house (that he won't even pay to have demolished and still has some of my Grandpa's stuff in it), from when he died in 1997 and has carted all of that crap up to the huge country estate they bought (like a 6000 ft^2 house on 10 acres... side note: took 5 years for him to sell previous house for about 40% less than he thought it was worth) "to retire in". They're essentially on a fixed income (which is pretty high, my mother did very well and has a good pension) and have a mortgage in their 70s and my Dad STILL won't get real about his pricing.
The most likely scenario is that I am going to end up in a horror show of events where one half of the legal owners of this disaster of properties dies and forces the other half to sell it all for whatever it will get at auction. If that's my parents, this is all on my shoulders... I'm certainly not taking a mortgage to buy into this mess.
They could have sold it 20 years ago, when the market was clearly not going to get any better, and been retired on a little lake somewhere since then. My father's foolish attitude about investments have literally cost him if not his retirement years, the last 20 prior to them. That says nothing about my mother is almost certainly going to die as the 1/2 owner of an "investment property" that she wants absolutely nothing to do with.
For me, this is all just horribly sad and I doubt that tone was very well conveyed because I've had decades to get used to the idea and have been more frustrated than sad for a long time. The only thing his actions have done is insure that my absentee sister gets a bunch of money for nothing (the property is still worth plenty of money even at a realistic price) and I get repaid for decades of having to deal with this and for the effort it's going to take to close their estate, which is going to be an immense amount of work. I would have much rather they have gotten the use out of their investment...
I've never taken an Economics class, but isn't this what the "dismal scientists" call an opportunity cost? If you hang onto the depreciated object/property, you can't do anything else with the money that someone would give you for it. If you sell it, even for less than you paid, you suddenly have cash that can be invested elsewhere -- in something that will earn better if you choose well.
Great point, thanks for posting it.
I'm in the process of selling or giving away everything, so my next move will be easier. And, it's simply time to clear out the cobwebs anyway. When I add up the costs of UPSing & UHauling the same things back & forth across country many times throughout my life, I could have sold it all for brand new, high end everything.
I'd now rather have the $5 in my pocket for the book I've already read (just sold $500 in books) than to pay to transport it 1 more time. The few items I have that are of higher value... I'll be happy with what I can get for the opportunity to pass it along to a new owner & to not have to worry about it any longer.
I hope to get down to an espresso cup, eyeliner & change of socks.
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