Reno Real Estate's Investing tip: Cut your losses short

                          "Cut your losses short"

                                                       -From Investors Business Daily's 20 Investing Rules

I haven't met a man who enjoys being wrong.  Nobody does.  And admitting that you've made a mistake, yeah, I won't even start with that (just ask married couples).

That's why this rule is a lot tougher than it reads.  This rule could also be summed up as 'admit you were wrong and take a hit to avoid getting in deeper'.  A rule that we must subscribe to if we are serious in being successful in real estate.  Nobody is right 100% of the time.  It's impossible.

The great stock trader William O'Neil once said that if we are right just 50% of the time in investing but cut our losses for the other 50% (mistakes), we can be very wealthy.

last summer I had a client who wanted to sell her house.  We priced her home to be in the top three in the neighborhood.  After less than ten days we had gotten seven showings. Not long after, I sensed a certain complacency 'oh, we got seven showings in just over a week,maybe I don't really have to rush this' and decided to pull out their home from the market. 

I tried to explain to them how the market was already going down and from the looks of it the correction would continue to deepen.  They did not heed what the market was telling them 'cut your losses short'. 

And I understood where they were coming from, if they sold at that time their profits would be significantly lower than if they had sold a year or two before.  It was a harsh reality.  But one that they had to face, I tried to tell them that based on the market's stats, the losses would continue to mount if they did not act fast.  They decided to wait in the sidelines.

In less than a year I had closed a home for my other client (buying side) in the same neighborhood,same size, same everything.  I closed the home for $40,000 less than what we were asking for just a year earlier for my other client(seller).  In short, they lost $40,000.  From harsh to brutal. 

My heart just breaks for stories like these.

But I want to make a point that the market does not care who we are,whether rich or poor,prominent or pauper--the market will be ruthless or good depending on how we'll play it.  So wouldn't it be better if we played on its side?

And life, my friend, will become a romance.  Hopefully.