Dear David,

I sold my home at a price I that made me comfortable. There were some issues with the inspection, and now the buyer wants to reduce the purchase price. My agent doesn’t seem sympathetic to the fact that I am feeling some financial strain. Don’t people understand that I have other expenses and they need to compromise? – STRETCHED TO THE LIMIT

DEAR STRETCHED: All of us have an idea in the back of our minds about what our home is worth, but it’s important to differentiate between Market Value and Emotional Value. Market Value assumes a buyer’s point of view and is based on what someone else is willing to pay for your home. Emotional Value has more to do with your wants and needs as a seller: what you paid for your home, the cost of maintaining it, or how much you need in order to buy your next home are all important things for you to keep in mind, but they don’t affect what someone else is willing to pay.

The concept of value is subjective, of course. Different people will pay different amounts for the same thing, which is blatantly obvious when buyers are competing. I’ve seen multiple offers on the same property come in with a $100,000 spread between them. But a high-bidding buyer isn’t thinking about how much the seller needs to move. They’re focused on the other buyers and what it might take to best their offers. They’re focused on their Market Value.

When a home sells with conditions attached, there’s a chance that its Market Value could change. A conditional offer isn’t a done deal, but merely a promise. If a buyer uncovers unforeseen issues while performing their due diligence, they could come back to the table and try to re-negotiate their purchase price (or they could just walk away). In this situation, it’s not uncommon for buyers and sellers to reach a compromise that adjusts the selling price in order to solve the problem.

When my clients sell their home and the deal still has conditions attached, I always tell them “don’t spend the money” until the deal is firm. If your buyer has raised concerns with the inspection, leaning heavily into the Emotional Value of your home at the expense of Market Value could leave you vulnerable to losing the deal. Ideally, a reasonable price adjustment will hit the buyer’s sweet spot while still helping you to achieve the highest possible return on your investment.

Dear David,

We bought a home at the end of the summer and realized pretty quickly that it wasn’t the right choice for us. Now we want to move again. Should we expect to pay income tax on any capital gains we make from the sale of this property when we’ve only lived in it for a few months? – CONCERNED DEAR CONCERNED: This is a question for your accountant. That said, this is your principal home. From the sounds of it, this was not a business venture and you didn’t set out to flip a house for profit. Gains on your principal residence are not typically taxable. Likewise, if you wanted to move and ended up selling your principal residence for a $20,000 loss, you wouldn’t be able to deduct that loss from your taxes.

Pro Tip: If you’re moving 40 kilometers or more for work, your moving expenses (including professional fees) could be tax-deductible. If this applies, ask your accountant to investigate. #AskDavid