Throwing Good Money After Bad? Hardly
It’s certainly a sympathetic — if not necessarily rational — stance on the part of a would-be Seller whose home is (still) worth less than they paid for it.
Namely, since they’re going to lose money when they sell, psychologically, they don’t want to spend any more money prepping their home before they put it on the 
market (of course, if the obstacle is financial, that’s a different problem).
Unfortunately, instead of saving the owner money, such a mindset virtually guarantees that they will lose even more.
Penny-Wise, Pound Foolish
To pick a real-life example from yesterday’s City Lakes office meeting, consider a Minnetonka seller who bought their home for $600k in 2009.
Even though the housing market has rebounded in the last year, prevailing prices are still about 15% – 20% below when they bought.
However, as Realtors take pains to point out to their clients, what price any particular home fetches falls within a range, depending on how well it shows, the home’s updates (or lack thereof), curb appeal, etc.
A broad range.
Of course, less appealing homes not only sell for less, they typically take longer to sell.
Return on Investment
How broad a range?
If the Minnetonka owner budgets, say, $15k to spend strategically on new paint, carpet, light fixtures, perhaps a new appliance or two, and staging (especially staging!) . . . their home might sell for $525k, quickly.
On the other hand, if they try to “save” the $15k and instead the home comes across as tired and dated, it could easily sell for $460k – $480k.
Or perhaps even less(!), given the hefty discount Buyers are now placing on homes that aren’t perceived to be move-in ready.
I don’t know about you, but spending $15k to make an extra $50k strikes me as a pretty good return on investment.
P.S.: It’s a bit of a staging cliché, but it happens to be true: the first price cut, assuming the home doesn’t sell, would have more than paid for a generous staging budget.
