One family even told me they were having money problems after the birth of a child and the loss of a job. 

It wasn't an expensive class to begin with, so I figured it wasn't a huge loss if it sucked.

You changed the way the load is distributed and therefore that weight needs to be correctly supported.

In fact, I still have a carry forward loss of somewhere around 100k on the books. 

You suddenly will realize that on papers you might be at no loss, but commissions (6% realtors fee) and blah blah type expenses will increase your loss or eat up your profit .

These things sound great going in but when something goes bad that is when the upfront agreement is worth it's weight in gold. 

I'd like to sell my home and get something smaller, and then use the savings from the decreased mortgage to put towards investing, but that doesn't seem likely without a considerable loss.

Worse, what about unexpected personal losses not even related to real estate (job loss, health issues, catastrophic event, etc.)? 

Unless there were some special circumstances, paying par value for the note will cause general loss as future value depreciates. 

Which example you give the most weight to is totally dependent upon what your goals are and what your comfort level is.