Solving problems with problem properties
The reason a home doesn’t sell is because it’s priced too high for its physical condition or location. The buyer’s reasons for not buying the home outweigh the positive reasons why they should. The challenge for a seller and their agent is to eliminate anything that could be considered a reason against buying while highlighting the positive features. Although a property’s location can’t be changed, its environment can be improved or modified. An objective evaluation of a property’s physical characteristics should be completed early, preferably before the property goes up for sale, in order to correct, improve or mitigate the issues by pricing the property accordingly.
There is an old saying among agents “Price cures all ills.” At some price, regardless of the extent of the property’s problem, someone will buy it, if it’s priced low enough.
Not every home for sale is in immaculate condition, sitting on a gorgeous large landscaped lot, located in a desirable neighborhood, beautifully decorated and priced ten of thousands of dollars less than similar listings. Specially challenged properties may require some additional creative thought and work to make them saleable in our current market.
Reducing the price of a home to compensate for whatever may be the problem is the easiest action for an agent and seller to take but may not always be the best. Some sellers are unwilling or unable to spend money or time on preparing their home for sale and some agents are not aware of the necessity. A significant price reduction can compensate for worn carpets or a dated design but I have found a buyer’s definition of “significant” is much different than sellers.
There are circumstances when a price reduction for a specially challenged property isn’t in the seller’s best interest. Most buyers will not consider specially challenged homes regardless of the price. If the reality of a home’s physical characteristics doesn’t match a homebuyer’s inner vision, they usually will not buy. Contractors, investors and flippers look at challenged properties differently but they are not players in our current market. I have watched physically challenged properties continue to languish on the market even after many price reductions because the listing agent or the seller refused to solve the existing problem.
Not every challenged property requires money to fix a problem. My clients liked the modular home on 10 acres in the Garden Valley area. The property had been vacant for nearly a year and currently priced $50,000 less than when it was first listed. My clients’ offer would be an easy sale. They had high FICO scores, a 20 percent down payment and had recently sold their home in Sacramento. There was only one problem…the modular was built prior to 1976 and no lender would finance it.
Financing a modular or manufactured home, even when attached to a permanent foundation, has never been easy. Modular homes are not a preferred property by most lenders. FHA and VA will finance them, IF (big if) they meet certain age and building requirements, which this one did not. After many turndowns, I called the listing agent to discuss the dilemma.
She was not surprised or sympathetic to know that there was no financing available for her listing. No, she had not checked for any alternative sources of financing. She told me, as the listing agent, it wasn’t her responsibility to find financing for “my” buyers. No, she had not discussed with the seller the possibility of “seller financing” and did not think he would be interested. She offered no suggestions on how she was going to sell a home that could not be financed but said she would probably reduce the price again next month.
The process of selling real estate is more than installing a “for sale” sign and showing properties. It is solving problems for buyers and sellers. This lady had been charged with the responsibility solving the problem of selling a property that could not be financed and had waited a year to address the situation.
Creative initiative is often required when marketing a specially challenged property. There are reasonable financial limits to mitigating the problem but a price reduction should not be the first and only response to marketing a difficult or non-conforming property.
The inspection period, after escrow has been opened, is not the time for suspected or non-disclosed issues to surface. Sellers and agents need to be proactive to eliminate any reason a buyer might have second thoughts about proceeding with the sale. Resolving issues early will not only help to sell the property but it will sell for a higher price.
Objectively is important when evaluating a property’s blemishes. Most homeowners cannot be objective about their family home and some agents will not for fear of offending a seller and loosing a listing. If “beauty is in the eye of the beholder” then it only makes sense to make a home as attractive as possible, which may include a little makeup.
There is an old saying among agents “Price cures all ills.” At some price, regardless of the extent of the property’s problem, someone will buy it, if it’s priced low enough.
Not every home for sale is in immaculate condition, sitting on a gorgeous large landscaped lot, located in a desirable neighborhood, beautifully decorated and priced ten of thousands of dollars less than similar listings. Specially challenged properties may require some additional creative thought and work to make them saleable in our current market.
Reducing the price of a home to compensate for whatever may be the problem is the easiest action for an agent and seller to take but may not always be the best. Some sellers are unwilling or unable to spend money or time on preparing their home for sale and some agents are not aware of the necessity. A significant price reduction can compensate for worn carpets or a dated design but I have found a buyer’s definition of “significant” is much different than sellers.
There are circumstances when a price reduction for a specially challenged property isn’t in the seller’s best interest. Most buyers will not consider specially challenged homes regardless of the price. If the reality of a home’s physical characteristics doesn’t match a homebuyer’s inner vision, they usually will not buy. Contractors, investors and flippers look at challenged properties differently but they are not players in our current market. I have watched physically challenged properties continue to languish on the market even after many price reductions because the listing agent or the seller refused to solve the existing problem.
Not every challenged property requires money to fix a problem. My clients liked the modular home on 10 acres in the Garden Valley area. The property had been vacant for nearly a year and currently priced $50,000 less than when it was first listed. My clients’ offer would be an easy sale. They had high FICO scores, a 20 percent down payment and had recently sold their home in Sacramento. There was only one problem…the modular was built prior to 1976 and no lender would finance it.
Financing a modular or manufactured home, even when attached to a permanent foundation, has never been easy. Modular homes are not a preferred property by most lenders. FHA and VA will finance them, IF (big if) they meet certain age and building requirements, which this one did not. After many turndowns, I called the listing agent to discuss the dilemma.
She was not surprised or sympathetic to know that there was no financing available for her listing. No, she had not checked for any alternative sources of financing. She told me, as the listing agent, it wasn’t her responsibility to find financing for “my” buyers. No, she had not discussed with the seller the possibility of “seller financing” and did not think he would be interested. She offered no suggestions on how she was going to sell a home that could not be financed but said she would probably reduce the price again next month.
The process of selling real estate is more than installing a “for sale” sign and showing properties. It is solving problems for buyers and sellers. This lady had been charged with the responsibility solving the problem of selling a property that could not be financed and had waited a year to address the situation.
Creative initiative is often required when marketing a specially challenged property. There are reasonable financial limits to mitigating the problem but a price reduction should not be the first and only response to marketing a difficult or non-conforming property.
The inspection period, after escrow has been opened, is not the time for suspected or non-disclosed issues to surface. Sellers and agents need to be proactive to eliminate any reason a buyer might have second thoughts about proceeding with the sale. Resolving issues early will not only help to sell the property but it will sell for a higher price.
Objectively is important when evaluating a property’s blemishes. Most homeowners cannot be objective about their family home and some agents will not for fear of offending a seller and loosing a listing. If “beauty is in the eye of the beholder” then it only makes sense to make a home as attractive as possible, which may include a little makeup.
posted by Ken Calhoon at 7:48 AM
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