Real Estate Investing

Reading a “Realtor Only” post over at Active Rain, I had to laugh at an agent’s analogy that taking an overpriced listing is like dating a married man.  Basically, you’re wasting your time and energy on a relationship that has no future - destined for failure.

I find many sellers want to price their house higher than market value so they’ll have some negotiating room.  They know what they want for the house (period) and seem terrified that someone will try to get it for less.  They don’t want to appear stubborn by NOT negotiating, so the higher price is their choice.

But what really happens when you overprice your house?

First, you potentially lose buyers who are looking RIGHT NOW - often the most important buyer.   Buyers do go online - a lot - to find out if there’s anything new in their price range.  If it’s overpriced, they don’t even find it but they will find the one that’s priced correctly.

Second if the home is overpriced, it will linger on the market to the point that people start thinking there’s something wrong with it. Price reduction after price reduction sends a terrible message - it’s stale and undesirable.

Key is getting the price right at the get-go - or maybe pricing it a couple thousand BELOW market value.  If it’s price is tempting, you’ll hopefully get immediate interest and offers.  You can negotiate UP in price just as well as down in the event the buyer wants concessions like closing costs, title insurance, or a warranty.

The Maryland Real Estate Blog offers even more insight on why you shouldn’t overprice:  the appraisal.

The second problem is centered around the appraisal.  Let’s say your house is valued at $300,000 and you are convinced you can get $350,000.  OK, you do get a knucklehead to offer your $350,000 and you are flying high!  You are throwing out one “told you so” after another at your agent.  Here is where it bites you.  Your generous buyer’s mortgage company then comes into play.  To protect their interest in the investment, the mortgage company will then send out an appraiser to value the property.

If you decide you’re ready to sell, remember to be picky that your agent isn’t telling you anything just to get the listing, that it costs you time and emotional wear-and-tear to overprice, and that the listing could grow market weary.

A growing trend in real estate marketing is virtual staging for empty houses.  We all know that staging a home for sale is an important step in getting top dollar for a seller. It helps to be able to define a room, to show beautiful possibilities to would-be buyers.  However, the cost of staging an empty home can be out-of-reach for many sellers, especially if they’ve already moved away and don’t have furniture to rearrange, rugs to put down, a nice chair with a woven throw over the back.

According to the National Association of Realtors all homes need to look their best but it can be cost prohibitive,

To professionally stage an occupied house can cost from a few hundred dollars to more than $1,000, says Barb Schwartz, a staging pioneer and founder of StagedHomes.com. The price tag is even higher for vacant properties; add rental furniture and the costs can skyrocket.

The article goes on to tell about the growth of virtual staging through technology.  There are several web sites available that offer products that can help you change wall colors, flooring, and more.  Included in the NAR list are:  Obeo StyleDesigner, Home Design Studio, and Live Interior 3.  Although I may not be a graphic designer by trade, I’m certain I could figure this out on behalf of my sellers!  I will be bookmarking each of these sites for future reference.

However all good intentions aside, agents must be careful to disclose that the images they post on the MLS and in their marketing materials are computer generated. It would be quite a shock for a buyer to walk in expecting to see a lavishly decorated home and see bare white walls.

Photo from Obeo StyleDesigner. 

Several years ago, a colleague who is now retired co-listed a home in Nashville that was haunted.  It was not “supposedly” haunted … it had ghosts, plain and simple.  The home seller was a Civil War buff who had gone to a reenactment with a group of friends.  The reenactment was near an old plantation house and cemetery that were haunted.  There were tales both of laughter from children and images of adults that would appear in windows.  The cemetery was full of ghosts wearing mostly confederate uniforms.

After the reenactment, the group of friends sat on the back of a pick up truck drinking… watching for the ghosts to come out as the skies grew dark.  They waited a couple of hours and decided to call it a night before their wives came looking for them.  But as the brave seller was about to get in his cab, he shouted a challenge to the spirits, “If anyone wants to come home with me, hop in the back of the truck!”   The friends just cackled with laughter and punched him in the arm jovially.  It was a fun night and the memory of it wouldn’t fade quickly.

As it turns out, it didn’t fade at all because within two nights of his return home, mysterious things began happening at his house.  Toys that belonged to his grandchildren would be found on the floor of the playroom in the morning - toys that had been on a shelf the night before.  The seller ran a business out of his house and often times when he was on the phone with a client, he’d hear a child giggling.   Once he heard a toddler crying and he ended his call to see what was going on.  He never did find anyone.

The young spirits weren’t too bad, but an older soul would sit in the rocking chair for two hours every night.  At precisely 8:20 p.m., the rocking motion would begin. At 10:20 p.m. - after the local weather went off - the seller would say, “It’s time to go to bed.” and the chair would stop.

The house went on the market for six months and it was advertised as being haunted.  But no one was interested in buying a house with ghosts.  Why?  According to Curbed Hamptons,

It seems the paranormal don’t sell houses all that well, particularly in a luxury market, so on the surface, the Hamptons is utterly devoid of spirits. A 1991 court ruling in Upstate New York scared many storytellers, when a $650,000 house sale fell through after the seller didn’t reveal the hauntedness of her house. A $32,500 deposit had to be returned after it was proven that the seller had relayed ghost stories to the local newspaper and Reader’s Digest, but not to the freaked out buyer. 

So next time you think about inviting a ghost home with you, be careful.  You might not be able to find a buyer until after the ghostbusters come in to rid your house of unwanted, invisible, cold guests.

Photo by my former colleague of the house that really WAS haunted.