By Brian Copeland
I love reading warning labels. One of my favorites is “For external use only,” which has been spotted on numerous curling irons. Another favorite is on a child’s Halloween superman costume that says “Wearing of this garment does not enable you to fly.”
Wouldn’t it be great if homes came with warning signs posted with the true warnings that buyers may need to know? Here are some of the signs I’d recommend.
“Warning! This house is overpriced by $30K because the seller has been under a rock for the past 18 months.” Real estate practitioners carry the power to prevent this label, but find that getting the sign in the yard, getting the bragging rights that he/she “won” the listing, or getting to put it in an internet lead system to get more buyers is more important than being honest with the seller. The same holds true for a buyer’s agent who is too concerned about a paycheck to pull true comparatives for a buyer.
We have the responsibility to point out the pricing warning sign to today’s buyers and sellers. We need to tell sellers, “Oh, and by the way, if you think that you should price it higher because you need negotiation room, you may not see any showings and your home may become stigmatized as a stale home. This could cause buyers to question their ability to resale the home in the future.” As a buyer’s agent we should pull comparatives for every home that has landed in the client’s top five for consideration before going to contract.
“This house is lipstick on a pig.” It’s one of my favorite pulled quotes that the local CBS affiliated pulled out of an interview they did with me when I THOUGHT the camera was off. It holds true though. Some renovated homes are pretty, cosmetic make-up put on a trash of a structure. Be super cautious of renovated homes. If someone is renovating homes in this market, likely they are smart, conscientious and know what they are doing. Only the best try this buy, remodel, resale market of 2009 and 2010.
You need to know the “big dog” renovators in the market and should be able to give you the information you need on reputation. I admit, I don’t always know the renovator, but I certainly can do some stalking and get the scoop in a few hours. If you’re buying a home that was renovated and resold in the “flipping” heyday, WHOA BESSY!!!!! The buyer will want to make sure they get not only a home inspection, but also a structural inspection. They’ll want to talk to the immediate neighbors to see how long it sat in the open weather. Check the tax record or with the previous sales agent to conversationally find out what that client is doing now. I’d be most thorough with homes renovated between 2002 and 2007, when every idiot who wanted to make a quick dollar decided to try one house.
“Stop! This home says it’s a short sale, but really it’s a lofty dream.” It’s odd when you examine the MLS and see the number of short sales listed, then you look at the numbers to analyze what truly closed. A short sale is technically a process where (1) a seller or seller’s agent contacts a bank, (2) gets them to approve a certain price below what the seller owes on the home and (3) offers it to the buyer’s market for that price.
In this market, we have a lot of agents and sellers who are just trying, hoping and praying to sell the home for what they can. I’ve seen some “listed” for $200K UNDER market, but the bank not even consider the price when an immediate offer comes in. The bank often doesn’t know that the home has been listed for such a low price.
Encourage your buyers to go into the short sale home search process with eyes-wide open. Be ready for the question, “How many short sales have you written contracts on and seen to closing table.” Keep in mind, a you might have written 20 short sale buyer contracts, but only closed one or two. Don’t be afraid of those kind of numbers when articulating your experience. Be more concerned about being an agent who is familiar with the ups and downs of the system.
Brian Copeland is a real estate practitioner in Nashville, Tenn. You can follow Brian on Twitter: @NashvilleBrian