I try to tell that to my clients and friends all the time. So many people feel that if the price is right, the house will sell, and they don’t need to do anything to make the house nice. But in reality, even the worst house on the street will sell faster than the others if the first impression is that the house has value.
I took a new listing just this week. It’s in my own neighborhood, it has everything that a house in that neighborhood should have and it’s about $100,000 less expensive than other homes on the street. I should preface these comments by pointing out the house is vacant and has been for a year or more.
We installed the sign on Friday and on Saturday the phone started ringing. That’s a good sign. But the unkempt yard and the “Palmetto” bugs here and there throughout the house just totally upset the first people who came through—they were Canadians--and although the price was right, the first impressions were wrong and so I am almost certain they will not be my buyers.
As I write this, I am thinking of what I have to do to make sure the first impression is a good one. The owner has moved to another part of Florida and is depending on me to handle this sale. There’s little I can do to change out the rugs or turn the pool from a nice earthy green to sparkling blue, but I will be spending some time with a garbage bag or two to straighten out the mess.
My client is not alone in offering a home that is not quite move-in ready. He’s in a situation where his asking price is not going to net him anything, as his is a short sale. So he is unwilling to put any money into fixing or upgrading his house. Other homes for sale that I have seen lately are equally messy, and these homes do sell—usually to investors who will handle the fix-up and resell the properties for a profit.
Sprucing up a home to sell it faster and for more money is a strategy frequently advocated by brokers and real estate agents—but it usually does not work in a short sale unless the bank is willing to help out. And banks are usually not willing to help out until the foreclosure has been completed and the ownership has moved over to the bank. (At that point the bank calls them Other Real Estate Owned, and the acronym is OREO or simply REO)
There are still plenty of dilapidated foreclosures on the market marred by water damage, mold, broken windows and missing appliances and plumbing fixtures, properties that hold little appeal except to investors and professional rehabbers.
But as we make our way through the sale of the “troubled” properties, the quality of foreclosures and the communities where they are located has improved, so, too, has interest in them by consumers. To entice those buyers and lessen their inventory of REO’s; banks are spending thousands of dollars on some foreclosures. It’s pretty ceap to paint every room white, and to clean or replace carpet. In addition to new paint and carpet, wood floors are being refinished, old windows are being replaced, and leaky roofs are being repaired.
The strategy benefits the banks and homebuyers, who otherwise would have trouble securing mortgages on homes that a lender could term “uninhabitable” because of needed repairs. At the same time, it helps the real estate market because while the foreclosures still sell at a discount, it is not at the fire sale prices of unlivable properties. And the repairs (when done by the bank) can be added into the resale price. But the real net value to the bank is the sales come more quickly.
For traditional home sellers, the trend of banks plowing money into foreclosures means they will have to be more realistic in their pricing, because the foreclosure for sale down the street may look a lot more inviting to prospective buyers.
There are over 1,500,000 vacant homes in Florida today! And Fannie Mae repossessed more than 262,000 single-family homes nationally last year, as of Dec. 31, its inventory of single-family REOs was almost 163,000.
Under its “first look” program that began in September 2009, Fannie Mae will only consider offers from owner-occupants or buyers like nonprofits during the first 15 days a home is on the market. Fannie sold nearly 29,000 homes to consumers under that program during its first year.
Buyers are jumping on the best REOs, and keen interest can lead to multiple offers, but the buyers are different now than they were at the beginning of the real estate down turn. They have more to pick from and the prices are all pretty much the same, so they pick the nicest one.
My Grandmother used to say, “You can’t make a silk purse out of a sow’s ear.” That was a little tough for a 4 year old (me) to understand at the time I first heard it, but I am seeing what she meant every day. I suppose the corollary to that concept is, "you can put lipstick on a pig." And if lipstick makes a better first impression, bring it on.