Andrew Wetzel's Musings

July 14, 2017

Buying a “dated” listing? What should you do?

Filed under: Uncategorized — awetzel @ 1:48 PM

You have a buyer-client interested in making an offer on a house that is dated. Hmmm. Does it need updating or does it need repair? Some buyers may think they are the same thing! I want to focus on houses that need updating. I will say that there are some parallels between both “conditions” but that houses needing repairs probably have a smaller potential audience and their condition may impact how a lender and/ or municipality views them. Hopefully, a buyer knows what they can handle!

Some houses seem to sell over and over again while others stay off the market for many years. I wonder why some seem to keep coming on the market. Perhaps there is something that needs to be looked at? On the other hand, houses that change hands frequently tend to be more updated as each seller wants to attract interest and, generally speaking, most sales involve a property inspection and a municipal inspection so there are repeated processes to check how a house is doing.

Conversely, houses that are sold less frequently have fewer opportunities for third-party evaluation and may not be updated with the latest equipment, features or decorating ideas. For example, in my local area you will find many houses with wall-to-wall carpet (even shag carpet!), aluminum siding, paneling and dropped ceilings! Salesman flooded the area in the 1970’s and sold a ton of these “ready fixes” that became “staples”. The presence of any (or ALL!) of these “dates” a house and can send some buyers running away. Frankly, unless you like what you see, these old-time “upgrades” may be unappealing, difficult to change and/ or even hide issues that should have been addressed but were covered up. Given the current low interest rates, unless a buyer specifically wants to decorate a home to their own tastes or buy a house to “flip”, they may be more inclined to spend more (it typically costs about $5 per month for every $1000 borrowed) to get a house that needs little improving or has nothing to do before moving in. How much does that extra bedroom or bathroom really cost? If you are planning for down the road, what is the potential impact on resale?

Ideally, houses should be priced for features and condition (the location cannot be changed so I am ignoring it here but it is obviously important). Buyers should evaluate houses in terms of the competition, its features/ condition and how it fits their needs/ wants. I firmly believe that a house is something a person/ family should “grow into” rather than “outgrowing it” as ‘closing costs” are very expensive! Aside from their perception about how a seller priced it, buyers need to consider how much to offer and whether to ask for specific repairs up front. It is always risky if not disingenuous to make an offer on a house already priced for its features and condition and then to ask for financial consideration arising from a property inspection that points out the obvious. Inspections should focus on what is not obvious during a showing as well as pointing out what a buyer and their agent did not know at the time. Of course this will depend on whether the market favors buyers or sellers and the level of urgency the seller has.

I trust my ability to represent the interests of a buyer-client when they have interest in a house that needs work. I need to know what they are thinking so that I can properly advise them. Then, I like to have an honest conversation with the listing agent before my client commits to making an offer and spending money on inspections only to find that their perceptions and expectations differ from the seller’s. Wasting time making an offer that will go nowhere may allow better options to sell to other buyers; spending money on inspections that reveal repairs a seller will not address costs money. Of course, every situation is not ideal and time and money may get wasted.

HIRE WISELY!

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