Recently, one of the Agents in our office, relocated out West.
As the annual dues came into play, she decided to not renew her membership in this State.
During her time here, she was well known and well respected among her peers. Her name was synonymous with quality representation. It still is.
SCENE:
A parcel of land is purchased in June of 2003. The market is Booming and construction is almost everywhere you look. The home is completed in the early months of 2004. The owner of the home lives in it for a year. The house goes on the market in the middle of the year in 2005. 3 1/2 months later it is under contract, by the current owner.
The new owner has a primary residence out of state. They came to vacation a couple of times each year since it was bought...
The Market begins its downward spiral.
It's now the last couple of months in 2007. The market is still spiraling downward, with the bottom yet to be seen.
The current owner decides to sell. Our former Agent is hired to get the job done.
TODAY:
The Listings this Agent had have now been handed off and the Clients are being contacted about either renewing their contracts with an Agent in our office or withdrawing their listing(s).
I contacted one of these owners on one of these listings, introduced myself, then explained the situation. The owner, although he LOVES this former Agent, was quite disappointed by the performance of this listing. He told me that it seemed, "Everything she told us, was wrong". His words, not mine. He said this home has now been on the market for 5 years.
I was at a loss for words.
I then told him that I wanted to walk this home, inside and out, to get a sense and feel of the property...
I walked the lot. Nice lot. I went inside and started, top to bottom. The bottom floor is a walkout basement. The only problem is the entire bottom floor is unfinished. The heating system is Hot Water Baseboards. The bottom floor has them and they are connected to the rest of the home.
The owners have said that they have had numerous showings, but never an offer.
I dug a little deeper.
Back when this home was purchased, they got it for $165./ft. When they listed it 2 years later, it was listed at $210./ft. (This was about average, for comps in that area). Only thing was, was we were still in a freefall. The numbers were changing daily and not for the better.
I told him this home, in its current state, including its finished square footage was selling for $115-$125/ft. The finished portion of the home is a little over 1300 sf. The unfinished are in the basement is almost 1000sf.
When prospective buyers saw the basement, it has been determined, they saw work. An additional expense that was not anticipated nor desired. The buyers walked.
I told Mr. Seller that if the basement area was finished out, (approximately $15K in additional expense) this home could in fact sell for another $100,000.
He asked me why his former agent hadn't pointed this out. I told him that when it was initially priced, the numbers that were showing, were based on the recent history at the time and it was basically a crapshoot at that point in a falling market. I likened it to throwing darts with a blindfold on. He wanted to know if it was worth putting in an additional $15K. I told him that this would be an approximate investment of $12/ft. with a return of a potential $120./ft
He is going to finish the basement.
He might even make a little more than what he paid for it 7 years ago. (Enough to cover settlement costs, anyways.)
Pricing a home in a volatile market can be tough. Pricing one in a downward spiral is almost impossible.
Things are getting better though.
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