Listing Agents & Sellers: Can you substantiate your improvements and upgrades?

By
Real Estate Agent with RE/MAX Compass, formerly RE/MAX WHP 0524642
https://activerain.com/droplet/XNR

This morning I called on a listing for my buyer. My clients curiosity peaked when they read there was over 70k in overall improvements and upgrades on this 150k home. I was just as curious. That's an awful lot of money spent on a 150k home. Perhaps there was an insurance claim. We wanted more information. When I asked the listing agent for verification or an outline for such upgrades I was told that this information was provided by the Seller and they had no "exact" documentation, but if I "really needed it," they'd try and find all the receipts.

This response made me and my buyer both nervous and slightly annoyed.

A buyer who makes an offer on a home does so with the knowledge they have been provided. If the Listing Agent says there's a new air condition, the Listing Agent better have some proof. A 5 year old air condition isn't new. If the Listing Agent says there's 70k in upgrades they better be able to substantiate such a claim. Not doing so could put them in a legal fiasco of he said - she said. Deceptive Trade Practices are the number one reason people sue in real estate.

Realtors aren't the only ones who should be careful about making bloated statements when it comes to upgrades and improvements. Home Sellers aren't necessarily immune and shielded because they have a Realtor. It's always best to be truthful, transparent and honest about your homes improvements and upgrades.

I once had a Seller tell me that his backyard pool and landscaping was worth well over $100,000.00 and that is how he wanted me to market his home. After further research I learned that he and his friends constructed the entire backyard on their own for about $35,000.00. The work was marvelous, but they weren't pool or landscaping appraisers and I am in no position to make such grand assumptions. In the end, we agreed to have a pool company and landscaper provide written quotes on what it would cost to duplicate such a beautiful scenery. The cost? About $70,000.00.

 

 

 

Posted by

 

 
Greg Nino
, Houston area Realtor®.
Helping residential buyers, sellers and tenants 7 days a week.
Available @ 832-298-8555 

RE/MAX Compass (Formerly RE/MAX WHP)

www.GiveMeMyHomesValue.com

www.EverydayHoustonHomes.Com

 

 

The information contained in this blog is believed to be reliable and while every effort is made to assure that the information is as accurate as possible, the author of this blog, and its comments disclaim any implied warranty or representation about it's accuracy, completeness or appropriateness for any particular purpose. All information is copywritten and the property of Greg Nino.  

 

 

 

 

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Re-Blogged 1 time:

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  1. Winston Heverly 08/17/2013 07:06 AM
Topic:
Home Improvement
Location:
Texas
Groups:
The Art Of Marketing You
What NOT to do in REAL ESTATE - BAD BUSINESS
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Diary of a Realtor
Tags:
improvemnets and upgrades mls
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mls upgrade verification

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Show All Comments
Rainmaker
1,523,673
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Fifteen Years Experience in Brevard County

Yep...new is not always new and upgrades offered by a builder are quoted at inflated retail.  Just upgraded egos here...

Jul 01, 2013 03:03 AM #13
Rainmaker
528,217
Martin Kalisker
Greater Boston Association of REALTORS - Boston, MA
Professional Standards & Legal Assistant

If the information is readily verifiable, don't we have an obligation to do so?  Sellers need to know that  offers made based on incorrect disclosures will likely lead to headaches down the road not only for them, but for their agent - especially if they are a REALTOR®. 

Jul 01, 2013 03:14 AM #14
Rainmaker
29,239
Georgia Perez
Windermere Real Estate / WSI - Seattle, WA
Broker, ABR, CNE, Seattle, WA 206-356-9872

Really good points Gino and not just for what we do with our clients, it's a reminder for me to keep really good records of the work we have done over the years on our own home!

Jul 01, 2013 03:18 AM #15
Rainer
349,346
Raymond Denton
Homesmart / Evergreen Realty - Dana Point, CA
Capo Beach Realtor® - www.CapistranoBeachHomes.com

I've been here 16 years, and can produce every receipt ... they all go in one file.  I want my cost basis to be as high as possible when I sell, to offset taxes as much as possible.  I thought most homeowners did the same.

Jul 01, 2013 03:35 AM #16
Rainer
295,633
Paddy Deighan JD PhD
TimeshareLawyers.pro - Vail, CO
Paddy Deighan J.D. Ph.D

interesting blog post...have doscovered over the years that mset sellers cannot substantiate improvements, repairs and upgrades

Jul 01, 2013 03:58 AM #17
Rainmaker
430,688
Mitch Muller - Charlotte NC Real Estate
ProStead Realty Charlotte, NC CRS SRES mitch@prostead.com - Charlotte, NC
Certified Residential Specialist

Never ceases to amaze me what the MLS sheet says and what the photos look like, then what the house actually looks like when you get there!

Jul 01, 2013 04:21 AM #18
Rainmaker
415,037
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Very true, Nino.  And yes the word "new" is thrown around a little too much without any substantiation.

I ask sellers for receipts and permits all the time... it's rare that anyone has anything.  The few people that do keep records tend to have everything, all the rest are just flying by the seat of their pants.

People are funny.  In my mind "new" means 5 years old now.

Jul 01, 2013 04:34 AM #19
Rainmaker
303,933
Michael J. O'Connor
Diamond Ridge Realty - Corona, CA
Eastvale - 951-847-4883

AAAAHHHH, yes, the improvements fluff.  I refuse to use the word new.  Updated and newer are the words that I use.  And never would I market with a dollar figure as it really doesn't make a difference how much they over or under paid for those improvements.  It's whether the buyer places (and sometimes the appraiser) any value on those 'improvements'.

Jul 01, 2013 04:46 AM #20
Rainmaker
848,557
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Greg, we agree.  However, sometimes the seller is not that good a record keeper.  Best include a disclaimer in those cases.

Jul 01, 2013 06:27 AM #21
Rainmaker
370,513
Travis "the SOLD man" Parker; Associate Broker
iXL Real Estate-Wiregrasss\ - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

I recently had a listing with a lot of remodeling - over $40,000 in just material on a $175,000 home. I asked them to get receipts ready. They didn't & first buyer offer was low. When I got them to scramble and get me the receipts and sent to the other Agent, the offer jumped drastically. And sold!

Jul 01, 2013 06:29 AM #22
Rainer
483,689
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Not many sellers, in fact none that I know of have ever kept home iimprovement records or receipts and they will wish they had when it's time to refinance their home, won't they?

Jul 01, 2013 08:12 AM #23
Ambassador
4,068,074
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

I think it's essential to beable to document. It's too easy to inflate the value. And might not this information be useful for documenting the basis of your home for tax purposes?

Jul 01, 2013 01:33 PM #24
Rainmaker
724,401
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

It seems they used to really make this a point of emphasis in new agent training-avoid puffing or puffery, blowing smoke, never a a good practive.

Jul 01, 2013 03:00 PM #25
Rainer
21,823
Thomas Halzack
RightTrac Financial Group - Fairfield, CT
Extraordinary Mortgage Solutions

wow...good post, Nino.

Makes me think of other negotiations in other industries. Need to verify is always important. Easy to throw around a number. People always think more of what they do 'to or for' something than is factual. 

This makes me think...another good post would be about the type of negotiators everyone has each experienced. what percentage breakdowns would be the 1) toughest, but most effective negotiators 2) Toughest, but worst 3) Worst negotiators, etc.

I feel a blog post coming on!

thank you Nino.

 

Jul 01, 2013 03:05 PM #26
Rainer
21,823
Thomas Halzack
RightTrac Financial Group - Fairfield, CT
Extraordinary Mortgage Solutions

I'm sorry Greg. I read your name wrong and just caught the last name...as if it were your first. Deepest apologies. Again, thought provoking post.

Jul 01, 2013 03:06 PM #27
Rainer
288,479
Thomas McCombs
Century 21 HomeStar - Akron, OH

It is a good thing your buyers were using you, an experienced Realtor, to guide them past these possible land mines. Good job.

Jul 02, 2013 01:17 AM #28
Rainmaker
1,557,374
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

Puffery, but maybe their calculator was broken?

Jul 02, 2013 04:21 AM #29
Rainer
48,648
Tyler Soulliere
Windsor Realtor - Windsor, ON

This topic got me thinking about the one client I had once who IN FACT, had to the penny all the upgrades he done to the home. it was a model build, so the base price is what all realtors would see, so when I went to list it, i had substantial proof that what property was purchased for was not in fact what home is worth, due to the many upgrades their were in the home. Too bad not all of our clients can do this :(

Jul 02, 2013 05:22 AM #30
Rainmaker
758,562
Jeff Pearl
RE/MAX Distinctive / LIC in VA - Lovettsville, VA
Full Service Full Time Realtor

Yeah, I've run across some agents who like to exagerate and estimate. I usually use lists like " new HVAC in 2011", " new interior paint in 2009", etc. and don't mention any values. Paint really doesn't add value, buyers expect the paint to be in good shape. And basically same for HVAC, just because seller spends $5000.00 on new ac syatem doesn't mean the house is worth $5000.00 more. Any receipts will be available to potential buyers.

Jul 02, 2013 06:34 AM #31
Rainmaker
2,394,983
Evelyn Johnston
Friends & Neighbors Real Estate - Elkhart, IN
The People You Know, Like and Trust!

That's a whole lot closer to $100,000 that I thought they would come in at.  Still, you made a good point.  You need to have the receipts to back  it up.

Jul 02, 2013 07:01 AM #32
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Greg Nino

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