Obsolescence:"Price it Out, Not Explain it In"...Marketing Realities
This is a absolute on obsolete . . . must read!! I re-blogged Gary Waters post for a reason. And that reason is: He's correct!
I have to add my own story. Several years ago I assisted a first-time buyer who had no legs. That was her reality. She was such an inspiration to me, and I enjoyed helping her find her home -- which was NEW CONSTRUCTION. She did well.
However, when she was planning her kitchen and bathroom cabinets installation -- the fun of picking out cabinet fronts, stains, wood selections, hardware and placement -- the vendor told her about the ADA standard sizes, which are considerably lower.
Now, this sounded wonderful to my client. But, I asked her to consider the future. What if she did have the lowered cabinets installed. She would get the benefit out of them, for sure. But . . . upon resale, she would get less than fair market value.
Why?
Because of the buyer pool. First, she'd have a buyer pool for her City, which was further outside of Portland Metro, much more shallow of a pool! Second, lower cabinets would be great for someone, such as herself, in a wheelchair. But again, the buyer pool would be shallow for that amenity as well.
While she lived her entire life (she was 38-years old at the time of her purchase) without lower cabinets, she agreed and did not install lower cabinets. The resale value would have been greatly, and deeply affected.
When I work with buyers I always urge them to think long term about when the time comes to sell. This is especially important when a property has some distinguishing quality that may not be appealing to most others.
Still, many times, the realities (and challenges) of selling a home do not become clear until well into the process. Hopefully, the light bulb comes on before the omissions/commissions translate to dollars lost.
For those who may one day sell a house I have put together this list to review before the time comes. Many of these are the opinion of the writer, only. Some are common sense.
- Add ons and improvements should be done without an expectation of an expected return of investment. It is all about what an owner likes now when it comes to improvemnts.
- Over-improvements don't mean much. If a simple pool (no screen enclosure, no salt system, end of life equipment) adds 22% to the price of your home then consider it an over-improvement. Prospective buyers will! There is never a 1:1 return on investment. Buyers do not care what you paid for anything!
- Not everyone wants a pool, really! Just because someone is moving to Florida does not mean they absolutely must have a home with a pool.
- Real estate brokers are not created equal. Being a "big box" brokerage does not mean there is an audience size advantage. Size does not matter - its the message and method of delivery.
- Functional obsolescence must be priced out and not explained in. Trying to rationalize (marketing as vintage, retro, etc.) structural design and preferences of decades ago rarely translate to value today.
- Colors and style do matter. Tacky rarely sells. Of course, tacky is in the eye of the beholder! Buyers know what they want and understand what they see. Piecemeal (found) updating and rehab looks like piecemeal updating.
- Staging can help sell your home. When getting your home ready for selling remember a great staging job will not overcome deficiencies in design, structure or condition. Your house is what it is.
- Outside often reflects inside. The outside of a house is almost always an indicator of how well the inside is maintained. If the yard is neglected, paint is fading, plants are dead it is quite likely the inside will show neglect. It all starts with curb appeal.
- Location can't be changed unless its an RV. A new coat of paint will not change the zip code. The house may look great but it will always be location, location, location.
- Being healthy (condition) is always better than an insurance policy tha
t helps deal with problems later. Offering a home warranty (insurance, sort of) does not compensate for poorly maintained/prepared homes.
- Price should reflect three things if a seller is motivated: condition, location and competition. Proper pricing takes into account issues. If your house is just like the rest, then the price will be pretty much just like the rest!
- Quick closings are always preferable. The longer the time between the contract and the scheduled closing the greater the chance something will happen to derail the transaction.
- Memories are mobile. Sometimes sellers attempt to price in their memories when they are trying to sell their home. If memories could have a price tag associated with them you can be sure the seller's price will not be anywhere near a prospective buyer's value.
- Emotions must be contained. Selling a home requires sellers to keep emotions in check. When deciding on a listing price for your home an unemotional cost-benefit analysis is a good starting point.
Value, much like beauty, is in the eye of the beholder.
When buying, prospective buyers will find reasons to pay less. When selling, prospective sellers will find reasons to price their home higher. A good, local knowledgeable Realtor, whether working with buyer or seller, is critical.
Choose wisely, my friends.
Gary L. Waters, is a Florida licensed real estate broker at Waters Realty of Brevard, LLC, Melbourne, Florida serving Florida's Space Coast including the cities and surrounding communities of Melbourne, Viera, Rockledge, Suntree, Merritt Island, Cocoa Beach and Satellite Beach.
Call or text me directly at 321-693-3850.
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