The Greatest Reward is Generally Realized by Taking the Greatest Risk

Reblogger Gabe Sanders
Real Estate Agent with Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales 3090099

If you're looking for success, odds are that you will need to take some risks:

 

Original content by Chris Ann Cleland VA License # 0225089470

The Greatest Reward is Generally Realized by Taking the Greatest Risk

Risk vs. reward is a concept that comes up often in real estate.  Even in my office hours having brunch with a friend, I found myself explaining the concept of risk vs. reward.  My friend Betty has a friend that needs to sell her home.  Betty's friend, Marta, is cognitively impaired as a result of dementia, so Marta's daughter, Stephanie would be the seller through Power of Attorney.    Here's where risk vs. reward comes into the picture.

Marta's house is a wreck.  It needs A LOT of work and Stephanie is not close enough to do the work herself, and apparently not in a financial position to pay for it.  After all, the care Marta is now requiring is costly and the funds from the home are needed for that.  Betty has a family member, Roger, who flips houses.  Betty wondered if hooking Roger up with Stephanie for a flip purchase was a good idea.  Betty's concern, and rightly so, is that Stephanie will get her nose of out of joint that someone else is cashing in on her mom's home.

What Stephanie needs to understand is that, without the resources (money) to fix up the home, the price of the home, based on current condition, is drastically reduced.  There is no flooring on top of the concrete slab and there were bathroom accidents that have left human urine soaked into the floors.  Deferred maintenance, outdated kitchens and bathrooms, coupled with a rat infestation, are driving the price of this home down.  So either Stephanie finds a way to take the risk (improving the home prior to sale for max sales price) or sells for what she knows she can get now and leaves the reward to the flipper, who the risk will be shuffled to in the purchase.  She can't have it both ways.  No one is going to overpay for the privilege of taking on risk.

In situations where resources and time are issues, often the risk is not even something a seller can bear.  They have no choice but to bottom out the price to attract someone who can take on the risk for a future reward.

  

Another example of risk vs. reward that I see more commonly is that associated with cash offers vs. financing/appraisal contingent offers on listings.  So many times, sellers will want two things that rarely go together in our Bristow-Gainesville-Haymarket real estate market:  a cash buyer offering way above list price with no appraisal contingency.  

Cash buyers are sure things.  There is little risk.  Cash buyers know this and their value in the market.  As such, they generally offer lower than list price.  A sure thing is rarely a great pay out.  On the other hand, the higher offers generally do involve a buyer using financing and needing an appraisal.  But to get that price, you have to jump through the appraisal hoop.  Is it worth the risk?  Depends on many factors, including the skill set your listing agent may or may not have in preparing a package for the appraiser.  My skills are well honed in getting listings to appraise for high sales prices.

Risk vs. reward is ever present in real estate.  Hopefully, you hire an experienced, professional real estate agent to help you navigate the risk vs. reward waters and figure out what combination of risk and reward works best for you.  If you live in Bristow, Gainesville or Haymarket, that's my regular stomping ground.  Give me a call and let's evaluate the lay of the land in your upcoming real estate transaction.

Chris Ann Cleland, Bristow-Gainesville Real Estate Agent, 703-402-0037Chris Ann Cleland, Associate Broker-Licensed in VA

2017, 2016, 2015 PWAR Top Producer

Long & Foster Real Estate, Gainesville, VA

703-402-0037, ChrisAnn@LNF.com

www.UncompromisingValues.com

 www.SellingBraemar.com

 

Long & Foster Real Estate

 

 

The opinions expressed in this post are those of Chris Ann Cleland, not those of Long & Foster Real Estate®.

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Rainmaker
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Jeff Masich-Scottsdale AZ Associate Broker,MBA,GRI
HomeSmart Real Estate - Scottsdale, AZ
Arizona Homes and Land Group/ Buy or Sell

I like your concepts and illustrations Chris Ann Cleland. "No RISK IT No Biscuit! No Pain No Gain! 

Mar 11, 2019 10:40 PM #1
Rainmaker
4,876,944
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Good morning, Gabe Sanders great choice for a reblog.... I'll leave a comment on the original....

Mar 12, 2019 12:51 AM #2
Rainmaker
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Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Excellent selection for a reblog, Gabe. The risk/reward relationship is something I learned a long time ago in business school and in the corporate world... but it's a message that bears repeating.

Mar 12, 2019 05:06 AM #3
Rainmaker
746,432
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Excellent choice to reblog with very clear explanantions of two difficult situations many sellers have a problem seeing through to get the right result.

Mar 12, 2019 09:04 AM #4
Rainmaker
5,271,087
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thank you very much, Gabe, for sharing this excellent reblog selection.

Mar 12, 2019 01:15 PM #5
Ambassador
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Gabe I believe the saying goes "No risk, no reward" and it is very true.

Mar 12, 2019 03:36 PM #6
Rainmaker
1,462,552
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

You know how to pick out some good posts for reblogging, and the extra exposure is surely appreciated.

Mar 13, 2019 01:38 AM #7
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Thanks for the reblog.  

Mar 13, 2019 09:18 AM #8
Rainmaker
1,648,883
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker and Attorney Licensed in DC, MD, VA,

Thanks for reposting this - I have a client deciding between two offers - one is for full price and the other is for $5k less but is a more certain transaction - it is less than 1% of the sale price in difference- they need to decide

Mar 28, 2019 04:33 AM #9
Rainmaker
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Jane Chaulklin-Schott
TEAMCONNECT REALTY - (407) 394-9766 - Orlando, FL
TeamConnect Luxury Homes - Orlando, Florida, 32836

Excellent reblog,  Gabe Sanders,  I will go to Chris Ann Cleland site and leave a comment.   

May 16, 2019 04:02 PM #10
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Gabe Sanders

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