How much of a discount should a Buyer get for buying in a bad location

By
Real Estate Broker/Owner with Godzyk Real Estate Services NH License 033394

A couple of years back I had an out of town buyer looking for the biggest  home for the least amount of money. He was shopping price. He did not care much about location at the time. I came across a newer home built adjacent to a commercial area, right behind the home is a fast food restaurant. Looking at home while hungry at me craving the strong smell of burgers and fries. 

 

The house was priced way lower than any other home this age, size and good condition. The buyer acknowledged he was getting a great deal for it's location. Fast forward 3 years and he wants to sell. He knew i was the person to sell it and had me come over. Values are up over 20% in 3 years. The seller then quoted the higher prices of homes 1/2 mile away down the road on the quiet cul de sac section of this area.

 

The problem is, that his home still sits behind the restaurant. It still smells like fries. He then said that is why he was selling, he cant stand the smell of the cooking any longer. 

 

As we went through the home, he kept quoting the high prices. Sadly I told him what his house was worth. He found it hard to believe his house was worth less than the more Private homes down the street. I took out my pen and wrote down what he paid, multiplied by 120% and showed him the value. Then did the same with those more private homes without the smells and sounds of commercial America.

 

He lamented he had to sell, that he could not take another morning being woken u before dawn with delivery trucks, dumpster trucks and oh that smell of burgers. The hard truth is all those reasons are why his home is worth less than private home down the street without the sounds and smells. His wife got it. (rounding up) that they paid $250,000 for there home. Today it is worth $300,000. The home in the private location sold for $280,000 3 years ago and is worth $336,000 now. That the equity they built reflects their location. 

 

Back the I told them, that they can buy this home at a discount and when it comes time to sell, they will be selling at a discount. She got it. The wife understand and was ready to list the home. The husband like a giant bucket of water dropping down then got it. "Location matters" he said. He then confessed he had a friends wife who just started in real estate come by who told the the house was only worth $250,000 today. They knew that was low and did not make much sense. 

  

In the end they were happy with my values. They were happy they built $50,000 in equity. They were also happy i did go over future values when they bought. They listed the home with me and need some time to get it ready to show. They will be moving excess furniture out, painting the interior and moving his collection of baseball collectibles into storage. It seems to have taken over the entire lower level of their finished basement,

 

 

The MOST IMPORTANT thing in real estate for me, is to provide great service. To stand out from the crowd by being there through each step of the buying or selling process. My message that I want to share in Real Estate, is that my philosophy is simple, to provide more personal and professional service to guide clients through each step of the buying or selling process. All Agents are not created equal and every buyer or seller should take the time to hire the BEST not just the biggest.

 

To CONTACT Scott Godzyk please call 603.661.2121 or EMAIL: Sctprop@aol.com .

 

About the Author: Scott Godzyk is the Owner/Broker of the Godzyk Real Estate Services in Manchester NH. Proud to be locally owned and operated with 33 years of experience, Scott is a leading Agent for Listing and Selling Homes in this area.We are Full Time Agents ready to serve all of your Real Estate needs. Servicing Hillsborough, Rockingham, Merrimack and Belknap counties. 

 

    

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Rainmaker
1,712,218
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker and Attorney Licensed in DC, MD, VA,

aren't you glad you had that conversation when they bought the house so it was not a surprise 

Nov 04, 2019 07:48 AM #1
Rainmaker
2,049,175
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Fort Worth, TX
Selling Homes Changing Lives

Scott, you are an upstanding man who works with integrity. People can always trust the ones that tell the truth. Sometimes, people forget what they were told and need a reminder. I'm glad the conversations went well and I wish you all the very best. 

Nov 04, 2019 08:06 AM #2
Rainmaker
740,964
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

The problem is, that his home still sits behind the restaurant. It still smells like fries.

You get what you pay for and yes, you can have fries with that.

Nov 04, 2019 09:34 AM #3
Ambassador
2,896,360
Anna Banana Kruchten CRB, GRI, WLS
Phoenix Property Shoppe - Phoenix, AZ
603-380-4886

Scott location means something.   A  guy I talked to the other day thinks his house is worth more than a similiar home on the golf course with incredible views. Nope, sorry it's not.....

Nov 04, 2019 10:44 AM #4
Rainmaker
2,579,047
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

They say there is a buyer for every property if it is priced fairly.  While some buyers say, they'd rather fix up a delapidated property in a good neighborhood, others are afraid of a "bad" location.  That being said, I have sold to folks who enjoyed overlooking freeways, and another notable client who liked living next door to a bar because they wouldn't need to drive home!

Nov 04, 2019 01:00 PM #5
Rainmaker
2,579,047
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

CONGRATULATIONS Scott, on having this blog FEATURED in the Old Farts Club group!  

Nov 04, 2019 01:01 PM #6
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3,935,101
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Scott and I'm glad that you had the conversation before they purchased the home the first time. Our friend bought along the outer edge of a nice community and when it was time to sell, potential buyers couldn't get past seeing the large ice cream delivery trucks from the back patio window. 

Nov 04, 2019 02:31 PM #7
Rainmaker
67,365
Kris Collis, Associate Broker
Smart Way America Realty - East Stroudsburg, PA
Professional Results you Expect 570-507-7510

Scott, Congrats on the listing and all the prep you did to bring this seller into the reality of their less than optimal location.  

They got it, buy at a discount, sell at a discount.  

Nov 05, 2019 06:48 AM #8
Ambassador
3,403,195
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Such sage advice, Scott! I do this pre-emptively as well and it makes is so much easier to get the message across to them when they're ready to list..."Remember when we talked about the negatives of the house?" 

Nov 07, 2019 09:46 PM #9
Rainmaker
3,040,491
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

I think it is a must to have that conversation Lise Howe , they love dit when buying but not when selling but they did remember and did get it.

Nov 08, 2019 06:03 AM #10
Rainmaker
3,040,491
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

The hard truth is not what people always want to hear Patricia Feager, MBA, CRS, GRI,MRP but it is what they NEED to hear. They loved teh discount when buying but not selling but t hey remembered, it was selective hearing

Nov 08, 2019 06:04 AM #11
Rainmaker
3,040,491
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

That is what i thought Candice A. Donofrio but will power won and i did not go get any. It did smell good, maybe more so because im trying to eat well.

Nov 08, 2019 06:05 AM #12
Rainmaker
3,040,491
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

A lot of people think that becuase it is theirs, it is worth more, they forget facts and the golden rule of location location location Anna Banana Kruchten CRB, GRI, WLS 

Nov 08, 2019 06:06 AM #13
Rainmaker
3,040,491
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

Price cures all Myrl Jeffcoat and yes, i found buyers who wanted a big house in good condition for a low price.

Nov 08, 2019 06:07 AM #14
Rainmaker
3,040,491
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

That would be dangerous for me to live close to an ice cream stand, it is my weakness Kathy Streib 

Nov 08, 2019 06:07 AM #15
Rainmaker
3,040,491
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

Thank you Kris Collis, Associate Broker , it is good to tell it up front, they still did well and in the end understood. 

Nov 08, 2019 06:08 AM #16
Rainmaker
3,040,491
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

I always look to head off future issues Debe Maxwell, CRS and i have live sthrough this story before, so a warning was needed and the choice is theirs. 

Nov 08, 2019 06:09 AM #17
Rainmaker
797,961
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Great example and very well explained. I like the way you showed how both sets of homes had increased in value and gotten to their current values today. Good luck with the listing when it comes on, hopefully you can find a burger and fries lover.

Nov 08, 2019 06:21 AM #18
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One of the Manchester NH's area Leading Agents
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