Are you one of the many would-be buyers who are seeing every "nice" house go off the market before you have a chance to think? Bill Kuhlman, CRS, who is the broker/owner of Kuhlman Residential gives some advice that lots of people know, but many are not following.
In my experience, whether a homebuyer has $200,000 or $2,000,000 to spend, they all compromise on one or more of the primary property-related factors that drive market value. These include location, size of the living space and the lot, layout, and condition. I rarely represent a buyer who feels like the home they buy fulfills everything they want in their dream home.
It’s my opinion that the impact of superficial factors has become increasingly exaggerated over the past few years. This has irrationally driven up demand for shiny homes relative to homes with good fundamentals in need of a little work.
If you’re a seller, you’d be well advised to invest a few thousand dollars on curb appeal and surface items with relatively low-cost improvements such as a fresh coat of paint, new kitchen appliances, refinishing the floors, and landscaping. If you’re a buyer, your best opportunities to find a relative bargain would be to look right past these things.
If you’re a buyer who’s having difficulty finding anything you like in your price range, you should make a point to include in your search homes which have been on the market 60 days or longer. If you’ve been repeatedly beaten to the punch or outbid by other buyers for the homes you like best, maybe you should focus less on new listings and focus more on those which have sat on the market for a while. You will find significantly less competition from other buyers for those.
Don’t assume there’s something intrinsically wrong with a property just because it hasn’t been snapped up in the first few weeks. The “problem” could be something as trivial as the seller initially pricing the property too high for the market.
After the first few weeks a home is on the market, the only buyers who come looking are brand new to that marketplace. Maybe they’ve just begun their search, or maybe they’ve just started looking in that town or in that price range. And with any home that’s been on the market longer than a few weeks, you can bet the first question these buyers ask is, “What’s wrong with it?” or “Why hasn’t it sold yet?”
If you do have to make a compromise, make it on something that is relatively easy to fix. Don’t be scared off because the house needs a new roof or a new heating system or a new kitchen or new bathrooms. Factor in the cost, time, and aggravation to fix these issues in your purchase price, and there’s a good chance you can address these shortcomings for significantly less than the premium most buyers are willing to pay for a tricked-out home fresh on the market.
True, it’s not as simple as waving a magic wand, but these are discrete issues you can solve with time and/or money. But you can’t fix a location issue by throwing money at it.
There’s nothing new in this advice. What is new is the degree to which I find the vast majority of today’s homebuyers ignore this advice, throw caution to the wind, and pay a 10 to 20 percent premium for something that would cost them a fraction of that to correct after the closing.
In short, if you’re looking for a relative bargain, look beneath the surface. Don’t be distracted by all the shiny things in a property. Focus on the things which cannot easily be fixed, such as location, lot size, and the basic layout and construction quality of the house.
The author is solely responsible for the content.