Sometimes its what you DON’T do…

Sometimes it’s what you DON’T do…

1410 Rock CreekThis was the experience of a home seller that recently reaped the benefits of patience and strategic timing. By recognizing potential pitfalls on the horizon—then taking the time to avoid them—optimal results were achieved, despite a number of limiting factors. Those results? Full price offer, record high sales price of the development, and complete avoidance from losing substantial return on investment.

It was the spring of 2012 when I first started talking with Genia, who was referred to me by a long time broker in the area. She had been enjoying life in Gunnison for quite some time and had purchased a partially finished new construction home about ten years prior.

Over the course of those ten years she had poured countless hours of work into it—from drywall to trim, to tile, to carpet etc—racking up the sweat equity. It’s safe to say she was deeply invested in the property, both financially and emotionally, so was torn on the thought of selling the home as she was just beginning to enjoy the fruits of her labor. But when life throws you a curveball, sometimes you have little choice but to move on.

There was an element of pressure here as Genia needed to sell quickly because of looming health concerns induced by the high altitude of Gunnison. She was a bit overwhelmed and uncertain with the somewhat sudden need to pack up and leave town, and I could tell right away that this was going to be much more than just a real estate deal.

For me, it is critical to understand the big picture of a client’s situation, and that the real estate part is often times just one component of the overall objective.

At the time, the market was near rock-bottom of the last downfall with values suffering from an abundance of foreclosures and little buying activity. Now this is where an extensive assessment of property value can save people lots of time (and money).

I didn’t meet Genia that day with my pen and contract ready for signatures, along with a predisposed price for her home.

Sure, I had a range in mind, but first we needed to have a conversation. Discuss details of the situation, ask questions, and gauge the variables at hand. And that’s exactly what we did over the course of a couple weeks.

Ultimately, the numbers didn’t make sense for Genia to sell, even in the best of likely scenarios as she’d likely be bringing a check to the closing table, which was not a viable option. As you can imagine, this wasn’t what she wanted to hear. She expressed her frustration and I’ll admit, it was tough.

I would much prefer it if the conclusions drawn are always exactly what my clients want to hear, but sometimes it doesn’t work out that way. For Genia, the sound option here was to rent the property out with the plan to sell as soon as things stabilized in the market. Understandably, Genia went ahead and talked to a few other Realtors for “second opinions”.

Well, opinions must have been the extent of what she was given because it wasn’t but about a week later when I heard from her again, distraught over the aggressive pricing recommendations she had received ( a.k.a. “CMA’s” and “Free Home Evaluations”).

And see that’s just it—the plans/solutions structured from my approach are not derived from price-driven concepts, opinion, or hype; but rather research and common sense.

Fast forward a few years and I get a call from Genia… “I need to sell the house, now!” She had been receiving my newsletters and living 200 miles away in Denver for a few years at this point and had grown worrisome about the condition of the property and keeping up with it. While the market had made a significant rebound since the last time we discussed selling, there were some new challenges in the mix.

You can probably guess what happened over the course of being a rental for a few years. Heavy wear and tear, deferred maintenance—the place looked like crap, plain and simple. On top of that, we were dealing with some very uncooperative tenants, who not only had the place looking like a complete pig sty, but also voiced clear opposition to the idea of putting the home on the market. Per the lease, they didn’t really have a say on whether or not Genia listed, but regardless, this was a major red flag not to be ignored.

Genia was ready to sign contracts and get the place listed that day, but I had to say “slow down”. Because not taking the time to make assessments and diagnose a proper plan of attack can be a costly, fundamental mistake in the real estate world, so we discussed.

As you might imagine, first impressions are critical when it comes to a timely home sale and I could see from a mile away that showings would be a complete disaster with these tenants. There was no doubt in my mind that the place would show a thousand times better without them there.

Thus, not listing the property until the lease expired in a few months was my recommendation (and was without a doubt the single most influential decision that played a part in Genia’s profit from the sale).
But this could have easily been overlooked by another real estate agent pouncing on the opportunity to slap a sign up in the yard immediately (like so many do), given Genia’s motivation. She knew no different and just wanted the place sold.

So I ask, what do you suppose the outcome could have been trying to show a property trashed by renters who didn’t want it to sell? Would anyone be able to look past the mess and damages? What kind of offers would that generate, if any at all? Low-ballers? Would the listing become stale from extended time on the market? Those are just a few of the risks Genia could have been exposed to, should she had been urged to list right away.However…

Eliminating unnecessary risk is a cornerstone of a value-driven approach that homeowners can take when preparing to sell and is discussed throughout my book: “The Value Driven Approach to Sell Real Estate: A practical guide to protect yourself from real estate greed and bank extra profit by thinking like the great Warren Buffett” (Request free copy at: FreeBookHelpsCharity.com)

 

 

A few months down the road and the tenants are gone. It is now early December with winter closing in and a traditionally slower time in our market. With limited time and funds; you could say that the pressure was on.

That was just the reality of the situation, and a big reason why I share this case study with you—because it is a great example of how homeowners can create favorable market positioning for their property even when resources are limited. It’s not always in the cards to turn a home into a perfect 10. Sometimes the idea is to go from a 6 to an 8, or a 3 to a 5.

We were still able to bring some proper preparation together to get the home presented as best we could. A thorough assessment from the home inspector made the handyman’s work cut and dry, which he made quick work of. Professional cleaners came in and did a number on the place—I couldn’t believe it! Never thought those carpets would be able to look practically new again.

Final pricing strategy was then laid out and the place was poised for quality offers on day one—which is a mindset I often encourage with my clients, to avoid wasting prime exposure time and the pitfall of having to regain attention in the market with price reductions. Especially in this case with a vacant property and house payment coming up, which Genia could not afford.

We went ‘live’ in the MLS on Monday morning and had 3 showings set up by that afternoon, despite slow winter market conditions. Our strategy soon came together that Thursday with a full price offer on the table. I remember the evident relief and slight disbelief when Genia responded in all caps to my email notifying her about the offer. Making quick work of the transaction, we were at the closing table about a month later.
A four year journey, although rough at times, was over just like that.

Genia could now officially move on in life. House sold, stress relieved, and of course— $21,343 in net profit from her investment. And for a little added bonus /bragging rights? Record high sales price in the development. Truly could not have asked for a better outcome.

Now let’s be real here before wrapping this up—does it always pan out perfectly like this? Not necessarily. But those who make sure they don’t lose the money they’ve invested in their home understand that their results stem from taking the time to diagnose a proper plan when selling.