Pricing Distressed Properties

I recently showed a property that was listed for $70,000 in a neighborhood where many similar properties sold in the $120,000 to $140,000 range.  As soon as my buyers pulled in the driveway, they were spouting off defects and the price tag to fix them.

It didn't get any better when we walked inside.  The windows were old, the carpet was shot and there was an active leak in the basement.

Much to my surprise, the buyers were subtracting these repairs from the asking price and they were getting pretty darn close to asking the seller to write them a check in order for them to buy the property.  The more I tried to talk reason to these folks, the more they gave me the evil eye and acted like I was working for the seller.

 When I work for buyers, I work for buyers.  But I don't like wasting everybodies' time and emotions writing offers that are incredibly unrealistic, unless the buyer will acknowledge that the offer is unrealistic but wants to give it a shot anyway. 

When a house is priced $50,000 less than a similar property in better condition, it is safe to assume that the seller at least tried to price it for condition.  Did they price it fairly?  Only doing some homework will say for sure.  Start with a list of repairs.  Research what it cost to have the work done and subtract that from typical market value in the neighborhood.  Then start negotiating with the seller.

The Kiss of 'Real Estate' Death

The house has been just sitting on the market.  No one has come to see it in weeks.  It's time to make a price adjustment and so I begin that dreadful conversation with the sellers.

"Well, we are not in a big hurry to sell.  We are willing to wait for our price," they tell me.

 UGH!!!!  GROAN!   And a few other words that I don't dare publish.

More than ever before, buyers are very educated to the real estate market.  Often they will start poking around the Internet six month to a year before they are ready to make a purchase.  Sometimes they know the inventory better than a realtor, going through each house, picture by picture, room by room.     And if they are not walking around with all the latest real estate stats on the tip of their tongue, one of the first questions they will ask about a house that they like is 'how long has it been on the market?'

When a house is brand new on the market, buyers will ask "What will it take to purchase this house?"  Once a house has been sitting on the market a month or more, buyers will ask "How low will the seller be willing to go?" and if the house goes stale after 6 months or so, buyers always ask 'What's wrong with it?'  That is why I say nothing depreciates a house faster than a 'For Sale' sign.

Dropping the price is not an easy out for real estate agents.  It usually sets off a list of tasks that include new ads, new flyers, e-mailing past showings, etc all to earn less commission.  The only reason a real estate agents recommends a new price is that is what it is going to take to put up a 'SOLD' sign.

Low Ball Offer

My clients cleaned and painted and staged. Finally, we put a ‘for sale’ sign in the front yard. For weeks, they walked on egg-shells trying to keep the house ready to show at a moment’s notice. And finally we got the call! An offer was coming in.

As soon as I picked up the offer, I knew my clients would not be happy. It was $30,000 off asking and this was not an expensive house. What I didn’t expect was their anger.

“That offer does not deserve a response,” he stormed. “Tell them to go find another house!”

The most important advice in this situation is not to take it personal. In fact, try thinking like a buyer when trying to sell your home. If there was the slightest chance that you could buy a house for $30,000 less than the asking price, wouldn’t you try it? Of course you would. It is only human nature and so don’t hold the low ball offer against the buyer.

It took some time and effort for my sellers to regain their composure. They finally agreed to write a reasonable counter offer that the buyer ended up taking. Today they are living in a new house.



Not all transactions work out this way. Sometimes the buyer walks. Sometime they counter back with another very low offer. But whatever the situation, it is most important to stay calm, focused and not take it personally.

Tomorrow I'll talk a little about low ball offers for buyers.

Mrs Clean Does Not Live Here!

Wow! I've seen some dirty houses on the market in recent weeks. I'm not talking dust bunnies, I'm talking dust gorillas. And these aren't cheap houses either.

At one of these houses, my client turned to me and said I feel like I'd just be buying their mess. I assured her we could require that the house be professionally cleaned at closing but the husband shook his head and said, “If they can't keep up with cleaning, what makes us think they have kept up with maintenance items?” Good point!

At another house I showed, the floor was so dirty that we went back to the front door and put our shoes back on to protect our feet. Then when I walked into the dining room, I saw that someone had swept that floor but there was a pile of debris just waiting for someone to appear with the dustpan! This is not an exaggeration!!! This house was listed in the $175,000 to $185,000 range and we had to give 24 hours notice in order to see it. Unfortunately, they did not use that 24 hours to prepare for our showing.

Ladies and gentleman, if you want to sell your house at top dollar, start with a good cleaning. If cleaning is not your thing, then hire it out. And by a good cleaning, I mean wipe down your walls and doors near light switches and door knobs. Organize your cabinets and closets. Clean out your window wells because buyers will be looking at your windows. And yes, do the windows as well. Heck, I also recommend that you eliminate cob webs, even in the basement and attic. It doesn’t hurt to dust the hot water heater and furnace. Send the message that you have loved this old house and have been compulsive about its care. And as long as your house is priced properly for its location and condition, you will have a much greater chance of getting a full price offer.

Mary Shelsby
ReMax First
585-756-7457

Real Estate is Local!

Every time I watch the news these days I have an anxiety attack. Price of Oil! Recession! Crime! Fannie Mae & Freddie Mac! Global Warming! Cancer! Depression (no, not the economy; me!) And just about the time that I'm convinced that times are too difficult to sell real estate, my phone starts ringing.

Fortunately, real estate is local and the Rochester market is not all doom and gloom. I did about a million in sales in June and the only reason July is off to a slow start is that I've been on vacation.

I'm not the only one effected by the daily news. When I'm out and about talking to people, they often start the conversation with a sigh, shake their head and ask in a hushed tone, "How's the market?" Perhaps the number one question I'm asked these days is how long does it take to sell a house in Rochester these days.

Of course, there is no definitive answer to that question. There are parts of our area that are still getting multiple offers first week on the market. It's not happening much, but it does still happen. And there are other areas that are not even getting showings, much less offers. But just as a glimpse of our market, I did a quick analysis of yesterday's pending transactions.

Yesterday was a typical Tuesday in the summer of 2008. All total, there were 52 single family homes that went pending. Approximately 20% of the homes were located in the city of Rochester which supports my theory about the price of gas driving people to move closer to where they work.

Two of the houses that went pending were sold their first day on the market and two additional properties sold in 7 days or less. The average number of days on the market was 51. The longest time on the market was 166 days for a $200,000 property in West Irondequoit.

The average asking price for the single family homes that went pending yesterday was $153,142 with six of the homes with asking prices of $300,000 or more. There were five city properties listed for less than $20,000 as well as one mobile home in Wayne County.

There! I feel better and hope you do as well. I think I will keep away from CNN and instead stay tuned to the MLS. And if you'd like specific information about our real estate market, don't hesitate to call.

Be Careful of Estimates

The Internet brings lots of helpful information at our fingertips. Unfortunately, not all of it is accurate. And it is difficult to know what is reliable information and what isn't.



Case in point, is the fair market value of real estate. A lot of what Realtors do is recommend prices for property, both to buyers and sellers. These profession opinions are based on going in and out of a lot of property and knowing what factors such as location, features and condition will play on market value.



You can also find suggested prices for property on the Internet, sometimes referred to as a zestiment. Watch out for these estimates, whether you are buying or selling real estate. These prices are determined strictly by manipulating data. No one visits the property or drives by.



Last year, I sold a home in Avon, NY for $129,900. This was after it was on the market for many months, with a lot of advertising, six open houses and probably 30 showings. While it was a very nice house with a great open floor plan, the house needed some updating and sprucing up. With the amount of exposure and the number of people that looked at it, there is no doubt in my mind that the market value for this home is $129,900.



Want to know what the zestimate is? $147,500!!! Don't believe me? Follow this link: See home details page The site even acknowledges that the house recently sold for $129,900 but they still estimate its value at $147,500.

Most Expensive Offering in City of Rochester

The snow is blowing and the wind-chill is below zero tonight and so it's a good time to dream of living somewhere else. That is, until you look at the price of housing.

One of Rochester's most magnificent homes, the Charlotte Whitney Allen Home on Oliver Street is currently on the market. The 6000 sq foot museum-quality mansion complete with gardens designed by renowned landscape designer Fletcher Steele are being offered for a mere $879,900. photo tour and home details at: http://rochestersbesthomes.com/900877

By comparison, a similar mansion is being offered in San Francisco. It's a little larger, approximately 7,400 sq feet but is located on a lot less than half the size of the Rochester home. The Californian home does boast 7 full baths, compared to our local offering of 4 full and 2 half. The price tag? Well, are you sitting down? $14,950,000. But at this price, light fixtures and window treatments are excluded.

Of course, the New York home does come with property taxes in excess of $20,000 per year. And after 500 years or so, you would be better off if you purchased the west coast mansion.

Why Do I Blog???

Something about the first of January brings on soul searching. A time to look and analyze the year that just finished and to make plans, goals and resolutions for the new. And since it's been about a year that I've been blogging, it seems a good time to explore why.

Writing comes natural to me, kind of. I come from a family of journalist. My dad was a sports writer and my uncle recently retired with 47 years as a business writer with the Baltimore Sun. I studied journalism at the Univ of Maryland. I was suppose to grow up and be a journalist. Problem is, I'm not very good at it. Sure, I can put sentences together that make sense but it takes me hours to produce what a pro does in a few minutes. Since journalist must meet deadlines and answer to editors, I decided to get into real estate.

I believe blogging has made me a better real estate agent. When I decide to write about something, I do my best to research the topic and provide accurate information. After all, I believe my largest audience is other real estate agents and they love to let me know when something is not quite correct.

My biggest blogging dilemma is that when business is slow and I have all the time in the world to agonize over every written word, I don't have much to say. After all, it is tough to find inspiration in a phone that never rings. But let me pick up a couple of new listings or buyers, and I get overwhelmed with all the ideas I could write about. I am hoping that my new team approach to blogging, with contributions from a mortgage loan officer, home inspector and real estate attorney will allow for a more consistent flow of information as well as more interesting reading material.

I do plan to continue blogging through 2008 and I hope you will continue to stop by often and occasionally leave a few words of encouragement or suggest a topic you'd like to read about. Best wishes for 2008 and may all your real estate dealings be pleasant and profitable! Enjoy the following clip from a fellow realtor from Virginia who is obviously a lot more clever than I am.