Q: I have an elderly client and I am trying to sell her property.
The house, built in 1958 has four bedrooms, two and a half baths. It has an attached garage with a breezeway and swimming pool, on just about half an acre in Visalia, California.
While that sounds nice, the property has some downsides. There is a large crack in the pool, the house is in terrible need of updating. The bathrooms are very small, the roof needs repair and might even need to be totally replaced, and the kitchen needs updating or gutting. The whole house needs new flooring and the yard needs some landscaping.
I’ve had the property on the market for a month, listed at the seller’s requested price of $345,000. Unfortunately, there are only two interested prospective buyers. Both of the buyers are in the restoration business. One originally offered $225,000, but says he will go up to $280,000 to $290,000 based on an appraisal.
I will have to order an appraisal but I don’t know how to handle this situation — or even if I’m doing the right thing. I might add this is my first listing, I don’t have a mentor and I am eager to get a professional opinion. Thank you.
A: Sounds like a house with potential.
I guess I’m not clear on what you think I can do for you. I haven’t seen the house, and I have no idea if it’s worth what the owner wants, or what the buyers are trying to pay for it — or somewhere in between.
But I can tell you that the price the owner wants for the property is basically irrelevant. What matters is what similar fixer-upper properties are going for in the area.
You need to do a big comparative marketing analysis of the property and the surrounding properties that have sold in the area. Anything less is a disservice to your client.
And at this point, you don’t need an appraisal. You’re supposed to be able to look at the local “comps” and figure out how much the seller can get for the property. Based on the two offers you’ve had, it would appear that the home is overpriced. In today’s market, if the property were priced right, you’d have had several offers.
But pricing it right means taking the considerable work that’s needed into consideration. You may want to figure out how much more the property would be worth if the owner invested $20,000 to fix up the place. Instead of getting $280,000, she might get $325,000. That’s a great return on her investment, and you would be doing what full-service agents should do — provide great advice to their clients.
Clearly, you do need a local mentor, and it would be best to choose someone who really knows the area. Talk to the managing broker of the firm you work for and have him or her guide you in this transaction or pair you with someone who has a lot of experience in the business.
While you may pay some of your early commissions to your mentor, having the assistance of someone who really knows the business and can teach you how to be a great agent, will stand you in good stead throughout your career.
Obviously, you’re empathetic and smart, and someday you’ll probably be a very good agent. But this is your first listing and you seem a little green to me. I think it would be an excellent idea to solicit the opinions of the brokers who work in your office. Consider holding an open house for the brokers in your office to introduce them to the property and solicit their opinion on price and condition.
Real estate isn’t easy and doing right by your clients can be tough. You’ve got to deliver bad news sometimes (“your house isn’t worth what you think it is”) and you’ve got to walk them through strategies that will allow them to make decisions about large sums of money — yes, $300,000 is still a large sum to most people around the country.
But with hard work and attention to details, by next year you should be handling problems like this easily.
Sept. 26, 2005.