Why Homes Don’t Sell

The primary reasons why a home doesn’t sell are location, condition, financing, marketing, and price.  

Location is the only factor in which no one has any control over since it cannot be changed.  For example, if a home is located on a busy street or near railroad tracks, this detracts from its value (unless zoning permits it for commercial use in which case it’s highest and best use is most likely not residential property).  On the other hand, if a home is located on a golf course or lake, for example, there are always buyers who are willing to pay more for these unique locations. Of all the determining factors of value, location is the most important.

Another factor that determines a home’s ability is its condition.  If a seller wants to get top dollar for their home, it must be in top condition.  If the home is not in good condition and the seller is not in a position to make repairs it should be priced accordingly.  Common examples that adversely affect a home’s condition are an old roof, old HVAC systems, damp crawl spaces, old windows, and exterior and interior deferred maintenance.

Financing involves a buyer’s ability to obtain a mortgage loan.  This is self-explanatory in that a buyer will need to come up with a larger down payment and have more income to buy an executive type home.  In the $200,000 +/- price range the down payment is less of a factor with FHA loans being prevalent and income playing a larger factor in obtaining a mortgage loan.     

About fifteen years or so ago, in order for buyers to find out about homes for sale in the market area they were looking in, they needed to engage a Realtor to find out about them.  Today when a Realtor markets a home for sale, it is inputted in the Multiple Listing Service (MLS) which streams to a service called ListHub that disseminates the listings to a number of real estate websites such as Realtor.com and the like.  So generally speaking, if your Realtor is a member of MLS, then a seller’s home will be exposed on-line for buyers to see without having to contact a Realtor.  If a buyer is interested in finding out more about this property they will either call the listing agent directly or contact a Realtor friend. This is how the majority of homes are bought and sold.  As a result, Realtors who are members of the local MLS are able to market homes to the public at large like never before. A final word about marketing is that all the marketing in the world won’t sell an overpriced listing, it will just let more people know it is overpriced.

Price is another factor in which a seller has control over it since it is not the Realtor’s job to set the listing price.  The Realtor’s job is to help the seller come up with a list price by performing a Broker’s Price Opinion (BPO) but the seller ultimately determines how much to ask for their home.  Only once a home is listed and exposed on the market will a seller find out what their home is worth.  Based on the number of showings, showing feedback, and offers or lack of offers will a seller get a realistic picture of what buyers are willing or not willing to pay for their home.  Price is primarily a function of time. If a seller is in no hurry to move or can’t or won’t move unless they can get a certain price, they will have to wait longer and hope that the market improves.  If a seller has been relocated, chances are they will need to sell their home relatively quickly and they will either price their home to sell from the onset or reduce the price accordingly to sell at market value.  At the end of the day, a home priced properly overcomes all buyer objections.

Of course, there are other conditions that affect the salability of a home such as the number of bedrooms and bathrooms, upgrades/finishes, the functionality of the home, and the seller’s motivation or reason in wanting to sell.  The purpose of this article was to address the primary factors of why some homes don’t end up selling. 

If you are ready to buy or sell, call  Mary Staton or Bert Ward - they’ll be happy to answer any questions.

Continue reading
  127 Hits
127 Hits

What is a Hypothetical Appraisal?

A hypothetical condition is an assumption made contrary to fact, but which is assumed for the purpose of forming an opinion of value.  The most common example of a hypothetical assumption is an appraisal for new construction, "subject to completion". In this case, the home’s appraised value is based on the current market value as if complete, even though the home may not be finished for several more months.  The lender uses this appraisal for the purpose of construction lending by allocating installment construction draws to the contractor from the borrower's construction loan. When the home is completed, the lender sends the appraiser back out to certify the home's completion, typically but not always, for the original hypothetical appraised value.

If you are ready to buy or sell or getting ready to build, call  Mary Staton or Bert Ward - they’ll be happy to answer any questions.

Continue reading
  182 Hits
182 Hits

Quicksand

Before I entered the appraisal profession I was a new home sales agent for Coldwell Banker HPW, Better Homes & Garden, representing John Wieland Homes, First Oakland Properties, and C. Richard Dobson Builders (now part of D.R. Horton) at Mill Creek Golf Club in Mebane.

One day while working in the C. Richard Dobson model home in The Park neighborhood, a middle-aged looking couple dropped in to tour the home.  They seemed impressed with the Mill Creek master-planned community development, and excited about buying a home there.

After touring the home, the husband decided to briskly walk the lot with his wife shadowing him from behind.  I decided to observe from a distance on the back patio giving them personal space to look around and discover the lay of the land on their own.

The husband, meticulously surveying the land, continued walking beyond the grassed backyard and onto the back end of the next door cleared lot, at the end of the cul-de-sac.  The next thing I know, I saw him walk right into a sandy looking quagmire, ankle-deep. Seemingly unfazed, he proceeded to take two more steps and was shin-deep, then another two steps and found himself thigh deep.  In just a matter of seconds be for things had gone from bad to worse. I was stunned and speechless as I looked on in disbelief at what was unfolding before my very own eyes. It was as if I was watching an old western movie where the good guy was being swallowed up in quicksand.  Nothing in real estate school or new agent training had prepared me for what to do in such a situation.

Determined, the man mustered with all his might and strength to somehow slowly trudge through it all and walk his way out of this sinkhole to freedom.  As he made his way back to the house, I made sure he was ok and saw that both pant legs were heavily covered in this quicksand looking slop. Thinking quickly I remembered that the home had a garden hose used for watering bushes that were hooked up to the front side of the house and I sprang into action to hose him down as best I could.

The man and his wife then quietly walked down the driveway, got in their car, and drove off.  I never heard from or saw them again and twenty-two years later I still can’t help but wonder where they ended up settling down.  

If you are ready to buy or sell, call  Mary Staton or Bert Ward - they’ll be happy to answer any questions.

Continue reading
  105 Hits
105 Hits

Gross Rent Multiplier

Ever wonder how most real estate investors determine how much to pay for an investment property?  The most common method used is called the Gross Rent Multiplier (GRM).  To determine the GRM, the investor identifies three similar properties in similar neighborhoods that were rented at the time of sale and divides their sales price by the monthly gross rent.  For example, three similar homes recently sold in the same neighborhood. Home A sold for $75,000 with a monthly rent of $600, giving it a multiple of 125. Home B sold for $80,000 with a monthly rent of $650, giving it a multiple of 123.  Home C sold for $90,000 with a monthly rent of $750, giving it a multiple of 120. The investor now has come up with a GRM range of 120 to 125, giving them measurable data to determine how much they should pay for a similar type of investment property.  The tricky part is knowing about or finding other investment properties that were rented at the time of sale.  

If you are ready to buy or sell, call  Mary Staton or Bert Ward - they’ll be happy to answer any questions.

 

Continue reading
  260 Hits
260 Hits

Contingent Offers

A common dilemma many buyers face is whether to buy their new home first or sell their existing home first. If you don’t need to sell your home in order to buy your next home, then buying first is the most convenient option. If you sell first you may not be able to find your next home right away and may have to rent an apartment or home before you do. If neither of these two options are appealing to your situation, there is a third option, making a contingent offer to buy your next home.

In this situation, the contingent buyer should have already put their home on the market and identified a new home they would like to buy with the intention of closing on both their existing home and new home simultaneously. This can be tricky because it is risky business for any seller to accept a contingent offer without the buyer at least having their home under contract. If the buyer doesn’t have their home under contract, sellers are not inclined to accept a contingent offer since they don’t know when or if the buyer will get their home under contract. For the purpose of this article, we’ll assume that the contingent buyer has their home under contract.

So what happens next? Once the contingent buyer enters into a contract to purchase their next home, the seller is entitled to receive a copy of the contract on their buyer’s home in which they may or may not share confidential information such as names and purchase price. The reason to provide a copy of the buyer’s contract is to demonstrate that they do indeed have a contract on their home, showing the due diligence expiration date and closing date. Since a buyer can back out of the contract during the due diligence period for any reason, or no reason, it is important for sellers to know how long this period is. The shorter the period, the more attractive the offer, since time is of the essence. Once the due diligence period lapses, the earnest money comes into play and the chances of the contingent buyer backing out are less likely. In other words, the contingent buyer’s contract on their home is more likely to close giving the seller a greater peace of mind. Notice how I said more likely to close. There are still instances where your contingent buyer may not close, such as the buyer losing their job and having no choice but to breach their contract. Generally speaking, the best offers are the ones that are not contingent upon a buyer having to sell their home in order to buy your home. Having said this, if you don’t have any other offers or the contingent offer is substantially higher than the other offers, it may be worth the risk of entering into a contingent contract.

If you are ready to sell and buy but you have questions about the process, call Mary Staton or Bert Ward - they’ll be happy to answer any questions about the Contingent Buying.

Continue reading
  120 Hits
120 Hits

A Home For Large Dogs

This day started off like most any day when I was appraising full time.  I jumped into my Yukon 

XL with my clipboard, file folder, Sony Mavica disk camera, pencil, trusty 100’ tape measure, and drove to Mebane to appraise another home.

When I arrived at the home, the owner greeted me at the front door and invited me to come inside.  As with any homeowner, I advised that I would come inside to do a walkthrough, but the first thing I needed to do was measure the exterior of her home.

So off I went to check out the back of the house and as I turned the corner the first thing that caught my attention was a barking Pit Bull chained to a stake by a small and run down looking dog house.  Startled at first, I relaxed seeing that there was not a single blade of grass around the circumference of the stake, giving me peace of mind that I was out of harm's way from this territorial looking dog.

No sooner than just having turned my back to the dog to hook my tape measure onto the house, I see out of the corner of my eye this large dog charging at me, beyond his well-worn circular dirt path.  

A quick adrenaline rush came over me and in a split second, I dropped my clipboard, raised my tape measure in the right hand and prepared to hopefully strike the dog when he attacked me.  I was thinking, I’ve got one shot and it’s got to count.

Then all of a sudden and out of nowhere the dog, still running in full stride, veered directly off to my left to chase after the neighbor’s dog.

Hearing the loud barking dogs, the owner came out of her home and authoritatively rounded up her dog.  After securing her dog back to the stake she apologized and said that her dog had broken free from his collar again and that she had to buy him a new one about every six weeks.  

Vicious dog attack averted, thank God! 

If you are ready to buy or sell and you are looking for pet-friendly homes, call  Mary Staton or Bert Ward - they’ll be happy to answer any questions.

Continue reading
  185 Hits
185 Hits

You Can’t Sell A House If Your Spouse Doesn’t Sign

One morning when I was first getting started in real estate sales, I received a call from an older retired man looking to get his home appraised.  I asked what the purpose of the appraisal was for since there are different types of appraisal assignments that can affect an appraiser’s opinion of value.  He advised that he was interested in an appraisal for sale purpose. I let him know I could help sell his home, but if I did, I would not be able to appraise it since it would be a conflict of interest.  The owner decided that since I was an appraiser, a Comparable Market Analysis (CMA) performed by me would serve his interest just as well as an appraisal since he wanted to sell.  

After pulling and reviewing copies of the tax record and deed, a listing appointment was scheduled and I went out the next day to meet with him.  Upon arriving I covered Working With Agents with him and he proceeded to let me know why he wanted to sell.  As it turned out, he had purchased the home for his son to live in while the son looked after him.  The only problem was his son didn’t want to move back to Burlington so my client was moving to Texas to live with him.  He further explained that he was tired of living alone after his wife took him for half of everything he owned. I listened with empathy and promised I would do everything I could to help him sell his home for the best possible price so he could make the move to Texas and be with his son.  

After the second week his home was on the market, it was placed under contract with a financially qualified young couple.  Approximately four weeks later we met the buyers for the first time at the closing table. The first question out of the attorney’s mouth to my seller was, are you still married?  I was thinking this was just a formality and how could this man be married after explicitly telling me about how he had been taken for half of everything he owned? Then he replied yes he was still married.  

After hearing his answer my jaw dropped and I looked across the table at the young couple and their agent, looking at me as if they had just seen a ghost.  We were all taken aback and speechless, except for the attorney. The attorney asked if his wife was still in town to which the seller replied she was. He then asked if he had her phone number and that if he called her, did he see any reason why she would object to coming in to sign the deed?  To which he replied I don’t think so. As good luck and fate would have it, the attorney was able to reach his wife and fifteen minutes later she came in to sign the deed.  

After the closing successfully ended, I asked the attorney how he knew my seller was still married since the public records showed that my seller was the sole owner of record.  The attorney said that he handled the closing of the home when my seller bought it and knew he was married. My seller assumed that since he bought the home without his wife, that it was his to sell without her.  After hearing my seller’s sad story about being left by his wife and that he was the sole owner of record, It never crossed my mind to ask the magic question of whether or not he was still married. After this close encounter, I no longer assume that someone isn’t married just because they have settled up and parted ways.

If you have any questions about what you will need for a home closing, please feel free to reach out to Mary Staton or Bert Ward.

Continue reading
  221 Hits
221 Hits

What’s In a Name?

How does one decide what name to choose when going out on their own to start a new business?  After all, it may be the easiest yet one of the most difficult decisions to make when starting a company.  I was faced with such a decision while in my late twenties with my parents supporting my decision to make a move from a career in credit and collections to real estate.  It all started when my wife and I bought our first investment property and formed a company named Black Diamond Capital, LLC. The name was suggested by my father because of my love and passion for snow skiing.  Not giving it a second thought, I agreed that the name was perfect. A few years later I went into the real estate appraisal profession and started my own appraisal company. A name change was in order but I didn’t want to drop the company name that my father came up with.  As a result, the new company was named Alamance Appraisals-Black Diamond Capital, LLC – DBA as Alamance Appraisals. Several years later when I opened up my own real estate firm, another name change was in order so the company was renamed to Alamance Appraisals-Black Diamond Real Estate, LLC. – DBA as Alamance Appraisals, and DBA as Black Diamond Real Estate.  

Now that you know the story behind the name Black Diamond Real Estate, what about my nickname, Bert, where did it come from and how did it stick?  Some forty years ago or so, when I was a kid, my parents hired George DeLoache to teach me how to play tennis and look after me and my brother when they were not home.  George was the best, not only did he teach me a lot about tennis, he even took me to his family’s outlet store, when it was located across the interstate, and gave me a Peter Frampton screen print t-shirt.  Simply put, George was cool and someone I very much looked up to. So being his sidekick, he one day out of the blue just started calling me Bert. I thought how creative and original, I now had my own identity since I was being called everything from Bob, to Rob, to Robert.  I didn’t know any Berts and my father goes by Bob, my cousin goes by Rob, and I felt being called Robert was just too long of a name. Being called Bert was perfect. Next thing I know, my best at the time, Bubba, started calling me Bert along with his parents and grandfather.  From there the nickname stuck and took off by the time I finished middle school. I’ll still answer to any of those names, but my friends call me Bert, and I go by Bert when I meet new people. 

If you are ready to buy or sell, call  Mary Staton or Bert Ward - they’ll be happy to answer any questions.

Continue reading
  228 Hits
228 Hits