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Saturday, August 30, 2008

Coldwell Banker Burnet Troubles

Tale of Two Parent Companies

[Note: see, "Realogy Bankruptcy Filing Imminent?" (2/12/09) for an update to this post]

One of the most popular quotes making the rounds these days is Warren Buffett's observation about risk: "You don't know who's swimming naked until the tide goes out."

Latest addition to the list of naked swmmers? Realogy, Coldwell Banker Burnet's parent company (and Edina Realty's biggest rival in the Twin Cities market; Buffett is chairman and CEO of Berkshire Hathaway, Edina Realty's corporate parent).

According to the new Barron's (Sept. 1, 2008), one of the most troubled private equity deals in the last few years is Apollo's late 2006 purchase of Realogy for $7 billion ("Look out Below! More disasters could hit debt-laden companies owned by private equity shops Apollo, Blackstone, & KKR").

The Barron's article notes that Realogy's bonds are trading for 50 cents on the dollar. For those who don't know finance, that qualifies as somewhere between intensive care and life support.

By contrast, Berkshire Hathaway, Edina Realty's parent company (via MidAmerican Energy), is flush with cash and in acquisition mode. In just the last six months, Berkshire financed Mars' acquisition of Wrigley, launched a new municipal bond insurance company, and expanded its transportation sector investments. Oh, yes, and it's stock price is holding up well at $117,000 a share.

So how will the prospect of Realogy going bankrupt affect Coldwell Banker Burnet? To tweak that old line about chicken soup,"can't help, might hurt."

Thursday, August 28, 2008

"Tear-down Index" Up

Tear-down Activity Belies Recession Signals

Yes, the Case-Schiller real estate index just showed a record drop, and yes, consumer sentiment as reported by national gauges remains low. And investors don't need to be told that the stock market remains highly volatile, and down sharply so far for 2008.

However, under the category "all real estate is local," tear-down activity near the City Lakes appears to be at a record high.

I'm personally aware of at least six projects at various stages of completion within one mile of Cedar Lake in Minneapolis. I'd estimate that the market value of the homes under construction ranges from $1.5M to more than $4M (check out the spectacular home going up on the west side of Lake of the Isles!).

Counting major rehabs -- defined as more than $250k -- swells the number of in-progress projects to about a dozen in the same area.

Aren't we supposed to be in a kind-of-recession?

It is a bit perplexing. The bullish explanation is that people may be pessimistic short-term, but are optimistic long-term. If you are building a $3M home near Cedar Lake for yourself (vs. "spec," or resale), you undoubtedly are thinking long-term.

The other possibility is that at least some of this activity is defensive: when markets are volatile, people want their money close to home -- literally. You can't live in your stock portfolio, and, given the U.S. budget deficit, higher taxes on everything from capital gains to earned income may be in the offing. However, mortgage interest for most people is subsidized by the government (via itemized tax deductions).

There may also be a "buy low, sell high" phenomenon at work, at least with respect to contractors. With new construction off sharply and the overall economy slow, now is a great time to interview and hire people in the building trades (electricians, carpenters, etc.).

Wednesday, August 27, 2008

National Energy Crisis? Not So Fast . .

Twin Cities Well-Positioned
to Harness Wind Power

"Wind advocates say that just two of the windiest states, North Dakota and South Dakota, could in principle generate half the nation's electricity from turbines. But the way the national grid is configured, half the country would have to move to the Dakotas in order to use the power."
--"Wind Energy Bumps Into Power Grid's Limits" (The New York Times; 8/26/08)

It certainly makes sense that it might cost tens of billions to build power lines from the Dakotas to population centers on either coast.

However, last time I checked, the state that shared the longest border with North and South Dakota was . . . Minnesota. Granted, the Twin Cities is located on the opposite side of the state, but we're still talking hundreds of miles, not thousands.

Through the early nineteenth century, cities formed near cheap transportation -- think natural harbors (New York, San Francisco, Seattle) and rivers (St. Louis, Minneapolis, New Orleans), etc. Fifty years ago, cities sprang up -- and grew fastest -- where the human intellectual capital was greatest (think, Silicon Valley and Boston). Now, what may very well separate urban winners and losers is . . . access to cheap energy.

On that score, the Twin Cities would seem to be looking (surprisingly) good, cold climate notwithstanding.

Monday, August 25, 2008

Contrarian Indicator

The Big (and Little) Picture

The most bullish housing signal I've seen lately is all the attention paid to Nouriel Roubini (The NY Times, The Wall St. Journal, etc.). Roubini, an economics professor at NYU and "perma-bear" known for his dour forecasts, is rapidly emerging as the guru of this cycle (like Abby Joseph Cohen was to the '90's Bull Market, Henry Blodgett was to Internet stocks, etc.).

Nobody paid attention to him a year ago; now, everyone is. Not quite as good as Newsweek putting the bear market on its cover, but a good sign, nonetheless. (As every good contrarian knows, when everyone holds the same opinion . . it's usually wrong.)

When I work with Buyers and Sellers, "macro stuff" is really just background noise: ultimately, the focus narrows from the direction of interest rates, broad market trends, etc., to at most a handful of homes. Specifically, Sellers what to know the comp's for their home and how it stacks up against them; prospective Buyers want help whittling a list of finalists down to "the one."

That said, I think the key to the broader economy is housing, and the key to housing is the fate of Fannie Mae and Freddie Mac.

I'm going to venture a little way out on a strong limb, and make two predictions: 1) the template for any fix is going to be modeled after the Resolution Trust Corp. (the entity charged with cleaning up after the S&L mess almost 20 years ago), just with more zeroes added; and 2) the clean-up task is going to fall squarely in the lap of the new administration.

Friday, August 22, 2008

Too-Flattering Photography?

Homes Getting Bigger . . . Online

I've been showing a client 1,500-2,000 FSF houses in several closer-in, city neighborhoods the last few days, and I've never seen so many 14 x 18 foot living rooms that look like football fields in the online photos!

If you don't know square feet, that range usually corresponds to three average size Bedrooms (or two big ones), and comfortable-size public rooms, but certainly nothing extravagant. By contrast, "McMansion's" usually start around 4,000 square feet.

So what's going on?

Overly flattering photography. I leave it to the photography experts to explain the various techniques (panning, stretching, etc.), but clearly there's a disconnect between how large rooms appear online, and how they appear once you're standing in them.

The operative theory appears to be the real estate equivalent of, "if your parents don't have kids, you won't either." Translation: if a home doesn't get any showings, it won't get any offers, either.

Unfortunately, attracting prospective Buyers under false pretenses isn't the way to get offers, either.

Beating Expectations

As I've written in previous posts (and counsel my Sellers), the best way to get an offer is to underpromise and overdeliver (actually, that's a pretty good principle in most walks of life). Doing the opposite simply makes Buyers feel disappointed (if not misled). In my experience, such Buyers don't make offers, they simply move on -- quickly.

Ironically, as too-flattering photography becomes more commonplace in real estate, the main consequence is to make the Internet less useful to prospective home buyers, even as its role in everyday life grows.

Increasingly, if you want to know what a home really looks like, you have to get inside.

Thursday, August 21, 2008

Buyer's Letters - Part I

"Buy on bread, sell on cheese"

In the wine industry (which I otherwise know nothing about), that means if you're a wine buyer, you'd be well-advised to eat a piece of bread in between tastings. Because bread is neutral, it will clear your palate for the next wine.

By contrast, If you're a slightly shady wine seller -- especially if it's not exactly 1983 Bordeaux -- supposedly you offer cheese to prospective buyers in between tastings. Cheese has a reputation for distorting the palate, which makes judging wine harder.

In my opinion, Buyer's Letters play the same double-edged role in residential real estate that cheese does in wine tasting. If you're a Buyer, it may positively predispose the Seller towards your offer, so why not? However, if you're a Seller -- especially an emotional one -- heads up.

Realtors tend not to be fans of Buyer's Letters (I'm one of them), for two reasons. (*If you're a Realtor who disagrees, please feel free to comment at the end of this post.)

First, consider the famous legal quote about arguing a case: "if you don't have the facts on your side, argue the law. If you don't have the law on your side, argue the facts."

In real estate, if your Buyer is making a great offer . . you sell the offer. If they're not . . . you try to sell the Buyer.

Which brings up knock #2 on Buyer's Letters: they often verge on the treacle ("we loved your home from the minute we walked in the front door"), and can, shall we say, embellish. They're also highly predictable.

I don't know that I've ever caught anyone in a red-handed lie, but there certainly seems to be a "Lake Wobegone" effect at play, especially if the prospective Buyer is a family: the couple is always attractive and likeable, the kids (if any) adorable. And it doesn't hurt that they absolutely love your neighborhood and home (who wouldn't?), will cherish it like you have, etc.

That kind of pitch may not be that compelling if you're an executive who's moving for the fourth time in seven years. However, if you're retirement age, and selling the home you raised your family in and have lived in for decades, it's a fair bet that the process is quite emotional.

I've certainly seen plenty of sincere Buyer letters, and it's hardly the case that Buyer's letters and strong offers are mutually exclusive.

However, my standard advice to Sellers is to focus on the Buyer's offer, not the Buyer. There's plenty of time to bond after a deal's been struck.

Part II: Three Types of Buyer Letters

Wednesday, August 20, 2008

Fannie Mae, Freddie Mac End Game?

Mortgage Market Upheaval

The most significant financial development the last few days -- certainly for the housing market -- is the accelerating decline of Fannie Mae and Freddie Mac. At $5 and $3.5 per share, respectively, the two so-called government sponsored entities ("GSE's") would appear to be caught up in parallel death spirals (both are down more than 90%(!) in the last year).

What does that mean for housing? No one really knows yet.

The answer likely depends on the government's next move(s) -- and how the credit markets receive them.

If the U.S. Treasury effectively nationalizes them -- continuing to provide funding -- it's possible that the average home buyer or seller won't notice any change. However, the reason Fannie Mae and Freddie Mac arrived in such dire straits is because they became overextended and undercapitalized. Simply perpetuating those problems, without any underlying reform, would only serve to transfer any future losses from the companies' investors and creditors to U.S. taxpayers.

So some type of fundamental change is likely -- and needed.

What's ultimately at stake is who originates mortgages, who holds them -- and at what interest rate.

Tuesday, August 12, 2008

Tear-Down Economics

From Worst to First,
or, Housing "Leapfrog"

More than one would-be Seller has quietly harbored the hope that they wouldn't have to spend big money getting their home ready for market -- or face Buyers beating them up on their home's condition -- because, after all, "it's probably a tear-down." Unfortunately, more than 95% of the time, they're wrong.

Forget that many people are retrenching now in the face of a tough economy, or that new home construction is down dramatically and many builders are in full retreat. Most homes aren't tear-down's for the simple reason that the block won't support the new home's price.

Saved by the Wrecking Ball?

First, a caveat. Subject to local zoning rules and your neighbors' forbearance, your home is still your castle. If you want to tear it down and build a new one -- and have the money -- you probably can, even if it makes no economic sense whatsoever. There are plenty of examples where, either because of the owner's attachment to a particular piece of land, long-standing social ties on the block, etc., the location is decided first, the home (and building budget) second.

However, most people contemplating doing a tear-down at least pause to calculate whether it's a good investment. And if it's a builder contemplating doing a new "spec" home (as in "speculative," or, "build it and they will come"), that's the ONLY consideration.

Rules of Thumb

So, you start at the end: How expensive can a new home on the block be before it sticks out? If prevailing prices nearby are $600k - $800k, you can probably go as much as 20% higher (to around $1M), especially if the neighborhood trend is clearly up. However, anything more than that is risky. After all, if your budget for a new home is $1.5M, you'd probably want to build it on a block where the other homes also cost that much.

The other relevant consideration is the established ratio of land to home prices. Conventionally, land accounts for 25%-33% of the total land-plus-home cost. So, most $1M homes sit on lots worth $250k to $333k. Again, common sense suggests why: a $1M home on a $500k lot would feel undersized, while the same home on a $100k lot would seem ridiculously out-of-place.

Combine the foregoing and you come up with a fairly accurate rule of thumb: if the cost of the tear-down multiplied by 3.5 doesn't overshoot the top of the block, the home's a legitimate tear-down candidate. If it does, the answer's "no."

Housing "Leapfrog"

Note that the condition of the home isn't necessarily a consideration.

There are plenty of well-built, well-maintained homes scattered through expensive parts of Edina, Minnetonka, and around the City Lakes that have been torn-down that were not in disrepair. Rather, they typically were the "runt" on a choice block where the surrounding homes gradually became larger and more valuable (or abruptly -- I can name at least a couple Twin Cities neighborhoods that have seemed to metamorphose overnight!).

Because the margins on a luxury home are fatter than on a more modest home, builders will typically try to find the least expensive house on a block and replace it with the most expensive -- a process that can look like a game of "Housing Leapfrog."

Monday, August 11, 2008

Rose-colored Glasses . . or Magnifying Lens?

House Languishing on the Market?
It (Usually) Shows

Realtors constantly warn their home-selling clients about the risks of overpricing (especially in a soft market). Anyone who doubts that should have been along with me and my clients this weekend as we looked at about a dozen homes for sale in Minnetonka, Golden Valley, and Plymouth.

The houses that had just come on the market were like freshly wrapped presents: sparkling clean, all the lights on, marketing literature neatly set out, lawns nicely manicured, everything "just so." By contrast, the homes that had been on the market for months were, shall we say, a little . . . shop-worn.

It's not so much that the homes were dirty or dark -- although several were -- it's just that the homeowners had gone back to their normal
routine(s): doing the laundry, cooking meals, etc.

Which makes sense. Especially if you have kids, it's nearly impossible to sustain the "fire drill" quality of the first week or two on the market. That's when traffic is heaviest, and the interest is the most intense.

Six months later . . not so much. As showings taper off, it's easy for Sellers to become discouraged, and not have the time or motivation to do all the "little things" that Buyers notice. That can make their home even harder to sell, especially when there's newer competition down the street.

Rose-colored Glasses . . or Magnifying Glass?

The other phenomenon associated with too-long market time is a shift in prospective Buyers' mindset.

Instead of overlooking a home's blemishes -- and every house has some -- Buyers (and their realtors) zero in on them like lasers.

In the real estate equivalent of "Where's Waldo?," it becomes a challenge to explain why a particular home has sat on the market so long. Choppy floor plan? Dated Kitchen? Deferred maintenance? Uh-huh . . . so that's it! Even worse, with so many houses to choose from, many agents and prospective Buyers see online that a home has been on the market forever -- figure it's for a good reason -- and simply skip it.

By contrast, new listings often benefit from the rose-colored glasses treatment. Prospective buyers see the home's strengths, not weaknesses; particularly if the home is appealing and well-priced, and there's a lot of initial traffic, they worry that some other Buyer will beat them to the punch.

The foregoing psychology explains why overpriced homes not only don't fetch a premium, they often overshoot fair market value on the low side, if and when they finally sell. To overcome market skepticism, such homes need to sport a significant discount to (re)attract and win over prospective Buyers.

P.S.: The real estate equivalent of having a big piece of spinach on your teeth and nobody telling you is having a lockbox that doesn't work (note: realtors typically gain access to a home by entering an access code into an electronic lockbox on the front door).

If a realtor can't get into your home because the lockbox doesn't work -- which happened at one of my scheduled showings this weekend -- there are two likely explanations. Either the lockbox just malfunctioned, or, it's been weeks (or longer) since anyone tried to show the home.

Saturday, August 9, 2008

Housing Crystal Ball?

Beware the Too-Precise Price

Today's New York Times' Business section has an article that calculates how much the largest U.S. housing markets are still over -- or under -- valued ("In Their Various Ways, Economists Try to Find Right Price for a Home"; The New York Times, 8/9/08). The calculations -- by a Columbia Business School academic, Christopher Mayer -- indicate that Miami is still overvalued by 13%, while Detroit is undervalued 12%. Mayer calculates that Minneapolis is 7% overvalued.

Hmmm . . . 7%, not 8% or 6%, or perhaps even a more realistic range??

Forgetting Mayer's sophisticated methodology (read the article if you're interested), the precision of his calculations strikes me as, well, pretentious garbage (I actually had another word in mind).

Realtors who have studied pricing know that putting a very specific price on a home conveys a certain scientific objectivity and precision. Thus, the $500,000 home isn't listed at $500k, it's listed at . . . $498,756. I advise my selling clients against doing that, because I think it's a transparent gimmick that turns off prospective buyers.

I put Mayer's research in the same category.

P.S.: Maybe Mayer didn't want to be lumped together with all the economists whose research and conclusions are impossibly equivocal ("if you lined up all the economists in the world end-to-end . . they wouldn't reach a conclusion").

PPS: in my experience, sales gimmicks are like cockroaches: you never just see one.

Thursday, August 7, 2008

Mpls - St. Paul Magazine "Super Agents"

Many are Text-Messaged . . Few are Chosen

I always thought an unwritten rule of criticizing the SAT's -- (way) back in high school -- was that to be credible, you had to have scored well. If you did poorly and were critical . . . it was just sour grapes.

Well, in that vein . . . here's my take on the upcoming Mpls. - St. Paul Magazine's list of 2008 "Super Real Estate Agents" (I'm on it).

For the uninitiated, the Magazine compiles an annual list of the top Twin Cities realtors, awarding its "Super Realtor" designation to just 4%, or about 750 realtors. The list is announced in the Fall.

From all appearances, the editors take the selection process seriously -- and so do the realtors on the list. The selections are based on surveys of Mpls. - St. Paul subscribers, recent home buyers, etc.; and are cross- checked against the MN Dept. of Commerce Web site for complaints against said realtors. The nomination process is anonymous (to whomever nominated me . .. thanks for taking the time!!).

Realtors who make the cut receive a package with a letter of congratulations, various marketing materials, and a pitch to "leverage" the award by by licensing the Magazine's award logo, buying space on their Web site, etc. (also called "up-selling"). It's all professionally done, and to be honest, I've seen worse business propositions.

For me, though, I decided the "deluxe package" wasn't worth it, at least this year. After looking at the site featuring this year's "Super Realtors" (all 760 of them), I just don't see the average consumer wanting to screen such a big pool of similar-looking (it pains me to say) real estate agents. Even searching by sub-categories, such as "Company" or "City of Focus," still produces dozens of names. Ultimately, you're just another name -- and, if you pay for it, face -- in the realtor crowd.

My strategy is to stand out. I do that through this blog, regular correspondence and contact with past clients, and providing superior service to current ones.

P.S.: if somehow you don't see my name in the upcoming 2008 list, someone at the Magazine saw this post and didn't like it. If that should happen . . I'll tell you what I really think.

Wednesday, August 6, 2008

1st-Time Buyers

Fern Hill's Most Affordable

Looking for a single family home in St. Louis Park's Fern Hill neighborhood for under $200k? Here it is:

This cute 2 BR, 2 bath home features a large eat-in kitchen, spacious living room, two-car detached garage, and solid 50's construction. The finished lower level offers extra living and storage space. Great for first-time buyers, or as a condo alternative!

Know someone who might be interested? Please have them call me (612-925-7701) or email (

Tuesday, August 5, 2008

Showing Patterns

Listings that Have "Legs"

New listings and movie debuts share a lot of similarities.

Attention for both is almost always highest at the "premiere," then quickly tapers off. However, the box office for an especially popular movie declines more gradually, a phenomenon referred to as "having legs."

An appealing listing also has "legs." Homes that are in good condition and well-priced continue to attract regular traffic ("showings") once they're on the market. Sustained, serious interest signals that prospective Buyers are reacting well to the listing, and is almost always a prerequisite to getting an offer.

To use another metaphor, selling a home is like boiling a pot of water. Before the water gets hot, it first has to be warm.

Sunday, August 3, 2008

Financial Methadone?

Congress Tries To Help Housing Market
With (More) Tax Breaks, Subsidies

We've entered what George Carlin might call the "methadone phase" of the current housing/credit crisis.*

In this case, the "addict" is the U.S. housing market; the illicit drug is easy, cheap money (the best kind!); and the pushers are two so-called government-sponsored entities ("GSE's"), commonly known as Freddie Mac and Fannie Mae. Oh, yes, and the co-dependents: creditor nations such as China and Singapore, and flush OPEC members, that have willingly (so far) purchased the resulting debt.

Now that Uncle Sam has just explicitly guaranteed Fannie Mae and Freddie Mac's debts, their spendthrift ways -- if not the entities themselves -- are likely to come to an end. They'd better: with $5.2 trillion in guarantees and debt that the U.S. government is now responsible for, they pose a potentially mortal threat to U.S. solvency.

But everyone recognizes that going "cold turkey" would threaten an already fragile and, in many places, still-falling housing market.

What to do? Switch the housing market to temporary financial substitutes that stave off withdrawal, yet don't stoke the addiction. Voila! Financial methadone.

That's essentially what's in the new housing bill just passed by Congress and signed by the President. (At 700-plus pages, I doubt most members of Congress who voted for it really know what's inside, so I'm not going to presume to).

The legislation threatens to rein in Fannie Mae and Freddie Mac -- just not yet.

And it packs a whopper of a financial carrot for first-time buyers: essentially an interest-free $7,500 loan, that operates as a credit against one's federal taxes. Because it's "refundable," if you don't owe that much, the Government will send you a check for the difference.

In this case, the temporary aspect is the window of eligibilty: qualifying buyers must close on a home purchase between April 9, 2008, and June 30, 2009.

Will the "methadone strategy" work? Possibly. The housing market functions like an escalator, with first-time Buyers occupying the bottom rungs. Anything that strengthens their presence in the market makes the rest of the market healthier, too.

However, just as addicts must eventually wean themselves off methadone, eventually the housing market -- once healthy -- will likely have to give up its tax breaks and subsidies, too.

*My favorite George Carlin joke is about heroin addiction (actually, no laughing matter). Carlin recommends it, "because before you're addicted to heroin, you can have 10, 15 or even more worries; after you're addicted . . . you just have one."

Saturday, August 2, 2008

Big Rehab . . . Big Discount

Cedar Lake Rehab Opportunity!

Looking for a great rehab opportunity, just two blocks to Cedar Lake in Minneapolis?

This once-grand, 1930's Tudor might be for you! (or someone you know). The home needs a complete rehab, including repairs and odor remediation. However, at $450,000, there is huge potential upside. Great original pedigree and bones, including vintage tile, cherry and walnut millwork, gorgeous staircase. Bonus: large, level lot (.26 acre) on prime stretch of Sunset Boulevard.

Click below to see the MLS listing, or contact me by email ( for more details . . .

Friday, August 1, 2008

5 p.m. Friday

Positioning a New Listing

Five p.m. Friday, especially in the Summer, has very different meanings for the housing market, and the business world generally.

Big companies that have to announce an unexpectedly big loss or other bad news wait till 5 p.m. Friday, because they figure that that's when the fewest people are paying attention. (Dubious? Watch today at 5:01 p.m.) Lately, that's also been when the FDIC has chosen to announce that it is taking over a(nother) failed bank.

By contrast, in the housing market interest tends to be highest on Friday. That's when prospective Buyers screen for homes they want to see that weekend. So if you want exposure for a new listing, that's a good time to shoot for, especially to publicize any open houses.

In truth, Friday is really only the second best time to hit the market. In my opinion, the best is Monday, ahead of the Broker Tour on Tuesday. I've sold five times as many homes as a result of exposure on Broker Tour, vs. as a result of holding a Sun. open.

Notwithstanding the foregoing, new listings come on the market pretty much continuously during the course of the work week (Monday-Friday). Someone really looking for what you have will find you, regardless.

However, lots of people on the market don't have a crystallized notion of what they want yet -- or where. Positioning a listing to catch the eye of people like that is what real estate sales is all about . . .

Moot Point

Tear-Down? Never Mind about the Disclosures

In my July 26 post, "Too Good to Be True," I discussed (briefly) whether a Seller who overstates their home's square feet can be sued by a Buyer. In addition to the "reliance" hurdle, there's another possible "out": a misrepresentation, if indeed there is one, may be moot.

Case in point: an older home near Cedar Lake in Minneapolis that hit the market one year ago. More than one realtor -- myself included -- thought that the house's key stats (foundation size, finished square feet, etc.) came in on the "generous" side. Yet the home sold quickly -- in less than one month -- for what seemed to be top dollar given its size, condition, etc.

It turns out it didn't matter. As of a few weeks ago, all that's left of the home is the .3 acre lot it sat on.

The home's ultimate fate as a tear-down also explains mystery #2: why it sat idle for almost a year. When you're planning a $2.5M house -- and you can bet there's one coming, given both the location and what the Buyer paid for the house, er, land -- $40k or $50k in interest isn't a big deal (even if the Buyer paid cash, the opportunity cost on that money would have been mid-five figures). Logistically, it can also take that long to coordinate with the architect, builder, etc.

Sellers who may be encouraged by the foregoing to "take liberties" representing their home's vital statistics or condition should think twice: a small fraction of the homes people consider to be tear-down candidates actually are (see my Aug. 12 post, "Tear-Down Economics"). For the vast majority of homes, especially in today's market, a Sale is likely to involve a careful inspection by a budget-minded consumer.

P.S.: While most homes are not tear-down's, plenty are candidates for serious remodeling. If that's the case, it can be smarter to leave a major project such as a Kitchen for the next owner, rather than attempt a partial or superficial update.