Buyer Feedback: 'Win, Place, or Show'

Category #4: 'Out of the Money'

My favorite metaphor for how close a listing is to selling is temperature ("Listings and Pots of Water").

So, a new listing starts out at room temperature, heats up as showings (and second showings) accelerate, and reaches a boiling point by the time a strong offer (or two) comes in.

I still think that that applies, but based on the feedback my listings have been getting recently, a new metaphor seems in order: horse racing.

Four Categories

Specifically, listings these days seem to fall in to one of the following four categories:

Win: The best of what's out there. Offer imminent.

Place: First or second. The Buyer's next likeliest step is a second showing, to see both homes "fresh," dig in on the Seller's Disclosure, etc.

Show: Top three. The home had many nice attributes, and the price is in the ballpark -- but it was eclipsed by the finalists being considered by the Buyer.

Out of the Money: Didn't make the cut -- no further interest.

If a home is repeatedly "out of the money," action on the Home Seller's part is indicated: that can be either reducing the price and/or enhancing the home's appeal (by addressing whatever the most consistent objections have been).

On the other hand, if the home is making Buyers' short list, "standing pat" -- i.e., waiting for the competition to sell -- can be an option (and is certainly the path of least resistance for Sellers).

However, in a Buyer's market, I wouldn't recommend it.

That's because it risks being overtaken by new, better-priced horses -- er, listings, as well as existing listings that are not standing still, and instead are aggressively improving their price and/or appeal.

Seller's Seller's Disclosure

Are 2 Seller's Disclosures Better Than 1?

By law, Minnesota home Sellers must provide prospective Buyers with a disclosure detailing the condition of their home.

If one Seller's Disclosure is good, is a second -- the previous Seller's disclosure -- even better?

If the owner has been in the home a relatively short time -- say, less than 2 years -- definitely. That's especially true if the previous owner had a long tenure in the home and/or made major changes.

However, as the previous Seller's disclosure recedes in time, so does its significance.

Which isn't to say that it's not welcome if the current Seller provides a copy, for two reasons:

1) it telegraphs that the Seller has nothing to hide; and
2) from experience, I've found that Sellers who are meticulous about their record-keeping also tend to be conscientious about things like home maintenance.

Homes as Meth Labs

Balancing Home Disclosure Goals

Today's New York Times has a tragic story detailing the various health (and financial) calamities that befell one Tennessee family after they unwittingly bought a home that had formerly been used as a meth lab.

As recent Minnesota home buyers and sellers can attest, Minnesota requires Sellers to disclose whether their home had ever been used to make meth.

While my general stance is, "the more disclosure, the better," the meth disclosure seems questionable, for three reasons.

One. If you turned your home into a meth lab . . . . you're probably going to lie about it (and many, many other things) on the Seller's disclosure.

That's why Buyers should never waive having their own *inspector check out the home they're negotiating to buy.

Two. Little chance of financial recovery.

If a home Seller lied about a material defect -- and the Buyer can prove it -- they have grounds for a lawsuit. The ultimate goal of such a suit would be a claim for damages, or some other judgment against the Seller.

Meth lab proprietors typically don't have assets. Nor do they have homes (any more). They're usually what lawyers call "judgment proof."

So sticking them with liability for remediating meth contamination isn't going to do anything for the Buyer.

Picking Your Battles

Three. A very small sliver of the nation's housing stock is afflicted with meth-related contamination -- less than .02% of the nation's single family homes, or 2 in 1,000.

Even that number arguably exaggerates the risk. According to the article, the problem is concentrated in the South and West, and even there, is primarily in rural areas (it's hard to have a clandestine meth lab in an apartment building).

Given the horrific consequences of meth exposure, even a minute risk might warrant making the real estate buying public aware.

However, that goal needs to be balanced against another, practical consideration that's as or more important.

Namely, if you make the Seller's disclosure sufficiently long -- which is probably already the case -- no one will pay attention to any of it.

*As part of a home buyer's inspection, I always recommend talking to at least one neighbor to get the "scoop" on the house, block, etc. In the NYT article, the home's meth lab status apparently was known to the entire neighborhood.