Damage Control: Advice to Prospective Sellers
As Watergate made plain, the cover-up is often worse than the crime (although in Richard Nixon's case, ordering a burglary was plenty bad in its own right).
The same principle applies to selling homes.
Here are three examples where covering up a problem is worse than simply leaving it be (or preferably, fixing it before prospective Buyers ever show up).
One. Odors.
I don't know about other Realtors, but whenever I smell the distinctive aroma of a plug-in (or more accurately, my clients do, because my sense of smell is atrocious), my hackles immediately go up.
What is the Seller trying to hide? Is there a water intrusion problem somewhere? Other damage? Is the smell mold, or could it just be mustiness from not having the house opened up recently?
If in fact a home smells moldy, the homeowner should identify the source of the water -- which is always the culprit -- and eliminate it.
Even if the offending odors are from an especially pungent dinner the night before, it's still better not to try to mask it.
(Advice to Sellers: you may want forego preparing especially spicy or exotic dishes while your home is on the market -- or at least those days you're expecting lots of traffic. Seriously.)
Similarly, if the home smells of fresh paint, that can be a cue to look for wall or ceiling damage resulting from a defective roof, recent plumbing problems, etc.
Two. Noise.
Whenever I hear too-loud background music (I guess that would make it "foreground" music), I look outside: is the home on a busy street? Is it close to (or under) the flight path? Is there a commercial business near by?
"Foreground Music"
I think a good rule of thumb in such cases is, if you notice the music . . . it's too loud.
It's also surprising to me how often music that the Sellers assume is tasteful and mood-setting . . . isn't.
Three. Concealed damage.
Probably the most egregious example of covering up damage that I've personally encountered was the shoe I tripped over -- 10 seconds into the showing -- in the middle of the Seller's Living Room floor.
Directly below: a hole in the floor that went all the way through to the basement.
Aside from being dangerous (physically, liability-wise, etc.) it's also dumb: my Buyers had seen all they needed to to know that this wasn't the home for them.
As a practical matter, the cues that there may be underlying damage are (usually) much more subtle: the too-big or oddly out-of-place rug (covering damage to the flooring); a wall hanging that seems misplaced; a piece of furniture that you keep bumping into (again, covering floor damage); a shade that's pulled down because one or more window panes are broken.
If the prospective Buyer catches the problem early, their trust is shot; if they catch it later, during a second showing or even at the walk-thru, they're likely to demand a big price concession or may even threaten to walk if the problem is big enough.
Even if they stay in the deal, I can guarantee that the now-distrustful Buyers will ratchet up their scrutiny of everything else in the home!
None of the foregoing scenarios makes the Seller better off than if they had simply dealt with the problem in a straightforward manner from the get-go.
Showing posts with label home repairs. Show all posts
Showing posts with label home repairs. Show all posts
Wednesday, January 27, 2010
Monday, December 28, 2009
Estimating Home Upkeep
"Lumpy" Home Repairs
How much should you earmark for annual home upkeep?
According to one LA-based Realtor:
Before parsing this advice, however, first an aside: notwithstanding the article's headline, it gave no examples of how home costs are rising at the moment.
In fact, big ticket items like property taxes, as well as capital repairs like roofs and exterior painting -- not to mention major appliances -- are now getting less expensive, thanks to the recession.
Back to upkeep . . .
Yes, I agree with the 1% rule, but with a major caveat: home repairs are likely to be "lumpy." In other words, most years, homeowners will likely spend well below 1%; however, intermittently, they'll likely overshoot that quite a bit.
That's because things like roofs, exterior paint, and furnaces can last a decade or longer, but when they go . . . they go.
In the meantime, I'm a big fan of home warranty plans, which for a fairly reasonable monthly premium cover homeowners against major, unexpected outlays.
In fact, my standard advice to my Buyer clients is to get coverage for a calendar year, until they know their home, what reliably works -- and what doesn't. After that, they can re-assess as appropriate.
P.S.: Is The Wall Street Journal getting sloppy with its headlines? Consider this one, also from today's paper: 'Adjusted for Inflation, Dow's Gains Are Puny.' The article then goes on to note that the Dow, currently at 10,500 and basically unchanged from a decade ago, is only 8,140 when adjusted for inflation.
Since when does a 2,000 point drop qualify as a "puny gain"??
How much should you earmark for annual home upkeep?
According to one LA-based Realtor:
Homeowners should have 1% of the purchase price of their home in savings for improvements and surprise expenses. That is the absolute minimum. It's better to have 2% to 3% socked away somewhere.
--"Home Costs Keep Going Up"; The Wall Street Journal (12/28/09)
Before parsing this advice, however, first an aside: notwithstanding the article's headline, it gave no examples of how home costs are rising at the moment.
In fact, big ticket items like property taxes, as well as capital repairs like roofs and exterior painting -- not to mention major appliances -- are now getting less expensive, thanks to the recession.
Back to upkeep . . .
Yes, I agree with the 1% rule, but with a major caveat: home repairs are likely to be "lumpy." In other words, most years, homeowners will likely spend well below 1%; however, intermittently, they'll likely overshoot that quite a bit.
That's because things like roofs, exterior paint, and furnaces can last a decade or longer, but when they go . . . they go.
In the meantime, I'm a big fan of home warranty plans, which for a fairly reasonable monthly premium cover homeowners against major, unexpected outlays.
In fact, my standard advice to my Buyer clients is to get coverage for a calendar year, until they know their home, what reliably works -- and what doesn't. After that, they can re-assess as appropriate.
P.S.: Is The Wall Street Journal getting sloppy with its headlines? Consider this one, also from today's paper: 'Adjusted for Inflation, Dow's Gains Are Puny.' The article then goes on to note that the Dow, currently at 10,500 and basically unchanged from a decade ago, is only 8,140 when adjusted for inflation.
Since when does a 2,000 point drop qualify as a "puny gain"??
Thursday, August 27, 2009
"As Is" Misconceptions
No Free Lunch
Selling "As Is" is a popular choice for banks, estates and other third parties who don't know the condition of a property (because they haven't lived in it), and don't want to be responsible for any repairs.
Occasionally, however, "owner-occupant" sellers -- especially ones with deferred maintenance -- view selling "as is" as a panacea for making costly repairs.
Yes and no.
Yes, in the sense that they can certainly avoid having to do the repairs themselves.
No, in the sense that they'll pay a steep price for having the Buyer assume responsibility for whatever needs to be fixed.
No Shortcuts
Perhaps the biggest misconception is that selling "as is" avoids a Buyer's inspection.
Wrong.
Buyers who agree to buy "as is" still want to know what they're buying, which typically means doing a very thorough inspection.
The second misconception is that selling "as is" will net sellers more money.
Wrong again.
For every $1 in repairs that Buyers assume, they'll typically deduct $2 or even $3 from their offering price.
That's not just because of the time and inconvenience, but to cover the risk that the necessary repairs will be more extensive than appears. In fact, especially when the issue involves (hidden) plumbing, wiring, and any related contractor permits, such "padding" is often warranted.
To avoid such "3-for-1" discounts, Sellers -- at least ones who can afford to -- are often well-advised to tackle the repairs themselves.
P.S.: I remember taking a class in college "pass/fail," only to find out that my grade would have been a "B+." Selling a home in good condition "as is" is like that.
Selling "As Is" is a popular choice for banks, estates and other third parties who don't know the condition of a property (because they haven't lived in it), and don't want to be responsible for any repairs.
Occasionally, however, "owner-occupant" sellers -- especially ones with deferred maintenance -- view selling "as is" as a panacea for making costly repairs.
Yes and no.
Yes, in the sense that they can certainly avoid having to do the repairs themselves.
No, in the sense that they'll pay a steep price for having the Buyer assume responsibility for whatever needs to be fixed.
No Shortcuts
Perhaps the biggest misconception is that selling "as is" avoids a Buyer's inspection.
Wrong.
Buyers who agree to buy "as is" still want to know what they're buying, which typically means doing a very thorough inspection.
The second misconception is that selling "as is" will net sellers more money.
Wrong again.
For every $1 in repairs that Buyers assume, they'll typically deduct $2 or even $3 from their offering price.
That's not just because of the time and inconvenience, but to cover the risk that the necessary repairs will be more extensive than appears. In fact, especially when the issue involves (hidden) plumbing, wiring, and any related contractor permits, such "padding" is often warranted.
To avoid such "3-for-1" discounts, Sellers -- at least ones who can afford to -- are often well-advised to tackle the repairs themselves.
P.S.: I remember taking a class in college "pass/fail," only to find out that my grade would have been a "B+." Selling a home in good condition "as is" is like that.
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