Nancy Strong, Real Estate Pro in Armonk, NY

With buyers looking at homes in their range thinking they'll get more, how do you get them to look at a lower priced house that needs work?

Asked by Nancy Strong, Armonk, NY Wed Jan 6, 2010

For instance, a buyer who can spend $1.5M for a home is excited to see a house that would have been $2M a couple of years ago. How do you convince them to look at a $1M home that could be fantastic if they do the work?

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I do it by showing before and after comps. Avoid Expired listings, as they have proved to be Sellers futile experiences in a declining market. Use Solds showing condition of the property and make the buyer do a Pre-approval appointment with a Bank, and emphasize Home owners cushion needed for sucessful Homeownership (emercency 6 months salary in bank) They'll understand you are looking out for them.
Web Reference: http://PaulMVPteam.com
1 vote Thank Flag Link Wed Jan 6, 2010
Nancy, I have been working with the kind of buyers in your price range in the metropolitan area for a long time. There are various reasons why someone would not want to do what you are suggesting, and I will give you a few of them.
Let's say someone finds a $1 million house that needs $250,000 in renovations to become that $1.5 house. They would need 20% down payment, plus $250,000 to renovate, plus closing costs, which is approx $500,000 total. If they buy the $1.5 house, they can get 80% financing, so would only need $350,000. If they put down down 25% to get a little better rate, they still only need $425,000. On top of that, I find couples in this price range are in 2 categories, either a 2 income family, so who has the time to get involved with major renovations, or investment bankers and the like where only 1 spouse works, but so many hours that the other one would feel like they had a job just doing renovations. Most of these people have young children, making this job even more difficult.
You may find a person here or there who is looking for what you are talking about, but it is probably rare, regardless of how great a deal it looks to you on the surface.
0 votes Thank Flag Link Wed Jan 6, 2010
I always try to get the customer/client to look at the potential and value in a home. As we all know real estate is an investment and if there is a home that needs work and is fairly priced it may make more sense to jump on it. I try to get my buyers to think long term, I think we need to educate them. I show them stats, such as the cost vs. value reports. We as agents have to get the buyers excited, it begins with our knowledge.

Sincerely,

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
Legends Realty Group
914.406.9023
0 votes Thank Flag Link Wed Jan 6, 2010
As said previously, few buyers (other than investors) are looking to purchase homes that will need work prior to moving in. And don't forget, the credit markets are very tight so getting a loan on a home needing repairs could be problematic.
Web Reference: http://www.phgbrokers.com
0 votes Thank Flag Link Wed Jan 6, 2010
I think that it ultimately comes down to one's motivation, lifestyle, knowledge, and time. The reality is that some people simply don't have the motivation, time, or knowledge to attack home improvement challenges. I also think that in your example, most of my buyers would opt for the $1.5 million dollar property that they can simply move into and live, rather than spending a million dollars and being forced to do several hundred thousand dollars of work to simply make the property liveable (in their eyes). Obviously, the more aggressively priced the property is, the more one can justify that it makes far more sense to take on a major renovation project.
0 votes Thank Flag Link Wed Jan 6, 2010
Perhaps, you're targeting the wrong type of buyers. Most retail buyers want to buy homes that they can move into and enjoy immediately. Investors (myself included) might take a look at that home provided we can get it for a price that makes good business sense.
0 votes Thank Flag Link Wed Jan 6, 2010
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