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There
are three types of buyers for an older home:
Buyer
A-One: wants a turn-key product, i.e.; turn the key and move in. The
house needs no repairs and has been professionally designed,
decorated and constructed with all modern amenities. They are looking
for character and charm, usually in the country with don't-bother-me
neighbours but are common in city centers too.
Buyer
B: wants to buy an old house, do some renovating and decorating, and
eventually sell to Buyer A-One. They often are buying a big old farm-house
in the country, out of a genuine love for the lifestyle and the
architecture, or they are buying a large older house in an area of
the city that was once grand and is now being rejuvenated. They can
do a lot of the work themselves (but still have to contract out for
the major stuff) and hope to make some money on their 'sweat equity."
Buyer
C: is looking for distressed properties and is more focused on
profit. They seek run-down properties that are in need of more work
than the hobbyist-renovator (Buyer B) is willing to take on. Usually
they are professional renovators, but sometimes are private owners
willing to buy a dump and take it up the next level. |
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Each
buyer has different expectations of the price they will pay for
their home. If you can make a Buyer C distressed property appeal to
Buyer B you will get more for it. A Buyer A-One property will look
like a Buyer B property if the buyers see too many things that are unfinished.
There
are more type B buyers than either type A-One or C. If you target
your home to the buyers who can do repairs themselves, you will have
a better chance of attracting multiple offers. |
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When
you're sprucing the house up to sell it, take care of the repairs or
upgrades that the average handyman would NOT be able to tackle themselves.
Ideally,
all of the exterior work (new shingles/roof, chimney, windows,
siding or brick repointing) will have been done. Buyers then see it
as a weather-proof shell that only needs interior work.
If
the mechanical systems inside have also been upgraded (water supply
lines, drain lines, heating system, electrical panel and circuitry)
your home will appeal to the largest number of buyers and have the
best chance of attracting multiple offers. |
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If
you're Frank Stronach, you can afford to repair every fault in the
house to get it sold. The rest of us are loath to spend a dollar on a
house that we're not going to own much longer. Buy low/sell high
doesn't work if you buy low, spend lots, then sell for less than you spent. |
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"Condition"
is one of the principle factors determining the value of a property
(house + land.)
With
all other features being identical, if one house needs new shingles
and its twin does not, the one needing shingles will sell for less.
A
common mistake that buyers make is thinking they can subtract the
cost of the new roof from the value of the twin house to arrive at
the value of the house they are looking at.
A
common mistake that owners make is thinking that whatever money they
spent renovating has been added to the value of their house.
Improving
the "condition" will add value, but it is not a 1:1
relationship. (Read more about Renovating for a Profit in the
Seller's section of my FAQ.
Page.) |
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I'm
sure you know this, but I have gone to consult with renovators who
didn't know. Character is what buyers seek in an older home. |
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Do
not "modernize" the look if you want to attract older-home buyers.
Do
not replace moldings and beadboard and tin ceilings with drywall and
plastic trim.
A
modern stainless-steel and chrome kitchen is out of synch with what
buyers are seeking in an older home. It IS possible to effectively
work modern elements, like stainless-steel appliances, into a vintage
kitchen or bath, but please hire a professional designer to help you
retain the character of your older home as you do it.
The
vintage look and character will get them to stay in your house and
consider making an offer. Getting them to actually make that offer is
the next challenge. What stops them is their worry about what they
are getting themselves into. They wonder how much bad news is hidden
behind the walls. |
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In
the buyer's mind, fear of the unknown is a greater deterrent to an
offer than the anticipation of repairs that are obvious.
I
have an effective two-pronged strategy for getting the offers to
roll in. |
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If
you've read through my website, you know that I use psychology a lot
in helping sellers get the most for their house, and in helping
buyers get the most for their money. I don't manipulate people, but I
have studied how people think and I can use that to your advantage if
you're buying or selling, or both.
Buyers
who have found a house that they love, but have doubts about it's
structural or mechanical integrity, will stand by and let other
buyers take the risk. If those doubts are removed immediately, the
same buyers will rush in with offers, and will make over-priced
offers in multiple buyers situations.
Your
objective is to remove the buyers' doubts about your house as early
on as possible in the process. |
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Buyers
rely on Home Inspectors to advise them about the structural and
mechanical stuff. The offers almost always are conditional to a
satisfactory Home Inspection Report. Here's where the psychology
comes in: |
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The
older the home is, the less committed the buyers are to it without
seeing a Home Inspection Report. They hold back emotionally. Instead
of becoming committed at the showing, they spare themselves the
disappointment by holding back. They KNOW the odds are that there
will be a lot of things to deter them from buying.
To
get them to love the house and commit themselves to beating other
buyers with an early offer, you have to remove that "don't get
excited yet" attitude, and do it as early as possible in their
buying process.
Buyers
are a nervous bunch. They go through a house asking niggling
questions about the square footage of the house, even though they are
standing in it and can see how big it is. They ask about the lot
size, even though they can see where the fences are. They want to
know which curtains are included. They are overly concerned about the
appliances, and the equipment in the house (furnace, well-pump.)
They
are like you and me. They don't want to get ripped off. They don't
want to buy a house with a furnace that is going to break down the
month after they buy. With an older home, it's even more of a
concern, especially with less experienced buyers. You have to assuage
those fears for all of the buyers to attract those multiple offers.
To
get the offers coming in, I recommend that my sellers set up a Home
Services Warranty. It's a type of insurance policy that kicks in on
the closing date and, for around $300, pays to repair or replace any
system (furnace, appliances etc) that breaks down during the first
year after the new owner buys. (The seller can also buy coverage for
himself while it's for sale.) |
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Now
for the one-two punch: |
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Buyers
usually hire a Home-Inspector to go through the house AFTER the deal
is negotiated. I recommend that my sellers have it done BEFORE the
buyers see the house. That puts an expert's opinion in their hands
while they are considering an offer. It removes the fear of the
unknown. They go home that night and fall asleep seeing themselves in
your house and knowing their is nothing to fear.
They
wake up in the morning sunshine knowing that it is the house they
have been looking for, that it is sound, that they can fix the things
that need fixing, and that the mechanical systems are covered for a
year. Before they reach for the coffee pot, they reach for the phone
to tell their Realtor to prepare an offer.
Getting
buyers to make offers is the core of my strategy for getting all
sellers the best prices for their houses. My Home
Marketing System addresses all of the
other elements of the process and let's YOU wake up in the sunshine
knowing your house will be sold soon.
For
more detailed information on renovating for profit, home
inspections, and other issues, see my
Frequently Asked Questions page.
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