Reader 3rd Gen SD sent this in yesterday:
JtR, have your sales and experience led you to a percentage of listing price that should be devoted to making deferred maintenance and aesthetic updates? Perhaps a suggested metric other than percentage of LP?
To wit, I’m sure there are some listing agents who would love for their clients to dump as much cash into the front end as they can. No skin off the agents’ backs, right?
Hypothetical: If a CMA led to a listing price of 800K, would you advise your client to invest 8K, 16K, 24K toward making it truly marketable?
Am assuming paint and flooring, kitchen and master bath updating if needed, but there has to be a point of diminishing returns. I mean, there are “cream puffs” and there are “cream puffs”…
Any general guidelines you’d care to share would be appreciated.
General guideline: Make the house look and smell clean. Add new carpet and paint, do a thorough cleaning, and remove all clutter and half the contents. Include staging to provide emotional appeal and make it memorable.
Let’s go back to his paragraph two.
Not that anyone reads the contracts (principals or agents), but our listing agreement encourages sellers to consider all offers. But once the home is on the market, sellers tend to dig in on price. Their family, friends, and neighbors have seen the price, and sellers feel the need to defend it – at all costs.
It’s not necessarily a conscious thing – it is human nature….in this society.
It is miraculous that buyers are willing to satisfy the sellers’ demands approximately 3,000 times every month in San Diego County (3,568 detached and attached-home sales last month).
Agents hope that trend continues and are willing to list a home for sale at no cost to the seller. Yes, we can score a big bounty at the very end if we can get buyers and sellers to the finish line. But we do so without having a vote on the eventual sales price.
From Paragraph 7 in our listing agreement: “Seller is responsible for determining at what price to list and sell the Property.”
It happens regularly that a listing agent will spend weeks, months, and sometimes years trying to sell a house. They may procure several offers, which would seem to indicate what the market will bear. But the seller has no obligation unless a full-price offer is produced.
To tie it back to 3rd Gen’s question – Because every seller wants to sell for the top of the range of what homes are selling for in the neighborhood, agents are smart to tell them to buff it out before listing.
If sellers were willing – and committed – to sell for what the market will bear, then we could throw a house on the market in any condition and see what it’s worth.
But most sellers won’t sell for any price – they want to sell for their price, regardless of what the market will bear. Thus, fixing them up improves everyone’s chances of a successful sale. You’ve seen me personally get involved in the improvements too – I know it helps our chances!
If we could all understand and agree that a house will sell for what the market will bear, it would change everything. But instead, sellers are motivated to hire the agent that quotes them the highest price, regardless of condition. Some do the fix-ups, and some don’t, and then buyers are left to figure out the rest.
Another reason why realtors should be proponents of auctions!