Deeded Interest: Pride of Ownership
In past columns you’ve heard me talk about the need to price appropriately to match or beat the market rather than proceed based on what potential sellers might “feel” or “think” the number should be. I’ve also reminded sellers of the importance of making sure the subject property is ready for “prime time” and that specific maintenance items and upkeep be performed prior to list. It sounds like common sense to most, but believe me, it’s rarer than you think that this advice is followed, but when it is, the result is usually a quick sale. It takes time and money, but in the end, most understand that care and investment will result in a surplus in terms of net proceeds at the closing table.
It really comes down to pride of ownership. But that’s an emotion that can work both ways and either help accelerate a sale or severely cripple and stagnate the process. There’s a critical difference between properly caring for a home and making upgrades when needed rather than adding items without universal appeal. I’m working with a client now who is the epitome of this dichotomy. For him, it all started with a dream. An extremely talented local architect, he had the vision to create something unique and beautiful for himself and his family. After years of planning and hands-on effort, the house is finally complete and really is a work of art. Sitting on 2 acres in Missouri Heights, the home majestically looks out over the Elks and affords a private, zen, retreat-like setting.
But because he built this home for himself and to showcase a proprietary construction and insulation process known as ExoThermo, price of materials and labor ended up well over $2 million. As a green builder and environmentally conscious fella, he chose to utilize sustainable and non-toxic materials, passive and active solar, a geothermal system, LED lighting, even low EMF wiring. And while these techniques and systems are impressive and obviously of importance and interest to him, they don’t yet have wide appeal to the majority of buyers who frankly reside in the world of vanilla. It also goes without saying, these additions and improvements cost a great deal more money than traditional upgrades, although they are pretty cool.
Alas, this labor of love (and perhaps obsession), did not result in the permanent sanctuary he had hoped for him and his family. He divorced last year, and his children are now in another city, so he must let it all go. When we first met with him to see the house and offer our opinion of value, he just about had a coronary. It sucked. But as successful real estate brokers often say, “the market doesn’t lie.” We knew what was selling up there and what was not, what kinds of homes and finishes were attractive, and broke the news to him that he was likely to take a loss on his palace in the sky. In the end, he must have known he could not recoup his costs and accepted our suggesting asking price. We expect the home to sell this summer.
The house is overbuilt. He knows that. But he needs to move on for his and his kids’ sake, and his loss will be someone else’s gain. The lesson here is, even if you spend a mountain of money on special finishes, upgrades, systems you might like for yourself, be sure, and perhaps ask an expert, that those touches will appeal to the next owner. In a market where newly built or beautifully remodeled homes are often immediately gutted to accommodate the needs and taste of the new buyer, don’t make the mistake of trying to determine the right color for the carpet for the next guy. It’s impossible and all highly relative and subjective. It’s a decision that can end up costing you as much money as the original upgrades. If you enjoy it and want it, do it, but don’t expect those changes to always result in a higher sales price when and if you move on. Even experienced designers and builders have difficulty staying abreast and even predicting new trends. It’s a lot like fashion and sometimes doesn’t make sense.
Don’t get me wrong, the right upgrades can be very beneficial to value. But unless you’re in the design or construction fields, I would rely on the experts, use caution and be smart as you make your choices. It is possible to create the world you want when it comes to your home, but not everyone needs an auto-flush toilet with a heated seat. As I am fond of saying, this is not a game for the faint of heart, but for those who proceed intelligently and do their homework, living in the home of their dream can be as enjoyable as the future potential return.
Scott Bayens (GRI, ABR, CNE) is a Realtor with Aspen Snowmass Sotheby’s International Real Estate with more than a decade of experience with buyers and sellers. He’s been a renter, a homeowner, a landlord and investor through every kind of market. Scott can be reached at firstname.lastname@example.org.
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