Would you buy an "award winning" home?

My continuing search for positives and much needed creativity continued as I read the story in the Milwaukee Journal about Mayor Tom Barrett presenting the “Mayor’s Design Awards” for design excellence with categories based on design, environmental concerns, and architecture.

The story went on to name various buildings, some city owned, others historical sites, and others which are commercial that are being named and information about what was done to earn the honor. I came away thinking this is a good idea, and then wondering why I hadn’t heard about this before.

Next, I thought about how local real estate offices are supposed to know their community of service inside and out, and even if for selfish reasons want to see local property values as high as possible. The Design Awards in Milwaukee are for some city and some commercially owned properties. What about residential?

I’m sure there are some new condos and developments somewhere which are making a big deal about how environmentally friendly they are, or have an environmental improvement completed or about to be. There are others which take special pride in a garden or gardening arrangement. And the list of possibilities goes on.

Selling a condo in an “award winning environmentally sound building” would seem to be a plus for the listing agent and for the seller when this unit is put up against hundreds of other condos also available in this buyers’ market.

Various city and community leaders should be aggressively looking for anything which could accelerate local property sales. As we have detailed in past columns, each property sale generates thousands of dollars to people and companies (commissions, taxes, transaction fees, moving expenses, etc.) and brings money directly and indirectly into city coffers.

Before you wonder what difference an “award winning condo” or “award winning single family home” might make, start naming movies you have gone to see AFTER you learned that a film had been nominated or won one of the major awards. Yet, you didn’t go see it when it was playing down the street for weeks.

Let’s see if we can work together and develop a residential property awards program.

The prize is right? Not so fast............

As much as I encourage creativity in this real estate market, not everything I see quite fits the bill. Even though I applaud the realty agent profiled in this Dallas Morning News article:

http://www.dallasnews.com/sharedcontent/dws/classifieds/news/homecenter/realestate/stories/0508dnbusfreebies.3cce5f4.html


I’m not convinced the prize is right. I completely understand the concept of someone buying a high end home being rewarded with another high end gift. However, the gift should fit.

(For those who did not check the link, the story is about an agent who is offering an expensive car valued at more than $30,000, “free” to the buyer of a million dollar mansion.)

The article goes to the extent of quoting the agent as saying that if someone truly does not need the car she is offering, she would replace it with something else. If there is going to be an incentive of this magnitude (which I encourage), then have the incentive fit the purchase in the first place.

Instead, the article reveals how a local car dealer has donated the expensive car in return for the publicity and the agent admits doing this to call attention to the listing. She doesn’t realize how this could backfire on her.

Chances are either the reporter who wrote the story or some other reporter will do a follow up check in a few weeks. What if the house still hasn’t sold? With the way the media publishes negative real estate statistics all the time, one story about “the house that didn’t sell even with a car given away” would cast that agent, and perhaps the property along with it, in a negative light.

Then suppose somebody buys a $500,000 property through that agent. Don’t think that buyer won’t be asking for a car valued at $15,000 - $20,000 or another major incentive. Heck, let’s be honest. I know I would. If she is giving an incentive for only one listing, it leaves any other buyers she serves with something they would perceive as a lot less.

In addition, I would think that someone who can afford a million dollar plus mansion probably doesn’t need another car at the moment. A car would be a great incentive for a first-time buyer, but that is not economically feasible. My point is that the incentive needs to fit the property and the agent representing it. This does not.

If I needed to sell that million dollars plus property and use a significant incentive to do so, I would make sure the incentive goes with the house and directly benefits the buyer. For example, I would use that $30,000 of incentives toward things like a one-year gardening contract, one-year pool maintenance, a maid/butler or driver service, or for a contractor to help with room changes for the new owner.

This type of incentive not only makes life easier for the buyer, it serves as a one-year “reminder” about what that realty agent did. Face it. Referrals from million dollars plus home buyers go a long way in any economy. And would be a lot more effective than when that buyer is sitting in the auto repair shop waiting for the latest problem with their new car to be fixed.

In addition, this type of incentive could be used by the agent for any property she sells, even with a time limit. Her “June special” could be that you get a one-year maid or cleaning service with a condo purchase. That just might push the buyer on a tight budget to move a few days more quickly when they can save even a couple thousand dollars over the course of the coming year while enhancing their “new” home.

There are better ways to “drive” home sales!

Seller Decisions & Their Impact (or lack thereof)

One of the business techniques I have used successfully over the years is to look at a situation from the point of view of everyone involved, no matter what their part or role in a decision being made. I can learn a lot by taking the time to do that, and nowhere is this more true than in all of the real estate related marketing I do.

The story I am about to comment on did not involve anyone I know or represent. It is a good one to apply my theory to, in another attempt to revise the mindset of the current real estate market. I read about a property manager for a residential realty firm in the Midwest. They were representing and managing a long vacant house for sale due to an owner relocating for a new job.

It seems the home had what was considered to be unusual and bright colored carpet in its master bedroom and bright colored paint, including a bright pink for one, in each of the other two bedrooms. The property manager decided to replace the “rare” colored carpeting and have the other two bedrooms repainted with neutral colors. The story says that shortly thereafter, the firm received two offers on the property. Two more than the previous months with the replaced color scheme. This story was, of course, designed to make the listing realty firm look good, and to show how they both maintain and sold a property.

Now comes my theory of looking at this from all points of view – as I see it. If I were the seller, and was told about the paint and carpet jobs (since I’m not sure who actually paid for it!), I would ask why this wasn’t done right after I moved out. The agent is trying to look a hero for making the decision that made a difference and drew offers. So why did this decision take so long to make? I would think my agent would already have this knowledge and input before the house is put up for sale. If that were me, I would expect the cost of the carpet and paint to come out of the commission, since the delay of this “decision” meant a delay in my getting the house sold.

If I were the agent, and hadn’t known to suggest the carpet and paint changes at the outset, I would agree to have the cost of the changes come out of my commission. I would think that now seeing proof that the appearance of details such as paint and carpet make a significant difference in an empty house will make me a lot more in commissions in the future by now knowing to do this.

But now we move on to if I were the buyer. This is where I shoot holes in the whole story. If I liked the house enough and it was priced right, I wouldn’t care if the carpet was purple polka dots. If I wanted it and a reasonable offer was accepted, I would simply get bids and choose carpeting and/or paint jobs that I want, and have that done myself. I feel that I could do better by hiring who I choose and staying on top of it to get it done. Thus, if it is true that people really were not buying this home because of unusual or bright carpet and paint colors, then those early potential buyers may have missed out on a good deal.

When a home is being shown while the sellers still occupy it, potential buyers both know and are reminded that they would have their own furniture in each room and not to judge by what is currently there. Then why should the carpet and paint be treated any differently?

I would also assume that these potential and the eventual buyer had representation by a realty agent. This tells me that either the home wasn’t priced right, and that is the real reason it didn’t sell sooner, or the buyer realty agents missed out on an opportunity for a faster sale by not pointing out that paint and carpet can be done before moving in. I truly hope it was really the price and this “story” was slanted to try to make the realty firm look good, which it shouldn’t.

Going back 3 years to when my wife and I were last looking for our home, I always made it a point to share the good and bad about each home we were shown with our realty agent. There was one unit we drove to and didn’t even go inside because it was right next to a power line tower. Another where the reason we wouldn’t buy is because the only access road into the development fed into and out of an always busy major street, but there was no stoplight. I said if we couldn’t get in and out of there in morning rush hour it wasn’t worth the hassle.

At the home we eventually bought, we talked about what changes and improvements we wanted as soon as we bought. The paint wasn’t one of them, but if there had been a weird color, we would have handled that.

What I am getting to here is that there is a lot of blame for this one property to have taken a long time to sell, considering it went vacant due to a professional move. A potential buyer could have gotten a good deal and had some paint and carpet work done. The property manager wouldn’t have had to wait months to then make a decision that “helps” the sale. The seller doesn’t care what happens to the house as long as the sale is made.

This is not about the one realty firm, however. It is the lack of aggressive thinking and the “How can we make this happen?” attitude. It is not only “the economy” as a prime reason why the housing market is in the shape it is right now. Maybe a brain stimulus would benefit even more than the economic one.