do some buyers just not get it?

do some buyers just not get it?

Kalamazoo, MI · Member since 2014 · 224 posts · 129 votes

so far, my limited experience is rehabbing to first time home buyers.  But I am getting discouraged because I don't think the buyers even recognize all the work and expense I'm putting into the homes.  I live in western Michigan, and it's a pretty working class area.  (no high end car lots, expensive restaurants, fancy clothing stores, etc.).  Even new construction houses will have "off-the-shelf" cabinets, trim and are generally builder grade.

 So I just stick to the basics.  But I have found that I can get higher end stuff from suppliers for the same price.  I can get trim, cabinets, and such that you normally don't see anywhere close to the price range of these houses.  But I'm beginning to wonder if everything is lost on my buyers, even the realtors.  I see houses sell with ancient fixtures.  I used to see rehabbers flipping houses pretty nicely, but now the market has recovered some, they are all gone, out of business, or decided it makes no difference.   

 Right now, I'm listed in a cookie cutter neighborhood, and a potential buyer passed on mine but bought the house across the street.  The houses are identical.  I have brand new stainless appliances, a new birch kitchen, all updated doors, trim, bathroom, etc.  I'm 5 percent cheaper than the guys across the street, and they have a dated oak kitchen, used white appliances, non neutral paint, the floor needs refinishing, the basement leaks, and the buyer went over there.  Sorry for the rant.  But sometimes I feel like I fix these things up for people for no reason.  Maybe I'm trying to sell a steak from a hot dog stand.  who knows

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Real Estate Investor · Destin, FL · Member since 2015 · 131 posts · 64 votes
11y

FHA loan restrictions on flipped houses?

Remember, we are brainstorming here - there are no bad ideas :)

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  • Real Estate Agent · Philadelphia, PA · Member since 2013 · 451 posts · 369 votes
    11y

    If the property across the street has the same specs with lower quality features but sold for a higher price, my only thought would be that the other house was marketed better. You might want to look into getting a better real estate agent.

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    11y

    The Same buyer bought across the street instead.  It's not the listing agent, it's something else.

  • Real Estate Agent · Philadelphia, PA · Member since 2013 · 451 posts · 369 votes
    11y

    Well, if its not the price, quality or marketing, do you have any helpful suggestions Wayne? 

    John, you could reach out to the people who bought across the street and ask them why. 

    One more thing I can think of is property taxes, even on very similar properties they can easily vary hundreds or thousands per year.

  • Real Estate Investor · Destin, FL · Member since 2015 · 131 posts · 64 votes
    11y

    FHA loan restrictions on flipped houses?

    Remember, we are brainstorming here - there are no bad ideas :)

  • Kalamazoo, MI · Member since 2014 · 224 posts · 129 votes
    11y

    thanks for the replies. I am selling it myself, so the realtor angle may be right, though I am on the MLS and the buyer walked through both homes. When I say the houses are the same, I am speaking from an investor viewpoint.

    That house did have someone start to finish the basement, but then it flooded and they stopped.  So it had an extra bathroom there.  But no trim, probably mold behind the drywall, and no ceiling or flooring down there.   From my perspective, it would be worse than mine that is just unfinished.  But with all the additional features on my property, and the better price, I assumed there would be no comparison.  So apparently the upgrades/updates  don't matter to some people.  Maybe they just wanted a blue house instead of a brown one.  But I do think that these flip shows make people think this stuff is easy.  The only show of that ilk I like is DIY Realities.  That's what it really looks like.  But I've heard realtors say to me, you can just blow out this wall, just do this and that, blah blah, as if you can do it effortlessly or without expense.  I've done the work myself on some of these, and I know that a new kitchen and bath is no small deal.  But that's my frustration.  

  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    11y

    @Account Closed You do realize that what you think doesn't matter right?  This was actually a part of my presentation last night.  It was on Buyer Lists, but it applies here too.  Maybe, instead of building what you think is a "better mousetrap", you should build what is actually selling? You could very well have a much better product, but if the buyer prefers the "house across the street", maybe, just maybe, that's the house your should be building.

  • Rental Property Investor · Closter, NJ · Member since 2015 · 884 posts · 722 votes
    11y

    Ask the Realtor or the Buyer for Feedback.

  • Kalamazoo, MI · Member since 2014 · 224 posts · 129 votes
    11y

    yeah, you're right.  But if people don't care about stainless appliances, neutral paint, or new cabinets versus outdated used oak, etc., it would certainly save me money.  But out the window goes the whole idea of buying and rehabbing/ updating.  I should just fix the problems, and leave the rest outdated stuff alone.  I think some markets or higher price point homes have more discerning buyers.  For example, and I know it's mostly fake, but flipping Vegas or Boston is all about buying ugly and upgrading.  It would be a waste here.  Maybe that's why I don't see anybody else doing it.  

  • Real Estate Investor · Albemarle, NC · Member since 2015 · 86 posts · 16 votes
    11y

    I think you have a problem that I run into often -- you're to involved in your own work. I try to step back and look at my work with unbiased eyes. No buyer really cares what it used to look like or where it was. What they care about is the here and now. Maybe get one of your unbiased friends stop by and look at the house and tell them you need their honest feed back.  Learn from these mistakes and don't get all tunnel visioned like I do sometimes! @Joe Villeneuve hit the nail on the head.

  • Investor · San Ramon, CA · Member since 2011 · 1k+ posts · 569 votes
    11y

    Could it be the buyer's realtor doesn't trust flippers?  Unfortunately there are many who simply throw lipstick on a pig.

    But yes, I've found houses in west Michigan to be of pretty low upgrades... I couldn't believe vinyl flooring in $300k houses.  Real tile and hardwood are hard to find, very low end on the finishes in the houses we looked at.

  • Herndon, VA · Member since 2014 · 1k+ posts · 324 votes
    11y

    Could it be the lot/location make a difference?  Maybe there was a dated feature that they found charming.  If they went through 10 houses that basically looked the same, they might have decided they really liked some feature that stood out.

    What are you offer in terms of buyer's agent co-op? Could it be a bias against FSBO even though you are in the MLS?

    Also if the sale hasn't finalized, it could be between a negotiated lower price and seller's assistance they could be 5% lower than your asking price.  That wouldn't be a bad strategy to use, to use your listing to gain leverage and get a house for a lower price.

    My dad was looking at condos in the same building one was clearly nicer/better maintained - however he seemed to prefer the one that was in rougher shape.  Some people may feel more comfortable with a house that isn't as pretty, especially if they can negotiate a deal.

  • Investor · Feasterville Trevose, PA · Member since 2015 · 107 posts · 31 votes
    11y

    You may not be doing anything wrong.  No two buyers are the same.  You may have decor that appeals to the majority, but ran into a buyer whom is part of the minority.

  • Kalamazoo, MI · Member since 2014 · 224 posts · 129 votes
    11y

    thanks for all the feedback guys.  Very helpful  

  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    11y
    Originally posted by @Account Closed:

    yeah, you're right.  But if people don't care about stainless appliances, neutral paint, or new cabinets versus outdated used oak, etc., it would certainly save me money.  But out the window goes the whole idea of buying and rehabbing/ updating.  I should just fix the problems, and leave the rest outdated stuff alone.  I think some markets or higher price point homes have more discerning buyers.  For example, and I know it's mostly fake, but flipping Vegas or Boston is all about buying ugly and upgrading.  It would be a waste here.  Maybe that's why I don't see anybody else doing it.  

     Yes.  Always remember, it's the buyers that dictate what sells...not the seller.  If you want proof, just look at the Slinkey, the Hoola-Hoop, and my favorite...the Pet Rock.

  • Dawn BrenengenBusiness Member
    Moderator
    Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
    11y

    @Account Closed what kind of commission are you offering to the buyer's agent? 

  • Kalamazoo, MI · Member since 2014 · 224 posts · 129 votes
    11y

    I'm offering 3 percent.  Do you think an agent would have that much influence that they could steer a client toward a more expensive and outdated home, just so they could make a few hundred bucks more?  

  • Dawn BrenengenBusiness Member
    Moderator
    Real Estate Broker · Raleigh, NC · Member since 2014 · 2k+ posts · 1k+ votes
    11y

    @Account Closed Not for a few hundred dollars, but if you were not offering a commission in line with the rest of the market, I could see an agent talking up the other property that is. First time home buyers are the most likely group to look to an agent for guidance.  It sounds like you are offering the usual commission, though, so that must not be it. How are the lots? Is the one across the street larger, more private, further from a main road, etc?

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Account Closed 

      usually not.. I suspect it was some esoteric thing ... when we fix and flip retail these days we put the same finishs in a 125k retail in the mid west as we do a 500k spec home I build here in Oregon or the 400k spec I build in Charleston... Buyers expect it and want it.

    I think you have an anomoly

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    11y
    Originally posted by @Account Closed:

    I'm offering 3 percent.  Do you think an agent would have that much influence that they could steer a client toward a more expensive and outdated home, just so they could make a few hundred bucks more?  

    Make it 3.5% or 4% and you will have more showings! :)

  • Curtis BidwellPro Member
    Rental Property Investor · Olympia, WA · Member since 2014 · 777 posts · 744 votes
    11y

    Not a rehabber, but I had a duplex in a neighborhood of duplexes.  The one across the street went empty the same time ours did.  Theirs was $100/mo less. When prospects said they wanted me to meet the price I encouraged them to take the other unit.  I knew the sooner the low-ball competition got occupied the sooner I would get market rent.  Now that your direct competition is gone, the next family is in for a treat!

  • Real Estate Investor · Albemarle, NC · Member since 2015 · 86 posts · 16 votes
    11y

    Most agents around here scoff at 3%, They want the double commission from listing and selling so they primarily only show the houses they themselves listed.

  • Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    11y

    When it comes to rehabbed vs non-rehabbed houses, buyers also like what you like when you said "I have found that I can get higher end stuff from suppliers for the same price".  The example buyer you gave might be an anomaly, or, they may have gotten themselves a 5% DISCOUNT across the road based on YOUR selling price (or, some other factor because no two properties are actually cookie cut).  Seems to me it is time to shake things up. 1. Do you pay more than needed in the first place? 2. Is rehabbing for flipping the best strategy in the area (vs buy-to-hold and/or investing elsewhere)?  And yes, does your selling strategy need tweaking?  Cheers...

  • Charleston, SC · Member since 2013 · 380 posts · 157 votes
    11y

    Lots of good feedback above but my guess is that there is something different about the other house that you're not seeing.     It's also possible that the seller paid closing costs so the buyer had to have less $ up front or some other such arrangement that would be invisible to you.   

    Most of the buyers I see do recognize upgrades (though it might be because I point them out) but it's often other factors that sell a house.

    As has been suggested, ask the new neighbors why they chose the other house.   They might know someone who wants to buy yours!

  • Herndon, VA · Member since 2014 · 1k+ posts · 324 votes
    11y
    Originally posted by @John Semanchuk:

    As has been suggested, ask the new neighbors why they chose the other house.   They might know someone who wants to buy yours!

     Good suggestion.  If they know someone who wants to be neighbors with them, you might not even need to pay an agent.  

    The only thing in the OP's description I can see is maybe the agent talked up the potential of the basement in the other house, even if it's condition is rough.

  • Investor · Saint Augustine, FL · Member since 2014 · 35 posts · 7 votes
    11y

    Is it possible the other side of the street has different zoning or is in a differenet school district...it does happen...

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