“You won’t believe the deal my buddy got on his house. He paid thirty cents on the dollar!”
“You’re right. I don’t believe that.”
“I’m not fooling with you. The house was worth $300,000, and he picked it up for a hundred grand.”
“It was worth $300,000 when?”
“Huh?”
“He got it for $100,000 in what condition?”
“Huh?”
“The house might have been worth $300,000 four years ago. And it might have been in great condition back then, too. What was the list price when your friend put the house under contract?”
“It was listed at $97,500. But the original listing was for $300,000!”
“I don’t doubt it. A lot of homes have been on the market for years. What kind of shape was it in when your friend saw it for the first time?”
“It was great! I mean, there were some holes in the walls, and some of the doors were missing. But it just needed some touch-ups on the paint. And the carpets were hardly stained at all!”
“What was the kitchen like?”
“Cherry! All it needed was a range, an oven, a dishwasher, a microwave and a fridge.”
“In other words everythng but the kitchen sink.”
“No, that was gone, too. But the counters and cabinets were in great shape, just missing a few knobs.”
“So some nice folks bought more home than they could afford during the housing boom. They couldn’t make their payments, so they put the home on the market for more than it was really worth, even back then. It sat on the market for four years, through a normal listing or two, through a short-sale listing, and then it finally sold to your friend as a lender-owned home. Is that about right?”
“You bet! He got a smokin’ deal!”
“Except he didn’t pay thirty cents on the dollar, he paid $2,500 over list.”
“Oh, whatever. Did I tell you about the trout I caught last week at Lake Pleasant? I swear, it was bigger than my arm!”
“Now that I believe.”
Steal this book: If you want to use this column on your real estate weblog, feel free. Just give me a link back to http://www.bloodhoundrealty.com/
Ryan Hartman says:
Funny… just got back from the lake and this is at the top of the inbox… (Caught nothing btw.)
August 15, 2009 — 10:21 am
Jacquie Cliff says:
And don’t forget the interest paid while holding it and the 10% costs to get it sold!
August 15, 2009 — 5:08 pm
Robert Worthington says:
I like the to good to be true story. Great questions as well about what the value of the house really is.
August 17, 2009 — 6:25 pm
Tim Shepard says:
Great Post!
I hear these same stories on a daily basis. In fact, I meditated over this very scenario this past weekend and came to a few conclusions:
1. Not all buyers value properties the same way.
2. The acquisition “method” is more important than the value for some buyers.
3. Some buyers need a story to tell their friends.
I believe strongly that top agents naturally have excellent situational management skills and are quickly able to assess the needs and wants of a diverse client base and act/present accordingly.
The 30 cents on the dollar guys are easily dismissed as crazy but in reality just present another opportunity…as long as we present the story right!
August 18, 2009 — 7:29 pm