The Rise of the Unsightly Home
Your listing is less than perfect, and it’s going to take a miracle to sell. Learn about the market for “ugly” homes.
May 1, 2012
For every perfectly staged home that beckons buyers, there is a growing number of lemons—and one day you might have to sell one of them.
From gaping holes in the wall and missing appliances to overgrown yards, the housing inventory is getting uglier, some buyers say, as the tally of abandoned homes and foreclosures swells. The longer homes sit vacant, the more they can deteriorate. And there might not be a budget to spruce up an abused property. Before you accept defeat, read up on how some in the industry are confronting the “ugly.”
Hire a sitter. House-sitters can keep a for-sale home ready to show and serve as a deterrent to would-be vandals. Home Caretakers International, based in Tampa, Fla., offers a service to move “caretakers” into vacant properties. Available homes span a vast price range, from $15,000 to $2.5 million. The service is free to real estate professionals or home owners; the company makes money through a fee caretakers pay to live in the home. Home Caretakers inspects properties and handles minor repairs and problems.
“If you walk into a home that smells and looks terrible—the pool is green, the yard hasn’t been cut in months—people’s perceived value of that home is less than if it looks and smells good,” says Mike Shelton, director of operations of Home Caretakers International. “Caretakers are responsible for keeping the property clean and to be away for showings.
Sell as-is. Some investors are excited by phrases like “fixer-upper” or “handyman special.” One company, HomeVestors of America Inc., boldly advertises “We buy ugly houses.” The company, which has franchises in 33 states, works with real estate professionals in most of its purchases. Franchisees renovate and then sell or rent out their purchases; rentals represent the company’s biggest growth area. While the company buys some REOs, it buys mostly from home owners, not banks. “We believe we are partners with [real estate professionals],” says David Hicks, co-president of Dallas-based HomeVestors. “We work together to help raise the values in a neighborhood by getting vacant homes off the market.”
Be honest. Harry Ackley, a sales associate with Coldwell Banker Weir Manuel Real Estate in Plymouth, Mich., wishes more agents would tell it like it is. “It’s a pet peeve when you go out to look at a house and the listing ad doesn’t say anything about the furnace being gone or the toilets being missing,” Ackley says. “If people want a house like that, they’ll come.”
Several years back, Ackley provided the straight facts on a real dog—a 704-square-foot home built in 1941 that was outdated and in poor condition. In the listing’s public remarks section—with the seller’s permission—Ackley wrote: “The bottom of the barrel! I have avoided listing this one as long as possible, since it will take a miracle to sell. Sure, it has two bedrooms, one bathroom, and an oversized lot in a desirable Plymouth neighborhood. But beyond this, there’s nothing else that’s positive.”
The property sold within 17 days for $112,500, only $7,000 less than the asking price. Ackley says his phone rang off the hook from real estate professionals wishing they could be so frank about their listings. This proves that telling the ugly truth can pay off.