#457 in a series of true experiences in real estate
March 2004, Hills Newspapers
The first column in this series appeared in print in March 1993, eleven years ago. We were a young company then and the column provided a way for us to tell who we are, to make contact with people who wouldn’t have known us otherwise, and to explain what was going on in real estate.
Our columns in that first year urged buyers to think, to decide if they wanted to buy, or not. Because deciding seemed to be what was lacking. There were plenty of people at open houses. We and other agents were working with people who said that they were buyers. But many of them weren’t buying.
The pace was slow, with buyers taking their own sweet time. They were picky, and they were worried. They didn’t know how long they’d have to stay in a house before they’d be able to sell for the same price, or more. Would prices go up, or down?
Buyers expected to negotiate, to have the termite and roof work done and paid for, and not by them. Many looked long and hesitated, often for such a long time that it was too late for them to get what they had hoped for.
The market was different than it is now in a number of ways. Prices were of course lower while interest rates were higher and rising. It was just the beginning of multiple offers. They occurred only occasionally, and buyers hated it, many of them telling their agents they wouldn’t offer on a house if they had to compete for it.
There were so many houses for sale that the buyers would simply move on to others. I wrote that in a typical week there were about 200 houses on tour, too many by far for us or our clients to see. But we tried. In one column I told about our buyers who in only 8 weeks managed to see 152 houses. Then exhausted, tired of the whole process, they chose one.
The house wasn’t ideal, they complained. In fact, for 2 weeks after getting into contract they agonized over their choice. Maybe they hadn’t looked long enough, hadn’t “tried on” enough possibilities, maybe there was a better one out there.
Sellers then usually got a termite report. It used to be common for the seller to credit back in escrow the amount of the bid. So buyers were buying “as is” but what they did with the money was up to them. Often it helped pay their closing costs.
Eleven years ago, very few sellers had a general physical inspection done before marketing. Buyers got their own reports, learned what was wrong with the house, and although it didn’t happen every time, often prices were renegotiated downwards to cover the cost of repairs.
And while sellers were advised by their agents to spiff up their houses to make them look their best, professional staging was rare. When this column was new, we had a listing in Berkeley’s Elmwood, the first we ever had staged.
The staging was minimal – a rocking chair, ottoman and rug, a few pictures on the walls and a bowl full of lemons in the kitchen. Otherwise, the house was empty. We turned to staging then because we were in love with what we had accomplished in that house and wanted others to be too.
The owner, a man in his sixties, was selling because he was about to make a large life change – entering a monastery. He’d lived in the house for many years without doing any upkeep. When the downstairs toilet leaked and rotted the floor, the owner shut the door. When the fireplace was damaged in an earthquake, he put a board against the front. The roof was bad, the furnace dead, everything was beat up and the grounds overgrown.
He wanted to maximize his proceeds, money he would not be taking with him to his new life but intended to pass along to his family. And because he was feeling guilty about the state of his abode, he offered to move out and provide the money if we’d see to things.
We had a wonderful time working on that house. We had it cleaned and painted. The large yard with its own barn and apple tree was plowed and left ready to plant. Furnace, roof, flooring, and kitchen counters were replaced. We even found room in the budget to rebuild the fireplace.
There was only one offer on that house and, not surprisingly, it sold for less than list price. But even if there had been many offers, the bids wouldn’t have gone very high.
For example, we sold a duplex in Oakland’s Rockridge that same year, a property that attracted intense buyer interest. The asking price was certainly lower at $219,000 than other properties nearby. But it was hard to tell what the value of the building actually was.
For one thing, it was full of tenants who had leases but nevertheless were freaked out about the sale. They didn’t want to let anyone in. And no inspections had been made, not even a termite report.
We and our buyers joined a crowd the day we were told we could get inside. The upstairs tenants did allow a quick walk through, 2 at a time, but no one was home downstairs, and the listing agent had no keys.
In those days there was no appointed day for offers, nor did listing agents require that sealed offers be dropped off to them. When you had an offer, you presented it as soon as the seller was available to hear it.
In this case, immediately there were many offers. We wrote a completely “as is” contract for our buyers and, among the throng, theirs was accepted at $220,000, only $1,000 over list price.
They weren’t able to get possession for 6 or 8 months, and when they did, the building required a new foundation and a roof, fireplace rebuild, as well as other work. But they were delighted to have the property and they still are.
This happy ending was possible because they had a strong commitment. They didn’t over think the situation but moved ahead swiftly and acted bravely, much like successful buyers today.
