How Did You Sell That?
Three Massachusetts REALTORS® reveal how they got difficult listings to the closing table.
By Bridget McCrea
Selling a house that’s “out of the norm” presents unique challenges for real estate professionals regardless of market conditions. Whether the home shows poorly, is located in a less-than-desirable neighborhood, or has a lot of red tape associated with it, getting to the closing table with your seller requires time, patience, and some elbow grease.
Add a challenging market to the equation and the hurdles increase exponentially. The three professionals we interviewed for this article know all too well what it takes to sell a difficult listing and live to tell about it. Here, they give the lowdown on their difficult listings and tell exactly how they went about closing the deals.
1. The "Endless Legwork Listing"
About the listing:
Square footage: 1630
Year built: 1930
Sometimes it’s not the selling process that eats up an agent’s time – it’s the prep work. Mike DelRose, a broker-associate with RE/MAX Leading Edge in Watertown, learned this firsthand recently when he took on a listing that wasn’t quite ready for prime time. The Belmont colonial needed more than the typical home staging makeover to get it ready to list.
The roof had long outlived its useful life and shingles were falling off during high winds and storms. And although the existing leaks had been patched, the damage had taken its toll on the home’s ceilings. Other areas of concern included the interior and exterior paint, which was in dire need of a scrape-down and replacement, and a plumbing system that had been assembled incorrectly and “would never meet current building codes,” says DelRose.
Compounding DelRose’s challenge was a pair of homeowners who wanted to avoid a lengthy listing period. “They didn’t want to have their home on the market for months on end,” explains DelRose, who spent much time working with his clients and trying to decide how much money to invest in the repairs in order to reap the best returns. Over the next six months, DelRose worked closely with the owners to get the roof, cosmetic, and plumbing issues repaired. “There were a lot of issues to address,” he says, “and a lot of decisions to make.”
How He Sold It:
DelRose wore a number of caps on this project. He not only served as REALTOR® and advisor, but he also connected the homeowners with reputable service contractors and even initiated a few “trades” with those providers to help save the owners money. He orchestrated a pre-home inspection to ward off potential problems once the home was undercontract; made suggestions on how to arrange furniture; and helped the owners purge their personal possessions in order to get the property to the closing table as quickly as possible.
DelRose estimates that the owners shelled out about $25,000 for the repairs. The investment paid off when the home sold at 97% of asking price just eight days after it hit the MLS. “Very few issues came up while the home was under contract or during the inspection,” recalls DelRose. “There were no surprises; it was pretty straightforward.”
“Listen and understand your clients’ needs and realize that not everything is about price,” says DelRose. “For some sellers, other issues – such as getting the home on and off the market as quickly as possible – are more important.”
2. The Teeny, Tiny House
About the listing:
Location: North Andover
Square footage: 984
Year built: 1965
Susan Rochwarg knew she had her work cut out for her when she listed the small home in North Andover. A broker with Keller Williams Realty in Andover, Rochwarg looked around and saw that the 984-square-foot home was situated in the middle of larger ones equipped with newer amenities and features. “I knew we’d be looking at a pretty narrow buyer pool with this home,” says Rochwarg.
For all of its challenges, the home also had a few things going for it. It was small, and therefore would be in an affordable price range for the price-conscious homebuyer. Located in a desirable neighborhood, the home also was on a lot that was double the size that one would expect from such a small property. “Even with those advantages I knew I’d have to get creative when marketing this listing,” says Rochwarg. “For a home this small it would all come down to selling its potential, rather than its current state.”
How She Sold It:
Working with an owner who had purchased the property 12 years earlier and “fallen in love with it,” despite the size limitations, Rochwarg took a candid approach when interacting with her client. “I told her about the narrow buyer pool and asked her what she’d change about the home if she were buying it today,” says Rochwarg. “My goal was to get her thinking about what it would realistically take to get the property sold.”
The seller opened up about the tweaks she would make to the house (interior and exterior paint, new flooring, kitchen upgrades, etc.) and then expressed concern about not being able to sell the property in today’s market. To alleviate that fear, Rochwarg showed her client the recent sales in her area and used those comps to come up with an asking price. “She made a few minor home improvements,” says Rochwarg, “and then priced the listing at what she would be willing to pay for it.”
Rochwarg took her creativity up a notch by selling the home’s potential to prospective buyers. “Expansion was part of the equation,” says Rochwarg, who acknowledges the fact that the majority of buyers do not purchase based on potential. Still, she helped buyers envision a larger home by featuring virtual imaging of an expanded kitchen and family room in the home’s marketing materials.
“We painted a picture around the potential for the future,” says Rochwarg. The strategy worked so well that a family with four children fell in love with the home, despite its small size. It fit their budget perfectly and came with enough room for future expansion. The home sold for $241,500 – just $1,000 under asking price – within a week.
“Getting listings sold successfully in this market really comes down to the sellers’ motivations,” says Rochwarg, who works closely with clients to understand exactly what’s driving them to sell. Are they in financial trouble? Do they want a larger home? Are they moving because of a job? The answers help Rochwarg tailor a marketing plan around her sellers’ needs, rather than just market whims. “Once I understand their motivations I can emphasize the optimistic aspects of the market,” says Rochwarg, “and come up with creative strategies (like using virtual imaging to show what a home ‘could be’) to get the home sold.”
3. The Short Sale+ Home
About the listing:
Square footage: 1700
Year built: 1960s
Handling a short sale is one thing. Trying to sell a distressed property that has utility infrastructure issues and a lengthy repair “to do” list is something else entirely, as Bill Gassett found out recently. “The listing was challenging to begin with because it was a short sale that had fallen into disrepair,” says Gassett, a REALTOR® with RE/MAX Executive Realty in Hopkinton. “Then a few other issues compounded the problem, making it even tougher to sell.”
Septic was a major dilemma. The property was serviced by a septic system that had failed. “Without a septic system or sewer in Massachusetts, a bank will not lend money on the home,” Gassett says. Connecting to the street sewer system was feasible, he adds, but the work would cost $10,000 – an amount that the current, financially distressed owner didn’t have to spare.
The house itself was in average condition and in need of repair. Floors needed to be refinished, exterior trim was worn and falling off, and the home’s pool was completely inoperable, empty, and its liner was torn,” according to Gassett.“Unfortunately, the seller wasn’t in the position to be able to make any repairs,” he adds, “so I knew it would come down to pricing the home at a point where buyers would feel like they were getting an acceptable deal.”
How He Sold It:
The home took about six months to sell. The biggest chunk of time was spent waiting for short sale approval from the original lender, says Gassett, who estimates that actual market time was closer to 45 days. The lender countered the buyer’s original offer and then asked for justification when the latter wouldn’t budge enough during the negotiating process. “We had to prove that the numbers were within reasonable value of the property,” says Gassett. “As it turned out, the lender had valued the property when it was in better shape than it was currently in.”
Once the home was under contract, Gassett started searching for lenders that would dole out a mortgage before the actual septic work was done. “We scrambled for weeks before we finally found one,” says Gassett, who was referred to the lender by a local mortgage broker he’d worked with in the past. To assure the lender that the septic work would be done once the home was closed on, the buyer had to get estimates for the project and then deposit 1-1/2 times the project estimate into escrow.
The home sold for about $30,000 under asking price about six months after Gassett listed it. “The price difference basically covered the septic issue and various repairs needed,” he says, “so it was a pretty fair deal.”
“Have a few lenders in mind that you know are willing to do complicated deals,” says Gassett, who regularly connects with other real estate and financial professionals in his area to stay on top of lending trends. “If you don’t have lender contacts, you’re going to be out there looking for cash investors,” says Gassett, “and they’re not easy to find right now.”
Seven Tips for Handling a Challenging Sale
1. Be ready to put the time into the task at hand.
2. Expect Murphy’s law to rear its head at every turn.
3. Stay in close contact with all parties throughout the transaction.
4. Work with area real estate professionals to find buyers.
5. Insist on regular price reductions, when appropriate.
6. Pay close attention to bank deadlines regarding short sales.
7. Understand that sometimes it takes more elbow grease to get a difficult listing sold.