This just in: home buyers like nice homes!
This is gonna blow your mind—especially if you're a bank with a bazillion REOs on the market, or a bank holding a bazillion REOs off the market—but a new survey reveals that home buyers don't much like houses with dead landscaping, decrepit carpeting, decaying roofs, peeling 1970s wallpaper, thirty-year-old paint, door handles so dirty you stick to them, deadly pet odors (or at least you hope they're pet odors) and kitchens less appliances, all of which, coincidentally, are features of the bank-owned home.
Inman News' Steve Bergman shares this revelation in his April 22 column Rehabbed REOs Spend Less Time On Market. An Arizona company that rehabs homes for banks tracked the days on market of 17,252 properties in thirteen states and found that rehabbed sold 68 percent faster than non-rehabbed. Of course, that's exactly what smart agents tell their sellers: spend a few bucks on paint, floor coverings and appliances, and your home will sell faster. To a happier buyer. Who's more likely to stay in contract. Without bitching and moaning all through escrow. And demanding concessions every other day. And you'll get at least a dollar back for every dollar you spend, Mr. and Mrs. Seller, and often much more.
So why don't banks do this? According to industry sources Bergman quotes, they did, back in some golden age. But his sources tell him banks stopped pouring (trickling?) money into their homes when prices started sliding faster than rehabbing propped them up. To which I would respond, "Since when did banks ever consistently put money, serious or otherwise, into their homes, at least in this area?"
I sold my first bank-owned home in mid 2008, fairly early in the game, and it was a vision of paradise compared to the usual bank-owned beat-on crap my clients had been trudging through for months. New paint! Inside and out! New (cheap) carpet and vinyl! It even had a new (cheap) stove! It was enough to have you down on your knees sobbing in gratitude! A new stove, Ma! Think what we could use it for!
Then a neighbor yanked me back to reality. The home had been so disgusting, she said, even by bank-owned standards, that even the gerbils back at Lender Headquarters, running on their tiny treadmills millions of galaxies away, knew they had to jeopardize the stability of the universe's financial system by throwing a few bucks at the house. And incidentally, employing a few out-of-work tradesmen, although this couldn't be helped.
Contrast and compare this magazine feature home with my most recent bank-owned sale, although we're only a little in contract and my young buyer might be drawing social security before we're fully in contract. What's the hang-up? Oh, just the "robo-signing" fiasco, sometimes called ForeclosureGate, a made-for-TV-and-state-attorneys-general event that's succeeded in reducing the trickle of bank-owned homes coming on the market to less than a trickle. The gerbils back at HQ have to pore through every foreclosure file they have, going back to 1850, to make sure the former owners aren't part of the infinitesimal number wrongly foreclosed on. Apparently making an acceptable offer doesn't move my client to the head of the line.
Well, I could wax eloquent about the (de)merits of the home, but see paragraph one, above, for a brief summary. But my buyer sees its potential, and at the price she's offered she can afford to make the home special, but there it sits, just out of reach, while a certain lender lavishes the kind of attention on its foreclosure files that it didn't give its underwriting files until it was almost too late. Which has us looking at homes again, and a few weeks ago we were in one of those bank-rehabbed™ homes that sells in a heartbeat. Bank-rehabbed™! Kinda catchy, isn't it? "Bank" = "bargain" and "rehabbed" = "turn-key". Yes sir, some kind of bargain if your idea of "rehabbed" is sticking a few packs of groundcover in the front yard and leaving the remaining neglect and bad taste intact, then refinishing the floors and maybe slamming in some cheap windows, although to be fair it was hard to tell where the previous owner's cheap ham-fisted upgrades stopped and the bank's cheap ham-fisted upgrades began. The kitchen cabinets weren't bad but they weren't new, and the countertop was the kind of below-horrible low-ball laminate you see in old apartments. Some kitchens feature "extensive use of granite"; this one featured "extensive use of cheesy fake brick veneer backsplash".
And, God help us, all of us agreed that this home was the nicest of the four we'd seen that day! Fortunately for the banks and their bank-rehabbed™ homes, the bar isn't high in most neighborhoods where bank-owned is a regular feature. Spend a few bucks, wisely and with a modicum of taste, and banks could raise that bar. And raise their profits and put a few contractors back to work.
Yes sir, Corporate America™ could show us small-time real estaters a thing or two.