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Monday, November 9, 2009

My life in real estate: FSBO – part 1

Fast forward to my next life experience in real estate....

I decided it was time to move from Scott Street. My income was better, so I could afford a bigger place. I wanted both a change and an apartment with a second bedroom so houseguests wouldn’t have to sleep on a sofa bed in the living room. Because of my first venture in real estate, I had come to believe that real estate agents were not to be trusted and I could do a lot better if I represented myself and bought directly from the owner of the property.

Without the benefit of the Internet, I began scouring the want ads of the Tribune. I avoided any property that had a real estate agent listed and honed in on FSBO (for sale by owner) properties. I found just the right apartment on Lincoln Park West. I went to see it and liked a lot about the place… no electric heat; great views of the park and while the owner seemed reasonable, he was a bit overboard about how great his place was. I made an offer. He didn’t particularly like the offer, but he accepted it. Done deal, right?

Because there was no realtor involved, I assumed my attorney could take care of everything. I didn’t have a real estate contract to complete with the seller, so the transaction was verbal at that point. I suppose I’m dating myself when I say, that at that stage in my life, I really did believe that a person’s word actually meant something.

I called my attorney and asked them to write up a contract. So back and forth my attorney negotiated with the seller’s attorney. Then BANG: the seller had signed a deal with someone else. I was flabbergasted. I had been negotiating in good faith thinking that I was going to be getting a new home. I thought we had a deal; after all we had a verbal agreement.

I guess I’m a little more cynical these days than I was back in 1986. I called the seller and let him know what I thought. He certainly didn’t feel any guilt or remorse about what he had done – his word didn’t mean anything – it had to be in writing.

As a postscript: about a month later, I got a bill from my attorney for $3,000. I was in shock – that was what they charged me for associated time they had spent negotiating and drafting a contract with the seller. No home – just a bill from my attorney. It was bitter lesson to learn.

As you would suspect, my first FSBO experience taught me several things:

  1. Dealing directly with a seller definitely has its drawbacks. They are way too sensitive about their own property and don’t know what they’re doing. They rarely provide the right information; the appropriate disclosures or a standard contract to sign. The two of us couldn’t get it together, mainly because neither of us had knowledgeable agents working on our behalf.

  2. Never believe you have a deal until all the parties signatures are on a contract.

  3. I don’t recommend hiring an attorney from a major law firm to do simple real estate transactions. Hire someone from a small firm or a sole practitioner who specializes in real estate. They charge less and can get the job done quickly, efficiently and with standard real estate contracts.

But the real lesson I learned was this: maybe real estate agents do serve a valuable role in real estate transactions. After all, they will show you an assortment of properties, help with you with contracts and disclosure information, advise you during negotiations, etc. And unlike attorneys, they won’t charge you an hourly billing rate for all the time they spend working with you. They are compensated only when the deal actually comes together.

So my first FSBO experience left me poorer, without a new home, but hopefully a little less naïve and wiser.

…To be continued.

Wednesday, November 4, 2009

What's the value of curb appeal?

Have you ever had the experience of driving through a neighborhood and then slowing down at a certain house to study and stare at the property? What is it that grabbed your eye – the color? The landscaping? Who knows… some houses just have “it!” Pizzazz, taste, warmth – whatever “it” is. You know it when you see it: curb appeal.

Houses with curb appeal have a distinct advantage over those that don’t. I’ve had clients who, when we have driven up to the front of the house, have refused to go in because the house just didn’t look right to them. Much in the same way a Californian's car is their personal signature, many North Shore homeowners feel the same way about their houses. They want their house to make a statement; they want to be proud of their home and to reflect who they are.

I find that curb appeal can also be personal. For example, I have worked with buyers who won't consider a stucco house. It was surprising to me. I grew up in a stucco house and think it's an amazing exterior: cool in summer; warm in winter; easy to maintain. I think of Tuscany all the stucco facades. I see beauty. But it is personal.

I was talking with one of my colleagues and I asked her the question, "What's the value of curb appeal?" $50,000? $100,000? We had no idea -- I wouldn't hazard a guess. Or can you put a price tag on curb appeal? I don't know that curb appeal in of itself has a market value. However, I do know that the house that has curb appeal is definitely more marketable. In today's buyers’ market, when you feel like you've won the lottery if one of your listings gets an offer, a more marketable home really means a lot.

There are certain styled homes that can always look good, but even a great house can lack curb appeal when the trees are overgrown or the landscaping is messy. The house must draw that buyer out of their car, unto the sidewalk and up to the front door. So many factors go into curb appeal: color, the landscaping, the walkway, driveway and sometimes the neighbors’ houses as well. All these things give the house a feel that can both attract and detract potential buyers.

While we can't all have that darling house on the street, there are some tips to consider if you want to improve the curb appeal of your home. Walk across the street and view your home from several angles. Take a really good look at it.

  • Can you see it? If you can't see your home, you can't sell it. While trees and shrubs are great, they should be trimmed so that you can still see the house.
  • What about the color? Does it blend in with your neighbor's house? Is it a neutral color? While a distinctive color may appeal to you, it doesn't sell well to the masses -- and that's what you're trying to accomplish. If you can't paint the whole house, then consider painting the trim and front door.
  • How clean does it look? If the paint is chipping, it reflects poorly on the house -- it gives the impression that the house has been neglected.
  • What about the driveway? Are there cracks, oil stains, garbage cans? Clean it up and clear everything off. Resurface it if necessary.
  • Look at your sidewalk. Is it obvious as to how to get to the front door? With some houses, it's hard to tell. There should be a clear pathway that leads the buyers to the front door. It should be inviting and draw them in. Walk the sidewalk yourself. If it needs repairs, then make them.
  • How is the landscaping? Make sure that the grass is well watered, edged, and mowed. Flowers, flowers and more flowers. Pots and beautiful arrangements can draw people to the door. It can help if they vary with the seasons -- beautiful bright colors in the spring; bold geraniums in the summer, mums in fall -- and evergreens in winter. Smell is enticing as well. Nothing makes people feel better about a house than that Spring smell of a viburnum or lilac! Look around the yard. Does it need mowing or weeding? The buyers notice these things.
  • Is your mailbox freshly painted and standing up straight?
  • Is the front door clean? Nothing looks less inviting then spider webs or hornets nests around the front door.
  • Check the hardware. Is it clean and polished? Do the keys open the locks easily? If not, get these things repaired.

While your house may never be a showcase or designer's dream, there are things you can do to make it more inviting and appealing. Curb appeal means a place that looks neat and clean, the kind of place a buyer might like to live. In today’s market, you need to pull out all the stops to get that buyer interested in your house and creating great curb appeal maybe just the thing that makes the difference.