Monday, April 13, 2009

Q: I had my house on the market for a while but decided to wait a year so that I could get my price.

We already moved so the house is empty. Friends are telling us we should rent it out but I don’t want it trashed. What do you think?

There are a couple of issues here. The first is the issue of renting out your house. Unless you don’t really worry about money at all, you’re throwing away a lot of it by having your house sit empty. There are mortgage payments, utilities, insurance and taxes to pay, plus the cost in time and/or money to keep up the yard. Renting would get you some money to cover those costs.

If you do a proper job of screening tenants you won’t have your place “trashed”. Trust one of the property management firms on the Island to find good, responsible tenants and that shouldn’t be a worry.

The other issue is holding on to your house to “get your price”. I’ve said many times before that the price is set by what a buyer is willing to pay. You can hold out all you like but if your expectations are too high, you’ll put a lot more money into the house with little hope of recovering it.

The real estate market here on Vashon is really not bad. Sales of homes actually went up 14% in the first quarter of 2009 over the first quarter of 2008. The average price of those homes did drop, but only by about 10%. That’s well below what most markets have experienced.

It almost seems that we have only two kinds of property on the market: homes that sell in a few days or weeks, and those that have been sitting for months or even years. It’s all about price. The well priced properties have been selling quickly, some even with multiple offers.

If you don’t want to price your house to sell now, then getting a renter in there to help offset your negative cash flow would be good.

Q: I don’t know how you real estate people ever come up with the prices that you do.

My neighbor’s house is for sale and it’s a total dump! I don’t even think it could be remodeled into anything. But their real estate agent has it priced at half a million! That’s crazy. No one will pay that much for it.

There are many things to consider when pricing a property for sale. Certainly the listing agent would have had to come up with comparable sales of similar homes, adjusting for our dip in the market over the last year. Other things to consider are location, condition of the house and property, and the obsolescence of the style and floor plan.

Some considerations are just an issue on Vashon, like the distance from the north end ferry. But most issues are the same as elsewhere and include things like the condition of the house, number of bedrooms and bathrooms, yard or garden, size of the parcel, closeness to recreational areas, and for families with children, the closeness to schools.

It’s important to consider the value of the land. Buying land and building is a very long and frustrating process for many people and it’s often more cost effective to remodel an existing house. The land your neighbor's house sits on has a spectacular view and spacious grounds. The landscaping hasn’t been tended for awhile, but, as the landscapers say, “it has good bones.” Just the land itself would sell for close to the asking price they have on the house.

As a neighbor, possibly with different standards of neatness, this property may seem “trashed”. But the house is structurally sound, has a good floor plan and a good location. It needs to be remodeled but just cosmetically like paint, newer appliances, nicer floor covering and yard clean up. The home offers many things that buyers are looking for and I think it’s priced well and will sell quickly.