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Selling Inherited Property
The real estate world has changed. Baby boomers have entered an era that they knew was inevitable but may have put on hold until it was necessary to face it. For many, that time is now. Either by choice or out of necessity, a whole generation of Americans must now consider selling their childhood home.
What You Face
To an average home buyer, it may be just another house in another neighborhood, but to you it is a vessel of memories not easy to part with. To complicate matters, dealing with family members can be stressful. One member may want to sell quickly and move on with their life. Another one may prefer to maximize the value of the home. Still another may not really want to sell at all and would rather wait for the right buyer to come along and make an offer they cannot turn down.
Regardless of where you may fall in this scenario, one thing will still be true:
A home will only sell for what the market will bear. A buyer will not be considering the value of your memories when making an offer. Their purchasing decisions may also be based on emotion, but they will be different emotions than yours.
What Has Changed
For as many decades as most of us can remember, conventional wisdom dictated the mindset: “Let’s start high and let the buyer make us an offer.” Or, “We can always come down in price.” Unfortunately, some real estate agents may have unwittingly exacerbated the problem by declaring, “I will sit at an open house every weekend until it sells.” What some may not realize is that the old rules don’t apply any longer. Everything changed in 2006.
In 2006, a company called Zillow changed forever the way homes would be priced. By compiling data from dozens of the most recent sales, Zillow provided “Zestimates” of the approximate value of homes in an area and made that information available to anyone with access to the Internet. Suddenly the market was transparent. What was once the purview only of real estate agents whose license gave them access to the Multiple Listing Service was suddenly now open to the public.
What is Zillow's Impact?
What does this mean for the baby boomer, or for that matter, anyone who is considering selling his home? Just this: Since any buyer now knows what a prospective home is worth within a few thousand dollars, overpricing a home with the idea of dropping the price if necessary has become a pointless exercise. In fact, doing so may actually have the opposite effect.
According to Zillow’s book, The New Rules of Real Estate, people who price their homes at or just under actual value tend to get 4% over value and sell in less than three weeks. Conversely, 47% of the homes that are priced over value end up selling for under value after reducing the price one or more times. Those homes languish on the market for three months or longer and eventually become “shopworn,” leading to an ultimately lower selling price.
Questions To Consider
Will the home be unoccupied during its time on the market?
There is an old saying in real estate: “Houses don’t like to be empty.” Homes tend to break down over time when there is no one living in them. Even though a baby boomer may be willing to sit on his parents’ estate property “for as long as it takes,” he runs the risk of natural forces taking their toll. Water pipes can freeze, faulty wiring can cause fire, leaky plumbing can flood, and pests such as termites can take over. In addition, vacant homes run the risk of theft, vandalism, and squatters. If no one is going to be living in the home and caring for it, there is all the more reason to price it to sell quickly. And as noted above, this usually results in a better selling price as well.
Has the childhood home been updated?
The estimates that Zillow provides do not take this point into consideration— only its actual selling price. So, two similar homes in the same neighborhood could sell for widely divergent prices, depending on the updating that has—or has not—been done. A home that has not been remodeled within the last 10 years may require $20,000 to $50,000 worth of work to bring it up to the neighborhood standard. Pricing that home the same as others that have undergone a facelift will actually help the other homes to sell while this one sits on the market.
Family Disagreements & Recommendations
But what if your disagreement is with another family member who also has interests in the family home? Here are some recommendations:
1. Have the home professionally appraised and have a general home inspection done. Include a pest inspection and roof inspection if warranted. This is an excellent way to know the value of the property as well as avoid costly and stressful disagreements with the buyer while in escrow.
2. Hire a third party, disinterested REALTOR®, like me. Having multiple family members making a decision can be complicated, but adding in your cousins, spouses, brothers can add fuel to the fire.
3. Take all family memorabilia out of the home. Once a home is for sale it is no longer a home, it's real property. Taking out the memories is one way of reminding yourself that buyers are comparing the property to other property and have no emotional connection to the property.
4. Meet at the REALTOR®'s office. Having a meeting in a professional office setting, instead of on the couch, is an excellent way to remove the emotion from the transaction.
My Role As Your REALTOR®
Getting an offer is fairly easy. Getting an offer that will close on time and on budget is very difficult. Far from being an “open house-sitter” or “tour guide,” today’s real estate agent has a more important and vital job than ever before. My goal is to be completely in tune with the market on a daily basis; to know the inventory, which homes have been updated and which are stuck in the ‘90s [or, have not], to have superb negotiating skills, understand market trends, and be able to help buyers, sellers and family members come to agreement.
Homes come and go, but memories last forever. While the idea of selling a childhood home can lead to some anxious moments, with planning and foresight and the help of caring professionals, the process can bring pleasant closure to another chapter in the family’s long and enduring history.
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