As liquidity slowly seeps back into the economy and some qualified buyers, perhaps encouraged by the first time homebuyer tax credit, tentatively stick their toes into the proverbial home buying waters, bank owned properties have become the jewel de jour. Nightmarish stories of endless waits for banks to approve short sales have put a dingy taint on the short sale property. Buyers want to know at what price the property is available not a best guesstimate of a real estate agent, comps or no comps.
So within the slightly less than moribund real estate market is the percolating bank owned segment. It appears to be the opinion of the populace that the bank owned property represents the rock bottom price. A short sale still signifies an unrealized loss to the bank and why would they accept that when there is a full inventory of properties that have already darkened their balance sheet via the foreclosure process. And, a For Sale by Owner or a conventional listing, no matter how discounted the seller claims the price to be, it still appears to the buyer, correctly or not, that a portion of the price is the seller’s equity which they wouldn’t have to purchase through a bank or other financial institution.
I’ve recently seen instances where a bank owned property has sold within a day after being listed. This is reminiscent of the “frothiness†that Greenspan spoke of pre-meltdown.
But the challenge is that these bank-owned homes have often been vandalized by angry owners as they fell across the precipice of foreclosure. At best, a bank owned property will be structurally intact but empty, with dingy outlines of removed pictures spotting the walls and the floor showing where appliances or large pieces of furniture had dutifully resided.
But, as Realtors, we are used to seeing empty houses. We easily visualize the house’s potential, we’ve seen it realized many times over while showing other homes with the same floor plans. Buyers haven’t looked at hundreds of furnished homes and understood that beyond the tasteful (or not) furnishings that a house is just a floor plan with upgrades. And knowing the floor plans we instinctively understand how each room can hold furnishings and how the home will “flow†when furnished.
So what is one to do when we can see in the buyer’s eyes that statistically, (number of rooms, baths, sq ft, neighborhood, etc.) the bank owned property is just what they are looking for but somehow it just doesn’t feel right. And remember, home buying is an emotional event. It has to FEEL RIGHT! But an empty house will never feel right. They buyers are looking for a home.
In a perfect world, the seller would hire a specialist to “stage†the home so that the kitchen smells like vanilla, the bathrooms like bouquets of flowers and the rest of the home like fresh linen. But we are far removed from the “good ol’ days†and there is no way a bank is going to pay to “stage†a property. That would involve renting furniture, etc. and they have already taken a bath on the foreclosure.
So when we see the hesitation cross our client’s faces like a storm cloud across the sun we have to step in and alleviate it. I usually keep a few 8 x 10 color glossy photos (think Officer Obie in Alice’s Restaurant) of tastefully decorated rooms from the same floor plan available to show them what the rooms would look like with furniture. Then I quickly insist that they look at listings that are owner occupied so they can “feel the flow.†I let them experience the space with the “good vibrations†of it being a home. This only takes a little more research to be properly prepared.
This strategy may take an extra day and burn several additional gallons of that liquid gold we call gasoline, but when you see the buyers smile between themselves and they decide, Yes, they can see themselves ensconced happily in a this house and it will become their home, and they start to ask about the offer process, you will realize that it is very much worth the effort.
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