When I smell cat urine in a house that’s up for sale, I get excited.
What about you? If you’re grossed out, you’re not alone. When potential homebuyers enter a home, senses are in hyper-alert mode. If something is off, they usually react strongly. What’s that horrendous smell? Let’s get the hell out of here. At that point, 90% will have walked out the door. And that is a big mistake.
Let me explain.
Cosmetic defects = value
If you want to get a great deal on a home, you have to be able to look past what I call cosmetic defects. I’m not saying you should be okay with the filth – not at all. Instead, you need to put the filth in terms of what it would take to fix.
For example, the cat urine property. Cat urine can be completely cleaned up with about 4 hours of work, a couple buddies, and the cost of new carpet and pad. The first 2 hours you rip out and dispose of the carpet and pad. Then you bleach the spots on the subfloor. Return the next day and bleach it again. Apply vinegar. Repeat this process until smell is completely gone. Finally, call a carpet guy and you’re good to go. What had seemed like a huge, gross problem can actually be pretty easily remedied.
Now that you’ve identified a property with cosmetic defects, you may be thinking: how do you know there’s value here? Good question.
The short answer: if the property is priced significantly lower than comparables, less the estimated cost of the repairs. Now this takes some experience to figure out, but a good realtor should be able to determine this fairly easily. The savings vary depending on just how appalling the cosmetic defects are. Based on my experience, savings can range from $5k all the way to $50k. I always advise my clients to be conservative when estimating repairs.
Another thing worth mentioning: cosmetic defects give your realtor leverage when negotiating your offer. This is especially true if the property has been on the market awhile.
Let’s say your realtor determines that the property with cosmetic defects is priced only slightly lower than comparable properties that are move-in ready. It’s easy for a realtor to explain this to the listing agent and negotiate a lower price based on these cosmetic defects. Win!
Below is a house that has serious potential. It has a weird smell, nasty carpet, and highly questionable Dora the Explorer/outer space wallpaper. Most of this could be fixed easily and inexpensively. It’s an auction property and is a deal at the current bid price.
Be aware of your emotions
Most humans make decisions based on their emotions. It’s human nature. I actually think emotions are an important part of the decision-making process, but they must be put in perspective. Being open to cosmetically-challenged houses will save you money with a decreased purchase price. However, if a certain layout or space doesn’t “feel right” then it certainly may not be the house for you.
The point is to try to pay attention to what’s triggering this feeling and determine if it’s something that can be easily fixed. I encourage all homebuyers to just be aware of their emotions and to put a dollar amount on the things they don’t like about a home.
Expand your scope–find a home
As you have probably noticed, I have a bias toward homes with unattractive cosmetic issues that can be easily fixed. I find it exciting when I know my clients can build equity quickly by making a few updates and repairs on a home.
I’m not saying that you can’t get great value with a completely updated and pristine home. What I am saying is that it’s wise when you see a property – especially one that maybe grosses you out a little – to open your mind and consider real numbers, not just your emotions. You’ll expand your options and most likely make a better home-buying decision.
Good luck with your home-buying adventure! Contact me if you would like to work together to find your next home!