It’s always nicer and easier to sell pretty homes that are modern and in great shape. But is that always the best thing for the home owner? Or the buyer? Sometimes it’s not.
THE PROBLEM
John Carle was working with a client who’s house was in pretty rough shape. It had been a rental property for 30+ years, and was in need of a strong refresh. Mechanically & structurally it was fine, but it was pretty beat up and in rough shape. Furthermore, the last tenant pulled a “midnight move” leaving a huge mess of junk, garbage, and busted up old furniture.
The seller was elderly and wasn’t really equipped to renovate the home themselves, nor did they have the disposable cash to hire it done. They were done with being landlords.
So the question was put to John; what should we do to get it ready for sale?
THE SOLUTION
John’s suggestion surprised them. The house was worth about $350,000 in heavily renovated condition, but needed about $50,000 of work. John suggested that they stop cleaning it & emptying it. Leave the junk, don’t do any renovations, and throw it onto the market as-is.
His logic was this: He would market the home as a “rental gone bad” and sell it in as-is condition. Someone would be attracted to the opportunity for sweat equity and could do the renovations themselves and build themselves some equity.
The market was a challenge at the time; interest rates were a bit high and property values had recently dropped after a huge boom. People were feeling pressure to find value in the market; that was the opportunity for this home.
The seller was really shocked when John told them to stop cleaning it up. He called it REVERSE STAGING; make it look messy and dirty in such a way that buyers could see through it and realize that it needed some personal labour to clean it up. A little would go a long way.
THE RESULTS
They priced the home at $299,900 with a quote showing that it would cost about $50,000 for a contractor to renovate the home. That added up to the evaluated price of $350,000. The sellers were comfortable with that.
It took some convincing to the MLS to allow John’s ad, the MLS people took exception to an advertisement about “rental gone bad”, but eventually the listing went live. We had a weekend of back-to-back showings, with realtors literally lined up the street to show it.
On Sunday evening the home had several offers. It finally sold for $320,000 to a young man who worked in the trades and figured he could renovate it himself. He was drawn to the huge double garage behind the house.
The sellers were ecstatic. They were expecting around $340,000 after spending $50,000. They didn’t have to carry the mortgage while the house was being renovated, it was sold and out of their hair, and their net proceeds far exceeded anything they could have hoped for.
One of the sellers has since passed away, but John has maintained a close relationship with the other seller. Checking the address on the MLS to write this case study, there’s no listing for the property since this transaction. It’s been 15 years, and apparently the buyer is still in the house. We hope he’s had a good life in his home.
