Listing

Vacant Showings

I went out yesterday and showed 5 properties to buyer clients. Nothing odd about that. Except that, for the first time in my recent memory, all the properties were vacant, and none were new construction.

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The houses I showed yesterday were all in the $300-400,000 range. These are not homes where owners regularly pay cash, nor are they owned by folks for whom owning “an extra home” is not a problem. And so I have to wonder, “What is going on here.”Hmmm. My partner Jim Duncan has written about this phenomenon in the past, and I have certainly commented on it. But, frankly, I’m surprised that I’m still writing about it.

Currently, we have a very small inventory. Across the city and Albemarle County and all product types, there are only 903 properties for sale. Take out those that are “proposed” (meaning not yet started pre-sell new construction) and that number drops to 715 properties. And within that group, there are currently 206 homes that are listed as Vacant for showing instructions or 28.8%. This is certainly down from several years ago when the bubble burst, but not as much as I thought it would be.

There are several reasons for a home being left vacant. 1) The owner has taken a job in another town. 2) The owner purchased another home and has moved out. 3) House was originally a rental property and the owner has ceased renting pending a sale. Or 4) The owners have moved to a retirement facility or passed away. I’m sure there are other reasons that I’m not mentioning here, but these are the big causes.

In case 1, occasionally a new company will be paying expenses during the move, so the vacancy is less painful. But in all the other cases, this is a real expense eating away at cash flow and wealth. Even if you pay cash for a home there is still a cost of capital to the investment costs, plus taxes, utilities, maintenance, and heaven forbid repairs if something should go wrong such as a water leak. There is a reason many home insurance companies drop vacant homes from their rolls, or significantly increase the premium.

During the run-up to the bubble, when people thought houses were guaranteed to sell in 7 days, a vacant house was not necessarily a bad plan, but today, homes need to show their best. And vacant home rarely show as well as furnished homes. One of the homes I went to yesterday had filthy carpets, sticky countertops, and the only blinds that remained with the house were those that were broken. My client instantly knew the property had not been cared for. The price expectation went down a solid 10% upon seeing the condition. (If this is what I see, what do I not see?)

There is not doubt that there will always be some vacant homes on the market, but if you need to leave your home vacant: Maintain it like you live there. Keep it fresh and clean. Run water in all the sinks and tubs once a week to keep the gasses from come through the pipes. Furnish it as best you can. If it looks great when it is vacant, buyers will know you cared about the home when you lived there.

RiverBluff – In the Residents’ Own Words

At Nest we represent a lot of different clients in different types of projects. I have been honored to be a part of a great project in RiverBluff. Comprised of nearly 19 acres along the banks and bluffs of the Rivanna River, RiverBluff is only a mile from the Downtown Mall and part of the nearly 20 mile trail that surrounds the whole city, meaning that biking and walking is convenient. And of the 19 acres, only about three acres is actually built on, leaving the remaining space as common land.

Hear what our residents have to say about living at RiverBluff and why the chose to live there.

Being Different Gets You Noticed

We started Nest so we could do things differently. We knew we wanted to challenge the status quo, and shake things up a bit. We knew that people would eventually see that we were revolutionaries of a sort. But I don’t think we recognized how ready for change Charlottesville really was. I don’t think we recognized how quickly people would value what we were doing.

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I picked up a listing agreement yesterday. Photo above of the property.

I will go more into this listing in future blog postings, but there is one thing for certain. I would not have this listing if we had not started Nest. I’d like to think I’m that good, but it is about my team and the vision that we share together. It is how that vision is playing out in our actions, our marketing, our space, and our clear and directed philosophy. That is why we as a team have this listing.

More to come, but suffice it to say, we are excited.  

An Agent Representing the Agent, aka Dual Agency

Originally Posted February 17, 2009

To understand how Dual Agency has come about, one needs to think just over a decade back two decades to the days where every real estate agent worked for the seller. There were numerous reports done that showed that most buyers thought their agents worked for them, but they were wrong. Every agent worked for sellers, either as the listing agent, or as a “Sub-Agent” to the seller. This also helps to explain why commission is typically paid by the seller to both the listing agent and to the selling agent. (Look for an future post on Divorcing Commissions) Read on to see why Dual Agency should be called Non-Representation

In these days, a buyer would find an agent to work with, and would then go house to house while the agent representing each seller, not their buyer. Technically speaking, it would have been unethical to suggest a lower price than asking, it would have been unethical to point out deficiencies in homes such as Quest Pipes, Asbestos tiles, Masonite siding, highways that might bisect the neighborhood and more. The reason is simple, the agent’s responsibility was to the seller, and getting the highest price possible.

Buyer’s representation was born of the need for buyers to have protection. Buyers required that their agents be open regarding pricing, home condition, and other factors that affect home values. Hence, buyer’s agents were born. A new breed of real estate agents, buyer’s agents represented the buyer, and worked for them to find the best financing terms, the best legal counsel, the best home, and to get the lowest price possible.

In the days of Seller agency only, it was routine that an agent could receive double commission by bringing a buyer to the contract and handling both sides. In all honesty, this was fine. Because, the buyer was never represented, and thus, no ‘additional’ disservice was being  performed. But, when buyer’s agency was born, it didn’t take long for agents to say that they could represent both parties. Herein lies the problem.

If you are a listing agent and you are selling a home with Masonite siding, you are required to list this in the MLS. However, you don’t add a disclaimer that says you have Masonite siding and all of the issues that are inherent in poor installation of that product.  Why? Because it is not in the best interest of the seller. Plain and simple, Masonite homes are harder to sell than Hardi-Plank because they can have problems. If I am a buyer’s agent, I should always point out that a home has Masonite and explain what this means to maintenance and resale values and resale time. I explain that many companies will not allow their employees to purchase homes sided with Masonite if they are part of a company funded transfer. Why would I point out things that might make my buyer pause before buying? Because it is in the best interest of the Buyer. I represent them, and only them.

In Dual Agency, the real estate salesperson tells both buyer and seller that they represent them. But they can’t. Instead, they land up representing neither. A Dual Agent cannot help both seller and buyer in determining a fair price for a home. They cannot assist in working through home inspection items. They cannot represent either client when one becomes unreasonable. If my client is unreasonable, I still go to the mat for their issue, even if I disagree… because I am hired to represent their every issue.

At Nest, we have in our Policy Manual that no agent can ever act as a Dual Agent. If I am representing a Seller and someone calls me to see that house. I will show it, and I will do my best to sell the positive features of that home to the prospective buyer. And if that buyer decides to purchase the property, they will have two options: to work with me as a “non-agent”, or to contact another Realtor and ask that they represent the Buyer. Regardless of which choice that buyer makes, he or she will make it as an informed buyer. Not all buyers require representation, but none will be denied.

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