When Something Is A Great Deal, There Is Usually A Reason…

April 17, 2012 · 81 comments

Recently, I wrote about the house in my neighborhood that was on the market as a ‘short sale’, and shared my frustration that people who can fully afford their mortgage payments are allowed to just abandon their homes.

When I wrote about this house previously, it had originally been offered ‘for sale’ normally at $299,000. Over the course of less than 6 months, it became a bank owned property and the price had dropped to $238,000. Shortly after that, the house did indeed sell, but for $208,000.

I recognize that most of you do not know where I live or have an understanding of housing prices in my area, but a 2800 square foot house in a city with an excellent school district selling for $208,000 is an incredible bargain (for the buyer). Of course, this sale will kill the comparables in our neighborhood, and my home’s assessment did go down dramatically. I have no way of knowing how much this short sale affected my assessment, but I assume it had at least some impact. Since we are not moving anytime soon, it only helps my tax situation. However, for those that plan on moving, this house being sold at such a bargain-basement price can not be good news.

For Some, A Great Deal Is Still Not Enough

The other day, our new neighbor was outside doing some yard work. Thankfully, they have been spending a lot of time fixing up the inside of the house, and they are now tackling the outside. The house never had much curb appeal even when it was occupied, but after sitting all those months, the outside of the house is a mess.

While talking with the new homeowner, he was very frustrated- he was almost disgusted with the state of the yard. I empathized with the guy, but then I thought “well what did these new homeowners expect?”. This house was purchased at such a low price because it needed work inside and looked rather unkempt on the outside. You can’t expect to get a deal on something and then then be frustrated when it is not perfect.

This conversation took me back to my point in another previous post where I figured that if banks (or whoever owns a property) put just a little bit of money into a house (and yard) that is for sale, the payback would be more than worth it. Had a landscaper spent five hundred dollars just sprucing up the yard and made some minor changes to the outside, how much would the sale price of the home increased? I am guessing by quite a bit more than 500 dollars.

The Lesson When Buying and Selling:

Next time you are selling ANYTHING, make sure it shines. Do not let emotions rule you decisions, but use your common sense and possibly involve a third party to get an impartial opinion. If you are looking to buy something, consider items that have cosmetic problems and appear to be undervalued for that very reason!

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Tagged as: buying, housing market, selling, short sale, undervalued homes, underwater homes

{ 79 comments… read them below or add one }

Tie the Money Knot April 17, 2012 at 11:36 pm

It’s a good idea to keep in mind that most of the time, we get what we pay for. So yes, I agree with you that when you get a great deal there’s a reason most of the time. The sayings that my father once shared with me are applicable across the board: there’s no such thing as a free lunch, and you won’t get something for nothing!

Thad P @ thadthoughts.com April 18, 2012 at 7:42 am

You are indeed right. For some a good deal only leads to wanting much more.

Your neighborhood sounds like ours. Have seen far too many homes for sale, and far too many were short sales. It does help the property tax situation…

Jenna, Adaptu Community Manager April 18, 2012 at 6:07 pm

I know the feeling. I just bought a fixer upper and while the outside looked nice, the inside as a mess. I’ve spent so much time getting it habitable, now the outside looks like a mess. Oh the joys of home ownership.

Kris April 19, 2012 at 11:59 am

Are you my neighbor? 🙂

It can be fun to put your own touches on something though. Enjoy the process!

Jenna, Adaptu Community Manager April 20, 2012 at 1:45 pm: I don’t think so, unless you moved to PDX?
Yeah, it’s pretty exciting watching it come together.

Reply

First Gen American April 19, 2012 at 5:39 am

Well, it sounds like you’ve got a good neighbor anyway. I love when I see dumpsters in people’s yards because it means they are adding value to my neighborhood. I’m glad he is fixing up the place. Must be really nice to have the house looking less like an eyesore.

I think your theory is dead on by the way…it’s really a million dollar idea, to hire stagers for foreclosure properties. I don’t know why the banks haven’t thought of it.

Little House April 19, 2012 at 10:12 am

At least the new neighbor’s are fixing up the yard and that should increase the value of both their house and yours! It does stink that all of these short sales are affecting neighborhoods, but at some point things should level off.

Christa April 20, 2012 at 10:44 am

We bought a fixer-upper in our neighborhood for a song, and we put a ton of work into it (not a short sale, just a family that let it go and did not want to fix it up). I loved to tackle work on the house because it meant more in our home value! It also meant a lot to the neighbors — we constantly had neighbors complimenting us on the curb appeal as we worked.

Sounds like you got a great neighbor who will improve that home’s value before too long!

Steve White April 20, 2012 at 3:39 pm

It’s interesting from both sides of the fence. As a buyer, you’re likely not to settle for anything less than a great deal – but a “great deal” means something different to a buyer and a seller. One thing that needs to happen in this country is a new way of thinking about money. Thought management teaches us a lot about how to reroute our thinking to achieve the things we want, but it also teaches us that a “good decision” is all relative. Great post – thanks for sharing!

Don April 21, 2012 at 3:33 pm

It’s great that the new people are fixing it up 🙂

Great advice presentation is everything in sales!

The Biz of Life April 23, 2012 at 8:23 am

One man’s piece of junk is another man’s treasure. I think this guy should stop whining and be happy with the bargain he got. He’s lucky the house isn’t completely trashed. He can take some of the $80K or so that he saved on the purchase price and hire a landscaper.

Charlotte@EverythingFinance April 23, 2012 at 9:31 pm

I agree with Steve, it just depends on which side your on. Given enough time, the value will rise and you will have enjoyed a lower tax rate for a few years.

BeatingTheIndex April 25, 2012 at 12:10 pm

You shouldn’t worry too much about the drop of your house assessment if you’re planning to stay a few years. The idea with the landscaper totally makes sense, but I guess with banks they just want to unload their assets asap without giving thought on improving the price.

Debi April 26, 2012 at 5:53 am

Well, you know banks….who is responsible in the end for this crisis we have all been put through?….Just saying!

Alison April 26, 2012 at 5:55 am

Fully agree that you need to make things shine before selling them. There are people making a living out of that alone, i.e. buying under-evaluated stuff and making it shine.
Cheers,
Alison

small business Loan April 27, 2012 at 2:54 pm

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Amy @ Jobcred CV Builder May 2, 2012 at 2:49 am

Very true. New owners have the right to receive their properties in shining, if not, at least in a satisfactory condition. I like your idea on how to take advantage of cosmetic problems.

Mike Collins May 2, 2012 at 2:45 pm

Many people just aren’t willing to look beyond even minor cosmetic issues when buying a home. There are little diamonds in the rough all over the place because they lack curb appeal, but if you are willing to put a little cash and elbow grease into sprucing things up you can get a great deal.

101 Centavos May 4, 2012 at 7:14 am

We have a house up for lease in the subdivision, but thankfully not on my street. The yard is starting to look like a jungle, with tall weeds. Makes me mad that the owners would let it go like that.

FInancial Excellence May 5, 2012 at 4:13 pm

I totally agree with you. Many buyers can’t look past the minor fixes like a little landscaping and some fresh paint. If sellers (especially banks) invest a little to make the house look a little nicer, they’ll sell for a lot more because they won’t have to search for the one buyer in 100 who sees the potential in the house.

Oren @ Oren's Money Saver May 7, 2012 at 12:15 pm

I am a dental student and I always knew that when I submitting something for grading, it didn’t have to be perfect, but if it shined and had no scratches, I would get a good grade. It is the same idea.

Superoxide Dismutase August 28, 2012 at 7:38 am

I agree with you!!

Financial Directory September 17, 2012 at 2:38 pm

I would generally agree that if something is unusually cheap theirs a reason. But their are bargains out their to be had whether it be in real estate used cars or just about anything else. It may be very rare to pick up a house for half of what its really worth. But it does happen..

QUALITY STOCKS UNDER 5 DOLLARS April 2, 2013 at 1:04 pm

Generally speaking when a house sells for a lot less than similar homes in the same area theirs usually a reason for it. Its possible to find real bargains in the market today because the buyer have the upper hand.

PatrickLem September 3, 2021 at 6:46 pm