Overbuilt can be a problem...

The city of Vancouver has been pushing for infill development for many years but the high cost of development has home builders in a pinch. Building a luxury home in a neighborhood of starter homes tends to be counterproductive for the builder.

Buyers should always be aware of the location of their prospective property. Location has always been a cornerstone to real estate value. In general it is always better to buy the worst house on the street rather than the best house. I often have people ask me, "Why do I want the 'worst' house?" That sounds negative, but the reality is that neighborhoods drive value either up or down depending on what's happening in the area.

Buying the best house in the neighborhood is fine if all the houses in the area are similar and yours is just a tad bigger or on a larger lot. But an overbuilt house would be something like a 5500 foot English Tudor built on a street filled with 1950s 1200 foot ranch homes. That would be way over built and frankly the house would stand out in a negative way. The neighborhood of 1950s ranch homes might support values in the $300,000 range and the 5500 foot house could cost $500,000 to build. The market ceiling will tug the price down on the overbuilt property. That is counterproductive.

The opposite however can be quite favorable. A lone 1950s 1200 foot ranch surrounded by 5500 foot luxury homes allows the potential value to be very high on the little house. An addition or a serious remodel with the highest grade of materials would add more value to the home than it costs to do the work. The market ceiling in this neighborhood could be $600,000 and that leaves a great deal of potential upside for the 'underbuilt' house.

With the drive for infill development Vancouver USA is seeing this kind of neighborhood mix of properties more and more often. Development costs are so high the builders feel compelled to puff up the houses a bit with luxury designs and materials but sometimes they are pushing the neighborhood too far. There are curable problems and incurable problems and neighborhoods are often incurable. Having a house next to an interstate highway is an example of an incurable problem. Likewise there are good things about a neighborhood that could be lost in the future. For example a gorgeous stand of trees that fill an adjacent area to a neighborhood could someday be gone should that land be developed. A home next to that forest might look attractive and maybe experience a bump in value for the aesthetic value provided by the trees, but that is out of the homeowners control and may someday be gone. Paying too much of a premium for it is not wise.

I am seeing a lot of overbuilt homes for the area and buyers need to be cautious as these overbuilt homes are the first to slide in price in a down cycle. Buyers should always go in eyes wide open when considering a property. I have touched on this before including this article here.

External Issues need Special Attention

Sometimes a seller has a home that is facing external issues beyond his control. These can be neighborhood issues, location, busy street, crowded, noisy, overlooking industrial area, etc. There is nothing the seller can do specifically to change these external problems. If these problems existed when he bought the house then it is likely the price was reflective. The seller probably got a "deal" on it when he bought it.

Sometimes these external issues develop over time. Maybe a busy new shopping center was built down the street recently and that has created a negative vibe that wasn't there before. Regardless of what the external issue is sellers affected by them need to give special attention to their home to make certain the negative external issues are offset by positive internal value. Internal value comes in the form of the condition of the home and the presentation of the home.

Sellers faced with external negative value should prepare their home for the market by fixing most of the easily visible problems. A fresh coat of paint inside and out could go a long ways towards bringing internal value. Staging the house by eliminating unnecessary clutter and keeping it spotlessly clean will do wonders to overcome external problems.

The external problems will likely be noticed BEFORE the buyers ever enter the property. First impressions can be hard to shake off. It is critically important to show tremendous value once the buyer is inside the house. If they walk in and go, "Wow! I wasn't expecting this to be so nice inside..." the seller has done a good job at overcoming the external negatives.

Regardless of efforts to shine light on the positives the external issues are sometimes too great to completely overcome without a price advantage. But even if price is used to cover the gap, the nicer that home looks and feels the more money it will fetch.

The first and foremost thing to address is the front yard and entry to the home. The external issues have already been seen as the buyer approaches the home so having that front yard really sharp and clean will take attention off the external and put it on the value of the home itself. It is equally important that the buyer walk into the home and see as nice a presentation as possible. This takes their attention away from the negative and delivers a warm and desirable feeling of 'home'.

If the buyer has driven up the street and seen the external problem, then they already have reservations about the property. When they arrive up front the curb appeal is more important than ever. If the curb appeal is bad as well as the external you have two of the proverbial three strikes already in place. Sellers don't want to be facing an 0-2 count before the front door even opens, if you'll pardon the baseball parlance.

Have a landscaper spruce up the front yard. Make that entry and first room look as nice as possible. We all know that ultimately kitchens help sell homes, but if the house has some downside before the front door opens, then that first entry point becomes equally critical as the ever important kitchen!

Sellers need to overcome external problems and surprisingly, they can be overcome without too much time or expense. Failure however to compensate for external problems will result in the only other solution, a lower price or less favorable terms.

As the market continues to enjoy the upswing in prices, buyers can even seek out homes that have external issues and use those to leverage a better "deal". Of course the buyer ultimately has to be willing to tolerate those external problems.

The bottom line is that external issues need not be a break point for the seller. A little care and attention can save the seller a lot of heartache and maybe a whole lot of cash as well.

Real estate is a local business.

(I wrote this for the Equity Northwest Blog and thought I would re-post it here.)

How often have you heard the expression, "real estate is about location, location, location"? If we are to take this idea at face value, then real estate is a local business. Local companies are much more in tune with the neighborhood trends, community developments, municipal and county regulatory and legislative agendas, and other important facts about the area. It stands to reason that working with a local real estate professional in a local company is a good idea.

This blog has been established to get good real estate information out to the public. We often post tips about home care, and local market trends. Today we will talk about the importance of local businesses and local professionals.

When choosing a real estate agent, buyers ought to think about the local aspect of real estate. Will this person understand the immediate market they are interested in? Is the company they represent a locally owned company or a national franchise? If the latter, then are they at least locally focused. Purchasing a home is most likely the single most expensive thing most people will ever buy. It seems obvious that care and attention to whom trust is placed to represent that transaction is paramount.
Local is critical because the difference between a "house" and a "home" is local. Building a home from a house is done with family, friends, neighborhoods, schools, churches, clubs and services. Local, local, local is as important as location, location, location because knowing the right location requires a local awareness.

If moving from Portland, OR buyers should consider carefully before using a dual licensed Portland agent for a Clark County home purchase. Although Portland is just across the river, it is a state away. Real estate in Oregon is conducted in a similar fashion but there are many different facets and nuanced subtleties that can be significant enough to bring about pause.

It's been more than a decade since Gene Thompson left one of America's largest national real estate firms to open his own brokerage here in Vancouver U.S.A. Equity Northwest Properties has always adhered to Gene's idea that real estate is a local business. One of the advantages to large national chains has always been resources. But national chains are typically run from a corporate office in some far away place. Local branches are often force fed a staple diet of the latest corporate headquarters buzz program. As we turned the century over to a new millennium many of those "resources" began to become widely accessible through the ever present internet technology. Now smaller, local companies have similar access. The resource edge offered by the big national brokerages has eroded significantly since 2000.

That has allowed companies like Equity Northwest Properties to thrive. Local Realtors® working local markets with a local corporate policy is pure bliss. This local minded business model has allowed Gene's company to evolve into one of the region's largest independent brokerages with offices in Vancouver, Camas and Kelso. Between the three offices are affiliations with the two largest multiple listing services in the Pacific Northwest, both the RMLS and NWMLS. That makes Equity a very local company with a regional reach. This is a powerful combination.

In conclusion buyers and sellers should strongly consider the local aspect of real estate when deciding upon whom they will hire to represent them. The best decisions are made with the best information and real estate information is local to the core.