Someone bought a house that was listed for 35,000. Before you go all â€œDamn, I could have bought THAT!â€ â€¦.Â think about this. Â It was a really beat up huntridgeÂ cottage. I think itâ€™s been a rental for something like 40 years. At least it looks like it has.
It wasÂ of aÂ Vintage whereÂ the windows were wooden doublehungs. They havenâ€™t been opened in years except for withÂ a pry bar. Even then they required a pry bar.
Itâ€™s got the original (or is that retro) kitchen and bathroom. TheÂ thing isâ€¦every piece of tile, Â and every porcelain fixtureÂ is cracked or chipped. The cabinets are beat up. The plumping is original galvanized pipe. No one ever updated it.
No one bothered to dig out the concrete floor when it started humping. Itâ€™s standard re-hab work and not all that terrific of a task when the house is empty, but itâ€™s Â a real pain when youâ€™re living in it.
The bank had no use for the house. They werenâ€™t about to put any money into itÂ to make it better. They knew there are a few cash only, as-is buyers out there. There’s no way to sell it retail, as the house won’t qualify for financing on it. The bank knows that if they donâ€™t figuratively GIVE IT AWAY, that it will just sit there and cost them even more money. The banks are under cutting each other to get the limited pool of buyers to jump on theirs instead of the competing homes. Of course theyÂ knew that noÂ retail buyerÂ could get a loan on it. But thereâ€™s cash buyers out there at the moment.
The bank could have listed it at 40,000 or 45,000 just as easily.Â Probably at 60,000 as a list price, those same buyers might not have been in such a hurry. But every cash investorÂ whoâ€™s looking for project houses seriously RAN to look at it because it was 35,000. Â Thatâ€™s the power of bargain basement prices. Itâ€™s the same thing for whatever you went back to the Mall to buy on the day after Christmas.
My client got the house. It was multiple offer. I happened to run into one of the people we were bidding against at a terrific Christmas Eve Cocktail Party. I didnâ€™t know that I knew him at the time, but he got another similar house that same weekÂ and wasnâ€™t unhappy about not getting the one Iâ€™m telling you about. I had a different client who was doing some thinking about the house that he got. Many people at least looked at it during the 4 days it was on the market. At least 3 bid on it.
NEWS FLASH! Not all Hundridge Cottages are now worth $35. per square foot. Â However, I wonder if some bank will finally get to the point of GIVING one a way. Now THAT would really be a bottom.Â On the other hand,Â I think the one thatâ€™s under contract with a 40,000 list price is in even worse condition.Â
So whatâ€™s a similar house thatâ€™s been loved and cared for worth? Especially if the owner bought it for about 106,000 in sayâ€¦2001. Thatâ€™s about what a typical 2bedroom 1 bath 1000 sf home sold for in the early 2000â€™s. In the early 1990â€™s it would have been about 60,000.
Yes, the banks are throwing away the unloved, beat up, worn out, and abusedÂ houses.Â The actualÂ price isÂ proportionate to the square footage, but thatâ€™s how we compare them. Dollars per square foot. But we are back to 1980â€™s and 1990â€™s prices for theÂ â€œJUNKâ€.Â
There was a house recently that I featured that got sold in the first week. It wasnâ€™t Huntridge. It wasnâ€™t JUNK. It could have been really cute and really functional and it could have been lived in while the restoration was going on. It was a desert modern in the John S. Park Historic Neighborhood. It had hardwood floors, and a salvageable, but not great kitchen. It was listed for 80,000. It was also a 2/1 and also about 1100 sf. Why wasnâ€™t it $35,000? I had 2 clients â€œthinkingâ€ about it, but someone else swooped in and grabbed it up, and it didnâ€™t have to be $35,000 to get it done.
Thereâ€™s some even better ones around 100k, and some better ones yet at every step of pricing as you go up the scale. But there IS a shortage of WELL loved, well maintained homes, where the seller ISNâ€™T desperate. They exist. Theyâ€™re the majority of the homes in Vintage Vegas. Many of you are living in one even as we speak.
They exist, but theyâ€™re not on the market. And they wonâ€™t be till the owner of any particular home can get a price for it thatâ€™s equal or greater than what the property is worth to him at that same moment in time. That has NEVER changed. Itâ€™s a fundamental rule akin to gravity. But if you change some part of that equation, such as â€œweâ€™re now behind in paymentsâ€ or â€œI just inherited it, get me what ever we can for itâ€, or “it’s bank owned” then the value of the house will be different. I just isn’t worth as much to the seller anymore.
Thatâ€™s how we price houses now, and thatâ€™s why the LOWEST PRICE sale is more important than the highest price one. Obviously, the onesÂ that are in betterÂ condition, and haveÂ the coolest features ought to get a higher price. People are fighting over the lowest priced ones. Thatâ€™s a real good sign. A few more of you who can, ought to jump into it.
Thereâ€™s retail buyers who are buying the best of the â€œSELLER MUST SELLâ€ homes. Iâ€™m starting to see multiple offers on them. Every single â€œFun Fixtures Found In Foreclosuresâ€ homes sold soon after I posted them.Â The pricing of homes in comparison to others is always a hierarchy that builds from the bottom up. To the typical buyer who I work with, it sounds like â€œthe best house I can get for the leastÂ money that meets my needsâ€. Thatâ€™s not a new thought. I never ever ever met a buyer that didnâ€™t think thatâ€”-regardless of what the market was.
It ALWAYS builds from the bottom, and prices will always start increasing from the bottom up. Thatâ€™s why itâ€™s called â€œThe Bottomâ€.