Making House Lemons Into Lemonade (If you have recently bought a house, condo, apartment or any other dwelling, you may be surprised and shocked to learn that the abode you once fought several other bidders for is now considered a “lemon” – yep, you heard right, a lemon!)
With the surplus of residential units on the market it seems as if buyers are getting pickier and pickier as they find themselves with a plethora of homes to pick from. Once minute problems such as bad views or not-so-fashionable paint jobs are starting to make or break a sale. It seems as if a home has to be close to perfect in order to sell in this market. And if it needs a renovation or even worse, a full gut – you can practically kiss your hopes of a quick sale goodbye.
A September 10, 2006 article by Teri Karush Rogers of The New York Times, “When a deal turns sour,” looks at the various things that can ruin a sale in this unpredictable market.
“‘The concept of anything being hard to sell is completely unfamiliar at this point to a whole generation who have grown up in the market since around 1992,’ said Frederick W. Peters, the president of Warburg Realty, referring to the fact that in a rising market, buyers are more likely to snatch up flawed properties. ‘A 20 percent increase in your value of real estate was like a constitutional guarantee, kind of like life, liberty and happiness. But buyers are more anxious in a slower market.’”
“That anxiety is creating a more expansive crop of so-called lemons, Mr. Peters explained. Defects like airshaft views are becoming deal killers as buyers agonize about how such shortcomings will affect price when it’s time to sell. And with so much more on the market to choose from, buyers are favoring blue-chip properties over cubic zirconia or even diamonds in the rough.”
Rising construction costs have also caused many problems for investors and others who have properties that need gut renovations.
People either cannot afford to renovate a whole property, or they simply do not have the time to devote to such a major time-consuming project.
So basically anything with minor problems, such as obstructed views, or anything that needs major renovation is now considered a lemon.
“One reason for the growing disinclination toward renovation is that while the discount for a wreck has remained steady at around 20 to 25 percent, the cost of construction has soared, Mr. Miller said.”
“Mr. Peters of Warburg Realty blamed Hurricane Katrina for the spike in the price of building materials. ‘It’s hard to do a decent renovation in New York now for much less than $200 a square foot,’ he said, ‘and even that’s relatively low.’ But cultural change may also be forcing the fixer-upper’s fall from grace.”
Construction costs are not the only things that will scare buyers away when they are in the midst of their own market.
Anything from bad views to oddly designed floor plans can have potential buyers on their way to looking at something else.
In this slow market, sellers must do anything they can to turn their house lemon into some end-of-summer lemonade.
Happy Squeezing.
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