Thoughts On Value And A Homes Self Esteem: Is Labeling A Home As An “Estate Sale” The Kiss Of Death?

Does estate sale homes equal cheap?Some readers may not see the correlation I did with houses and people but let me try to explain myself.  If you have a troubled child (or maybe not even troubled) and you treat the child as though they are a hassle, getting on to them all the time, and not spending time with them, is there a high likelihood that the child will have “issues”?  Maybe self esteem issues.  Maybe even problems with how others see them.

I started thinking about this when a home in the area I live in went on the market for sale.  Without getting too personal I will say that the owner had passed away, and the family was selling the home.  The MLS write up described the home as an “estate sale”, it needed some paint, and the sellers were motivated.  I pass this home quite often and have yet to see it being shown.  The grass has started to grow a little higher than normal and the outside is rather drab.  I started wondering if the Realtor selling this home did not consider it worthy of putting in the necessary time and effort to sell it because it was an estate sale.  Did they not explain to the family that it is important to give the home curb appeal so this would increase the chances of selling it?  Did the fact that it was an “estate” sale mean that it had to be listed for $15,000 to $20,000 less than what other similar homes have recently sold for?

I am not a Realtor, and I have all the respect in the world for what they do, but it is my opinion that this home could have been listed for a lot more than what it was, and the home could have been given more curb appeal for less than $100 (see my friend Ryan Lundquist’s post on this).  Did the fact that it was labeled an estate sale dictate how aggressively it was prepared for sale and subsequently marketed?  And beyond that, will potential buyers pick up on this negative vibe?  Will they consider it a “lesser” house and make a lower offer on the home?  Will this contribute to declining values in the neighborhood?  These are all questions that have gone through my head.  Are they valid?  Tell me what you think, I am eager to listen.

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Comments

  1. Join the crowd of folks with “foreclosures” eating away at property values. It’s like having 3 bricks of gold (same weight, same purity) sitting side by side – one earned, one given, one taken – they’re all worth the same – yet the one earned is maintained and loved (there is “protective” value there), the one given has value yet not as personal nor as protective (it wasn’t their home and they aren’t keeping it), and the one taken — well, it’s a black market, get what you can type of deal. Your post is exactly what every homeowner feels (whether in the home for months or years). The question is – how does this change your view when valuing homes in the market? Does this make you more empathetic to buyers/sellers? Does this make you more protective of the value of your own home? Does this make you want to run down there, slap a coat of paint on the house, mow the grass and plant some flowers? Just curious, as a homeowner myself living in close proximity to a foreclosed home, what you would do to preserve the value of your neighborhood when there’s an “owner” that doesn’t have your protective interest in the property value of the home for sale…

    • Very interesting analagy. Appraisers are trained to look at a properties condition combined with the supply and demand factors in a market. We really don’t look directly at them as the three scenarios you described, however it does have an impact on how well the property is taken care of. In answer to your question about wanting to go down there and slap a coat of paint on it I would say “yes”, because you hate to see little things like that cause a property to sell for a less.

      • I appreciate your candor and love picking your brain — you seem to be very forthright about dispelling some of the myths and “secrets” (that really aren’t secrets – but with the new “rules” in place do not allow for much communication directly with an appraiser). If I haven’t told you before, let me tell you now — THANK YOU.

        I’m also curious about how an appraisal would be ordered on this house should a buyer come around sniffing out that “estate sale.” With it being a “non-occupying owner,” does that have an impact on the appraisal? Are you required to appraise it against other “estate sale” properties that you find (or in my instance with the foreclosure in my neighborhood, would the appraisal be ordered to place more weight on appraising it against other foreclosures) to derive a value? Say for instance your home is worth $250K, the house that is an estate sale is identical to yours, but sells for $200K (or in my instance with the foreclosure, $150K) – I know your property value would go down, but in the other instances, would the appraised value be written up closer to the value of your home to reflect the value of the home itself or the value of that sell (i.e., it sold for $200K – is the value $200K or would it be closer to the $250K value of your home – all things being equal)? The seller/owner’s interests being the only difference in the properties – one not having to sell, the others possibly due to financial issues — what weight is placed on your home’s appraised value if you were to sell yours? Are those “estate sales” and “foreclosures” noted as lesser homes than yours or are you just kicked in the pants and your home is now worth $200K (or $150K) – again, all things (other than “owner” interests) being equal?

        (And by the way — thanks for the link to Ryan’s blog too — interesting stuff!)

        • We have to use a minimum of 3 sales in an appraisal. A lot of times we use more. Every appraisal is different, however we try to look at all the sales and consider how they sold and the motivations behind the sales. There are more foreclosures these days that we have to consider. Five years ago there may be one foreclsoure sales out of 15 or 20 so we would just throw them out, but these days there are more of them. We also have to consider active listings. We have to look at what is available for sale and what other homes a potential buyer would consider if the house we are not appraising were not available. The foreclosure these days are in a lot better condition than they were five years ago too. They are more comparable to “normal” sales. If there are condition differences we do make adjustments for them. The number of foreclosures will probably not change for a while until the inventory levels decrease. I read an article the other day that said they do not expect recovery to start until 2015, which is not good.

  2. Thanks so much for sharing the link, Tom. That was very cool of you. Great topic. I’ll be curious to hear from any buyers and real estate agents in your market about how they perceive the “estate” issue you mention above.

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