The adage "Pretty Costs More"
applies to a number of subjects, but especially to the current real estate market.
Buyers in today’s market are being bombarded on all sides with confusing stories about what a home might be worth, whether it’s a good time to buy, what to look for in a home, and especially whether the market is going up or down from here. What to do?
Many buyers go for looks. Just like a pretty girl gets more attention at the high school dance than the brainiac, a house that looks like it stepped out of Dwell
or House Beautiful
gets more attention and subsequently more money than the house with good bones, solid construction, but tired or out-of-date bathrooms and kitchen.
One example of the pretty
theory: a 3-bedroom, 2-bath house in Highland Park recently came on the market for $379,000. It was a trust sale and the house needed a lot of work. So the agent had inspections done, had the sellers clean, paint, and stage it, and hoped to get a few offers and a bit more than the asking price. Perhaps you saw it on the front page of the Los Angeles Times
. This property captured the attention of the media because it was cute and charming -- and at a great price. The paint and staging brought out the unique character of the home and buyers came running. Seventy-three (yes, 73!) offers later, the property ended up selling for $542,000. And that was even after the agent provided to all prospective buyers disclosures and inspection reports that showed the house needed lots of work, including foundation, electrical, plumbing. Basically all the expensive, not fun items that make for a smooth-running, low-maintenance home.
Here’s another example: a cute little 2-bedroom, 1-bath cottage in Eagle Rock was listed for $419,000. At the time (the start of the spring buying season), it seemed like a reasonable price for a small house in a good but not the best part of Eagle Rock. Seventeen offers later, the house sold for $505,000 cash
. This was an investor flip and all the investor did was polish it up a little -- new kitchen counters and a dishwasher, refinished the hardwood floors, painted and landscaped. The inspections showed that the chimney was completely unusable, the HVAC was at the end of its life, and the sewer line was invaded by roots to the extent that the camera couldn’t get through the whole line. No matter, the buyers were happy that they were able to buy the charming home.
The perfect example of how pretty is worth more is 2035 Ridgeview Avenue
, which was perfectly updated and exquisite, but only 1353 square feet. We came on the market at $649,000, which was what the sellers had paid for it in 2006 before putting about $200,000 into in, and we ultimately sold it for $760,000, the highest price per square foot for a home sale in Eagle Rock since 2007.
The final example is where all the factors came together at the perfect time: a good 1920s house on a large lot with views, a wonderful private setting, a tastefully updated floor plan, and a seller who did everything the stager dictated. We priced it at $699,000 because that was a number the seller could live with, and at our first open house we were asked by some people why it was priced so high. There were no comparables for a house that size in that location, but the house had such emotional appeal that we ended up with 23 offers and the property ultimately sold for $865,000.
On the other hand, there are a couple of good solid homes in good locations that are currently sitting on the market. We priced them $80,000 to $100,000 less than the prettiest listings, and we have no offers. These are properties that a buyer could put their own designer touches to and have great properties for less money, but buyers obviously don’t see it that way. Why?
Buyers have no imagination. If it isn’t gorgeous already, they don’t see the potential. Sorry, buyers, this sounds harsh, but I have seen it time after time.
In today’s market, the pretty houses that are well-priced are going for more in multiple offers. If you are a buyer, tired of losing out in the intense competition, what can you do?
- Find some more money and offer more on the next one.
- Look for properties that have several good features, see if the ones you don’t like are ones that you could improve yourself, and make an offer.
- Give up and stay where you are.
Another option that I have seen many people try is to keep looking, thinking they will surely find that needle in a haystack, that great house that nobody else has seen that is in a great neighborhood, has a great price, and is really charming and pretty besides. If this is the option you are pursuing, maybe you should ask yourself if you really want to buy a home right now, or do you just think you do. This is the subject of another article that is coming up soon, so stay tuned.