The toughest generation to deal with...

Perhaps the toughest group to deal with in terms of pricing a home for sale these days is the group that most of the time in the best shape on the their mortgage - the Baby Boomers and Matures (a classification for those who are slightly older than the normal age-range associated with the Baby Boomer generation). Many of these homeowners have owned the same house since it was built in the 60's or 70's or 80's. Most did not fall to the temptation to cash out equity, so most owe little or nothing on the houses.

What these older homeowners did fall victim to were the stories of the steadily and rapidly increasing values for those houses in the late 90's and early 2000's. They may have even had an appraisal done. They sure seem to know the guy down the street that got $300K for his when he sold in 2001/2/3/4. And, they have a firm belief that they should be able to get that, too.

Let's look back for a moment. Most of these homes were built in a era when $70-80-90K was big money. Some may have even gone all out and spent $100K to get one with all of the extras of the day - deluxe Formica countertops, fake wood beams in the family room (which was paneled in oak or maple, of course), certainly the multicolored slate tile in the foyer. Over time perhaps a portion of the basement was “finished” by painting the block walls and putting down some good indoor-outdoor carpeting under the ping-pong table and maybe putting in a dropped ceiling.

You can tell it was built using all good stuff, because most of it is still there today, although the place may have been freshened up a bit by painting over the paneling in the family room. Maybe the kitchen cabinets have been replaced, but more likely just new doors were put on them. Perhaps granite countertops were put in, but just as likely that deluxe Formica has held up pretty well. And there was certainly no need to replace the turquoise bathtub and toilet in the upstairs bathroom.

Sound familiar from either side of the equation? It happens every day in this area. We have lots and lots of these homes that were built in the 60’s, 70’s and 80’s in southeastern Michigan, many of them built by our local success story – Pulte Homes. They are well built and have held up well. They were upscale at the time that they were built, not luxury-homes per say, but certainly more upscale than most subdivision homes of the time. Now hundreds of them are coming on the market, as the earliest stages of the Baby Boomer generation starts to retire and move or downsize.

So in walks Mr. Realtor and tells them that the house is “dated”, needs extensive updating and is likely only worth $180-200K on the market today, if that much. “Throw the bum out, they say. “The guy down the street got $300,000 for his house in 2003, I should be able to get close to that for mine.” So starts the tenuous relationship between the homeowner and representatives from the real estate industry. I say representatives, because this type of homeowner is likely to go through 2-3 Realtors before becoming realistic (worn down might better describe their mental state by then) enough to actually settle on a price that will allow the home to sell.

What to do…what to do? As a Realtor, I almost dread being the first listing agent for the house, because I know that I’m going to have to push and push to get the price down and that I’ll probably not even be around when it eventually does get to a price at which is will sell. It’s kind of a real estate mantra that you’re better off being the 2nd or 3rd Realtor to list a place like this than to be the 1st.

I think the best advice that I could give the homeowner is to make sure that they get 2-3 good CMA’s from local Realtors, maybe more; so that they get multiple opinions about the market price. I’d certainly advise them to be wary of any agent who walks in and immediately agrees with their price estimate, without even doing a CMA – they are just desperate for listings and are not likely to do a good marketing job either.

And homeowners should look at the logic and data behind the CMA’s that you get. Having a raft of “Comps” is expected, but take a look at the details for each house to see whether the Comps are really meaningful. I have actually stopped using the word Comparables (Comps) and use the term “Similar homes” instead, because I have seldom been in all of the houses that I might want to use for the market analysis.

In the end, the Dr Phil approach – Let’s Get Real – might be the best, in dealing with these clients. I try to honestly lay out all of the facts, the CMA numbers and the details on the “similar homes” that I used, plus I show them the market that they will be competing in (sometimes we might actually go visit a couple of similar active homes). If, after all that, I cannot get agreement on a reasonable market price; it’s time to suck it up, thank them for the opportunity and leave without the listing. Maybe they’ll call me when a year or so passes and they’ve been through 2-3 Realtors. Who knows, maybe the retro look will be “in” by then and turquoise bathrooms will be back.