Steps to Success in Real Estate – Creating Value for Sellers

Value is an extremely subjective term. The “worth” of something to one person could be nothing, while another might consider that same thing to be very valuable or useful. Our goal when dealing with a property seller would be to determine what holds the highest value to them, and what their ULTIMATE goal is when selling a home or property.

Ultimate is emphasized here for a reason. That’s because most people would say their goal when selling a property is to get it sold for the highest price possible. In reality there is almost always at least one thing other than price that is more important (holds more value) to the seller.

Consider an example of someone who inherited a home with a lot of deferred maintenance that’s in a great location. They’ve been living in the home with their now deceased relative while they took care of them full time. So they have no income and no assets to speak of other than this house. With about a $50,000 budget the house could be renovated to sell for $400,000. It’s possible to sell the home in it’s current condition for around $300,000 but it would probably take a while, and this person can just barely afford the utilities, upkeep, taxes, and insurance on this old drafty house. So carrying costs are a real issue. To get it sold quickly in as is condition you’d be selling at about $250,000 and netting out roughly $220,000.

Is the sales price their primary concern? If selling the home using traditional means was their only option what is the likely outcome? My guess is that they would have to fire sell the house to get it sold immediately because they simply cannot afford to “float it” while they work on getting the best price. But what is their ultimate goal here? I’d say ultimately they’re most concerned about being able to live somewhat comfortably while they figure out the next steps of getting a job, home, and getting to a new normal. If you could offer to trade them a smaller house in a less desirable part of town that was turn key move in ready and worth about $100,000 do you think that would be valuable to them? How concerned would they be about the comparative value of the two homes? What if you could not only trade them homes but also offer them your 5 year old Toyota that’s in great shape and you were considering trading in on a new car this year anyway? In addition to these you could also offer to provide them with $1500 per month for the next 2 years. The cost of these things for you would be your basis in the house, the trade value of your used car, and the time value of the $1500 cash flow for 2 years. I’d argue it’s probably far less than the $220,000 that they would receive by selling the home outright, but it requires no effort, no decision making, and a sense of security that they’re receiving a home, transportation, and monthly income for long enough to get their living situation stabilized. Uncertainty can be extremely stressful, and there is substantial value in helping people avoid that uncertainty.

That is just one example of how deals don’t just come down to dollars and cents. Develop rapport, have a genuine interest in helping people, and find out what concerns they have or what problems they’re trying to solve by selling the property in question. If you can skip the money and go directly to solving the problem the price won’t matter as much to them, and that becomes a win-win.