Jul. 1, 2007 Edition

Selling Houses With White Elephant Issues

In a down market, you've got to pay attention to the buyers By Mike Blatney Mike Blatney During the last several months, I have visited markets where the sale of existing inventories was the problem. I have noticed a lot of "white elephant" issues with aging inventory. Houses next to busy streets and railroad tracks, with non-conforming exteriors and floor plans, poor add-on footage, etc., are all examples of properties that are more difficult to sell in any market, but especially in a declining market. In an appreciating market, there are fewer homes for sale. Buyers will accept and settle for houses with white elephant issues since these are sometimes all that is left to choose from. In a declining market, the houses become part of a larger inventory. The sale price must be adjusted to offset the lack of demand and the increased supply of better properties on the market. Your first opportunity to adjust the sale price is when you are buying! It is very important that you recognize and adjust the after-repair-value (ARV) to compensate for these white elephant issues before you make the offer. I have always discouraged the rehabbing and retailing of properties in a declining market unless they are the cream of the crop. Retailing a problem property in a declining market is asking for trouble. Second Eyes expert Kent Letterman says, "In a normal market, I tell new franchisees in training to adjust 5% for a white elephant issue, and more for multiple or severe white elephant issues. In a declining market, I tell them to double the adjustment." This means a $200,000 house with a white elephant issue would only be worth $180,000 in a declining market. Lately, I've seen some homes with severe white elephant issues. I was standing in the backyard of one such property when a train came by, creating a vibration I'm sure would have measured a 7+ on the Richter scale. I visited another house that was right next to an eight-lane freeway! Great place for signage, but the market for that property was almost non-existent when you take into consideration the active inventory of homes to choose from in the neighborhood, away from the freeway. You should make an appropriate consideration before making an offer on properties with issues of this severity. Some franchisees have properties in inventory with white elephant issues, and are wondering what to do to get them sold. Here's what Suzane and Rick Edson of HouseBuyers in Austin recently did. Suzane showed me a property they rehabbed next to a semi-busy street. This was an up-and-coming older neighborhood, and the Edsons hoped they could attract a young single or couple wanting to live in this neighborhood without giving up the amenities of a newer home. The house had been finished and on the market for a while. Suzane listened to the feedback from showings. The majority of the comments mentioned small backyard, noisy street, and the master bedroom did not have a private bath. She and Rick decided to address the feedback. They installed a new fence next to the sidewalk, adjacent to the busy street extending it as far as they could toward the front of the house. It increased the size of the backyard and served as a great sound barrier. They also installed a doorway from the master bedroom into an adjacent bathroom that currently opened up only to the hallway. Then they staged the house and put it back on the market. Sold in seven days! The important thing is that the Edsons listened and reacted to what the market was telling them. You can do this with any property -- with or without white elephant issues! In these remaining months of summer, focus, focus, focus on reducing your inventory! . . . Mike Blatney is director of field services for HomeVestors. He's on the road just about every week helping franchisees build successful businesses. In Dallas/Fort Worth, you can listen to Mike every Sunday morning on the Real Estate Investors Hour, 8 a.m. CST, on WBAP 820 AM. Click here to listen live via HomeVestors.com or download archived shows.

The HomeVestors.com Facelift

Sleek, user-friendly design unveiled at Mid-Year Summit By Lawri Murray Clean, uncluttered, and easy to navigate -- probably not the words most would use to describe the current HomeVestors.com Home Page. But this is about to change. As VP of Marketing Mark Hagen revealed during the Mid-Year Summit (MYS), our Home Page is undergoing a significant redesign that is being driven by several goals: To equally address all four of our key targets -- potential sellers, potential buyers, real estate investors, and potential franchisees To make the site more engaging for the user, and easier to navigate To more effectively leverage the HomeVestors brand. If we can achieve all of these goals with our Web site, we believe that we can achieve the ultimate goal of increasing both buys and sales, and attracting more investors and franchisees. Home Page Strategy Our new Home Page prominently features the "We Buy Ugly Houses®" billboard, drawing an instant connection to one of our most recognizable symbols. This page offers visitors four portals through which to enter the site, depending on their primary reason for visiting. The visitor can choose to either: Sell a house, Buy a house, Invest in real estate, or Own a franchise. Targeted Landing Pages Keep Message Focused A separate landing page has been developed for each of the four choices outlined above. The Sell Page focuses solely on visitors interested in selling a house to HomeVestors. The page gives a quick, bulleted overview of the reasons a person might be considering selling to HomeVestors, and the benefits of doing so. The page also offers links to Frequently Asked Questions (FAQs), television spots, and testimonials that are all specifically related to selling a house to HomeVestors. The page also features its own unique URL -- www.WeBuyUglyHouses.com -- which will be featured on advertising aimed at potential sellers. When sellers type this URL into a browser, they will arrive on the Sell Page, bypassing the Home Page. The Buy Page speaks to consumers interested in buying a house from a HomeVestors franchisee. It explains the benefits of buying a HomeVestors house, and offers links to FAQs, television spots, and testimonials that focus on the first-time home buyer. The Buy Page is accessible from the Home Page, or by typing www.WeSellLuvlyHouses.com into a browser window. In similar fashion, the Invest Page is directed toward real estate investors, and those who are interested in investing in real estate. There are two unique URLs for this page: www.UGInvests.com and www.InvestWithUG.com. Finally, the Franchise Page addresses potential HomeVestors franchisees. Located at www.HomeVestors.com/FranchiseInfo, this page offers information for someone just beginning to consider the purchase of a HomeVestors franchise. For now, most of the rest of the site's content will remain basically the same. However, each page will carry the new design template. The new site is scheduled to launch on July 6, 2007. . . . Lawri Murray is HVA's marketing creative manager. She can be reached at 972.761.0046, ext. 217.