I had a client who had a cool way to tell me she was done looking at a house.
“WELL! This house will make a nice house for someone . . . ” (Walking out the front door)
The weirder the house the sooner I’d hear that.
The cool part is that she was totally right . . . There IS a buyer for EVERY house . . . even the weird ones.
Sometimes it’s weird people who buy weird houses.
Sometimes it’s “Normal People” with vision.
Of course, ALL people are “Normal” until you get to know them, right?
There’s a “Weird House” quirk in the “normal” process of the transaction that’s worthy of consideration and investigation BEFORE getting too deeply in love with the house.
What’s the FINANCING going to look like?
Lenders don’t like weird properties because lenders like “homogeneous” houses so they can feel better about funding the purchase. they want to be sure that they can get their $300,000 back in the event of a foreclosure . . . and they’re afeared that the weirdness factor will leave them hanging.
If it’s weird, that means that there’s not a high probability of finding any recent, similar properties having sold to establish a basis for determining value.
So . . . The Buyer and Seller share this weighty burden of determining value and cross their fingers and pray a lot during the appraisal and underwriting process.
The bank takes care of itself by requiring higher down-payment requirements (20%) and probably higher than optimal rate.
Having said all of this . . . if you have a weird property to sell, your odds of successfully selling AND closing that property increase significantly if you can pre-arrange a few financing scenarios.
Doing this work up-front (Prior to listing it for sale) will save that awkward moment when you have a Buyer who loves the property and wants to buy it at any price . . . but not the cash required.
What’s a “Weird Property?”
The one I walked through today is a single family house in an urban area. Family has owned it for 50 years and has built SEVERAL additions to the extent that they have literally covered 3/4 of the entire lot with house. There are FOUR complete “apartments” (Kitchen, Living Room, Bedroom, Bath, Utility Room in each) . . . all with interior access from a central hall. These are not “Rental Units” (and never have been) because family lives in all of them. The total square footage is @ 4,000 . . .
This house is in a neighborhood of single family 1800-2200 SF Ranch Houses.
Who’s going to buy it?
What will they do with it?
Bed and Breakfast?
Owner occupy one . . . rent the other 3?
Rent all 4?
These are the kinds of questions to ask . . .
Determine which of these possibilities will net the most dough . . .
and go to market!