As I’m writing this, the Baltimore Ravens are pounding the San Francisco 49ers in Super Bowl XLVII. I really don’t care as, like half the country, I’m only in it for the commercials (and prefer hockey anyway). And so far, the commercials have not performed to standard but there’s plenty of time to be entertained by singing dogs picking stocks and majestic Clydesdales slinging beer in the Rockies. One can only hope.
My Real Estate Listing, My Choice
I noticed something last week as I was helping teach a FortuneBuilders class for new real estate investors who want to get into flipping houses in Hawaii. We were running some comps on recent MLS listings and sold single family houses on Oahu. We went over all the basic info that both homeowners and real estate agents use when running comps, such as:
- Size of the house (living sqft)
- Lot size (sqft)
- # of bedrooms / bathrooms
- Sold date
- Proximity to target property
Of course, there are other factors, but these are commonly considered the most important ones when calculating the value of a house. I remember one property in particular — I believe it was in Kaneohe or Kailua — with the condition noted as “Above Average“. For those who aren’t aware, there are predefined categories of house condition from Excellent to Tear Down from which the listing agent is supposed to choose and assign to her listing. This “Above Average” house had a kitchen that needed at least $15,000 in renovations — unless you think red is all the rage and the 1970s are about to make a comeback and take over Better Homes and Garden magazine.
The room had a laugh but it brings up an important point — so much of real estate is subjective, from home value to the actual information on an MLS listing, ex. condition and agent remarks. Sometimes you really need to take it all with a super grain of salt, as in a Biblical Lot’s wife size pillar of salt.
Now, in my experience, most condition category choices are usually on the mark, but there’s a lot of liberty one can take when choosing between “Above Average” and simply “Average”. I’ve seen some homes listed as Above Average that were, in my opinion, well deserving of an Excellent rating.
What is Above Average?
After all, what does “Above Average” mean? It ought to mean better than most of the homes on the market, but instead it’s commonly used to refer to any house that’s been recently modeled or needs few, if any, further upgrades. Sometimes these definitions match up, but not always and that’s where one can be misled.
I’ve learned to take the extra step when running comps to look at all the photos (knowing that itself doesn’t beat visiting the house) instead of just scanning the stat sheet for the condition label. I go back to the red kitchen — without looking at the photos I would have assumed, via the Above Average label, it to be a recently upgraded or built home. Instead, the photos clearly indicate some money’s going to have to be sunk in the property to bring it up to modern Hawaii housing market condition (unless it’s going to be featured in the next Austin Powers flick).
So take it from me — nothing beats doing plenty of homework and legwork before buying a house in Hawaii or anywhere else. Seeing with your own two eyes and trusting your own instinct and inner judgment are the best methods for both making your home search efficient and, ultimately, successful.