Cross The Finish Line!

United States' Aries Merritt crosses the finish line to win the men's 110-meter hurdles final during the athletics in the Olympic Stadium at the 2012 Summer Olympics, London, Wednesday, Aug. 8, 2012. (AP Photo/Mark Baker)

If you’re going to run a race, there’s simply no point in starting unless you’re going to finish.

And as we were taught from a very early age, any task worth taking on, is one worth finishing.  Or even the adage, “A job worth doing, is doing well” might be more applicable.

I point out a lot of occasions where the listing agent does a half-job, or provides an incomplete listing, but there’s also a lot of sellers who are guilty of the same.

Why would a seller list a property when they’re only 80% of the way to the finish line?

London Olympics Athletics Men

When I bought my condo, the 1,200 square foot terrace was a barren wasteland.

It was nothing but concrete slabs, completely flat, with no character, and actually no furniture other than a rusted 6-piece patio set from Home Depot.

I saw the potential in the space (I think that goes without saying, I mean, who doesn’t see “potential” in 1,200 square feet of terrace??), and decided right away that I was going to build this thing into a masterpiece.

I hired a carpenter, and we went over multiple designs for the terrace.

In the end, we built a 20 x 25 foot deck, elevated about 2 1/2 feet, and then left the rest of the space open (for a large dining table, and a ping-pong table that I have used twice…), and a series of planter boxes that hold 18 large trees, and a lot of plants and shrubs.

The cost of this masterpiece was $10,000, all-in, and I paid him $5,000 up front as a deposit.

Like most contractors that are hired to do just about any job, on any house, this one was delayed, and then started very slowly, and then got even slower.

After an October start for a project that should have taken five full days, he guys were still out there working in November, long after the terrace would have any use, or I would plant any greenery.

By the end of November, the work was about 95% finished, maybe more.  All the planters were built, and only one of them needed some horizontal-banding across the front, then the waterproofing and liners had to be installed.

But the strange thing was, the carpenter wasn’t getting back to me.

I figured he had one more full day left, or maybe even a half-day with a couple of guys.

But to my amazement, he didn’t return three phone calls left over about ten days, or return my email.

He finished 95% of a job, that was going to pay $10,000, and had only received $5,000.

It didn’t make any sense to me at all.

He could have sent two guys over to finish the job, and potentially collect $5,000.

But his loss was my gain.

It only cost me $500 to finish the work, and in the end I had $10,000 “worth” of carpentry for $5,500.

To this day, I still don’t understand why somebody would give up so close to the finish line.

And to take that analogy further, it’s not like this was a marathoner whose body gave out at the 26.1 mile-mark, and was physically incapable of finishing.

Speculate all you want.  Put a positive spin on it if you’d like.  “Perhaps he had a $100,000 job, and it wasn’t worth his time to finish.”  Sure.  Or maybe it’s something much simpler, such as he just wasn’t a good businessman.

I see this all the time in the Toronto real estate market, and I can’t help but wonder what the sellers are thinking, and then why the listing agents don’t give them better advice.

A reader sent me this photo on Monday:

FutureDeck

That’s a property currently listed for sale.

And that’s a deck, or at least, 50% of it.

The house is being sold as-is, and that deck isn’t going to be finished.

The listing actually says “future wrap-around deck.”

Future.

As in, after you buy the property, and finish the deck.  THEN, this will be a deck.  But until then, it’s a “future deck.”

So as my reader pointed out to me in an email, it might only cost the seller a couple thousand dollars to finish that deck, and perhaps significantly less if the seller is, or has a friend, who knows how to cut and screw wood.

But as my reader asked me, “What else do you think is wrong in that house?”

If they’re going to leave something as obvious as a 50-percent-completed deck out in the open, then what’s going on inside the house?

What’s behind the walls?

You know something – maybe there’s absolutely nothing wrong with this house.  Maybe that half-deck is the only blemish on the whole property.

But that won’t stop the buyer pool from wondering.

It won’t stop them from considering the downside that I pointed out above: “If they’re willing to sell the house with a half-finished deck, then what other corners did they cut?  What surprises might lay in store for me once I own this house?”

Buyers are often quite skeptical, and they ask a lot of questions.

Some even jump to conclusions.  And why not?  A first-time home-buyer is making the largest committment of his or her life, and emotions run high.

So why wouldn’t a seller and a listing agent do everything they can to make the buyer feel comfortable?

This is why top listing agents always do minor repairs and improvements before the listing, stage the house, provide a pre-home inspection, and even go above and beyond by providing information on schools in the neighbourhood, daycares, or even bio’s on the neighbours – something I witnessed with a house I just sold on Golfview this week.

No house is perfect, so you can’t do everything.  But you can sure make the home look like it’s loved and well-cared for, and isn’t half-finished.

I was very surprised to see a “half-finished,” or in this case, an 80% finished house, fetch a decent price on the market earlier this year.

This was the shell of a triplex in High Park, on a massive lot, but the house was offered for sale before it was even close to being completed.

Have a look at the photos:

Q1

Q2

Q3

Q4

Q5

Q6

Q8

Q9

Q10

Q11

Q14

Q16

Again, you can choose to look at this cup-half-full, or cup-half-empty.

An optimist might suggest that there’s an opportunity to pick the finishes, and the style of each of the three units in this triplex.  Instead of paying for somebody else’s finishes, which might be picked with a series of darts thrown at a series of boards, inside IKEA, a savvy and experienced investor might jump at the chance to take a house where all the structural and mechanical work has been completed, and pick up the project right where the personality of the home is formed.

A pessimist would simply ask, “Why did they stop working now?”

Maybe the owners ran out of money.

Maybe they had a family emergency and didn’t want to finish the property.

Who knows, we can speculate all day.

But I know the buyer mentality, and buyers are automatically going to get their back up at this “rare opportunity.”

Buyers are going to ask questions, and then provide their own answers.

In this case, the property sold for $80,000 over the list price, but what does the “list price” really mean these days?  I don’t know if selling over-asking is an indication of success.

But whether the sale price was reasonable or not, I still think this property would have sold for far more, and provided the sellers a higher return on their money, if the three units were finished.

In fact, if the units were finished, and then suitable renters were found, and the property was marketed as a “turn-key investment property,” the sellers would have done really well!

I’ve seen a few triplex and fourplex units sell this year, with thorough financials, and information on the tenants right down to their income and credit scores!  It makes the buyer feel safe, confident, and informed.

People often say, “In this market, a house will sell itself.”

I know people want to think that, and at times, it seems like it.  But in reality, it’s so far from the truth.

There can be a 15% swing in price depending on who, when, and how a property is listed and marketed.

A half-finished or incomplete property doesn’t make buyers feel safe, confident, and informed, and frankly, I have no idea why a listing agent would put the listing contract in front of the sellers and say, “Let’s get this on the market.”

You might want to think that spending $2,000 finishing a deck only gets the seller $2,000 more for the home, or that “buyers will see this for what it is,” or that somehow buyers will “correctly factor in the renovations,” but that’s not how our market works.

Our market runs on different tastes and preferences, wants and needs, risk tolerances, and emotions.

So if you’re a seller, why would you ever take chance that you rub a buyer the wrong way?

“Start” and “Finish.”

They seem to go pretty well together, don’t they?

5 Comments

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  1. Free Country says:

    Suggestion for your next piece (apologies if you have done this before): Best renovations to do before listing, that will obtain the best bang-for-the-buck for the seller preparing to list and sell his/her house or condo, versus over-the-top or useless renovations which don’t pay off in terms of maximizing selling price. It may be tough to generalize – every house has its quirks – but i’m sure you can think of some good examples.

  2. Kyle says:

    That deck framing is definitely not done right and who designs a deck that pretty much renders the garage door useless?

    1. Mike says:

      I totally agree with you on that.

      As for the the why, there can be a number of reasons like death, divorce or running out of money.

      It looks like from the pictures though these houses were bought as flips by people who have been watching too much HGTV and W Network. Thinking they can buy a house, throw a couple grand into it and then pocket a cool two-hundred grand. Once they get into it they quickly learn they’re in over their heads, bills start piling up, financing runs tight and “how come they never mention carrying costs in the shows” becomes a huge issue.

  3. Izzy_Bedibida says:

    I’m a strong beliver in the “they ran out of money ” reason. Ran into a situation like that when ex wife and I were house hunting. What made it worse was the partially finished work was half assed. Realtor casually mentioned that couple was splitting up because “they ran out of money ” on the renos/upgrades.

  4. ParkhurstBessborough says:

    As I read this, I kept saying to myself, “yes…true….so true….”
    This line, in particular, stuck out:
    “If they’re willing to sell the house with a half-finished deck, then what other corners did they cut? What surprises might lay in store for me once I own this house?”
    Very interesting blog, Dave.

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