We want to talk to those of you who have found it challenging to show and reflect the value you believe your house or your property has to the marketplace and help them understand that it’s worth paying for.
Featuring:
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Bob Nelson: It’s an interesting thing, because there’s such a thing as … It’s called the principle of balance. It’s a concept that appraisers work with. It’s a concept that you and I both work with. It is possible to have a property that is out of balance, too much improvement for the site, for the lot, or too little improvement for a whole bunch of lot.
Marcia Edwards: Now, an easy example of that would be a four bedroom, one bath home with say 3,000 square feet. That one bath is overload, so right now you’ve got a problem there where you’ve got too many people living in the house likely for every other use, except the bathroom is the commodity.
Bob Nelson: Yeah. That’s an interesting concept. You’re either going to develop a very high pain threshold, or you’re going to have to … Oh, gosh. Let’s back away from that one. It is interesting. Take the same situation with a duplex on a one acre lot, and you’re unable to, because of zoning restrictions, you would be unable to build maybe on the rest of the lot. Well, you’re going to be paying an awful price for the extra land relative to the rent that’s going to be pulled in by the two units. So, the cap rate, or whatever measurement that you have for productivity, is going to be out of balance.
Marcia Edwards: I recently saw a duplex that just in that scenario, where there’s a lot of land attached to it that may be going into the urban growth boundaries, maybe. So, the seller says, “Now, I’m going to sell it. I’m going to sell it as if it already is in the urban growth boundaries.”
Bob Nelson: Of course.
Marcia Edwards: A potential they think that they can cash out on.
Bob Nelson: I want to get paid for next year’s potential. I want to get paid for potential 10 years down the road. The buyer of course says, “Well, I see potential, but unless I see benefit today, I’m buying real estate today because of its capacity to generate income in the near future, not 50 years from now. It would be nice if it was there, but I’m not going to be around 50 years from now.”
Marcia Edwards: So, it’s great to get an expert like Bob on the scene or myself for residential real estate to understand what you can do to appeal to a greater audience, take advantage of what you do have, and make sure you have all the flex you can in your marketing when you go to sell it, because you’ve got the balance you need on that property.
Bob Nelson: Well, the most important thing is know what you have. What’s going to be a decent offer? You may have a concept, and I can tell you, “Hey. This ain’t going to sell right around this zone.” If you get an offer in that range, you better be paying particular attention.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30 on KPNW for the “Real Estate Today” radio show.
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