Selling Real Estate
I sometimes wonder if other people connect their psyches and tendencies to real estate the way I do. In it’s simplest form, real estate is about buying, renovating, holding and then selling. These are all very distinct phases, but they are phases that everyone must go through. The possible exception is that some people avoid the renovating part of the equation like the plague while others embrace it, enjoy it and perhaps even make it their careers and passion. All you have to do is watch a few episodes of some show or another on HGTV or The Magnolia Network to understand that the art of renovating or flipping has become a global obsession. I also am aware from shows like Love It Or List It, that compare the challenges to renovate or not renovate show us a pretty big set of decision having to do with the physical limitations of a house, the economics (though this and other shows try hard to gloss over or underplay the cost factors…or perhaps at least the financing of those cost factors). When someone puts $100,000 into renovating the wreck of a house they live in so that it can have the various elements they now want in a house, how do they pay for that (maybe the show producers have a budget to carry those costs until the house resells)? When you buy a new and bigger house, my experience is that you get a bigger mortgage, which you can presumably now afford based on some newly increased level of income, plus you chuck in some more savings you may have accumulated. Obviously, if you have plunked those savings into your renovation, there is a timing gap in recouping the hopefully increased value of your old property, so a bridge loan seems still required.
I feel I can tell a lot about people when I watch these shows even though I know some of it is just faked producer/director drama which the subjects of the show are asked to spin up to make more interesting television. I certainly understand the various perspectives that someone wants to do their own personalization of their home through renovations versus someone that wants nothing to do with renovations and wants a turnkey home. Needless to say, there are many shades of grey in between those extremes and feelings change once you get in the new home and life moves on or overwhelms your best intentions.
We have owned this house for ten years now and have gone through one level or renovations or improvements when we first bought it, another level as we owned it and visited it now and again, and now a whole third level as we have made it our full-time and permanent home. While I recognize that everyone is different and everyone has different taste in what needs updating and what is just fine as is, but nothing other than perhaps your clothes says so much about you as the way you keep and decorate (in the broadest sense) your home.
But my interest at the moment is about the emotions that get wound into the buying and selling process. Neither of those takes place in a vacuum without thoughts of renovation or decoration, but the fundamental acts of committing to a purchase or committing to a sale are themselves very clarifying moments. I have gone through that on twenty homes over my adult life (I include in that two for my daughter and one for my oldest son…all of which I had some degree of involvement and financial stake). Since I now think of myself as still owning three of those houses, I guess I should differentiate the buying from the selling. I have bought twenty and sold seventeen. One of the twenty is my daughter’s duplex in Brooklyn and while I did help her buy it and renovate it, any decision about a sale is 100% in her and her husband’s hands… as it should be. My oldest son’s house is on Staten Island and I am a co-owner of it and have taken over the mandatory (water damage related) renovations and sale of the property, so I’m in that one up to my eyeballs. And the third is my hilltop here in San Diego, which I have no intention of selling until I get dragged out of here. And as for my house in Ithaca, while it was a long-term leasehold and did involve “purchase” and “sale” considerations, I feel those have happened already and I am only left to clean up the traces at this point, so I do not count it as “pending sale” any longer.
I have stated quite openly that I consider myself a very good buyer and a not so good seller. I believe that if I had to choose being a good buyer or a good seller, I would always opt for the former since buyers get to live in their outcome where sellers just get to bank their outcome. Don’t get me wrong, I wish I were good at both buying AND selling, but I know that I’m not. Being a good buyer seems to me to be a case of having good instincts and vision. I know I am an impulsive person, so if I were not such a good buyer, I think it might be a disaster for me since impulsiveness only works well if you do have a good filter to select a winner. Some people are paralyzed by fear of making a mistake, but one of my personal attributes is that I go in knowing that there is no perfection or infallibility and I am prepared to make a mistake now and then for the sake of not missing out. I guess you might say I am driven by the ultimate house FOMO.
When its time to sell, my impatience works against me. I find myself thinking that if my house does not sell immediately (and they never seem to), my next offer may be my last and best offer. I will agree that its a less likely concern than I make it out to be, but it did cost me in one instance when a guy made an exploding bid for my house in the Hamptons and when I balked he pulled the offer. It ended up costing me at least $100,000 and the really funny thing about it was that the guy ended up being one of my employees at Bear Stearns. It probably bothered me more than it did him since he was a Risk Arb Hedge Fund guy who wasn’t phazed by much.
It seems like my daughter wants to stay in her house in Brooklyn forever. It feels smaller than I would want with two kids, but she doesn’t want to move and seems quite happy with her duplex. The house has increased in value considerably in the last nine years they have lived there, and they could trade up nicely into the suburbs if they wanted, but they do not seem to want to…at least now now. As for my oldest son, he is just so glad to be out of Staten Island and into a far better situation in Delaware that the sale of the house has become a secondary concern. That is aided by the fact that we have had a bit of a water damage disaster at the house and I am forced to give it a generic “white box” renovation in order to garner maximum resale value. I am anxious to unload the property, but distance and detachment may have finally made me a better seller.
The one thing I have learned over the last fifty years is that if I am indifferent or ambivalent about something I can gain the attribute of patience and that patience can maximize my sale price. I recall in the late 80’s when I owned ten acres overlooking Lake Copake in Columbia county. For some reason, I was not in a rush to sell it and there was a buyer who wanted to deal. More precisely, he wanted that property. I had posted a big number on it and I rejected every offer he made and countered with a “no budge” recital that my price was my price. It became rather funny at how upset this kept making the buyer. It was like he couldn’t believe I wouldn’t come out and play. Well, I don’t know if I can be that calm about this sale on Staten Island, but I think I have a decent property and it is now a property I am forced to put renovation money into, so I am taking this all a little for personally and want a bit more than I would otherwise seek.
Selling real estate is not something I plan to do much more of in my life after this. In fact, I hope to never have to sell again, which is my way of saying I plan to be on this hilltop until I simply don’t know what’s going on…which is probably my ultimate real estate sales tactic.