“This new land rush, involving billions of dollars, tens of thousands of Americans, and hundreds of miles of coastline, is gaining speed…” This is a direct quote from an article entitled The Baja Land Rush that ran in October 2003 in the New York Times. And those were heady times for those of us in the industry. It was a hot, go market right up till October 2008. Then the plug was pulled and the boom ground to a screeching halt.
Lots of ordinary citizens fancied themselves as developers and borrowed money or used their ready cash to build homes to sell for a profit. That is called speculation or “spec homes”. They thought they would build up more cash for travel or to leave to the kids.
Many sellers were and still are reluctant to lower their prices. They use words like “when the market comes back” “this is what I have in it,” or “I need this much out of it.” Buyers with cash are here, sniffing out bargains, and they are buying houses, but they are rarely paying full price. And they are fully aware that it is their time, their market. And they don’t care what the seller paid for the house or needs to get out of it; they just want the best price they can get, and they know if you are not willing to bargain, there are dozens of sellers that are. And there are houses newer than yours, and more complete, more up to date, perhaps in a gated community or with a better view and priced to sell.
Buyers are more considerate of an owner selling their primary home, but they still want to negotiate. They will bargain harder on your empty, unlived in, unloved, usually unfinished and aging spec home.
What makes prices go up? High demand, easy credit, and low inventory. What makes prices drop? Plenty of inventory, tight credit, low demand. High inventory and low demand is what we have in Baja California Sur. The land rush is over and has been for several years.
So now your great idea spec house that was to sell at top dollar to supplement your retirement or your kid’s inheritance sits, and sits, and sits. Maybe you slapped a For Sale by Owner sign on your property. Maybe you ran the gamut of most of the real estate agents in town. Yet, the house sits. Meanwhile, your neighbors plant palms, their pools glisten in the sun, their houses are loved, lived in, and pretty. And your house sits. It drives you crazy. And your conversations are “if only it would sell…” or “When we sell that house, we can…”
Here’s what you have to do to move it:
Part one: Face Reality
You may end up selling your house for less than it cost to build, but it’s cash in hand today, and that is not a bad thing.
- Recognize that the market has changed, and it isn’t coming back for a decade or more.
- The buyer doesn’t care how much you have invested or how much you need out of it.
- The house is aging; it needs maintenance; it will go out of style.
Part Two: Marketing it properly
It takes a tech-savvy agent with experience in challenging markets to get a house sold.
1. Price it to sell. If it is 2-3 bedrooms and has 2-3 baths, keep it as close to $200,000 as you can or what comparable sales indicate.
2. List your property with a member of the Multiple Listing Service so it is exposed to a wide audience.
3. Is the agent you choose using the latest technology to present your home to the wider market (print and internet advertising, videos, social media, new media).
4. Amenities: Visit the comparable properties and be realistic about what comparable properties have and your home does not.
5. Price: Find out what is selling and for how much and to whom. Stay at or below the competitor’s price.
6. Curb Appeal: Spend some money on landscaping. Put some pretty pots with bougainvillea or palms near the front door.
7. Incentives: Offer a closing cost credit to the buyer. Closing costs are high in Mexico, and a credit like that can sweeten a deal for the buyer.
8. Flexibility: Be ready to negotiate on price, closing costs, and repairs.
9. Creativity: Consider seller financing. An experienced agent can help you do this safely.
10. Staging: You spent tens of thousands building the house, now spend a little more and make it look like home. Visit a segunda and pick up some key pieces for the main rooms.
11. Time and Timing: There are still a few months of high season left; get the house listed; get a tech-savvy agent working on making a market for your house.
You tried to sell the house yourself, and you have seen houses around yours sell. Now is the time to turn that dream of riches into the reality of cold hard cash.
Susan Fogel is the broker/owner of www. PrestigePropertyGroupLapaz.com