You just have to find the right buyer. This is not a slight-of-hand answer. This is a core truth.
Shift your mindset. In sales and marketing, we have a motto: “You have to meet your audience where they are.”
This is an extremely powerful fact to imprint on your selling consciousness. It reminds you that your audience is not always someone like you.
It is very common to craft a sales plan, look at it, and think, “Yeah, I’d buy that!”
But to reach your strongest selling position, you need to understand your product from your target buyer’s point of view. This may differ a little or a lot from your own point of view. When you are selling, you need to get out of your own head. You need to think like your potential buyer, who might be—and very likely is—nothing like you.
So, if you think the house is “unsellable,” that tells you that you are looking at it from your personal point of view—the angle of why you would not choose to buy it. And if you only focus on pitching the sale to an audience of buyers who think, act, shop, and buy like you, then you are absolutely right, it WOULD be “unsellable” to someone like you.
Don’t pitch the sale to you. Find the buyers who would want that house. Position the product you are selling, in this case a house, to the buyers who would value what that product offers.
To do this, you have to step away from the limitations you placed on that house. Change your mindset so you begin seeing it as a highly sellable house. Think outside the box and brainstorm who might want the property with the “flaws” you perceive it has—or better yet who would not even consider those things “flaws” and might even perceive them as strengths.
Now, I am not speaking about issues of pricing here. You can always change a price. So, if you are judging a house to be “unsellable” solely based on the issue of pricing, that fix simply requires altering your mindset about what kind of profit or loss you are willing to accept.
I am addressing broader issues about a property that can cause it to seem undesirable or to be seen as a potential liability (for reasons of location, condition, rehab-gone-wrong, etc.).
Let’s talk about how perception of a property affects its value, negotiations, equity, and success. At the same time, I’ll give you a little twist on the idea of “unsellable” and how that works differently depending on how you pivot the concept.
An investor I know, Tim, found a property that had been on the market for about 12 years. (Yes, you did read “12 years.”) If you saw the property, you would understand why it was on the market for that length of time.
It had originally been a carriage house, a term coined to describe buildings where literal carriages were stored in prior centuries (essentially a garage for horse-drawn carriages). Often there was a living area above it that was occupied by the coachman. The horses themselves were usually housed in a separate barn building.
Nowadays, the term is used to describe buildings on a property that were used as additional quarters for various purposes.
This particular carriage house had once belonged to a much larger estate. Over the years, parcels of the estate had been acquired by different developers and multiple neighborhoods had gone up on that land. But this carriage house had been left out of the mix.
So, it sat for decades, a deteriorating eyesore outside all these lovely neighborhoods of various ages.
Related: How to Think Like a Buyer When Getting Your Property Ready to Sell
Eventually whoever last owned it passed away, and no one inherited the property. It reverted to being city-owned, where it sat on the books for a very long time. At a certain point, the city decided they should get on with selling the property. They listed it for sale on a city-maintained website. That is where it sat for 12 years.
During this time, the property had fallen into a state of complete disrepair. Tim drove by the house frequently over the years, each time thinking of the unique ways this building could be refurbished.
But his curiosity about the house and his search for the owner led him to the city’s website. He submitted a bid.
Now, here is the original stance on the mindset of “unsellable.”
As the listing had been sitting on the city-maintained website for 12 years, the city had come to view the property as “unsellable.” In truth, however, they were not thinking creatively about how to market it to attract an appropriate buyer. So, with each passing year, it actually became more and more difficult to sell. A vicious cycle, their perception that it was “unsellable” caused them to shut down their creativity and with it any unique possibilities.
Because the city had come to perceive the carriage house as “unsellable,” Tim was able to use their own negative perception of the property in his negotiations. Hence, Tim negotiated the purchase of the property for less than 5 percent of the asking price.
Tim did not view the property as “unsellable.” He viewed it as having “incredible potential.”
Tim was correct. He bought it for $1,800.
At that price—and with a solid plan for the building—it was easy to get financing for a complete rehab. He brought in a partner. They made changes to the existing house, turning it into a thriving multi-unit short-term rental property in the heart of the city.
The equity value is currently 244 times what Tim paid for the property. The carriage house is now valued at $440,000.
In addition, as a short-term rental, the house is currently turning more than a $100K a year in profit.
All this from an “unsellable” property.
What the example of the city’s experience teaches us is that, once you place a label on something, you will respond and act upon it with the label you have assigned to it. Don’t make the same mistakes the city made.
Once they assigned the label of “unsellable” to the carriage house, the city began to believe and act on that perception, causing them to commit the following errors in judgment:
The “unsellable” label they assigned the property limited their vision and therefore their potential for profits.
What the example of Tim’s experience teaches us is to look at the property with fresh eyes. Make a very detailed list of all the pros and cons of the house and the surrounding yard.
Be objective. Be specific. Be alert. The more detailed you are, the greater your chance of finding the hidden marketing gems you might otherwise miss.
Also, be willing to step outside yourself and your own perceptions. Call in a friend, mentor, or colleague who you know can always find the good in everything. (By the way, if you don’t have anyone like that in your life, start cultivating those relationships.) Positive thinkers and outside-the-box thinkers will spark creativity.
Walk the property with them. Get out of your own way. Listen to what they say.
If they say they like some aspect of the property, whether the yard or the house, don’t bring up objections! Ask them why they like that item or feature. Delve into what benefit or value that detail adds to the property for them.
Next, let go of the idea of “problems.” Every problem is an opportunity.
So, look carefully at the “cons” or the negatives on your list. This is when your true creative power switch gets turned on. Open your mind and come up with a positive slant for EVERY “con” on your list. I mean it.
And if any one of those “cons” really stumps you, pull in that positive-thinking friend again—maybe even make them a partner.
No matter the reason(s) for perceiving a house as “unsellable”—whether you think your property is in an undesirable location, someone died in the house, there are condition issues (deferred maintenance, pet smells, water damage, mold, lead), there’s a lack of amenities, it’s inconvenient architecture, has outdated appliances or decor, or any other “unsellable” feature—let go of viewing it as a limitation. Shift your viewpoint.
Related: How to Save Your House Flips When They Don’t Sell
Stop assuming a challenge is a barrier when it is only a hurdle. Jump over it, go around it, go under it, maybe just smash through it. But look for the opportunity.
As we say in marketing, find the hook. Find the take. Find the slant.
In other words, find the opportunity.
Keep your eyes open and your creativity flowing. This is the beauty of real estate investing: One person’s shanty is another person’s castle. It is all in the perception.
Change your attitude and you change your options!
Do you agree or disagree with my points about perception? Can you think of an instance in the past in which you could’ve benefited from adjusting your viewpoint?
Weigh in with a comment below.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.