Ever since I discovered that I can watch HGTV shows for free on hulu.com, I’ve been a big fan of Real Estate Intervention. On this show, real estate agent Mike Aubrey has the unenviable job of telling homeowners that their house is not worth what they thought it was worth.
But a tough market calls for tough love. Real Estate Intervention gives prospective buyers very good information on what to do and what not to do when it comes to buying, renovating, and selling a home. Here are some lessons I’ll be taking from Mike‘s advice on the show when I purchase my first home (not for a while!):
- Beware of unconventional financing structures. So many homeowners have taken out 100% financing, so that when the real estate downturn occurred they have no equity to ride out the storm. One lady took out a negative amortization loan in which her monthly payments don’t cover her interest, so that every month a little bit of principal is added to the loan. Instead of paying down the loan, or only paying interest, she is actually INCREASING her loan amount as time goes on. *blinks*
- The market doesn’t care how much you paid for the house or how much you need to sell it for to break even. Buyers can’t price their homes based on what they need; worth is a measure of what the market will bear. Sellers aren’t stupid – they won’t buy a home for $300K if the place next door is selling for $240K and the size and features are comparable.
- What a majority of buyers want are very formulaic: neutral walls, hardwood floors, updated kitchens with stainless steel appliances, double vanities in master baths, adequate closet space. If you are renovating and you want to make back part of your renovation dollars when you sell the house, invest in kitchens and bathrooms, and remember not to personalize too much! Bright blue tile walls in the shower might be an attractive look to you, but most buyers want neutral colors.
- Appropriate pricing is important. In a declining real estate market, sellers need to set the market by listing the house at the correct price from the get-go, not chase the market by setting the price too high, then let the home languish on the market for months, then do periodic price cuts.
I’d suggest current and future home buyers to watch Real Estate Intervention for a good dose of perspective. Most of the homes they profile are concentrated in the D.C., Virginia, Maryland area. I’d love it if the show broadened it’s geographic reach and came to California!
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Very good! I love Mike's tough love attitude. He tells home owners everything they need – but don't necessarily want – to hear. And I totally agree. The biggest lesson I take from watching that show is that, just because you FEEL your home is worth something, doesn't mean it is. A lot of sellers are just so emotionally invested in their homes, or just desperately want to come out of the deal with a handful of money, that they're not thinking clearly when pricing their homes.
I love HGTV, but because I'm a guy and my girlfriend doesn't find any of that stuff interesting, I have to keep my fascination on the downlow. =[
I will for sure look up HGTV shows on hulu. woot!
HGTV also has a show called Man Caves. In one episode they transformed an ugly basement into a pool hall / guy's lounge.
I love HGTV and it's the channel I tune into the most. Mike is fantastic with his blunt assessment of the current market and riding in his hot white BMW 5 series. It amazes me at time of how stubborn homeowners can be especially thinking their house is worth more than they paid for given the housing glut we're facing. They should just heed Mike's advice instead of thinking their own is the right price. I recall this one episode where this couple did not want to give out the price to which they want to list the house for. The show had to pause and convince them to give out the listing price to which they ungrudgingly did. Then the host told them that price was still too high to list it for and not in conjunction with Mike's price. They didn't listen and went ahead with the listing and low and behold, they weren't able to sell the house. I think the price difference was around $20K-$30K. I mean, if they want their house to sell fast, they should listen to the expert and the fundamental of the market.
http://moneyhoneysf.blogspot.com/
Mike does have a very sweet ride.
Bad advice must pay. I think I know which episode you were talking about.. the husband was VERY resistant to anything Mike had to say, right? Makes you wonder why they go on the show in the first place.
I once walked through a woman's home with a stager (for an article I was writing), who was there to tell her why her home wasn't selling. To her credit, the homeowner had staged most of the home beautifully, but she'd left the master bedroom painted TEAL. As in, bright Caribbean teal. It was actually nice with her all-white decor, but there's not a buyer on the market who wouldn't have cringed. It's amazing how blind homeowners are about their own homes.
Exactly. What I've learned is that you can't stage your home as if you're living in it. You have to maximize the appeal to the largest number of people as possible, which means neutral, neutral, neutral! I've also seen some homes on HGTV where they vastly over-renovated for their area & price range – a family spent tens of thousands of dollars installing an in-home theater (with stadium seating) in their basement and was astonished when the real estate agent told them no buyer would be willing to pay over a certain amount for that.
This looks like great stuff! Those unconventional loans were running rampant here in SoCal. I'm sure that a lot of people right now that didn't realize they ended up paying more for the house because of increased interest payments. Yikes!
I don't follow HGTV but I really want to check this out especially since they are featuring houses in the DMV area. So many of the houses here are ridiculously overpriced and isn't even worth half. I would love to see the look on the homeowner's face when they hear the real value of their house. Not in a mean way, of course.
You should also watch, "My House is Worth What?" on HGTV. It doesn't focus on just underwater mortgages, but anyone that wants to value their house before they sell. It focuses also on both the interior and exterior factors that affect a houses' worth and sellability.
I'll check to see if that show is on Hulu.
Thanks for watching the show. The format is changing a little for season three (which we are shooting right now). I'll still give pricing advice, but this time Sabrina will help fix the staging issues that I identify as well.
I love this show. Look forward to the next season!