Fractional Ownership

Dear Atlantic Bay Sotheby’s Team,

Q: Can you address the question of fractional ownership? We are attempting to sell a condominium in the west end of Provincetown and our realtor keeps telling us to adjust the price. We’ve recently heard a real estate guru speak about maintaining home value by selling property fractionally? Tell me what this is.

A: This is a very good question and a topic that I’ve been asked to research by one of my clients. One obstacle we keep hitting is the collateral aspect. Each lendor wants to be in the number one spot if the payments are not made and the property needs to be sold.

With short sales now happening, it is easy to see how banks fight for every piece of the pie before a foreclosure occurs. With fractional ownership, the financing is difficult if not impossible to do. Each lendor will be vying for the number one spot for receivership. When conveying an entire house with multiple buyers, the best way is to have the buyers set up a corporation or limited liability partnership. This, so far, has proven difficult when most people who would "buy in" to this type of situation are buying one and two bedroom condominiums that are now reasonably priced. In your case, the best hope is to find two or three friends who buy your condominium together.

2008 is projected to be the bottom of the market and the best way to sell your property right now is to price it right. Real estate sells if it is priced correctly and fractional ownership seems to me like a complicated gimmick created to sell over priced real estate that will ultimately fail leaving your property on the market longer making it a stale listing.
Use your realtor and the tools at his or her disposal.

Here are three basic things to check.

1. Have your realtor show you comparable properties that sold. Look at the closed prices.
   
2. Are there any defects that need to be accounted for that will impact the price
   
3. How many days was the property on the market before it sold.

Use a professional, price it right and toss the idea of fractional ownership in the trash.

Quick & Easy Ways to Impress

Last week, a reader wrote in asking about the value of staging a property. Our response focused on the benefits of hiring a professional company to do the staging. There are many things that a homeowner can do without spending a lot of money that will optimize the marketing of his/her property and ultimately bring a higher sale price. When readying your property for market, follow these few easy suggestions:

1) FIRST IMPRESSIONS: FOCUS ON THE EXTERIOR
A buyer develops a first impression of your home when he or she drives up to it. Do not underestimate the power of Curb Appeal. Make sure your yard is tidy and that everything is in its place. Is the front door showing signs of wear or do you have to jiggle the handle in a particular way to get the door open? Give your door a fresh coat of paint and make the necessary repairs to windows and doors. Plants and flowers go a long way in establishing a positive impression.

2) CLEAN THE HOUSE
This is the single most important step in preparing your home for successful showings. The house should be spotless! When your home is clean, the buyer makes other assumptions about you and the way you have maintained your property. Dust all surfaces, vacuum rugs, make sure there are no dirty dishes in the sink. Take extra care in the bathrooms and make sure the shower is dry and toilet lid is down! Don’t forget the windows and shine the wood floors. Buyers notice everything.

3) DE-CLUTTER YOUR HOUSE
Once you sell your house, you must move. Why not begin packing today? Pack away all of your personal objects, including family photos, any collections you may have on display, and anything else that you don’t need. The idea is this: The buyer needs to envision him or herself in the space, and it can’t be done if there is an abundance of your personal property in the way. Take extra care in kitchens and bathrooms to clear the counter tops. Remove any papers or photos being held up by magnets on your refrigerator. Make sure that closets and cabinets are tidy – the buyers look everywhere!

4) TURN ON ALL THE LIGHTS AND RAISE THE BLINDS
It is very important that the house be bright. Leaving a lamp on in each room gives the house a warm, homey feel.

5) PAINT ROOMS WHERE NECESSARY
Take a good look around your house. Are the walls scuffed? Do you have a room that you painted in your favorite purple? Painting is relatively cheap and goes a long way. Get rid of brightly colored walls – use neutral colors. It is easier for buyers to imagine their own belongings in a neutral space. Plus, the smell of fresh paint strengthens the positive impression of your house.

6) LEAVE THE HOUSE DURING SHOWINGS
Staying in your house during a showing is not a good idea. Buyers are instantly turned off to the property because they are inhibited by your presence. Also, when you go out, take your dog with you. Cats are less disruptive and may be left behind. 

Setting the Stage

will help it sell quicker?"

A: Thanks for your question and it is one that has Sellers on the fence as to whether or not to go through the hassle. There is actually some factual data that we can draw on in order to try and answer this inquiry.

In 2003 when the market was strong, an organization called HomeGain researched the results of staging a home and found that a properly staged home or condominium sold for close to $3,000 more than an un-staged or vacant property. 

In 2005, the online training company Stagedhomes.com discovered that staged properties did indeed sell for 6.9 percent higher than other homes. 

These stats did lead many entrepreneurs to start home staging companies for both resort markets such as Cape Cod and primary markets. Staging fees range from $500-$1000 for consultations and actual staging.

Our buyers on Cape Cod seem to go off instinct and know immediately if they like a property based on a gut reaction when entering for the first time. If you are selling your fully furnished second home, make sure it is clean and de-cluttered at all times as if a renter will be using the property. Just doing this, according to HomeGain, made homes and condominiums sell for close to $2,400 more than the competing untreated properties. As for staging homes on the cape, if it is brand new and vacant, you may want to add a few pieces of furniture and touches to warm it up. However, there is no factual data to support that this will sell your property.

In my experience, the best thing to do is keep your house clean and ready for showings at any moment’s notice. Get rid of clutter and any extreme personal affects such as religious icons and an overload of family photos. 

The theory “less is more” is true in selling real estate. Just remember: Price it right, keep it clean and it will sell. Just be patient. 

Looking Forward to Retiring in Provincetown

Q: My partner and I would like to retire in Provincetown, but we are still three years away from our freedom. When should we start looking?

A: Even though you are not ready to move to Provincetown yet, you might consider beginning your search now. Over the past two and a half years, we have seen a dramatic shift from a seller’s market to a buyer’s market. Between 2006 and 2007, prices dropped an average of 5-8% in the residential market. If you wait three more years, you might miss the advantages that buyers are enjoying today.

Consider buying your future property today, and renting it out until you are ready to make it your home. You stand to benefit in many ways:

1. You will be buying at a time in the market where prices have dropped for the first time since 1994.
   
2. The rental income will contribute to your mortgage payments, property taxes and other maintenance costs.
   
3. You will have the advantages of using your vacation home when it’s not rented.
   
4. You will receive tax benefits of mortgage interest deductions.
   
5. Interest rates are currently very low.

Buying today instead of gambling on future home prices could put a substantial amount of money back into your pocket, and all savings matter when you are living on a fixed income as a retired person.

Give a Little. Get a Lot?

Q: "I am thinking of putting my house on the market and would like to really stick to the price I paid in 2004. I know the market has adjusted but how can I get the price I want with the market so weak? I’m thinking an agent bonus and maybe a giveaway?"

A: Your question is very common in today’s environment. The slow down in the real estate market has left many sellers scrambling for creative ways to sell. It’s a popular time for gimmicks ranging from broker bonuses to mortgage buy downs. However, keeping within the model of old fashioned solid real estate principals, only one thing matters. That is the price.

It's quite simple if you have two competing properties that are in similar condition and location. The one that typically sells quicker is the more competitively priced home. Gimmicks only work when you have competing properties that are priced nearly the same.

A gimmick may help a buyer choose one property over another. Of course, its all about the dollar. If a buyer can buy a condominium or a house for thousands less than a competing property, the fact that their buyer agent will get a bonus doesn't matter. The same goes for giving a car away, a buyer payback and so forth.

A buyer in today's market is going to look for a purchase that represents an opportunity. They want a low mortgage balance as rates slowly increase but are still historically low. If you are a seller who has implemented bonuses to either the buyer agent, listing agent or buyer themselves, or if you are giving away a car or a vacation...you may want to try a different strategy...something that really matters to buyers in this sensitive market, adjust your price to a realistic value where it belongs and remove the gimmicks. Next week we’ll answer a blog visitor question regarding staging your home and how that may help it sell in the current market.