Sociologist Morton Grodzins took the term “tipping point” from physics and applied it to his study of American neighbourhoods in the 1960s. In essence, the tipping point is where “one too many” of any specific item or circumstance makes people change their mind to the opposite position.
With real estate, buyers approach any given property with a set of their own criteria as to what is valuable and necessary for their new home. We can’t control that, but we can control the impression they begin to form as they explore a home.
We’ve taken our observations of buyers and developed three rules that we use with our listing clients to avoid buyers who are considering the home hitting the tipping point – and walking away from the home.
Rule # 1 – “If it’s cheap and easy to fix, fix it.”
The corollary to this rule is that no home is perfect. Sellers can often get overwhelmed with the work that would be necessary to turn their home into a show stopper, and decide to not do much of anything at all.
As buyers go through a home, they aren’t concerned about the first imperfection they see. They are forming an overall impression of the home and that impression is based on taking into account all that they see.
The exact number varies depending on the specific buyer but every buyer has a point where they say “Wow, this home needs a ton of work.” When a buyer reaches that point, they may decide to not offer to buy the home, or if they do, they adjust their offer price to a lower level.
Some imperfections with a home would cost a lot of money and take significant time to fix. Many imperfections, however, can be dealt with quickly and cheaply. Here are some examples:
- Worn, fading or damaged paint can be easily painted.
- Discoloured, cracked or missing caulking can be easily fixed.
- Dirty windows, surfaces and fixtures can be easily cleaned.
Any minor imperfections that can be easily and cheaply fixed should be fixed. They may not be impactful on a individual basis, but if we can avoid a buyer getting an overall impression of poor maintenance or care, it is well worth doing.
Rule # 2 – “Your best bang for your buck comes from turning a negative into a neutral.”
Another way to phrase this rule is that everyone has their own sense of style and taste, but no one likes something that is broken.
Buyers often want to put their own stamp on a property they buy and what one buyer considers tasteful is distasteful to another. We’ve often walked through properties with buyer clients where they hate a renovation that was just completed.
A good principle for sellers to follow is that if something is broken, it needs to be fixed.
- A dated bathroom with pastel tiles isn’t appealing, but if the tiles are cracked and broken, you need to fix it. That fix should make it inoffensive, but it is not necessary to totally renovate the bathroom.
- Stained and dirty stair carpet that can’t be steam cleaned needs to be replaced. It isn’t necessary to replace it with hardwood even if most buyers prefer that, but you can’t leave carpeting that buyers will find very off-putting.
- A small, basic porch or patio isn’t going to get you any rave reviews, but if the wood isn’t rotten or damaged, you don’t need to replace it. If it is damaged and a safety hazard, you can’t leave it without giving buyers a strong impression of the home being a money pit.
Such examples show that sometimes you have to spend money to repair a problem even if the end result is still not something buyers will rave about. What’s important is that you remove something that might make them decide to not buy your home.
Rule # 3 – “Turn unknowns into knowns.”
That may not be the most elegant sentence from a grammatical perspective, but the concept is crucial.
We are all predisposed to deal with uncertainty by assigning the worst possible case to it. It’s how we avoid situations where things are terrible – by assuming they will be terrible and not moving forward.
In real estate, there are often aspects or elements to a home that are missing or inferior. Adding or improving these aspects would absolutely add value to the home, but the cost is unknown.
- A basement with a low ceiling would be much more appealing if the basement was dug out by three feet. Getting a quote for that work and providing it to a buyer removes most of the uncertainty around that work.
- A home that needs a new roof should have quotes gathered on the cost of that work. It doesn’t need to be done, but you need to able to reassure a buyer as to the scope of the work.
- A condo that would be a good short or long-term rental means a buyer will want to know rental rates and if rentals are permitted. Finding out that information encourages buyers who might otherwise move on due to uncertainty.
It is easy to say that a buyer and their agent should satisfy themselves as to the answer to an important question – but it is far more helpful to share what information you can gather so you remove uncertainty from the equation. While the information may result in a buyer deciding to not offer on the home, it avoids wasted time with deals that don’t go forward during the buyer’s due diligence phase.
Every potential buyer for a property is assessing and weighing different aspects of it against an internal list of what they want in a property.
If you can remove easily fixed imperfections, turn negatives into neutrals and provide useful information, you avoid buyers reaching the tipping point of deciding the home isn’t for them. When you avoid that, you see more showings, more offers and a higher sale price. If that sounds appealing, get in touch so we can help you with your sale.