The Nosey Neighbor

We determined that $699,000 – $750,000 was the appropriate range for the house. It was mid-February and midway through the season. The owner was moving this May. We settled on $725,000 and would evaluate in a few weeks. That was until the nosey neighbor showed themselves.

There are lots of different types of nosey neighbors. Cray Cray’s, Jerks, Passive Aggressive, Smarty Pants, and on and on. This particular nosey neighbor is a “dog walking nosey neighbor” and she told the client to price it at $750,000. “Keep the values up”, she exclaimed. Our client felt the pressure and raised the price. In one sense the relief of running into the DWNN or “DAWN” meant less pressure. Not on selling the house but on dealing with the DAWN! After two weeks, showings were minimal and we were getting the wrong Buyers in line. I talked with our agent about it and there were several issues that needed to be addressed. 1) Carry Cost 2) Seasonality. 3) Pricing it in the right aisle.

I have WORDS I could say to the DAWN. There are other issues with the Nosey Neighbor which I’ll reveal later in the article, but first lets address the fact that Homeowners usually have no idea of the real cost of carrying a home. Many think they bought it cheap and own it free and clear. Ok. Let’s say for arguments sake that they cleared $650,000 in our case and have no mortgage. Back in the pre-covid world, sticking $650,000 under your mattress was about the same as putting it in the bank. Today, 5% on $650,000 is $32,500. It doesn’t matter if there isn’t a mortgage, and you bought the place for $160,000. The return of $32,000 is real money. What are your taxes? $4,500. How about insurance? Oh, that went up to $7,000. HOA cost? $400 a month or $4,800 a year. Landscaping another $2,400 a year not including new plantings. Electricity, water, home watch, sewer, stuff that goes wrong. Basically it’s at least $4,000 a month to carry the house. I wonder if the DAWN would be interested in contributing?!?

Second is seasonality…..

The seasonal renters are leaving in just 4 weeks. While they may or may not buy your home, they spur activity. Once they buy something it typically frees the homeowner to purchase something else. Snowbirds also start to dissipate in April and May. People do shotgun type purchases since they are zoned in more. The family market is more in April, May, and June. So, the problem for our homeowner comes if it’s a receding buyer pool come March 31, 2023. If it doesn’t sell then that $4,000 a month could continue on through the summer time. A $690,000 sale price closing on May 1 is be better than a $700,000 sale price on August 1. The three months of $12,000 carry nets you a loss of $2,000. Homeowners often say “I don’t need to sell” but once you look at it like a business, they really do need to sell.

As far as price goes, Sellers need to understand that in a low activity market, “must” Sellers will lower the price. Meaning if everyone at $725,000 to $750,000 needs to sell and moves the price to $699,000 along with yourself, than you are back to square one with more competition. Getting ahead of the curve before that happens is critical.

Nosey neighbors can be an asset to real estate agents but usually are a source of confusion to the homeowner and a nemesis of misinformation that the Realtor has to combat. They confuse on price and marketing, and give tons of misinformation. The one asset is they can spread the word. You want them to be aware of it and bring their friend unless it’s a CRAY CRAY neighbor. Cray cray neighbors can ruin a deal so try to keep those away.

As far as our story is concerned, I suggested we approach the DAWN to see if she would contribute the $4,000 a month carry cost. I said if you do that, the DAWN will see you and run back into your house and never bother you again. We changed the price to $699,000. This generated 2 separate Buyers and a bidding war broke out. It sold for $712,000.

Now that it dawns on me, our homeowner client will have moved and definitely will never see that DAWN again.

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Jeff Lichtenstein, originally from Chicago, got his start in the home furnishings textile business where he traveled over 35 weeks a year selling fabrics. After the family business was sold, Jeff moved to Florida and became a real estate agent. Today he is the owner and broker of Echo Fine Properties, a luxury residential brokerage voted best brokerage of the year. Jeff manages a non-traditional model of real estate that mimics a traditional business model. Echo has 80 agents, an average of one million dollars per transaction and over 500 million in annual sales. Between traveling for work and annual family trips to national parks with his wife and 2 now adult children, Jeff has visited 49 states. He is also one of the few Chicago White Sox fans you’ll ever meet. Some publications he has been quoted in.

Author of business & leadership book How Making a Sandwich Can Change Your World – The Amazing Success of the PB&J Strategy – Available to Buy Now!

Feel free to ask him a question directly at jeff@EchoFineProperties.com including a complementary valuation of your home.

Posted in Open House Blog, Real Estate Tips on March 1, 2024 at 12:40 pm.

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The Nosey Neighbor