After the buyer signed the formal consulting agreement I had provided, we went to see the home. With an address in a very popular neighborhood, location was not a concern. The buyer explained the issues regarding the condition of this "fixer" and that he intended to quickly renovate and resell. This gave me a context in which to evaluate the purchase. The fact that it was the first home he had ever bought and that, although he was not a licensed contractor, he planned to do most of the work himself, made me uneasy.
After visiting this 1912 Traditional-style house for just a few minutes, I could plainly see it was a major fixer. Although some of the original charm remained, there were two significant problems: poor condition due to extensive deferred maintenance, and a tasteless, 1970s, contemporary addition. I explained to the buyer that the first issue was curable, at a very large expense. Unfortunately, the out-of-character addition was incurable.
Other value deflators became apparent as I looked around: numerous aluminum windows and sliding doors, incongruous in a charming, older home; an unattractive and poorly positioned exterior wooden stairway and deck; an unappealing front yard that needed a total redo; and a small lot with minimal outdoor living.
In addition, there was a tiny, contemporary master suite with a dysfunctional, badly planned bath that defied a cost effective fix. From floor to ceiling, everywhere I looked needed repair, updating or both. Within the first few hours of our meeting, and after seeing the home, I counseled the buyer to walk away from this purchase; he had offered too much. In fact, this buyer and property were simply not a good match at any price.
The contract was not professionally prepared; clauses were not clear, and neither buyer nor seller was fully protected by this document. This was something else to deal with, but only if the sale went through. As I shared my thoughts with the buyer he listened carefully, but insisted this was a project he wanted to do. The excitement of being a player in the real estate game overwhelmed his common sense and caution.
Further, I suggested he have experts inspect, evaluate and give bids on various systems: foundation and drainage, pest control, roof, electric, heating and plumbing. Noting the long-term roof leak, I speculated about the possibility of water damage inside walls and, possibly, mold. This buyer took my advice and ordered the reports.
Once completed, the inspections painted a scary picture: 80 percent of the foundation needed replacement; the termite report was huge; there were three different types of toxic mold on each level of the house; and drainage, heating, electric and plumbing deficiencies were found. The building needed to be stripped to its studs and rebuilt with a new foundation. I felt the repairs would exceed $250,000.
Once again, I urged the buyer to forget this property. Undaunted, he decided to bargain with the seller.
In the end, another contractor offered more and the seller agreed. This buyer now realizes that, at the time the seller ratified his offer, he had only a fraction of the information and knowledge he needed to make an informed choice.
Be aware that many agents, even those with newly printed licenses, have the word "consulting" or "consultant" on their business card. This does not signify that they know anything about consulting or the business.
If consulting seems like a good fit for you, look for an experienced, competent Realtor who does consulting on a regular basis. After all, anyone can give advice; you want good advice.
Most buyers and sellers need professional assistance in today's complicated and expensive market. Usually, this means the traditional agency relationship. Sometimes, as in this instance, hiring a real estate representative on an hourly basis is the most logical thing to do.
