With Terry Story, 29-year veteran Real Estate Agent with Keller Williams in Boca Raton, FL
Have you heard of the latest trend in luxury real estate?
It’s called white-boxing, ever heard of it? White-boxing is when sellers on the luxury market strip out furnishings, rip out well-appointed bathrooms and kitchens and get the home down to its bare-bones structure. This creates a clean slate. It also caters to luxury buyers’ desires to uber-customize the homes they buy. White-boxing is also popular with older, outdated homes in upscale neighborhoods, where buyers will likely gut the house to build the home of their dreams.
To help buyers visualize what they could do with a white-boxed home, sellers often hire virtual designers to develop renderings of what the white-box space could hold. As George Bush, Sr. said, “It’s a vision thing!”
It’s what Walt Disney did too. After he bought a large empty lot in Anaheim, California, he had designers develop renderings of what it might look like. Then he took those drawings to bankers to show them his vision and have them bankroll Disneyland.
Do You Really Need An Attorney To Buy A House?
People are often told to have an attorney present when buying or selling a home. Terry Story, our real estate authority, says it depends on the state you live in. Most states, such as Florida, have title companies handle the closing. Moreover, home sale documents are standard templates, so you really don’t need an attorney to look them over.
Here are the downsides of bringing attorneys into a plain vanilla home sale:
- The attorney will feel like s/he needs to do something to justify her time and could make meaningless changes to standard templates.
- Changes initiated by one party’s attorney may make the other party uncomfortable and could delay or jeopardize the transaction or spook them into hiring their own attorney.
- If the attorneys have different personalities, they could add needless complications to an otherwise simple, standard process.
Long story short, avoid attorneys unless there’s something unusual or complicated about the home you’re about to buy or sell.
Price Your Home Slightly Below Market Value To Attract Buyers
Continuing last week’s thread, Terry strongly recommends pricing a home at slightly less than comparable home sale prices to get more showings and attract more offers. Don’t price it too low because buyers might then think there’s something wrong with the property and stay away.
As a buyer, bidding wars can get emotional, especially if you really like the house. Terry recommends parking your emotions at the door by setting a maximum upper limit you’re willing to pay and walking away if the price crosses that upper threshold.
To gain an edge over other buyers, you could appeal to the seller’s emotional side by writing a heartfelt letter on why they should really sell the house to you. In it, appreciate what they’ve done with the house, talk about your family, your love for the neighborhood, and why you’re the best person to own the house. If you’re lucky, yours would be the only letter they receive, which could make a difference if you’re tied on price with other bidders.
If you’re significantly below other offers, don’t pin too many hopes on the letter making a difference!
Finally, if you really want to beat the competition, cash is king. Sellers will pick an all-cash offer because it comes without mortgage or appraisal contingencies. It also ensures a quick, hassle-free sale.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: It’s time for Real Estate Roundup. This is the time every single week, we get together with noted real estate agent Terry Story. Terry is a 29-year veteran with Keller Williams, located in Boca Raton. Welcome back to the show, Terry.
Terry Story: Thanks for having me, Steve.
Steve Pomeranz: All right, here’s an interesting thing I never heard about. White boxing luxury homes, white boxing, what is white boxing?
Terry Story: Yeah, I never heard it until I saw this article, but basically, what it is is you have a house. You pretty much gut it, take out the kitchens, the baths, just make it a big old square box.
Steve Pomeranz: I mean, even if you have luxury appliances in the kitchen, and in the bathrooms, you take them out.
Terry Story: Gone.
Steve Pomeranz: Yeah, why would you do this?
Terry Story: Well, it’s kind of like painting a white, we tell people to neutralize their house, paint it all realtor beige, as I call it.
Steve Pomeranz: [LAUGH]
Terry Story: And in this case, it’s going to an extreme, and they’re doing it in the luxury market, where they’re just taking everything out. And I think for some people, they have the vision to be able to do that, but I think in reality, from my experience, I think you have to have some renderings of what it can be.
Steve Pomeranz: Mm-hm.
Terry Story: And it could also be that, these houses in the luxury market, think about it, I saw some luxury homes, beautiful home, but they’re outdated. Let’s say they go with the Mediterranean style, and now everything is a little more contemporary.
Steve Pomeranz: Right.
Terry Story: So, a lot of people can’t get past that they can totally gut this and redo it. So if it’s all totally gutted, then they can envision this beautiful modern home.
Steve Pomeranz: Well, it’s like the first George Bush said, it’s a vision thing, right? [LAUGH] And it also reminds me the story about Walt Disney, when he was putting together Disney Land all those years ago. He had to go to the bankers to get funding for that, and he went to his creative people, and he said draw me what this thing is going to look like.
And because these bankers really don’t have vision, they can’t imagine what this thing is going to look like. We actually have to show them. So, for me it’s like, I used to love walking through models because it’s like, okay, I want to live here.
Terry Story: Right, right.
Steve Pomeranz: Someone else has done the work. Over time, I’ve developed my own little style, which I’m pretty happy with, but, if you gave me a swatch of carpet and you tell me to hold it up in the corner so I can somehow imagine what this carpet is going to look like, I just can’t do it.
Terry Story: Yeah, no, a lot of people don’t have the vision. That’s why we do staging.
Steve Pomeranz: That’s right.
Terry Story: And we even take it a step further in a lot of our marketing.
We do virtual staging, where the house is not furnished. The photographer adds furniture to the photos because people don’t have the vision, they can’t see it.
Steve Pomeranz: Mm-hm, I got a problem with that in one regard.
Terry Story: Mm-hm?
Steve Pomeranz: These photos, all of the rooms look way bigger, [LAUGH] than they actually are.
Terry Story: Yeah.
Steve Pomeranz: Come on, I want you to admit to that.
Terry Story: Wide-angle lenses, fish-eye lenses, yeah.
Steve Pomeranz: Exactly, so buyer beware here. Those pictures look great, lighting is great, but those rooms are not that big. Anyway.
Terry Story: Agree.
Steve Pomeranz: Okay, let’s get to something about closing here.
I’ve been told many times that when you buy a house or sell a house, that you should have an attorney present at the closing to help you. You also have a title company that handles all of that kind of stuff. Why would I need an attorney, and is that something that you see a lot?
Terry Story: It depends on what state you are in, but in the state of Florida, you are not required to have an attorney. In the state of Florida, we have title companies; a lot of the title companies are owned by an attorneys. You have to have somebody do the closing, so it can be an attorney or a title company.
With a title company, basically what they’re doing is, depending on what city or county you’re in, somebody’s paying for the title. If you go with the title company, they can do the title work for both parties. They can handle helping out the buyer and the seller. So they’re not, even though there may be an attorney present, all he’s really doing is the title work there.
Steve Pomeranz: Yeah, and a lot of attorneys own title companies.
Terry Story: Correct, now if you’re in a situation, and quite honestly, Steve, these are boiler-plated contracts. You don’t need an attorney to handle that transaction. You do need an attorney, or should have an attorney, if you have a complicated situation, maybe it’s an estate short sale, something unusual. Or you really don’t trust the other side, the buyer or the seller, depending on what side you’re on, you might want to have legal counsel.
Steve Pomeranz: Yeah, so again, you can bring in an attorney if you suspect that there’s going to be complications that are well above just having a clear title.
Terry Story: That’s right, and for the most part, I’m going to go with at least 90% of my transactions are without attorneys. And now when I say without attorneys, I mean without a seller or buyer having legal representation. An attorney may be doing it, but they’re only closing the transaction.
Steve Pomeranz: And don’t forget that, if you are hiring an attorney, it will be his or her job to find something in the contract to change.
And I don’t mean to be sarcastic here, but if you’re hiring an attorney, they’ve got to do something.
Terry Story: That’s right, they’re there to protect your best interests. So sometimes, they’ll start changing some of the boiler-plated language, which makes the other side uncomfortable. Then it may turn into them feeling like they need an attorney. And then sometimes when you have different personalities of the attorneys, we have bigger problems than we should have ever had to begin with.
Steve Pomeranz: Okay, okay, I think we’ve covered that pretty well. Let’s talk about this bidding war thing. Months ago, you talked about this idea of actually not setting a high price to your house but setting a reasonable price. Maybe even a little bit lower, to try to bring in buyers because the buyers will see what’s going on in the market. You don’t want to make it too low because then they’re going to think something’s wrong with it.
Terry Story: That’s right.
Steve Pomeranz: But just being smart about it. And by doing this, try to attract more and more bidders. And then eventually, you see a price greater than you would’ve expected the other way.
Terry Story: I’ve got it going on right now. I’ve priced it properly, a little bit, tad below. I’ve got seven showings. Within hours, I have two offers, right now, I suspect more. What it does is the first buyer really wants the house, so they went over-asking and removed the appraisal contingency because they know they have the funds to make up any kind of shortfall.
And we all know, looking at the comps, it really should not be that much of an issue on the appraisal side, but he’s able to that. So, when you’re in this bidding war, set the maximum amount of money that you’re willing to pay for the house. And I say that, that you’re willing to walk away and lose the house. So don’t be afraid of that.
Steve Pomeranz: Well, the emotions get involved too. It’s hard to take your emotions, especially if you really love the house.
Terry Story: Right, right, write a personal letter as to why you want the house.
Steve Pomeranz: I really love your house, I love what you’ve done with it. I want to live there like you live there.
Terry Story: Right.
Steve Pomeranz: And so they may-
Terry Story: It may persuade them, it’s personal.
Steve Pomeranz: You’ve seen that.
Terry Story: You talk about, I have three children and two dogs, whatever.
Steve Pomeranz: Yeah, whatever it is, yeah.
Terry Story: Make it personal.
Steve Pomeranz: Okay.
Terry Story: It makes an impact on people, especially when you’re competing against other offers, and nobody’s done that.
Steve Pomeranz: That’s right.
Terry Story: It’s worth a shot.
Steve Pomeranz: Now, if everybody does it, they’re going, I got another letter.[LAUGH]
Terry Story: I got another letter, right, right.
Steve Pomeranz: All right, finally, if you have cash, cash is king.
Terry Story: Cash is always king.
Steve Pomeranz: Meaning?
Terry Story: Meaning, there’s no mortgage contingency with that. There’s no appraisal contingency.
Steve Pomeranz: You just pay what you pay, and put your cash down and you’re done.
Terry Story: And voila.
Steve Pomeranz: Yeah, okay, very good. My guest, as always, is Terry Story, a 29-year veteran with Keller Williams, located in Boca Raton, and she can be found at TerryStory.com. Thanks, Terry.
Terry Story: Thanks for having me, Steve.