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Real Estate By Design
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Real Estate By Design

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Real Estate By Design Real Estate By Design Presentation Transcript

  • REAL ESTATE BY DESIGN Design your Sale Design your Purchase
  • What is a Realtor?
    • A sales professional that has a fiduciary duty to a client.
      • Loyalty
      • Obedience
      • Confidentiality
      • Disclosure
      • Reasonable Care and Diligence
      • Accounting
  • The Motivation for Real Estate by Design
    • Real estate is the basis of many client’s financial viability.
    • One challenge of selling and buying real estate is to maximize financial outcome.
    • In many markets it is possible to enhance value by making strategic improvements before a sale or after a purchase.
    • This can apply to any type of property.
  • Traditional Real Estate is Marketing Focused:
    • Marketing is essential in alerting clients and their Agents that a property is to be sold.
    • Marketing has become very standardized in sophisticated markets.
    • Once the Buyer sees a property, a decision is made on the attraction to the property not on the marketing materials.
  • The Best Choice: Preparation is the key to motivating Buyers:
  • One Way to Analyze Value:
    • Homes and their attributes can be analyzed by price per square foot:
      • $300 range-structural fixer
      • $400 range-cosmetic fixer
      • $500 range-good condition
      • $600 range-premium condition
    • GOAL: Increase one price range profitably.
  • Test Case 1: Commercial Bldg.
    • Before improvements
    • 2 offers of $700,000.
  •  
  • How value was added:
    • BY CREATING A COHESIVE, SIMPLE UNDERSTANDING OF THE BUILDING BY ADDRESSING:
    • Cosmetics – Color is fundamental to an understanding of any property both spatially and stylistically indicating value.
    • Water – Elastomeric paint and simple roof drainage repairs.
    • Cleanup - Interior and exterior.
  • Test Case 1: Commercial Bldg.
    • After $10,000 of improvements
    • 2 offers of $850,000.
  •  
  • Price per Square Foot Change:
    • Original Offer: $166 per square foot
    • Final Offer: $202 per square foot
    • Investment: $2.37/sq.ft.
    • (total original sq.ft. price = $168.37)
    • Profit: $33.63/sq.ft. or $141,750.
  • How the Brain processes information and makes decisions:
    • Characteristics have value and can be added and compared.
    • Characteristics can be balanced and counter-balanced.
    • The brain makes a list of negatives and positives and makes a decision by weight.
  • How buyers make decisions and gain enthusiasm.
    • House and reports have clarity
    • Strong points brought out
      • Strengthen architectural style
      • Minimize need for repairs
      • Stylish or trendy details
      • Light and open w/pizzazz!
      • Weak points clarified or minimized
      • Engineering, furnace, roof reports
  • Test Case 2: Fixer Home in the Berkeley Hills (Vistamont)
    • Home Before
    • Home After
  • Decks before and after:
  • Entry:
    • Entry w/ deteriorated deck
    • Entry w/ new deck and stone
  • Kitchen before and after:
    • Cabinet doors missing, old tile, rotted maple counter
    • Cabinet refaced, new counter and appliances. Slate floor.
    • Living room before
    • Living room after
  • Adding continuity:
    • Master bedroom suite before
    • After
  • Stair between:
  • Bath before and after:
    • Replace tile and sink
  • Identified problems:
    • Foundation (poles), engineering and shear problems
    • Exterior access deck severely rotted
    • Interior in poor condition
      • Water-stained wood paneling
      • Kitchen very deteriorated
      • Baths deteriorated and/or dated
      • Surfaces needed attention
  • How problems were addressed:
    • Engineering report clarifying work and remediation.
    • Decks rebuilt.
    • Interior painting, trim and floor refinishing.
    • Kitchen remodel ($25,000).
    • Bath updates.
    • General interior and exterior cleanup.
  • Vistamont results:
    • Estimated sales price $925,000 –
    • $383 sq.ft. ($825,000 by independent agents)
    • Final sales price $1,250,000 - $540 sq.ft.
    • Cost: $100,000 (double because of friend)
    • $42 sq.ft.
    • Profit $225,000 - $93 sq.ft.
  • The brain is an imperfect observer
    • We perceives things accurately about 50% of the time and the conclusions we draw from observations are subject to faulty perception.
    Now what do you see?
  • The Brain is Subject to Biases:
    • Biases distort decision making
      • Confirmation Bias (preconceptions)
      • Anchoring and Adjustment-Initial impression
      • controls decision
      • Premature Termination of Search for evidence-initial impressions are important
      • Incremental decision making and escalating commitment-keeping information simple and clear allows decisions to be easily made.
  • In Real Estate this means:
    • Try to anticipate basic biases and counteract them with clearly defined information (engineering reports) and attractive, meaningful upgrades.
  • Address outdated, cheap details:
    • Kitchen Before
    • Painted with new counter, sink and hardware.
  • Make era-appropriate changes:
    • Bath w/ late 60’s remodel
    • Bath w/ 40’s era remodel
  • Remediate distasteful details:
    • Tub before
    • Tub after
  • Decisions are formed in various ways:
    • Divination
    • Coin toss
    • Consulting Authority
    • Listing Options _______________
    • + -
    • + -
    • + -
    • + -
  • When options are balanced or counterbalanced, perception is framed
    • Characteristics of a home have values that are added and compared in making decisions.
    • These characteristics can be balanced and counter-balanced.
    • In real estate preparation, try to increase positive perceptions by offering better options.
  • Therefore framing is important How verbal definitions are framed has consequences: Trial Lawyer-------------Public Protection Lawyer Drilling for Oil-----------Exploring for Energy :
  • How physical characteristics are “framed” matters The center circles are both the same size.
  • Test Case 3: New Construction
  • Living Room
  • Dining Area
  • Kitchen
  • Color to address problems of blandness and dark hallway
  • Pulled off market to address buyer concerns
    • Storage added to master bedroom, laundry and baths
    • Restaged from 1 master and 4 secondary
    • four bedrooms to 2 master bedrooms, 1 recreation/guest area and 3 bedrooms
    • Trees trimmed to increase view
  • Before: Not enough storage and five bedrooms
  • Restaged w/ second master suite and added storage:
  • Restaged to add 2 nd living area
    • Before as bedroom
    • After as play room
  • View Developed:
  • Outcome:
  • Restoration of a Mid-Century
  • Walls and cork floors sanded
    • Living room before
    • Living room after
  • Process:
  • Kitchen before and after:
  • Refinishing stair:
  • Adding space:
    • Existing detached room
    • Room from furnace room
  • Cleaning up
    • Bath before
    • Bath after
  • Laundry before:
  • Laundry after:
  • Analysis of Mid-Century:
  • North Berkeley Duplex:
  • How to evaluate the results:
  • Potential short sale:
  • The limits of staging:
    • Living room as lived
    • Living room as staged
  • New flooring, cabinets refinished, paint, new faucet.
    • Before
    • After
  • The benefits of staging:
    • Living room as lived
    • Living room as staged
  • Thank You!