May 21, 2019
The financial crisis taught mortgage lenders, servicers and policymakers that vacant homes pose major problems-from maintenance, blight, lower neighborhood property values and crime. Now, with the crisis largely behind, a different kind of issue faces vacant properties, said Redfin, Seattle.
A recent Redfin analysis found nationwide, vacant homes sell for $11,306 less and spend six more days on the market than comparable occupied homes. The analysis looked at homes listed and sold in 2018, comparing sale prices and time spent on the market for home listings that were marked “vacant” at the time they were sold with those that were not flagged as vacant.
“Although vacant homes are easy for buyers to tour at their convenience, the fact that the sellers have already moved on is often a signal that buyers can take their time making an offer,” said Redfin chief economist Daryl Fairweather. “It’s also likely that sellers who are in a comfortable enough financial situation to own a property that’s sitting empty aren’t as motivated to get the highest possible price for their home as sellers who need the cash from their first home in order to buy the next one.”
The analysis found although vacant homes sell for less money in every metro area, the amount varies by location. Vacant homes come with the biggest discount compared with occupied homes in relatively affordable inland areas. Vacant homes still sell for less than occupied homes in expensive West Coast metros, but the price differential is smaller.
For example, in both Omaha, Neb. and Greenville, S.C., where vacant homes are associated with the biggest discount, vacant homes sell for 7.2 percent, or about $15,000, less on average than occupied homes. In San Jose, buyers get the smallest discount on vacant homes, which sell for just 0.9 percent less than homes that aren’t vacant, followed by Las Vegas (-1.5%) and Orange County (-2.3%). Vacant homes take longer to go under contract in every metro except San Jose, where they spend an average of one and a half fewer days on the market than occupied homes.
“Whether occupied homes sell faster and for more money depends on a lot of factors, as everyone’s tastes and preferences are different,” said Billie Jean Hemerson, a Redfin agent in Orange County. “If a home is occupied and the furniture is modern, up to date and fits the space, it has a positive impact on a potential buyer’s perception of the home and they may pay more than if the home were vacant. But if a seller’s furnishings are dated, dark or too large for the space, buyers may offer less.”
The analysis found although vacant homes tend to sell for less money and spend more time on the market before going under contract, staging or virtual staging can help vacant homes make a better impression with buyers. “Staging a property can have a profound effect on both the sale price and days on the market, but the main challenge of physical staging is that it’s cumbersome, costly and offers no flexibility to showcase various aesthetic stylings,” said Pieter Aarts, CEO and co-founder of roOomy, a virtual staging, CGI and 3D modeling platform.