How Do You Sell an Ugly or Unusual Home?

But what if your home isn’t standard? Or what if, as a buyer, you have a flirtation with all things funky, a jones for the joyously original?

Whether the buyer or seller of an unusual home, plan to be in for some additional difficulty. Perhaps not surprisingly, being different is going to cost you.

Mortgage broker Kevin Casey explains that the root of the matter, financially speaking, is the appraisal. “The appraisal guidelines say that the appraiser has to evaluate the home using homes of similar construction,” he explains, and a home that is truly unusual will make it tough to find comparable homes.

Casey should know. He’s financed a handful of unusual homes, including one in the shape of a snail. “If you have a bunch of three-bedroom, two bath homes, and then you have this snail in the middle of the block, you can’t compare it to the others,” he explains. “That’s an extreme example, but lenders view a home that unusual as risky,” in part because the value can be difficult to determine.

Timing can also make a difference. “You have to be careful when you buy an unusual property,” he notes. “Appraisers can generally only go back six months, or an additional six, for a total of one year, if they need to.”

For buyers who think weird is wonderful, Casey says they can expect more stringent financing, greatly reducing the likelihood of zero-down financing.

But buyers also need to think of the long term, Casey notes, pointing out that they will be paying a mortgage on their unusual home for decades to come.

“In this market, just about anything will sell,” Casey says. “But you have to think about what happens four years from now, perhaps when it’s a buyer’s market and you need to sell.”

Nor are homes of odd shapes the only ones that lenders will deem unusual. “In some instances, mixed use properties or live-work lofts might be more difficult to finance,” Casey explains. The reason? “From a lender’s point of view, their concern is the limited resale potential.” In other words, a live-work loft will only interest someone who wants to live and work in the same general space, and has the proper permits to do so. By comparison, a standard home or condominium will appeal to a broader audience, thus increasing its resale potential.

That doesn’t mean buyers can’t purchase the unique home of their dreams – only that they need to be very careful how they go about it. For instance, Casey cites an example of a live-work loft that lenders took a dim view of – not because of any structural feature, but because the owners’ association did not require anyone to actually live in the live-work space.

But what does a seller do if they already live in such a home, and the novelty has worn off? Is selling impossible?

Certainly not, says East Bay real estate agent Steve Zager, particularly in this market. “There are two things you can normally do, regardless of the style or shape of the home,” he says.

The first is to pay attention to the terms when offering the home for sale. “You don’t want the appraisal to be part of the contingencies,” he explains. “Someone buying the home needs to believe in the price,” he explains, without hoping for comparable home sales (called “comps”) that may not exist. “This allows the seller to sell to the buyer who really wants it.”
With such an unusual home, Zager notes, forego the thought of accepting an offer of 100 per cent financing. “There’s no way,” he says. “That financing works well in tract homes, because they’re easy to comp.”

Although that seems like the audience is limited, Zager points out that doesn’t mean the house won’t sell. “I point to the house and I say, ‘Bob, you bought this house because you loved it, because this is your idea of what you wanted. Someone else will feel that way, too.'”

Knowing the market is crucial in such a situation, Zager adds. “You have to know your market, because not everybody will want this home.”

As an example, he cites an octagonal home deep in the woods, with hundreds of steps to reach the entrance. “Who’s going to look at this house? Is it a family of four? The elderly? No, because in both cases, they won’t want to climb the stairs,” he says.
“This home is more of a retreat. It’s nearly 4,000 square feet, deep in the woods, on stilts.” So Zager is marketing the home as just that – a retreat for one or two adults who want to get away from it all in a pristine natural setting, with privacy and great views (and perhaps some built-in exercise).

That laser-like marketing is what helps such homes sell. “Not everyone wants unique,” Zager says. “In fact, most people want the sure thing, really. It’s a rare individual who wants to, for example, climb 100 steps to get to the house.”