C O A L I T I O N Corner “White Elephant” Hunting: Spotting and Adjusting for a Property’s Unusual Features Coalition Corner: Business training tools for HR staff, real estate licensees and other service professionals in the relocation and real estate industries © 2005, Employee Relocation Council/Worldwide ERC ® Coalition

C O A L I T I O N Corner Program Objectives This program supplements a monthly editorial feature in ERC’s Mobility magazine This segment will: –Help users identify/recognize unusual features about a property that might make it difficult to sell –Provide an example, and suggest ways to research and arrive at an adjusted price, helping to keep such homes out of inventory

C O A L I T I O N Corner The term is used here to describe an item (property) perceived to be of less value/worth to the common market because of an unusual or undesirable characteristic Just what is a “White Elephant” Anyway?

C O A L I T I O N Corner Key Facts What to watch for: ANY feature that the subject property has/lacks, which all comparable sales and offerings do/do not possess It’s essential not only to recognize a property’s unusual feature(s), but to know how to adjust for it/them adequately Bear in mind properties with extra/added features can also become “white elephants” if market is not ready for/does not highly value them

C O A L I T I O N Corner Example: Assumption: strong market demand for three-car garages Conduct research to help determine how much the addition of a third garage stall would be, taking into account the “big picture,” or all external factors that might make it more costly/less desirable to add to a pre-existing property. For example: Cost of construction/concrete and equipment set-up/time Noise/disruption Paying for work “out of pocket” vs. including within mortgage when purchasing property with desired feature Arrive at value of third garage stall, based on above, and adjust market price accordingly Subject Property has a two-car garage, while all comparable properties have three-car garages

C O A L I T I O N Corner Conclusion Typical homes rarely become “white elephants” Best place to spot them: in homes with unusual features, or those that differ in some significant way from comparables Best way to avoid them: thorough research and appropriate market price adjustment