Selling a Vacation Home, Part 2 (Transcript)
Christine talks with Washington owner, Ed Reese, about his process for selling a vacation home.
Christine: OK, so why are you selling?
Ed Reese: So, you know it's been interesting all the houses have been profitable from day one.
Christine: Hmm. [agreeing]
Ed: You know, so it's been a great experience, but like other owners out there I went into it thinking that OK, it's going to be profitable by a lot, this is going to generate a significant income, I might even be able to leave my job and this will be cash flow.
Christine: Yeah.
Ed: Like cash flow that I can live on.
Christine: That does not necessarily work [giggling]
Ed: Just like everyone else…
Christine: [giggling]
Ed: That is listening is that, though it's profitable, it's profitable enough to be profitable and to reinvest.
Christine: Right.
Ed: So I get new flat screen T.V.'s, I get new couches, I improve the places, and at the end of the year even with three properties my profit line is somewhere in like, you know, the ten to twenty thousand dollars total combined for all three properties.
Christine: Hmm. [agreeing]
Ed: In profit.
Christine: Hmm. [agreeing]
Ed: Can my family live on that? No.
Christine: [giggling] No, most people can't.
Ed: Yeah, so I work full time and manage the properties, and when we had our son, my wife left her firm (she was partner in a design firm) and at the end of this year she realized the she really wants to be a mom and I wanted to support that.
Christine: Hmm. [agreeing]
Ed: So I also work full time in addition to managing the properties, and with us scaling back our lifestyle.
Christine: Hmm. [agreeing]
Ed: It's just not enough time in the day for me to focus on my career, plus managing three homes, plus home life without her income to help make things easier, and like I was subbing a lot of things out.
Christine: Right.
Ed: And now it's going to be more difficult to do that.
Christine: Hmm. [agreeing]
Ed: So with her leaving the firm it just seems to make sense, to not manage all of them, I just wish that the timing had been different. This is about the worst time in the history of mankind to sell a house.
Christine: [laughing] Well I'm not so sure if it';s the worse time in history.
Ed: Yeah [laughing].
Christine: But definitely in our lifespan.
Ed: Right, right.
Christine: You know, I mean it is not the best time to be selling, Oh can you hold on one second we just need to take a break for a word from our sponsors.
[Commercial "Home Away Network"]
Christine: So given that it's not the best time to selling.
Ed: Right.
Christine: What have you done, I mean like, you know there's a lot of people that ask when I go to sell a vacation rental property do I just sell it as a normal house, do I sell it as a business, what to do if I sell it as a business, what sort of documentation should I give to the buyer, you know, I want to show them that this is a vacation rental that they can purchase and they can cash flow on it and all that. I mean, so how have you dealt with the logistics of putting your property up for sale and the documentation?
Ed: I guess it's been very difficult; I created the twenty eight page document.
Christine: That's a book. [giggling]
Ed: I mean its profit/loss, cash flow, website statistics, inquiries, past guests, just a list of everyone that's ever gone to the house, and all my stats.
Christine: Hmm. [agreeing]
Ed: And expenses, and everything that comes in, what I'm battling, and this is what, I wouldn't say it's infuriating, but it's very frustrating.
Christine: Hmm. [agreeing]
Ed: I've presented this to several people now and these are people completely unfamiliar with the vacation rental industry.
Christine: Gotcha'.
Ed: And because of all of the late night advertising on instant profit and.
Christine: [giggling]
Ed: You know all the get rich quick stuff, like I'm giving real numbers and as owners know it's a lot of work.
Christine: Right.
Ed: And I'm not glazing over that.
Christine: Hmm. [agreeing]
Ed: And they';re like, wow this is a lot of work, and it's not guaranteed and what if I didn't suddenly have four hundred and fifty people a day on my website looking at it, and what if, and what if, and I'm like well, that's why you work really hard on your marketing.
Christine: Hmm. [agreeing]
Ed: That's why you always pick up the phone when it rings in the months of January and February you know.
Christine: Right.
Ed: That's why you respond to emails inside of ten minutes if you can.
Christine: Hmm. [agreeing]
Ed: You know.
Christine: So it's interesting, so by you giving this much information, very detailed twenty eight pages, it's really scaring people away.
Ed: It is, it is.
Christine: You know it's funny, when people read my book, I do on occasion get a lot of nice emails and phone calls and comments from homeowners and saying how much it's helped them. However I do get occasionally people that call me or email me and say, you know what, thank you so much for writing this book, and I read the book and I decided, this isn't for me [giggling] you know.
Ed: Right.
Christine: And I think that's OK.
Ed: Yeah.
Christine: I mean, because it's really not for everyone. However I think, you know, maybe you need to sort of balance this a little and I do have to say, I've known you for a long time as a homeowner, and I do know that you are, OK I won't beat around the bush, you're a little anal retentive about making sure everything is perfect.
Ed: Right.
Christine: And while that's the difference between what makes you extremely successful compared to the next person, doesn't mean the other person can't be successful without doing all of that stuff.
Ed: Right.
Christine: I mean, you might give up five or six rental weeks a year; however, with the number of weeks you're booking maybe somebody can afford that. So I think possibly presenting your information such that, "Here's what I did. Here's what I worked really hard at...” Maybe what you need to include is some average for other properties in your market. Other property managers that you can turn to and get some statistics from, perhaps your real estate agent can assist you with that. So but it's interesting that you've got the opposite problem.
Ed: Yes, I know. It's tough, and you know when you look at that, it's difficult for non top tier markets. Like people definitely travel to Seattle, but it's not Florida, it's not Tahoe, it's not Hawaii, it's just not. So when I look at my competitors and people that I think do it well, it isn't like there is an industry average. There are, in my opinion, five homes that do it well, that are booked as much as mine, in the entire state.
Christine: And three of them are yours. [laughs]
Ed: Yes, and two of them are mine. There you go. [laughs] I mean outside of my properties, there really aren't that many homes that I really see that are killing it consistently in terms of business.
Christine: Right.
Ed: I think part of it is just it's a young market in the Northwest. Again, a lot of other places, Oregon coast, the Carolina coast, all of these markets are used to the big summer trends. So Seattle is still relatively new, that's definitely part of it.
Christine: In the vacation rental category it definitely is a newer place.
Ed: Right.
Christine: So then when you're selling your vacation home a lot of people ask, "OK, what do I do? I've put my home on the market.” And this, by the way, is not the optimal market for you to be selling in. What are you doing? Are you continuing to take bookings and inquiries?
Ed: Yes.
Christine: Are you telling your renters that you're possibly going to be selling? Some people say that might be scaring them off. How are you handling that?
Ed: What I'm doing is in the marketing. I'm not saying someone looking at the house for a primary residence can't buy the house, it just doesn't make any sense for them to.
Christine: Right.
Ed: It's being marketed and sold as a vacation property, and the agent is telling people that through this season to go through the summer, I am part of the transaction. So I will continue to operate as manager, and the amount of commission or fees that I will get is of course negotiable upon purchase. But I am still part of the process. To the guest it's seamless.
Christine: So you're really selling this as a business, as opposed to just as a home.
Ed: Yes, I guess that would be accurate.
Christine: Is there something you've learned that maybe you wouldn't do the same way in selling your vacation home?
Ed: I definitely wish that there was more of a... my ideal scenario would be to sell it to someone who is already involved in the industry and knows a successful business when they see it.
My biggest difficulty and it's not a mistake, it's just I don't know where to turn is finding a place to put my properties and marketing strategy in business in front of someone who wants to grow from like five properties to seven properties. Or, maybe they have homes in Hawaii, and they would love to have some homes in Seattle, and step into a key turn situation.
My Website, for example, for all relative keywords for Seattle vacation rental, Seattle vacation home, harperhouse.com, which is my Website, is number one on Yahoo and MSN for all appropriate keywords. On Google it's bottom of page one for Seattle vacation homes, and it's middle of page two for Seattle vacation rentals, behind you guys and all the other big listing sites.
Christine: Right. [laughs]
Ed: But I'm pretty much the first or second individual homeowner listed on the search engines.
Christine: Right.
Ed: So, it is that powerful. Like, on VRBO, I was the very first person to pay for 12 images. So, when you look on Seattle for VRBO, I'm the very first home that every single person sees.
Christine: Right.
Ed: So, in VRBO alone, I average about 140 to 170 unique visits a day, just on VRBO.
Christine: Yeah. Ed, as I'm listening to you talk, I think you have a very strong attachment to... Now, I feel like Dr. Phil, by the way.
[laughter]
Christine: But you have a very strong attachment to the work, to the sweat equity that you've put in...
Ed: Oh, absolutely.
Christine: That you've worked hard to get this website up high in the search results and all of these other wonderful aspects of things. And when you do those things, it's difficult to sort of sell it, give it somebody else that's going to just throw it all away.
Ed: Correct.
Christine: And I think that's true with anything. I mean, even the house that we'd lived in when we lived in Atlanta, and then we moved here to Austin when I came to work for HomeAway. And I still go back and visit my neighbors and I'd look every time I'd go and I'm like: "Oh my gosh! I can't believe..." I mean, they pulled out my calla lilies.
Ed: Exactly.
Christine: And I had the most beautiful calla lilies. People would stop. Just like cars that were driving, they would stop and they were like: "Oh my Gosh! Those are the most gorgeous flowers."
And that somebody would pull them out? I'm like: "What are you thinking?"
Ed: Yeah.
Christine: However, once you sell it, you have no say so. Now, I do have regrets. I wish I would've dug up those calla lilies and just brought them with me...
Ed: And take them with you.
Christine: Because when guys are going: "Oh my gosh! Those are gorgeous flowers!" Guys don't notice sorts of things.
Ed: Right.
Christine: And it's not just that, there's other aspects of the home that I go: "I can't believe they cut down that tree!" or "I can't believe they did this!" So, maybe the thing that you may have to come to is not sell it as a vacation rental at all and just sell it as a second home. If your objective is just to sell it, sell it as a second home. Keep those things that you've done already for your home. Perhaps sell it to another homeowner that's interested in it, that already is listing a property or something like that.
I think there's a really fine balance that has to go on here that because you're selling something that you've put a lot of equity into, sweat equity, it's just a difficult... It's like handing your baby over to somebody, isn't it?
Ed: No, it's true. I mean, it really is. There's way more than money behind it.
Christine: Yeah, absolutely. Absolutely! Well, Ed, this is a really interesting story. Perhaps, if you end up or when you end up selling that home, I'd love to have you back on...
Ed: Sure!
Christine: And hear how it went. I wonder whether you'll sell it as a vacation rental, there's somebody that will continue renting it or if you're going to just sell it to somebody that's going to move in as a primary resident or perhaps, just a second homeowner who has no interest in renting at all.
Ed: Yeah.
Christine: I'd really, really love to hear the rest of this story.
Ed: I'm happy to do it.
Christine: Well, Ed, thank you so much for joining us. His home website is harper house.com, if you want to go and check out the houses that we're talking about. He's also listed on VRBO and HomeAway.
Thank you so much and have a great day!
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