As a real estate friend of mine put it, real estate is about perception, not reality. For instance, if a buyer can’t stand bugs and every time she sees a wetland near a property, she perceives there to be bugs. But, in reality, there is a perfect property for her that is near a wetland, but actually gets a constant breeze, so there are no bugs. She’s never going to buy that property because her perception is blocking reality. This conundrum creates “sleeper” properties, which can hold great value, especially Nantucket Sleepers, because the market discounts them. For example, a property does not sell within the first year of being on the market. It is a perfectly fine property, but now buyers perceive there is something wrong with it. “Why has it been on the market for two years? There must be something wrong. Let’s skip it.” The fog clears and reality sets in for another buyer, “Yes, this has been on the market for three years, but there is actually nothing wrong with it. It is actually a great deal!” What happens after the clairvoyant buyer closes on that property? People say, “I can’t believe you got that property for that price! That was a steal! What a great deal!”
So, next time you see a property that has been on the market for longer than most, don’t ask, “What are the problems with the property?” But ask, “Are there any problems with the property?’ The answer may very well be “no”. Lock it up and you’ve caught yourself an elusive “sleeper”. If the property is on Nantucket, you’ve caught yourself a rare Nantucket Sleeper!