Market Research Case Study: Lipstick on a Pig!

Market Research Case Study: Lipstick on a Pig!

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Reel Property Solutions, LLC is a real estate investment company that purchases, renovates, and resells properties that were distressed to like-new conditions.  In order to know what the competition is doing in our HOT SELLER’S market in Rochester, Minnesota, Reel Property Solutions, LLC will conduct a market research case study to compare/contrast the do’s and don’t’s of renovating.  In this particular study, the end result was definitely “Lipstick on a pig!”  In other words, very little was done to actually renovate the property, yet the seller’s price tag reflected a huge renovation.


*********In this market research study, the disclaimer is no specific information about the property will be given out since permission was not granted from the homeowner for this blog.  All information regarding the property was found in public records. *********

Here are the basic stats of this market research case study property:

  • 3 bed/1 bath
  • About 940 sq ft
  • Ranch style, single family home
  • 1 car attached garage
  • 12 acre lot which is 5,227 sq ft
  • Built 1909
  • Concrete foundation

Great features:

  • Across from a bus stop
  • Trees provided lots of shade in the backyard
  • Walking trails and a park nearby


  • Foundation crumbling
  • Small bathroom
  • No street parking and minimal driveway room
  • Located along a busy street

Timeline of events:

  • October 7, 2016: Listed for sale for $47,000
  • October 11, 2016: Sold for $25,000
  • November 10, 2016: Sold for $42,000 *****speculation is the property was purchased to prehab, meaning getting the property ready to be renovated. In this market research case study, it is possible the homeowner’s possessions were in the property that needed to be cleaned out then someone resold the house for the renovation*****
  • 9/2/17: Listed for $112,000
  • 10/20/17: Price change to $107,000
  • 11/9/17: Price change to $105,000
  • 11/16/17: Price change to $99,900
  • 3/6/18: Price change to $95,000
  • 3/12/18: Pending sale
  • 3/23/18: Back on market for $95,000
  • 5/30/18: Pending sale
  • 9/21/18: Listing removed

Like stated in the first paragraph, this market research case study is in Rochester, Minnesota which is a HOT SELLER’S market!  Many houses go from listed to pending within days, sometimes within hours, and most go for list price or above.  If a house doesn’t sell within one week, Reel Property Solutions, LLC has found there is a major problem with the property, the homeowner has a unique situation hindering the sale, or the neighborhood is undesirable.  In this instance, the property had major repair needs that were neglected which is why the property is classified as “Lipstick on a Pig!”  If renovated and/or priced correctly, this property could have sold quickly.  Unfortunately, the homeowner didn’t renovate all the major areas needed, had a hefty price tag, which in return potential buyers were turned away.  OUCH!

What were the key renovations that should have been done?  Reel Property Solutions, LLC toured the property before AND after this homeowner purchased and renovated.  NOTE:  The persons who did the labor and exactly what materials were used are unknown.

The Before:

  • Bad roof with curled, crumbled shingles
  • Old windows without any locking mechanisms
  • Holes in the ceilings from water damage
  • Soft spots in the floors from water damage
  • Kitchen needed extensive remodeling to bring up to modern day trends
  • Bathroom needed extensive remodeling to bring up to modern day trends
  • Crumbling foundation with dirt exposed in the basement
  • Fuse box instead of a circuit breaker
  • Big fridge in the kitchen, very apparent it had not been cleaned
  • Cracked sidewalks and driveway
  • Old, rusted water heater in basement

The After:

  • New shingles
  • Old windows NOT replaced
  • Holes were patched in the ceilings
  • Soft spots in the floors were covered with a laminate wood flooring and people walking on soft spots would sink down several inches
  • Kitchen NOT remodeled; however, brand new gas stove brought in
  • Bathroom NOT remodeled, still had old style pedestal sink and still very dirty bathtub
  • Crumbling foundation remained in the basement with dirt exposed
  • Fuse box was NOT updated
  • Big fridge in the kitchen stayed and still extremely dirty
  • Parts of the sidewalk and parts of the driveway were dug up and new cement poured with a hand cement mixer
  • Same old, rusted water heater still in the basement

Assessment of why the property did not sell:

  • New shingles were a draw, yet when looking closely, the roof was sagging. Also, could notice some pieces of siding were missing from areas near roof line and gutters were in poor shape
  • Windows did NOT meet code for many reasons, but probably a big reason was lack of locking mechanisms
  • Although holes were patched in the ceilings, it is unknown what damage still remained since roof was sagging in some areas
  • Soft spots in the floors are a major red flag
  • Kitchen should have been renovated by replacing cabinets, put in an island, and there was a wall that could have been knocked down to create more space between kitchen and a big entrance room from the garage
  • Bathroom was dingy, dirty, and nothing was replaced
  • Crumbling foundation should have been reinforced since it is a serious structure issue
  • Fuse box should have been updated to a circuit breaker
  • Big fridge in the kitchen should have at least been thoroughly cleaned
  • Major cracks in walls to indicate foundation is settling
  • Old, rusty water heater in the basement would need to be replaced

Crunching the numbers:

  • Purchased for $42,000
  • Rehab costs (rough estimates based on square footage, quality of materials, and experience in knowing costs):
    • Roof: $7,000
    • Patch ceilings: $7,000
    • Flooring: $1,000
    • Paint: $2,000
    • Brand new gas stove/oven: $500
    • Cement for sidewalk/driveway: $500
    • Misc: $2,000
  • Hold costs:
    • Taxes: $685/year
    • Electric, water, sewer: $25/month:
    • Gas: Most likely $0 since it did not need to be turned on
    • Insurance: Estimate $50/month for a vacant dwelling
  • Total: $42,000 + $500 transaction fees + $20,000 + $685 + $300/year for utilities + $600/year for insurance= $64,085
  • The property’s lowest list price was $95,000 – $64,085 = $30,915 for a hopeful profit.

Reel Property Solutions, LLC was educated by a top-notch premier education company, Fortune Builders.  One of the crucial points made from the start was EVERY TRANSACTION MUST BE A WIN-WIN!  PEOPLE FIRST, PROFIT SECOND!  Reviewing this market research case study shows many flaws that prevent the WIN-WIN and obviously does not reflect people first.  What should have been done?  Honestly, because of extensive repair costs, structure issues, and low resale value, the best thing would be tear down the property, fix up the lot and resell a vacant lot for a newly built house.  The win-win would be creating a safer environment for someone to live, a better-looking house for the neighborhood, and the cost of a tear down would be equal or less than the cost of attempting to renovate the existing property.

Reel Property Solutions, LLC has many other market research case study properties as well.  Contact us to find out more information or to inquire about how you can be part of a WIN-WIN transaction! 507-722-1511 or 507-218-8788.


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