Month: February 2011

When 2 negatives together seem like 3

by John Rice

Sometimes a bunch of negatives are overwhelming when you have to see them all together.  This is something I learned when I bought a fixer upper house that was worn out, out-dated, and in disrepair.  I was broke back then, so I had to live with it for a couple of years.  Man, that was rough.  I remember thinking that the carpet wouldn’t look so bad if the walls weren’t so bad, and how together they really make the light fixture unbearable.  I guess that is when it first hit me how 2 or more negatives seem to compound their effects when viewed in the same room.

This is something that has really helped me out in real estate.  Let’s face it, very few houses are totally updated showplaces.  Just about any house has something old and/or worn out.  My current house, even though we have done a lot to it, still needs new carpet upstairs and our green laminate counter top needs to join the rest of 1998 in the landfill.  When we bought the place, it was all original, which meant not only that once trendy green counter top, but also a green vinyl floor.  I can’t believe I am telling you all this, but what the heck, the kitchen also had wall paper with fruit on it that one of my friends said looked like something Willy Wonka would make.

While the counter top is still around, the wall paper has been replaced with fresh paint and the green vinyl is now  Brazilian Cherry.  It looks so much different that you hardly notice the counter top is still green, when you use to feel like you were in Emerald City from the Wizard of Oz.  It is still a negative, but less of one now when viewed without the others negatives.

I’ve got a listing in my pipeline that I have been working on for a little bit.  In general, it just feels like a rental grade property.  It has a nice floor plan and all, but just doesn’t feel like something that a buyer will fall in love with.  Like I have always said, a seller has more power in the deal if the house comes across as something special.  The market is currently flooded with “Average” houses.  This house already has some pluses that could easily be over looked.  It has a couple of nice ceiling fans and brushed nickel fixtures……Things that I bet most buyers wouldn’t even remember after leaving the house if we didn’t do anything to it.  So, what is the plan?  We have just had the place painted.  Now the whole house is a nice warm beige.  That will unify the space to a buyer.  Buyers like to see all the rooms the same color.  You have to remember that buyers are going from room to room in a 20 minute window.  They like it all to be consistent.  The next step is going to be to replace the vinyl flooring in the baths and kitchen.  Then we’ll clean the existing carpet and stage it.

Now, when a buyer comes in this place, they will see fresh paint on all the walls and ceiling, clean floors, and new vinyl in the kitchen and baths.  They will also probably now notice the ceiling fans and nickel fixtures.  See, the goal is to make it the best house any buyer can get in that price range.  After all, as long as there is one buyer out there, you know they’ll pick the best one.

Reading the tea leaves when your house isn’t selling

by John Rice

House not selling? Wondering how to interpret what is going on? Here are a few of my thoughts on some common situations. The following assumes your house is being presented well online with plenty of good pictures and marketing remarks that describe it with more than trendy generic AI generated verbiage.

The house that gets lots of showings but no offers

Assuming that you don’t have some negative that wasn’t obvious like backing to a highway, apartments, or having an Eiffel Tower looking electrical thing in your yard, this situation simply means that the house doesn’t live up to what buyers expected. The good news with this one is that buyers think the price for what they thought the house would be is okay or else they wouldn’t come at all. The solution here is to either lower the price or improve the house so that it meets the expectations buyers have. Whichever is easiest.

I once had a condo that got tons of showings. I kept encouraging the seller to paint. Once we did, it sold. I recently had another listing that was getting tons of showings. It was a nice place, but just felt like a 15 year old house that needed a fresh vibe. The seller did some painting and replaced the flooring in all the bathrooms. As soon as it was done, it sold. Both of these places looked great online, and just needed to match what buyers thought they were getting. Both were improved for far less than the price reduction we would have needed, so both sellers actually came out better by going that route.

The house that gets no showings

This one is easy, but hard for sellers to accept. The price is too high. If a house is presented well on the MLS, and still nobody comes to see it, all you can do is lower the price. Real estate is all about price, location, and condition. You can’t change the location, but the other two you have some control over.

Also something to think about is this: If you have a $400k house and you’re asking $475k for it, buyers are comparing it to other houses that are really worth the asking price. The buyers who are going to spend what your house is really worth aren’t even going to see it since the list price is over their budget.

The house that gets the same bad feedback over and over

This is the least fun thing that can happen to a seller. I mean, they get kicked out of their house for showing after showing with no offers AND get to hear what people hate about their house.

Several years ago I had this really cool older house that had been mostly remodeled. It had the smallest living room I have ever seen……must have been the smallest anybody had ever seen since that is all I kept hearing after the showings. I’d ask for feedback and the buyer’s realtor would go on and on about how beautiful the place was, how unexpected it was to have walk-in closets in such an old house….then they would say their client wasn’t going to buy it since the living room was so small.

We tried putting in smaller scale furniture, but that didn’t help. After that, all we could do was drop the price. A price reduction opens the house up to a larger pool of buyers as well as enticing them to overlook a shortcoming if they are getting a better deal. We got that one sold too.

If you have a situation that doesn’t fit into these scenarios, give me a shout and I’ll let you know what to do.

Negotiating An Offer Is Like Playing Poker

by John Rice

When I was a little kid, my dad had this old set of poker chips.  There were red, white and blue ones built into a little round thing with a handle on top.  I remember playing poker as a pre-teen with my friends.  I also remember winning a lot.  I didn’t do it by bluffing or anything that actually had anything to do with the game itself.  What I got good at was studying my friends.  It’s pretty darn easy to win when you can tell if your pals have a good hand or not.

My dad always told me I was pretty good at reading people and seeing their motives.  That is one of my favorite things in real estate.  See, when I get an offer on a listing, I like to sit back for a minute and just take in all that I know before responding.  It is even easier if the buyer’s agent has loose lips.  Sometimes google and Facebook help you out too. 

I recently was in a deal with a great realtor.  He did everything he should have done.  My clues here were the closing date.  It was the Friday before school started back after Christmas break.  Sure, most real estate deals close on a Friday, but what made this one stand out to me was how soon it was.  Not the usual 30-45 days out, this one was just about 2.5 weeks out.  So, I hit Facebook, and sure enough there was a person with the same name with school aged kids who lived in the same surrounding town that was on the check for the earnest money.  I also knew that most seller’s wouldn’t want to be out of their house the week between Christmas and New Year’s Day.  We stood firm and got a good price.

I just had another deal like that.  My listing is in the only neighborhood in its price range to have the good school district that it does.  We got a really low offer.  So low we didn’t even counter it.  Since the buyer thought this house was in poor condition, I figured they must really want to be in this school district.  I mean, there are tons of new/newer houses within walking distance of this one, but they are in a different school district.  I don’t know why somebody would pick a house they didn’t like that much when they can get a better house for the same money.  Had to be school district.  So, I hit the MLS to see what all choices this buyer had in that school district.  The only other house was one with a crazy steep driveway…….so I knew we could hold tight on our price.  We did and got it, despite the other realtor’s great effort to get it for less.

So, like Kenny Rogers said, “You gotta know when to hold ’em.  Know when to fold ’em.  Know when to walk away.  Know when to run.”

Home Inspection Gone Bad

by John Rice

Well…..It finally happened to me.  Finally encountered a house so bad that I had to tell my client to walk away from it.  My client has used me a couple of times now.  He likes to find a good deal, live there for a little bit, and then cash out.  That model has us looking at some houses that most other buyers won’t consider, so we tend to see bigger problems than usual.  We knew this one had some window issues and a lot of cosmetic stuff when we wrote the offer.  After getting it inspected, turns out the furnaces and air conditioner units were also shot as well as the roof.  These are things I can normally check before we get to this point by looking at the seller’s disclosure, but where this was a bank owned property, we were really shooting in the dark.  Sometimes I can search the history of the house on the MLS and get this info from when it had been listed before……This one had no history!  No electricity was on until the inspection and the roof had been covered with snow too.

Since this just didn’t fit my buyer’s model of getting a bargain and doing some sweat equity work, I told him to walk away.  I think I floored the home inspector, who told me he had never seen a realtor do that before.  He said most of the time realtors  always try to sugar coat things to keep the deal glued together.   To me, you have to put the results of a home inspection in perspective with your clients goals.  If this house could have been bought enough below the potential market value and my folks were totally in love with this place, my advice might have been different.  I might have gotten quotes on the work it needed and then negotiated with the seller.  In this case, it just simply didn’t fit with my client’s investor mindset.