Zillow, PLEASE stop doing this

Okay Zillow.  I can deal with you saying every house has a carport.  I can deal with your inaccurate Zestimates.  I can deal with you often messing up school districts.

What I can’t deal with though are the Pre-Foreclosure listings.

Why?  Because they ARE NOT FOR SALE!

Zillow, people see a house on your site and think it is for sale.  Why do you confuse the public and leave it to us agents to explain to our clients that the house you just posted is not for sale?

Here is what is going on with those Pre-Foreclosure listings.  The person who owns the house is far enough behind on their mortgage payments that the lender has filed a lawsuit.  As soon as that happens, Zillow posts it as a Pre-Foreclosure.  Since the person who owns the house is not the bank, you cannot go see it since it has not been foreclosed yet.

If the lawsuit goes the way the lender wants, the house will eventually be sold at the Master Commissioner’s sale.  The Master Commissioner is who is appointed by the court to sell the house.  Anybody with 10% down and proof of the remaining funds can go bid on the house.  You have to have the funds available.  You can’t go down there with 10% down and a preapproval letter for a mortgage.  You have to show proof that you have the balance of the money available.  You also can’t see the house.  You have to buy it without any type of inspection contingency.

There are two types of buyers at the Master Commissioner sale:  Investors and the Lender for the house.  Sometimes investors get the house.  Most of the time the lender buys the house.  Well, we call it a sale but in all reality what is happening is the money the lender pays for the house goes to settle the debt the seller owed them so they are getting it right back.  Picture a dollar getting pulled out of your left pocket and going into your right pocket.

If an investor buys it, most of them either flip it or rent it.  If the lender buys it, it eventually goes on the market for sale.  This time when you see it on Zillow, it will really be for sale….and it will probably say it has a carport.  And the Zestimate will be inaccurate.

How the terms of a contract benefit both parties

A buyer of mine just bought a house that was for sale by owner.  Nice sellers.  Nice house.  They have been very easy to work with so far.

Being unfamiliar with the contract that all the realtors in this area use, they did not like one part about the termite inspection.    It was the part that says the seller has to pay up to 1% of the sale price to repair termite damage if any is found.

They said they didn’t want to be on the hook for that much.  I get it.

However, this clause benefited the seller just as much as it did the buyer.

I’ve sold hundreds of houses and been involved in the inspections for all of them.  I have only seen 3 houses that had extensive termite damage.  All were in houses where the sellers had lived there for decades and never done a termite inspection.  It is pretty rare to  find termite damage.  Most of the time if there is any damage, it only costs a few hundred dollars to repair.

Let’s say there is some termite damage at this house and my buyers decide they do not want the house any more.

In this case, the seller would have been very happy to say to the buyer “No, you can’t walk away from the sale.  The contract says you have to let me fix it and by golly, I am gonna fix it.”  The seller would want to use this clause in the contract to keep the sale together.

 

How will I know?

Sorry if I have that Whitney Huston song going through your head now.

Buying a house is stressful.  You don’t want to lose a house and at the same time, you don’t want to make the wrong decision.

Back before the market got so hot, I would tell people they know they have found the right house if they wake up the next morning afraid it is no longer available.

I haven’t said that in a very long time because usually, a good house is sold long before you ever get in bed to sleep on it.

While I can’t really give that advice any more, the principle is the same.  If you like the house enough that you don’t want to lose it, that is probably a good sign that it is the right one.

 

Some questions I occasionally like to ask when a buyer is unsure:

Can you see yourself waking up here every morning?

Can you see yourself tucking your kid in bed here?

Is there anything that is such a big turnoff to you that it would make you miserable living here?

Think about what your daily routine would look like in this house?

 

For most people, buying a house is an emotional decision.  Sure, there are basic parameters of size, location, etc.  Among all the houses that meet that general criteria, buyers pick the one that makes them feel the best.

Did you get a good deal?

You bought the only house in the neighborhood that doesn’t back to green space?  Did you get a good deal?

You bought the only house in the neighborhood that doesn’t look like the others?  Did you get a good deal?

You bought the smallest home, the largest home, the one with the strange floor plan, the only 3 bedroom home in a neighborhood full of 4 bedroom homes, the one with a one car garage when every other house has a two car garage, the one with the really steep driveway, the only one that doesn’t have a flat backyard.

Did you get a good deal because you paid less than what the other houses in the neighborhood are worth?

Odds are you didn’t.

One of the toughest things to explain to buyers is the difference between actually getting a good deal and the perception of getting a good deal.  Often the odd ball house will appraise for more than it is worth because appraised value is different than market value.  Market value is what YOU or any buyer will pay for it.  Appraised value is what somebody who isn’t going to buy it thinks it is worth based on a formula of assigned values.

It is easy to think you got a good deal because your sale price was lower than the rest of the neighborhood, but value is so much more than price per square foot.  You often don’t discover you did not get a good deal until many years later when you want to sell.  It is only then when you can judge if you really bought it right.

When I buy a house, or am evaluating one for a client, I first determine what is the norm for the neighborhood.  You want a house to fit in.  You don’t want anything drastically different unless it is something like having more bathrooms than the norm, more garage space than the norm, a bigger or better lot than the norm.  Those are good differences because they are better than the norm.

While I am on this subject, I’ll add that having one big positive does not make up for one big negative.  If you have the biggest, nicest lot in the neighborhood but also have the steepest driveway, most buyer’s walk away thinking “If only the house didn’t have that steep driveway, it would be perfect!”

So when you are out house hunting, look around.  Learn the neighborhood.  Find out what the typical house is like.  Then compare it to the one you are interested in buying.   Or, make it easy on yourself and call somebody who knows that stuff already.

Mistakes first time buyers make

Being a first time buyer is tough.  I mean, you go into it with no experience and have to make one of the biggest decisions you’ve ever made!

When my wife and I were ready to buy our first house, we were clueless.  We had a tight budget like most first time buyers.  We would look at terrible houses.  One backed to a train track.  One was in a high crime area.  We finally found one in Winchester.  We had not thought about what happens once we find one we want.  We had no idea what to do with making an offer, the inspection process, or anything else.

We ended up with a pretty worn out house that the seller had only completed 80% of any renovations he had done.  The house did not have central air conditioning, the heat was a fireplace and a giant floor furnace in the dining room.  Usually those giant floor furnaces are in a central location so the heat can move around the house.  Our’s was in the far front corner.  It would get about 110 degrees in that room.  The next room was 90.  The next room was a very nice 70.  By the time you  got to the opposite rear room, it was 50 degrees unless you started a fire in that room.  Also, two of the floor joists were cut when this furnace was added to the house.  It was a really old house and probably didn’t have heat when it was built in about 1915.

We picked sort of a terrible location.  Turns out there was a shooting two doors down right after we signed a contract.  The seller assured me that the shooter only shoots at people he knows.  For some reason, that made me feel better and I made a mental note to never introduce myself to him to avoid being on the list of somebody he might shoot.

We moved in and we were happy living in our craptastic first home.

The house seemed huge at first.  Then we had two boys.  We began thinking about things like school districts and the boys playing outside alone.

We moved.

So, here are some common things that first time home buyers don’t think about……including one first time buyer who would become “THE LEXpert.”

  • Size-Most first timers are coming out of an apartment.  All houses seem big.  I see a lot of people buy a house barely bigger than their apartment.  It becomes too small once a kid comes along.  Try to buy something you can grow into a bit.
  • Location-Most first timers have to choose between a prettier house in a worse location and an ugly house in a better location.  They usually choose the prettier one.  Location never goes out of style, but trust me, one day we will be sick of having everything white and of shiplap.  When that day comes, you’ve got an outdated house in a bad location.
  • Condition-Most first times don’t know how long a furnace lasts, so when they hear that one is 27 years old, they don’t care.  They also don’t know the cost to replace one.  Same for roofs, windows, etc.  I usually tell all buyers that there are 3 biggies in a house, which are the roof, hvac units and windows.  I don’t usually see all 3 that have recently been replaced, but shooting for 2 of the 3 is good.  You don’t want a house that will have a $5000 expense coming up soon.
  • Price-First timers seem to fall into two categories:  The ones willing to pay the full asking price and the ones who will want to make an 80% of the list price offer.  I always tell all my buyers that the first thing we need to do is figure out what the house is worth.    Then we base an offer on the value of the house and not the asking price.
  • Maintenance-Houses are money pits.  Mother Nature is pretty much trying to ruin your house.  She will win the war, but you can win each battle.  You’ll have repairs for appliances, the furnace/air conditioner, your roof may spring a leak, the water heater may go out.  I’ve got a bunch of rental properties.  I usually spend an average of $2k a year for repairs and maintenance.

My goal with all my buyers, especially first timers, is to find a house in a safe location, that won’t need a ton of repairs in the near future, and that will be easy to sell when they want to move up.