Buying Advice

Is it turning to a Buyer’s Market?

by John Rice

Short answer: It depends on the house.

Long answer: I read an article this morning asking this same question. It had all the usual data in any article related to the nationwide real estate market. Average days on market, Average sale price compared to previous years, the number of listings compared to previous years……blah blah blah.

None of that really matters. Why? Because no two houses and no two markets are the same. There is no average house. Average means a composite of all data. It does not look at each house individually. Do you know who does look at each house individually? Buyers do.

A buyer looks at every house within their budget and decides which one they want to buy. Let’s say they look at 10 houses. They are only buying one so they pick the best one. Do you know what else happens? Usually every buyer in that same price range also picks the same best one. That means we have multiple buyers competing for the best houses on the market. Meanwhile, the rest of the houses sit there and dilute all those averages so the media can make illogical conclusions to share with the world.

I have been a realtor for 20 years. It was a Seller’s Market when I started. Then a Buyer’s Market. Then an EXTREME Buyer’s Market. Then a stable market. Then it slowly built into the strongest Seller’s Market ever. Now, more than ever, we sort of have two markets. If you want the best house in the best neighborhood, you better be prepared to go over the list price and be flexible on anything important to the seller. If you are not picky, make a low offer on one of those houses that nobody else has wanted. After 20 years of this, I can tell you that when you go to sell whatever house you decide to buy, picking the best one will always have been the wisest decision. The best houses will always be worth the most, be the easiest to sell, and will have the broadest appeal.

What I like about a contingency contract

by John Rice

Well, I don’t really like them, but there is a good side to this type of contract if you are the seller.  Guess what it is? The buyer will typically pay you more with a contingency to sell their house first than they would without it.

I see it all the time. A buyer with a house to sell gets really nervous about not knowing where they will be living once they sell their old home. Now, unless the buyer already has a contract on the house they are selling, I always counter back with a kickout clause.  That basically means that IF the seller would like to sell the house to another buyer who does not have a contingency, they give the contingency buyer a certain amount of time to remove the contingency or back out of the deal. 

Another thing I like is that IF the contingency buyer can and does remove their contingency,  you have a back up buyer. Sometimes it helps when negotiating repairs if the buyer knows there is somebody else wanting the house if the deal falls apart!

I don’t really care for this kind of contract though when I am working with a buyer…..for all the same reasons. When I have a buyer who wants to write a contingency offer, I usually try to get them to just wait until we sell their house first. Here is why I don’t think they are a good idea for the buyer who can’t possibly remove the contingency if needed: Any decent realtor is going to counter back with a kickout clause. That means that if another buyer comes along they will lose the house. If no such buyer comes along, that means that the house would still be there when the buyer’s old house eventually sells, and they could probably strike a better deal at that point.

It’s all about trust & credibility

by John Rice

Well, it finally paid off today. In a big way too!

I am all about keeping the trust I work so hard to establish with my clients. I want them to know I am looking out for them. I often look for ways to reinforce that vibe.

Let me give you a little background about this story so you’ll understand how me spending the money for a service call to have an air conditioner looked at turned out to be a fantastic decision.

I have a client who is buying a house. We had it inspected. The inspector said the copper had been cut out of the air conditioner lines. After informing the seller’s realtor about it, they had their HVAC person come out to inspected the unit. Their HVAC person said the lines were there and all was well. 

 Since we had opposing opinions about the lines, I decided to send my HVAC person out. I told my client I had no reason to believe what the seller’s realtor said was untrue, but I wanted to prove it to them. I was really expecting the lines to be there and all to be well. It was really about putting my client’s mind at ease that all was well………..

Only all wasn’t well. Turns out the copper lines were missing. Probably recycled by now and the thief that took them has already spent the money. My HVAC guy said it would be a few thousand dollars to get it working again.

I am so glad I decided to get this checked out myself. Not that I thought there was any deception here. This was just one of those things where the person checking it earlier didn’t investigate all that well and my realtor-friend passed along the info they were told. If anybody is to blame it would be the HVAC person who said it worked just fine. (So, realtor-friend, I am not pointing any fingers at you if you are reading this.)

Can you imagine if my client had closed on the house tomorrow, turned on the air, and it not work? Then find out they needed to spend that much money? Not only would that have been devastating, it would have killed any credibility and trust I had built with them. In the end, it was worth every penny of the service call to guarantee that my client’s wallet wouldn’t be drained, their house to be cool, and to maintain the trusting relationship we have.

Things you hear when I am your realtor

by John Rice

1)  “Don’t buy a 2 bedroom house.” They are harder to sell when most every buyer and their realtor enters “3” for the minimum bedroom count on searches. A two bedroom listings is like playing Marco Polo alone. You’re shouting Marco, but there is nobody listening to reply with Polo.

2)  “If you buy a house that had been on the market for a long time and was realistically priced, you will have the same thing happen to you when you go to sell.” I find usually that means there is something odd about the house that most buyers don’t want, or else it would have sold sooner.

3)  “It is good to be in multiple offers when in a slow to balanced market.”  My experience tells me that when this happens in a slow to balanced market, you either have a fantastic house or one that is priced below market. When you go to sell you will either have a house that everybody wants or are buying it right, or maybe both!

4)  “If you have to use the word ‘Except’ when you describe your purchase, it was a bad one.”  “Except” means there is some major negative that will bite you on the bum if you need to sell in a slow market. “We got a great house…..EXCEPT for the tiny yard…..EXCEPT for backing to the loading docks of a grocery store…..EXCEPT for being on a busy road.”

5)  “Avoid a bad school district.” There are exceptions here, such as a condo complex that appeals mainly to empty nesters. However, if you have a house where the target buyer will likely have kids, it will be important to them even if it wasn’t to you. And notice what I did not say. I did not say to buy only in the best district. Why? Because most buyers with kids are okay with an average or better performing school, they just don’t want a poorly performing one.

6)  “A fixer upper isn’t always a bargain.”  I learned this one the hard way long before I got into real estate. If you buy a house for 80% of the potential market value, but must spend the 20% savings to make it just as good as any other house on the street, all you have gained is experience that will help you if you ever decide to become a realtor.

7)  “Buying the least house in the best neighborhood doesn’t always make sense.” This one runs contrary to what most people think. The reality is that the typical buyer for the nicer neighborhood is going to find your house plain or too small. I see it all the time where people will pick the better house in a lesser neighborhood over the lesser house in the better neighborhood for the same price.

So, follow these rules and you should be on a good start to not losing your shirt when you need to sell!

Who will buy your house when you are done with it?

by John Rice

You know, I think too often realtors and the public operate out of “one size fits all” generalities. Case in point is resale value. If asked which is better, a house with a first floor primary bedroom or one with all the bedrooms upstairs, most people and realtors would agree that the one with the first floor primary has broader appeal, and broader appeal is what resale value is all about. True…..but what if both houses are in a neighborhood that many people pick because of a good elementary school? That means that the target buyer has young kids. Very few parents I have shown houses to with young ones feel okay about sleeping on a different level from them. So, I think in this case, the one with all the bedrooms upstairs is a safer bet.

I used to live near a house that has 4 bedrooms and is about 2500 square feet. Being in a good school district, who do you think will be attracted to that house? Right, a family with kids. But, this place has zero back yard. The deck is about a foot from the property line. So now this poor house will always need to  find a family that doesn’t care about the yard or a couple/single person who wants a big house. A smaller house would have been better suited to that lot, and would probably have taken up less space too.

Many years ago I listed a 3rd floor condo in a complex that was mainly retirees. Did I mention there was no elevator? That was a hard sale. The typical resident didn’t want all the steps and it wasn’t the type of place to be on the radar of most people who weren’t retired.

I had a townhouse listed a long time ago whose target buyer would be a person downsizing.  The place sat right between a pharmacy and an elementary school on the same road. Which one did I emphasize in the marketing remarks? That it was close to a pharmacy.

So, when you’re buying a place, always think about the whole picture. Will the floor plan work for the most likely buyer? Is the yard too big or too small for the most likely buyer? Is that buyer going to even care about the school district? I always find when you start asking yourself a bunch of questions, you can always make a better decision.