LOL…..I got one of the biggest laughs ever out of this!

I have been working with a super cool family wanting to buy in a school district where there aren’t too many choices. A house comes on the market, and since I suggested we look at everything in this school district, they wanted to see it.

I look at the house online and realize it looked familiar. I hit the history button and saw that it sold last year and an agent I know was the listing agent. It sold for $199k and the seller paid over $6k in that buyer’s closing costs….meaning the “Net” sale price was more like $193k.

The current listing price is $234k. Nothing has been done to it. The market has improved, but not that much. I tell my client that the house is grossly overpriced. This is where my story is leading……she says Zillow has the value at $287k!!!!!!!

So, we have a house that might be worth $200k with an asking price of $234k and a Zestimate of $287k.

How did that happen? The Zestimate I mean. We know how the house got so overpriced. The seller is unrealistic. Zillow has some computer program that looks at recent sales. That is good. Their program though, doesn’t go inside the house, know the condition of the subject house or the comparable sales, know why the same house in one neighborhood might be more or less than one in a neighborhood just down the road.

What had to have happened to get this Zestimate so high is that Zillow’s program looked at other similar sized houses within the same zip code or within a certain radius. There are houses with this square footage close to this house that are worth that much, but NONE in this neighborhood. In fact, when this house sold last year for $199k, that is the highest price ever paid in that neighborhood.

The problem with Zestimates is that it can mislead the public. If you didn’t have an agent that knows the local market and neighborhoods, it might be easy to think this house was a bargain at $234k, when in fact it is still $30,000+ overpriced.

My advice? Do like my people have done…..use Zillow for research and fun but find an agent that knows the local market and who won’t let you pay too much for your next house!

So, I am standing in the yard of one house that is in a neighborhood I recommend. My client asks what I think about the neighborhood right next to it. Both are about the same age. Both are about the same price range. Both have the same school district. I tell him I usually don’t recommend that neighborhood. He asks why.

There isn’t really anything wrong with that other neighborhood. I guess the biggest negative is that it is right beside a neighborhood that is a better choice. See, the one he asked about is a smaller neighborhood. More than half of it is just one long road. There are cars parked all over the place and people drive too fast down that long road. The neighborhood we were standing in was larger. Larger is better in the sense that it is less likely to be negatively impacted by it’s surroundings. The neighborhood I liked was also a much prettier environment. The type of place you can see people walking dogs or kids riding bikes without the hassle of speeding cars or vehicles in driveways blocking the sidewalks. If the neighborhood I liked so much was not there, then I could give that other neighborhood my blessing…..but I am always about helping people sort through stuff like that so they can make the wisest decision possible.

Don’t just find a house you like. Find a house you like in a neighborhood that you will enjoy the environment and will be attractive to buyers when it is your turn to sell.

I had a deal fall apart after the home inspection today.  That doesn’t happen to me very often.  Even my home inspector says I know enough about houses that I rarely let a client get a bad one.

The one today had the usual mix of old house issues, but it also had some pretty big foundation issues.  I looked it over good but I did not go in the crawlspace before we wrote the offer.

This got me thinking about what I usually tell people regarding when to walk away from a house.

In today’s case, I knew the seller well.  This would have been the 7th house they have bought or sold with me.  It was going to be their first rental property.  The husband/buyer is like me in the sense that he wouldn’t be able to sleep at night knowing he had a house with an unfixed problem.  He would want to repair it and do it correctly.  That just wasn’t financially an option for investment property….I mean, the goal is to MAKE money!

I had another client that bought a house that needed a lot of work.  He was buying it with the goal of fixing it up and selling it a few years later.  The cost of the repairs meant that it didn’t really fit into his model of making money.  We walked.

Another client had been looking for a very specific property.  He picked the house that holds the title “Worst Home Inspection Report of ALL the Houses John Rice Has Ever Sold.”  There was/is a lot for him to fix, but it was the only place he had found in years of looking that met his specific criteria for location and features.  There was no back up plan for him.  It was compromise his criteria/location or deal with the problems.

I had another client that almost walked away from a house.  I told him that he should stay in the deal.  The seller agreed to fix many things but the roof is needing replaced soon.  I reminded him that while the roof is expensive, the house has new windows and newer HVAC…..and is on a the huge flat lot he wanted in the exact neighborhood he wanted to live in.  There were more positives than negatives and he could not have found a house he liked as much that was equal in all ways PLUS had a new roof.  We are closing next week.

It is tough to make the decision after a home inspection.  I think there are really two questions to ask yourself:  Can I find another house I like as much?  Am I willing to take on whatever repairs the seller will not do?  If you can find another house you like as much that will likely be in better condition, then walk.  If you love the house and don’t think you can find a house you’d like as much, look at staying in the deal.  Then, decide if the expense of the repairs is either worth it or even possible for you.

And keep in mind that there are no perfect houses.  I have seen people walk away from houses against my advice only to find that the next house they had a contract on had 95% of the same problems.

 

 

 

 

Simple.  The market is hot for only the best listings.  While the market shifts a little here and there with time, there are some simple truths that always remain.  One is that the best houses will always sell faster regardless of the market.  During the bad market, I always said that if there are only two houses for sale and only one buyer, the buyer will pick the best one.  Now that the market is better, maybe I should say if there are only 200 houses in a price range, the 100 buyers out there will pick the top 100?

My friend Shaun and I were talking last week.  We were wondering how many buyers there really are right now clamouring for the same houses.  He recently blogged about this too, but from a standpoint of accurate list pricing.  That is also one of those truths that is constant regardless of the market….the houses that are priced accurately will also always be the ones to sell more quickly and for closer to the asking price.

So, what does this mean to a buyer?  Well, it means not all new listings will have the perceived competition from other buyers.  Buyers today are so afraid of losing a house in multiple offers that many default to offering list price.  That is great if the house merits that, but not all of them do.  Like, you would have felt pretty stupid rushing in with a full price offer for one of those 39 houses that were just reduced, right?  Those houses obviously were not worth bending over backwards in hopes that the seller would accept your offer.

So how can you tell the difference between a new listing that you better rush to see and one that will end up being reduced down the road?  I look at several factors:  Price, condition, neighborhood, school district, etc.  If all those are good, I look for things that most buyers frown upon, like a steep driveway, odd shaped lot, unlevel lot, laundry room location….just several different things that my experience as a Buyer’s Agent tells me will make the house harder to love.  It is part gut and part science.  The house that is priced right, is in good condition, in a nice neighborhood and easy to say “YES” to is the one you better move on quickly.  The rest?  Don’t worry about those.  I think there are a lot of buyers out there right now who are paying too much for a house because there is a perception that all houses are selling fast.  Not true!

 

Just won my people their favorite house in multiple offers.  There were a total of 3 offers on this house.  Didn’t have to waive any rights nor did I have to go over the asking price.  Just used my head and presented my people as…..wait for it…..people and not just the names at the bottom of the page.

Remember, there is more to getting a seller to want to sell you their house than just the offer price.  There are inspections, closing dates, etc that are variables in the offer.  What I did do here is check the box that allows us to have the house inspected, but we will not ask for repairs.  We will take it or leave it.  But that wasn’t what got us the house.  Sure it helped, but the listing agent told me:

“Congrats! on Contract. Your presentation of the offer was Superb and your
Timing was Right On because two other buyers wanted this place Real Bad.
They identified with your little Note about the family.”

See, as I walked around the house with my client, I noticed the sellers have 4 sons.  My clients have a son too.  A toddler.  They mentioned to me that they plan on having more kids while we were inside the house……Sooooooo, I sent this note with the offer:

“My clients really wants this house for their 18 month old boy, (typed his name here), and his future siblings.   They want to be able to walk to the neighborhood park and like that it will be a good, safe area for him to grow up in.  They also appreciate all the updating your seller has done…….and I really loved their choice in granite!!”

Every bit of that was true, and I am totally sure that the other two agents could have said the exact same thing.  But they didn’t.  And they didn’t get the house for their client.

I totally believe most sellers want to feel good about who is going to live in their house after they leave.  Especially if the sellers are attached to the home and have many good memories there.  It is all about making it easy for a seller to say yes to you.  So much more complex than just going a little over the asking price, which is the default setting for most realtors.

Did you lose your dream house in multiple offers?  Afraid you might lose out when you do find the right one?  Give me a shout….I’ll get it for you!!