Buying Advice

How to get YOUR house when there are Multiple Offers

by John Rice

I’ve been in a lot of multiple offer situations.  None of them are ever fun.  I usually win though.  Want to know how?

Well, in an offer, there are pretty much just a few things a seller cares about.  Price is the one that comes to mind the most.  Often overlooked but equally important are the inspection terms you do and the closing date.  What I try to do when I know there are other offers on a property is to talk to the listing agent and find out what is important to the seller.   Like, have they found a house yet?  If so, when will that one close?  Do they need to stay in the house a couple of days after the closing to make it an easier transition?

Here are the details of my first and most recent multiple offer deals:

The first multiple offer deal I ever had was back in 2005.  The market was super hot.  There was a great house on Grafton that would be perfect for my client.  The funny thing about this one is that I actually won the offer by making a mistake.  (It IS only one of two that I have made since 2005.)  On this one, I got up very early that day and we were writing the offer in a hurry late at night.  For the closing date, I meant to put a certain date in December, but instead of writing “12” for the month, I wrote “11”.  I was saying we could close in 2 weeks when I meant to write in 6 weeks in other words.  This was back in the days when the buyer’s agent would actually go to a meeting to present the offer.  It was the only time I have done this since technology has made that a thing of the past.  I went in, told the sellers what a great house they have, how much my seller liked it, and even how she used the same shampoo we saw in the shower.  The listing agent kept asking me over and over again if I was sure we could close by “That” date.  They took our offer because of “That” closing date.  The husband-seller worked retail and didn’t want to have to move during his peak season.  Now, the funny thing is that the loan officer for my buyer as well as the buyer were both fine with a November closing date, I was the only one in the dark.  They were fine with it…..and it got us the house! (I was awful green back then 😉

I just bought a new place for my family.  First day on the market.  Back to back showings all that day too.  I think everybody who saw it must have written an offer.  I suspected there would be cash buyers.  It is hard to win against them since the seller doesn’t have to be concerned about the loan nor the appraisal.  No hoops to jump through at all.  I was planning on writing my offer contingent on a home inspection, but I would not negotiate on any repairs afterwards.  I would take it or leave it.  I knew with all the offers, this wasn’t going to be enough.  I though to myself, well, I have bought enough houses and been on enough home inspections to know what to look for.  The roof wasn’t old and the HVAC was practically new.  Those are the biggest deal killers.  Also, as somebody who went to great lengths to stop water coming in the basement of my former home, I have a 6th sense for water/structural issues.  Soooooo, I bought it totally As-Is.  I’m sure it has the same $500-1000 in repairs that most houses need.  I’ll deal with that myself since this was the best house for my family and was priced below market value.   I also knew the sellers didn’t have a house picked out yet.  Where I am keeping my old house to rent, I didn’t have to be in the new one by any certain date.  I let the seller pick a time that worked for them.  Guess what?  I beat out a full price cash offer!!

I know not everybody can be as flexible as I was when buying a house, but if you want to win the house you want in a multiple offer situation, the key is to make it easy for a seller to say yes to you.  You do it by giving them the best combination of price, inspection terms, and closing/possession scenarios that you can do.

Why my wife would fire me as her Realtor

by John Rice

“Sometimes I don’t like being married to a realtor.”  Oh no she didn’t?  Yep, she went there alright.  See, after casually looking for a new house for what seems like forever, we are finally going to pull the trigger on something this summer.  Problem is I keep shooting down every house my wife falls in love with.  She also told me that she wished she could just find a house she likes, get excited about it, and buy it.  I told her that the reasons I shoot down some of the houses we’ve seen are for things she will thank me for years from now.

One of her favorite houses (and mine) backed to a big field full of tall trees……for now.  I hit the PVA to see who owns that property and if it is inside the urban service area.  The owner is a developer who has never had a truly successful project, so I shoot that one down.  It would only be a matter of time before the bull dozers regrade that field and we’d have all the runoff potentially flooding the basement.  It was zoned for single family housing, but zoning can be changed.  Sure, the neighborhood’s HOA would have fought putting apartments back there, but you never know.  Then there is resale value.  If you pay a bit extra to have nothing behind you, you’ve lost that money once there are houses back there.  NEXT!

Then, we find one we both really like.  My issue there?  There is a similar neighborhood right next to this one.  No big deal, right?  There is when there is a $50-75k price difference for a similar house.  I wonder if in 10-15 years buyers will perceive a difference between the two neighborhoods, or at least enough to justify the price difference…..NEXT!

There is one she totally loves.  Has a pool, kitchen in the basement, everything.   Price isn’t bad for all that…..but, it is in an area surrounded by much cheaper houses.  There are only about 10% of the houses in that area that are in our price range.  The rest are about half the value.  Never a good thing to have an island of more expensive houses surrounded by less expensive ones.  Over time, the less expensive area is more likely to impact the values of the more expensive ones than the other way around, especially when there are more of the less expensive ones.  Plus, right around the corner, there are a few streets with the same houses as the one we liked that are only about 5-6 years older and sell for much cheaper.  I kind of think that once the newness wears off of this area, the prices will be more in line with the streets full of the slightly cheaper houses that are 5-6 years older.  NEXT!!

So, now we are considering one that we both like due to the neighborhood.  It is a good value.  The area is old enough that the dust has settled and we shouldn’t have any surprises about its future.  Problem with this one is that it is on the main road through the neighborhood and sits diagonal on its corner lot.  I’m having a hard time thinking about being on the main drag of the neighborhood since I am always telling people that you’ll lose some buyers when you go to sell.  Plus, the backyard is really small where the house sits diagonally on the lot.  That doesn’t bother me personally, but you’re losing some buyers with several kids since it is not the backyard they will want.  I’m only going to buy this one if I can get it at the low end of the comps since I will always have to sell it at the low end of the comps due to the lot and road.  We’ll see.

I think my wife would sometimes like one of those realtors whose advertising says something like “Let me find the home of your dreams!”  For some buyers and realtors, that is all they think a realtor needs to do.  Take people out in a shiny car and open doors for them until the dream home is found.   I often get listings from sellers who used an agent like that when they bought.  All they knew was that they liked their house.  The agent didn’t tell them that their lot sucked, their floor plan was odd, or anything that would have an effect on their ability to sell their house later……SEE HONEY, I’M JUST TAKING CARE OF YOU LIKE I DO ALL MY BUYERS!!

All joking aside, my wife knows I’m watching out for us.  I shot down a great house when we last bought because there was a vacant field across the road.  I looked at the zoning.  It was so broad that practically anything could have been built there.  Ground has just been broken for a large apartment complex in that field.  The same house is for sale again for much less, and still hasn’t sold.  Meanwhile, our current house has turned out to be a good investment because it is in a popular neighborhood with a good school district, and I bought it right.

Now really is the best time to buy (and why it won’t last long)

by John Rice

Yeah, it sure is.  I remember throughout my career seeing other Realtors try to create urgency by saying “Now is the time to buy!”  It was usually tied to a drop in the interest rates.  I always thought my clients were smart enough to realize the interest rates dropping by an eighth of a point wasn’t that big of a deal, so I never jumped on that wagon.

Today is different though.  I am saying now is a great time to buy.  Probably the best time in the past 15 years based on all that has happened.  I’m not going to quote a lot of statistics here since they don’t always tell the whole story.  Like sure, having 1126 sales year to date verses 1000 sales for the same period in 2011 feels good, but 2011 was a bust after the tax credit expired in 2010.  Somebody could point out that 1126 sales YTD this year is nothing compared to the 1722 we had in 2005, but we don’t know how many of those sales were houses that were flipped, meaning one house can count for two sales.  Another could point out that we have had a milder winter that has brought buyers out early………and we all could debate on why the glove didn’t fit O.J. Simpson too.

I’m mainly looking at stability.  As somebody who owns a few houses, I’m concerned most about value.  It’s only the realtor in me that cares about the number of sales.  If supply and demand are pretty in balance, I don’t care.  If my house were the only one for sale and there was only one buyer out there, I’d be fine with it.

This is the first year in a long time where prices aren’t dropping around here and the market is standing on its own two feet.  The tax credits tried hard to stabilize the market, but that turned out to be just a shot in the arm.  Today, we don’t have any crutches for our market.  It’s just about good prices, really low interest rates, and the appearance (whether real or perceived) of an improving national economy.  I’m not seeing the fear of the future like we did as recently as last year, and I sure am not sensing the hesitation from buyers to pull the trigger on a house.

How long will this last?  Who knows?  While we aren’t going to wake up later this year to find an early 2000’s frenzy, I think we’ll see seller’s gaining confidence again.  Right now, they still feel pretty lucky to sell their house.   I think they’ll become less willing to bend over backwards for buyers, which means a higher sales price and/or less negotiation over inspection repairs.  Also, rates will eventually go up.  While rates dropping don’t motivate buyers as much as you might think, rising rates do.  That’s always been funny to me how people seem to care more about a payment going up by $35 a month than they do about a payment dropping by $35 a month.   Let me ask you this, do you see rates going much lower?  If your answer was no, that means the only thing rates can do is stay the same or go up.

So, now really is a great time to buy.  It’s also a great time to sell.

You’ll know if you had a bad Buyer’s Agent when you go to sell

by John Rice

I’ve got a pretty easy day today.  The phone hasn’t rung much, no houses to show.  It’s been pretty crazy busy lately, so that’s why I’m a little late with the blogging.

I was just scrolling through some listings in my saved tab on lbar.com.  I’ve been following this house that I sold a few years ago that was back on the market.  Want to know the story?

Here goes:  I was the 3rd realtor to have this listing and the only one to sell it.  It backs to a wooded area in a nice neighborhood.  I was the only agent that made a big deal over the wooded area.  Why did I do that?  Because it was the only unique feature this house had over every other house that was for sale in that price range.  Truth be told, it wasn’t a house I could have recommended to any of my buyers.  In fact, my wife and I had looked at this house before we moved 4 years ago and were not interested.  The house was right at that point where a lot of expensive maintenance was coming up and I didn’t want to fund all that, plus a tiny kitchen and odd placement for the laundry.

The house sold to a first time buyer represented by another agent.  It was great for my people because they were able to get top dollar for a house with rotting windows and a roof with shingles literally falling.  The repair list was very minimal, which made it easy for me (and the buyer’s agent…..which I suspect was why it was so minimal.)

Flash forward about 2 year.  The house comes back on the market.  I’ve got several buyers in that price range at the time, and they all want to see it.  I show it to them, but tell them what I know about the place.  None of them are interested.  The showing instructions that the listing agent put on the MLS was that the seller’s needed plenty of notice to show since they had to remove dogs.  The house was vacant.  The last time I showed the house, I told the listing agent they might want to change that since it could mean more showings, especially from the agents out with buyers looking at other listings in the area.  I often get calls from an agent with a buyer in their car that didn’t like the house they had an appointment for and have asked their realtor about “The one down the street.”  The dude never changed the showing instructions.

Finally, the seller changes realtors.  They got one that did a good job of presenting the house.  I’ve had a deal with this lady before.  She is pretty good at staying on top of things.  It takes a while, but it finally sells.   It sells for just over $10,000 less than they paid for it……probably to another buyer that has no idea that the house still needs a new roof and has the same rotting windows.  They also probably don’t know that 8 out of 10 buyers will not want the house when they go to sell it due to the tiny kitchen and odd placement of the laundry.

I guess all this just reminds me of what I see on a daily basis.  There are agents out there that don’t care a thing about their clients.  Then there are agents out there that really do care and do a great job.  If for some reason you are reading this and don’t think I am the agent for you, shoot me an email or text/call and I’ll be happy to recommend somebody that might be a better fit…..I’m just too tired of seeing people suffer the consequences of having a bad agent.

 

P.S.  I hit spell check after writing this post and it was the first time it said no errors were found.  Hope my 7th grade Language Arts teacher is reading this!!

Do you know what neighborhoods have the most crime??

by John Rice

People ask me all the time if a neighborhood is “Safe”.  That’s when I often start verbally blogging about the difference of what we perceive to be safe and the reality that crime happens everywhere.  I kind of think that most people see a pretty street with well-kept lawns as a “Safe” location……and a cheaper area with lots of chain link fencing and junk in the yard as unsafe.

I own 4 houses.  3 of them are rented and I live in, of course, the nicest one.  One is downtown and is worth less than $20k.  The other two are around Man O War near Alumni Drive.  The one I live in is near Hamburg.  Which do you think has had the most and least crime in the past 4 months?  You’d think my own house located on a cul-de-sac in a desirable neighborhood with the best school district in this part of town would have the least crime, right?  And my little rental shack off of 3rd street would by far be the most dangerous?  Well, you’d be wrong.

Below is a link to the crime map.  Before you click it, think about some of the neighborhoods you think would have the most/least crime then look at them on the map.  I bet you might be as surprised as I was.   I will add this though…..As somebody that checks the crime stats frequently, it seems that crime like cars and houses getting broken into seem to come in waves.  My neighborhood has always been pretty low on crime, but last fall and winter all those crooks made their unwelcome appearance in my area.  Once it starts happening frequently enough for the police to patrol more often, they move on.  They may be in your neighborhood next.  That is one reason it is better to look at the crime from a longer vantage point than just the past month.  I tell people looking back over the past 6-12 will scare the heck out of you, but should give you a realistic view of what you can expect before you buy.

Here is the link:

http://www.raidsonline.com/?address=Lexington,%20KY