Buying Advice

Helping out of town buyers

by John Rice

Well, I’ve got several out of town buyers busting into Lex soon.  Kinda got to thinking about how an out of town buyer is a little different that somebody that already lives in the area.

Obviously, they know nothing about Lex, traffic, schools, neighborhoods, the market.  They are kind of lost.  What they need is somebody that can be feeding them all that info before the drive or hop on a plane to look at houses.  I guess in the old days, and still today if you’ve got an old school agent, you didn’t really do anything except wash your car before they got here.  Didn’t have much choice before e-mail, satellite views, and the internet.

The beauty of all the info that is just clicks away is that a buyer can sit wherever home currently is for them and narrow down what school district they want to be in, see if the lot for a house they like is odd shaped, or backs to something undesirable, etc.  I guess I could also turn this post into why a house needs to be presented well online to even get anybody to come out in person to see it, but this is about out of town buyers………..maybe the next one.

I guess what I have learned to do is to work even harder BEFORE they get here.  Moving is stressful, but can you imagine coming to a town you know nothing about?  Lay in bed at night and wonder if you can really find a house you like in the short period of time you’ll be there?  Worry that you’ll make a bad decision just because you are pressed for time?  Run out of time because you’ve wasted so much of it looking at houses that won’t work for you?  All that really sucks.

So, what I try to do is narrow down the search to certain parts of town.  Usually a job or a school are the biggest things buyers need to work around.  From there, of course comes price range, old or new house, amenities they want, and the million other things they have in mind.  I usually spend a lot of time e-mailing answers to questions, telling them about neighborhoods, sending links for more info.  One thing that has really been sweet is that I bought a HD camcorder.  It is so cool to answer their questions with video.  They say a picture is worth a thousand words, and most realtors including me can probably go past that, so I guess it is also a real time saver too.

I’ve got some cool peeps coming to town this week.  I am excited to meet them in person.  I got a Facebook friend request, so this is actually going to be the first time I’ll know what an out of town client looks like when I arrive to pick them up.  I usually wonder around a motel lobby, make eye contact with anybody around until one of them smiles at me, then I say “Are you______?” 

I’m hoping after all the e-mails, all the previewing houses with the camcorder, all the info I have given them, that they will come to town and kind of feel like they already know enough to make a good decision.  That when they do see the houses, they feel like they kinda have already been there.  To me, that is really what it is all about:  Making it easy for them to make this huge decision…………and have fun when they get here!

When LOCATION isn’t enough

by John Rice

I had to take a different route to get to my kid’s school today since I had to park and go inside.  So I’m at a light at the end of a very prestigious street and I see this house that is for sale.  I’ve recently been in it, so that is how this all came about.

See, this house is on the corner of a street full of very old and grand homes.  It is one of those streets that has the huge old awesome houses where the rich people lived when it was new, and  still do.  This house is at the very end of that stretch of houses.  Beyond this house you start to have commercial zoning, smaller houses, and even some houses that have been chopped up into student housing.  It has location…..in theory.

This house has something else working against it too.  Like I said, the houses on this street are very grand.  The street has elaborately detailed houses of architectural significance…….This house looks like a giant farmhouse.  It has wood siding, simple architecture.  It really looks like something from a Norman Rockwell painting, just jumbo sized.  It doesn’t really fit in with its surroundings.

Then there is the fact that it has a tiny back yard, which is taken up by the 2 car garage that practically sits on the street.  When I parked there, my car hung out over the sidewalk.  And when you are in the backyard, you don’t feel like you are even in this nice neighborhood, you just feel like you are on a busy, loud corner.

Now that I’ve run though all that, let me tell you a little bit about the recent history of this house.  It sold for $400k in 2006.  Somebody spent a fortune on it, then tried to sell it less than a year later for $679,900….then $649,900…..then $599,900………then $437,000………then $380,000.  They even tried to auction it at one point with no success.  Now, you may be thinking that it was just a declining market, and that may have had some effect, but the real issue here is that the house just wasn’t right, despite having “Location, Location, Location.”  I am sure when they listed it for $679,900, that the comparable sales for that street supported that price……..again in theory.

So, I guess my real point here is that you really need to step back and take a look at what all is going on with a house before you make an offer.  Does it fit well with its surroundings?  Is it on the edge or in the middle of its defined neighborhood?  What negatives does it have?  All those things have market value.  See, when a realtor or an appraiser look at the comps, they don’t put a value on things that are more of a vibe issue  ( I do though!!)  If two houses were the exact same side by side and one had a really steep driveway, which one are you going to buy if they are priced the same?  What about one that has power lines running over the backyard?  Backs to apartments?  You’d pay less for an identical house with any of those negative features, and YOU are the market, even though on an appraisal they would be worth the same.   (Maybe I’ll blog about the difference between market value, appraised value, and tax assessment value sometime!)

If I had been the buyer’s agent for this house, I would have told him that even though this house seems to have location, it still has plenty of things that just aren’t right, and those things are going to make it worth much less that the comps.  I am sure he has learned all this now, but he has been foreclosed and the house is back on the market, this time for $285,000. 

If you ever buy a house with a big negative, you’ve really got to buy it right so you have some room to sell it right when that time comes.  The negatives may not bother you, but you need to know about them before you buy because one day you will need to sell.

Random Houses Don’t Sell as Well

by John Rice

I woke up at 3:44 this morning thinking about the differences between how a buyer and a seller view a house, what a buyer needs to know when looking at a seller’s house, and the other way around.

A buyer is going to come in a house, stay for 20-30 minutes if they like it, and wander around all the rooms.  They view the house as a whole at this point.  They are trying to decide if they like the whole thing since they can’t cut and paste features.  This is the main difference.  When a buyer goes from room to room and all colors are different, that just seems random to them.  A seller sits in each room for longer periods of time and tends to view the house as different spaces.  Same thing for finishes.  When a buyer sees brass door knobs, a nickel light fixture, and maybe bronze cabinet hardware, it throws them off.  It has a confusing vibe for them, just as it would for you if I spent the next few paragraphs talking about the Olympics and how much more I like coffee from South America than I do from Kenya.

If you are a seller, the best thing you can do is to give your house that cohesive vibe.  Paint all the walls the same color.  Makes things match.  It sounds silly, but those things have a calming effect on people.  People want to feel calm/relaxed in their home and this is one way to make  a buyer feel that way.  If two houses are side by side and identical, the one with the cohesive vibe is going to sell before the one with every room a different color.

Now I don’t want to make this about updates.  I think with HGTV we all believe  Stainless appliances and granite will make ANY house sell.  I’ve been in  houses that are totally random, but have these upgrades.  You know what happens if the house has the random vibe?  All a buy does is want to cut and paste those features to another house.  They say they really like that feature, but don’t buy it.  Often, real estate is more about minimizing negatives than accentuating positives.

If you’re a buyer, what you need to realize is that you can create that calming, cohesive vibe pretty easy.  You were probably going to paint anyway, right?  Another thing to remember is that you don’t want to over pay for a house just because all the rooms match.

How the $8k tax credit can effect neogtiating

by John Rice

Okay.  You want to buy a house.  You qualify for one of the tax credits.  You need a contract by April 30th.  But, who do you think has a little more power when negotiations begin?  Especially if your realtor let the listing agent know that you qualify?

I think we’ll see a little power return to the seller……..atleast until the credit expires.  For those sellers with the best listings on the market, they will probably get a few thousand buck more for their properties.  Buyer’s won’t mind paying a little more either since they will be getting it back through the tax credit.

What is one thing you can do to make sure this doesn’t happen to you?  Tell your realtor NOT to chit chat with the other agent and let the cat out of the bag that you qualify.  They may as well write “Sucker” on your head.  Especially once we start getting really close to the deadline.  I can honestly say that I didn’t bother to remember which of my buyers get it and which ones don’t.  So, when a listing agent asks me, I can honestly say “I don’t know.” 

Here is something else to think about.  Let’s say your somebody that gets the credit, writes an offer right before the deadline, then gets the house inspected AFTER the deadline.  If the seller and their agent know you will get the credit, and the deadline has passed, they know they can likely tell you no to any repairs you want.  You’ve lost a lot of leverage in negotiating repairs.

It sure is a great time to be a buyer, but it would be wise to find a house and get it inspected before the deadline.  It wouldn’t hurt to have a second or even third house on standby.

3 problems I never want to see

by John Rice

There are 3 things that are never good to see when you view a house.  Since I have a drafting/building material/architectural/construction background, I tend to always be in mini-home inspection mode when I look at houses with my clients.

I absolutely hate to see cracks in the brick that have been repaired multiple times.  I don’t know if you have ever seen this, but it also can happen to a concrete block wall.  It is where somebody filled in the crack, it came back, then it was filled again……….maybe over and over again.  You can tell because often the colors of the caulk or mortar are different.  The bottom line is that the house has movement.  That isn’t going to go away and can’t really be fixed totally.  Yeah, there are expensive things that can be done, but not of them can make it all good again.

Another thing I hate to see is when the seller has gone to great lengths to direct water away from the house.  Sure I appreciate the effort, but that tells you that the house has a big annoying problem.  You know this when you see big black corrugated drain pipe running all around the house.  Maybe if the driveway is right beside the house there will be globs of caulk at the joint.  To me, that just tells me there has been water in that corner of the basement before, which always means mold if it is finished space. 

I have a house that fit this bill, but I did some permanent fixes.  I say permanent because running drain pipe all over doesn’t really change the way surface water runs to the house.  It just deals with the water running off the roof.  After trying all these cheap fixes and still getting water in the basement, I went into overdrive.  I had the basement water proofed.  That kept water out of the inside of the house, but didn’t keep the water from eroding the soil under and around my foundation.  So, I hired a dude with a Bobcat and a dumptruck to regrade the backyard so surface water ran around my house instead of through it.  I also installed the one piece gutters that don’t clog, buried the downspouts and ran them where they wouldn’t be anywhere near the house.  Since I had one corner that I couldn’t really create positive drainage, I made a valley so that water would run parallel to the house.  Now my neighbor’s basement leaks instead of mine.  I hate that for him, but the reality is that if my house had been graded properly when built, he’d have gotten a lot of it anyway. 

 You may ask why I tell people to run when this happens if I fixed it in my own home.  The reason is because I think people should feel a sense of peace while they are in their home.  I did all this, but every time it rained hard or the ground was saturated, I was a nervous wreck.  See, the sump pumps could fail or we could have that one time where all my engineering can’t handle the amount of water.  I rent this house out now, but I still worry about it.  That isn’t the homeownership experience I want for my folks!

The next thing that can tell you a lot about the history of a house, even if the seller said in the disclosure that the basement is dry, is when you go down there and they have everything up on pallets.  Or maybe the washer and dryer are sitting on bricks.  People always do that when there has been water in the basement.  See, some sellers feel like if the basement only has a little water, or it only happens every once in a while, that you won’t mind when it happens to you!

These are the 3 things that always make me give a house a thumbs down.  I’d rather see a roof past it’s expiration date, or a furnace that is an antique than any of these.  Water and soil stability issues usually end with nature winning in its battle with man.