properties

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.

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.

Tricks Sellers Play

by John Rice

I was out with a client this week looking at old houses in Chevy Chase, Fairway, Lakewood, Lansdowne,basically 40502.  One house in particular stuck out to me because it was a FRAUD!!!

What do I mean by that?  Simply that the seller had done everything possible to make the house attractive……….except making it a good house.  They had all the lights on, a fire going in the fireplace, they were simmering an orange in some type of cinnamon gue on the stove.  It was decorated with small scale furniture to make the small rooms look bigger. I can over look that stuff, but what got me miffed was that the whole house was nothing more than a beautiful faux finish. 

The ceiling in the bathroom looked like tin……but it was just wall paper.  The counter top had a neat design on it…………but it was painted plywood.  The flooring in the kitchen was left over parquet flooring from an 80’s remodel, but they had painted a light green and white diamond pattern over it.  All the vanities in the bathrooms were ancient, but were painted a trendy flat black.  There was panelling in the basement and a little in the kitchen that had just been painted.

None of this would bother me in a $100,000 house………….heck, not even in a $150,000 house.   In fact, I would probably give them credit for all their effort.  But this was a $350,000 house.  I just felt like somebody was trying to fool me!

My advice for this seller is to put in some granite and do some updates that aren’t in liquid form and can’t be poured out of a can.  Make your house honestly good!  Location is only one third of the known real estate principles.  Condition and price are part of it too!

My advice for buyers is to watch out for this kind of trickery.  Until you started to look closely at what this house really was, it looked stunningly beautiful.   But, none of that comes with the house.  The decor will be gone.  The new owner will then realize that the house was really just cheap updates inspired by those HGTV shows where they make over an entire room for $1000.

But it won’t be my clients that fall for this!!

Negotiating Repairs after an inspection

by John Rice

You know, you can find out a lot of people’s motivation if you just listen to their realtor.  Most are big talkers.  Most of them view the deal as practically done once you settle on a price.  They seem to forget that there is usually one more thing to negotiate:  The repairs after the inspection.

Here are some examples of what agents sometimes say right after a contract has been accepted: 

1)  “The sellers have a contingency contract on another house that they were about to lose.”

2)  “The buyer needed to close on a house in time for him to get his family moved down here before he started his new job .”

3)  “The seller is making 2 mortgage payments.”

4)  “The buyer’s lease is up at the end of next month.”

Now, repairs are always the trickiest part of a deal.  The seller is thinking that they have lived happily in the house for so many years and that they let it go too cheap.  The buyer is always thinking that they didn’t get the house as cheap as they wanted and they don’t want to buy the seller’s problems.  That’s just human nature.   It gets rough sometimes.  Usually there is a little compromising, meaning neither party is truly happy.

But when the agent pretty much discloses that their client can’t afford to lose your client, it makes negotiating a little easier.  I’m nice about it and all, but the reality is that the only person whose interest I need to promote is that of my client’s.  If my client gives me a list of things they want repaired, I’ve got to try to get as much of it done as possible.

So, negotiating repairs is really about knowing what is happening with the other party while keeping tight lips about what is up with your client.  It is a lot easier to draw a line in the sand if the other party doesn’t know enough about you to predict what you’ll do next.

How to ask the seller for repairs

by John Rice

I’m in the middle of a deal and we just had the inspection done.  The place has some medium sized issues.  Nothing that is too too bad, but stuff that still needs to be addressed………..and addressed soon! 

As I was explaining to my client how I write a repair list, I thought that might be something good to blog about.  Most realtors just list all the deficiencies and ask them to be repaired.  That sounds easy enough.  Just give them a list of tasks to do and move on.  Buuuuuuuuut, there is a potential problem in doing it that way.  Granted, it rarely comes up, but when a problem does happen, it really sucks!

The problem is that if you ask for a task to be done, you can have a situation where an action was performed, but the problems wasn’t solved.  Don’t get it?  Think of it like this.  You get a home inspection, find out the faucet leaks because it needs a new washer.  You write on the repair list that the seller has to install a new washer.  Seller agrees.  Seller goes to Lowe’s, buys a washer.  Seller installs new washer.  The faucet still leaks.  You tell the listing agent that he didn’t fix the faucet because it still leaks and the agent tells you that all you asked him to do was replace a washer.  See it now?  I don’t see this kind of bickering as much now that we are in a buyer’s market, but it still happens some.  If it is for something minor like my example, the seller and their agent know that you aren’t going to walk away from the deal over something so small.  Even if they agree to go back and fix the faucet, it still causes a lot of stress for the buyer.

The simple solution came from my Dad.  He is the smarted man I know.  He is also a lawyer, so he is pretty good about getting things worded correctly.  I remember asking him to help me word one of my first repair lists.  I started to do it just like everybody else.  Then he said to me that I should word it where a result is to be achieved rather than just a task performed.  It was like a revelation or something.  As soon as he said that, I totally got it.  Since then, I always state the problem that needs fixed and usually add something like “so that it functions properly” at the end.  That way if there is some issue with the work that was done, I can always claim that it isn’t functioning properly.  Also, for plumbing, electrical, and HVAC work, I always state that the work has do be done by licensed, qualified contractors.  That keeps the roofer from working on your furnace and a handyman from getting inside your electrical panel.

Thanks Dad!!