Random Real Estate Thoughts

OK to take a contingency offer?

by John Rice

Well, I don’t really like to do it. Sure, an offer without that type of contingency is better, but there is a good side to this type of contract. Guess what it is? The buyer will typically pay you more with a contingency to sell or close their old house than a regular buyer will without that contingency.

I see it all the time. A buyer with a house to sell or close gets really nervous about not knowing where they will be living. They are desperate to find a house and will pay top dollar for the mental peace of knowing where they are going to land.

The bummer part is if the deal on their old house falls apart, so does your deal. There is an upside though, and it is the home inspection. If the inspection goes okay on the buyer’s old house, it typically means it will too on your house. Short of some catastrophic issue, a buyer will not walk away from your house. Why? There is not enough time to find another house prior to closing their old house…..and remember, they did all this because they do not want to be homeless once they close on their old house.

Negotiating is a lot like playing poker

by John Rice

When I was a little kid, my dad had this old set of poker chips. There were red, white and blue ones built into a little round thing with a handle on top. I remember playing poker as a pre-teen with my friends. I also remember winning a lot. I didn’t do it by bluffing or anything that actually had anything to do with the game itself. What I got good at was studying my friends. It’s pretty darn easy to win when you can tell if your pals have a good hand or not. My dad always told me I was pretty good at reading people and seeing their motives. That has been a useful skill in my career as a realtor. 

I remember a sale many years ago with a great realtor. He did everything he should have done. My clue about the buyer’s motivation was the closing date.  It was the Friday before school started back after Christmas break. Sure, most real estate deals close on a Friday. What made this one stand out to me was how soon it was. Not the usual 30-45 days out. This one was just about 2.5 weeks out. So, I hit Facebook, and sure enough there was a person with the same name with school aged kids who lived in the same surrounding town that was on the check for the earnest money. I also knew that most seller’s wouldn’t want to be moving out of their home the week between Christmas and New Year’s Day. We stood firm and got our price.

I had another deal like that. My listing was in the only neighborhood in its price range to have the very desirable school district that it did. We got an offer so low that we didn’t even counter. The buyer’s realtor told us the reason for the low offer was due to the perceived poor condition of the house. I figured they must really want to be in this school district. I mean, there were tons of new/newer houses within walking distance of this one, but they were in a different school district. I don’t know why somebody would pick a house they didn’t like that much when they can get a better house for the same money. It had to be school district. I went online to see what all choices this buyer had in that school district. The only other house was one with a crazy steep driveway…….so I knew we could hold firm to our price. We did and we got it, despite the other realtor’s great effort to get it for less.

From the lines of that old Kenny Rogers song, “You gotta know when to hold ’em.  Know when to fold ’em.  Know when to walk away.  Know when to run.”

Is a view worth less if it is not as good?

by John Rice

I was driving through the new Peninsula neighborhood the other day. It is over off Richmond Road and backs to the reservoir. I could see the back of the houses on Dew Court, Rain Court and Coolwater Court. For decades the owners of those house have had a rare and fantastic view of the water and the woods where there are now these new houses.

But that has changed. The water is still there of course. The woods are gone.

Question is this: Are those older houses worth less since the view is not as good?

To those owners who have enjoyed the “Old” view, I am sure it is not as good now. They probably think these new houses have impacted the value of their homes. I totally get that vibe. I dealt with something similar. I used to have a peek-a-boo view of the Greenbrier Golf Course from my last home. Across the fairway was a beautiful hillside full of trees. About 6 months after I moved in, I heard bulldozers clearing the hillside. Now there is a neighborhood there. While I did not like the new view as much as the old one, it was still a view. It just didn’t extend past the golf course now.

And that is exactly what the 1980s houses have. They still have a fabulous water view. I mean, the new houses are going to be extremely desirable being on the water and they have the houses from the 80s on the other side of the water in their view. There is no reason to think that somehow the market is going to like the 1980s houses less because they now have a view of the new houses across the water, right?

Something else to consider. Whenever the 1980s houses come up for sale in the furture, no buyer is going to know that the view was better before the new neighborhood was built. All they will know is what is currently there, which is a very rare water view.

The repair list shouldn’t be like playing Marco Polo

by John Rice

Most people think all a realtor does is open doors, fill in the blanks on the paperwork and cash checks. Sad thing is that there are a lot of realtors who think this too.

Not me.

The ultimate goal is the get the best terms for my clients and make the process as smooth and drama-free as possible.

I recently had a situation where my drama radar was going off so I made some moves to prevent it.

I got a repair list on one of my listings. The issue was the wording on the repair request for an air conditioner. The other realtor stated what the inspector found and pretty much just said fix it. The inspector stated that the air conditioner was only producing a temperature difference of 9 degrees. Now, I knew what the intent of the buyer’s request was. They wanted a normal working air conditioner. But at what point would they find a repair acceptable? If my buyer fixed it and it was only 10 degrees, would that be okay? Who knows? I never liked playing Marco Polo when I was a kid. I don’t like finding Waldo. I also don’t like the “I see something you don’t see and the color of it is” game. I am definitely not going to play those games with a repair list.

My Dad is retired now from being an attorney, but he is still a brilliant man. Back in 2005 when I was writing my first ever repair list, I consulted him on the wording. I think I did what most realtors do, which is to state the problem and just say fix it. He told me two things which I have never forgotten and try to share as often as I can with other realtors so our industry improves:

  1. Write a repair to be done to achieve a goal rather than for a task to be performed. Why? You can sometimes do a task which doesn’t achieve the goal. When that happens, you have no recourse because you asked for a task to be performed and it was done as you requested.
  2. Write EVERYTHING so clearly that a third party could read the contract, addenda or repair list and know exactly who was to do what and what the agreed upon outcome should be. That third party could be a judge or mediator.

So, when I read this one repair item, I knew there was no specific outcome requested. There was no verbiage saying that “If the seller does this with the air conditioner, the buyer will accept it.” The effort to get this right at this point may have saved some last minute drama right before the closing. When my seller has packed up and moved out, and the buyer has packed up and made moving plans is NOT the time to discover that we had a difference of opinion on what was expected.

Ultimately we agreed upon wording that said the air conditioner had to cool within industry standards, which is a minimum temperature difference of 15 degrees.

#1 thing I do not care about

by John Rice

There was a time in my career where this would have been a big deal. It is not now.

I got a letter in the mail recently from one of the bigger real estate brokerages in town. It was to congratulate me on being in the top 5% of all realtors in all of the Bluegrass in 2024. I think the intent was really to get me to consider coming over to their firm, which isn’t happening. Thank you for the letter though!

I had no idea I was in the top 5%. I used to track that kind of stuff a long time ago. Many years ago I was in the top 1.5%. I guess that was quite an achievement but I only have one memory of that year. I remember being on the edge of a nervous breakdown from working every hour I was awake for every day of the week for every week of that year. I definitely did not feel I was at my best nor did I feel my best. I remember making eye contact with myself in the mirror one day that year while I was shaving. I saw a robot who had figured out how to sell houses. I was just a machine. I remember trying to convince myself back then that this somehow was the fulfillment of my dreams. I have always been good at seeing through lies, even when I am telling them to myself.

So much has changed since I used to care about where I stood compared to other realtors in Central Kentucky. The biggest one I guess is that I am now back to where I started. Not in a sales production sense, but in my mindset.

When I started in real estate, my goal was just to be my best. I felt like if I was always trying to do my best for people, if I was always trying to learn something new from every experience, if I truly cared for my clients, that success would follow. I did not need to focus on trying to be successful. I often think of things in an agricultural sense. If you want the fruit of a plant, you focus on taking care of the plant. The plant takes care of producing the fruit in response to you taking care of the plant.

Here are some examples of what I now consider success:

A client who bought a house with me and then I sold their old one told me how great I was at communicating with them. They said every time they thought of a question, I would let them know the answer before they asked. They also said they appreciated my wisdom and experience in negotiating the sale and inspection repair lists for both houses.

Another client who is moving back to the area from out of state told me that they have worked with 3 other realtors over the past few years and I was by far the best one they have worked with.

There are other examples like this of course.

So now when I’m shaving and make eye contact with myself, I see a guy who is making things just a little bit better for those around me.