Where are you going to find anything better for that price?

I remember the day.

I was in a two week class for new agents.  One of those days the topic was CMAs.  That stands for Comparative Market Analysis.  It was how to figure out what a house is worth based on recent sales of similar houses.

Long story short, you start with the subject house.  If a comparable recent sale was better than the subject house, you deducted money from that sale price.  If the comparable recent sale was inferior, you added money to the sale price.  In the end, you had a bunch of debits and credits for the differences that you either subtracted or added to the sale price of the recent sales….. and then you know what the subject house is worth in comparison to the recent sales.

Very logical.  This is how it has been done for years.  This is how appraisers do it too.

In that class, one of the other newbie realtors asked how it was done before CMAs became the standard.  The teacher said that you just guessed a value.

I sort of feel like we are back to the guessing days now.

I’ve seen recently remodeled houses sell for up to 50% more than what the second highest sale price was in the neighborhood.  Granted, a remodeled house SHOULD sell for more than the average house, but not by 50%.

I sold a house for $160k.  The comps pointed to it being worth about $143k.  We got several offers between $137k and $143k…..then we got one for $160k.  That is $17k MORE than the second highest offer.  Those buyers were desperate.  They had lost several bidding wars and were not going to lose again.

There’s definitely been a shift in how we calculate value, and it appears that it has less to do with logically analyzing recent sales and more to do with it being a tight market.  Something I hear buyers and agents say a lot these days is “Where are you going to find anything better for that price?”  So, value is now determined by availability, just like the lobster prices at a restaurant.  A good day on the water might end up with lower lobster prices.  The very next day the fishermen aren’t as lucky and you pay more for the exact same dinner.  That is sort of scary to me because what happens when the market slows a little and there are more houses for sale?

 

 

 

How a hot market really sucks

As I was driving home today after a closing, I got to thinking about how the market is always  changing.

When I got into this, it was much like today.  Buyers felt lucky just to get a house and sellers were drunk with power.

Then there was the looming threat of a nationwide crisis.  We were convinced it wouldn’t  make it to Kentucky.  We all said things like “We didn’t see the crazy appreciation like California, Arizona or Florida did, so we won’t see any changes.”  Only we said that with the same fear in our voices as the kids from that Stephen King movie when they talked about Pennywise the clown.

Then “IT” happened. (See what I did there?)

It slowly went from being a seller’s market to a buyer’s market.

Nobody was happy.

Seller’s were bringing cash to the closing to payoff their houses.  Buyers were afraid their new house would continue to depreciate.  Buyers were hitting sellers up with big repair lists.  They felt the seller should just appreciate that they picked their house among the other 50 houses in the neighborhood for sale.

Then in late 2012/early 2013 we had this euphoric time.  Sellers were happy because their houses were selling in less than 6 to 12 months.  Buyers were happy because prices had stabilized.  Sellers were okay to do whatever repairs were requested since they were happy to have sold their house.  Buyers weren’t asking for as many repairs since they were happy too.  They knew the house wouldn’t be worth less by the time of the closing.  It was great!

Only it didn’t last.

Prices started going up.  Fewer houses were on the market.

Prices kept going up.  Even fewer houses were on the market.

Prices went up even more.  And even fewer houses were on the market.

And now we are back to where we were when I started, only a little worse.  Prices are sky high.  Buyers resent it but know they have to pay the price.  So, they are hitting up the sellers with big repair lists.  Sellers feel like they are doing a favor to the buyer just by accepting their offer.  They don’t want to do repairs.

Basically, nobody is happy right now.

It was fun to be me this week

I kind of like the crazy days.

It’s been a busy week for me.  I’ve sold 3 houses, have 9 pending sales, and have been out with several new buyers.

This time of year always reminds me of that scene in Bambi where all the animals come out on the first day of spring.  I’m meeting new people and seeing old friends.  The days are getting longer and I am close to being back in shorts.

 

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Many of my past clients are calling to say they are thinking of moving.  Several of my past clients and friends have referred their friends or family to me.

I had one especially busy day this week.

I had to show a new construction home to a friend who has used me 3 times so far.  There was not a lockbox on the model home, so I had to find another model home with the same key, then return that key after the showing.

Then I had to rush to Winchester to see a house a friend and past client may sell.  It was out in the country in a beautiful setting.  I took my little M Roadster.  Back roads from Masterson Station to deep in Clark Co.  Lots of fun.

The whole time I was at that house, my phone was going crazy with texts and calls.  One was an agent telling me she was sending an offer on a listing of mine.  I already had an offer so I had to tell the other agent we were getting a new offer.

I check my email before pulling out of their driveway.  17 emails.  One was a new client who was referred to me from her daughter, who has used me a couple of times.  They were ready to make an offer on a house I had shown them in Clark Co the day before.

It was already well past dinner time and I had to get some work done, so I did the only thing that made sense.  I got a pizza and ate it in my car while I returned calls, texts, and emails.

 

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I’ve never eaten pizza in the dark, nor in such a small car.  All I can say is that I am glad the interior is black and I was wearing a red shirt.

I got home, wrote the offer for the Clark Co property, worked on the offers for my new listing, and finally got done about 10:PM.

This weekend looks pretty calm since I crammed about 3 days worth of work into that one day.  Saturday is Cars and Coffee, then Sunday I am going for a long drive in the country with some other car enthusiast friends.

The busy days make the not so busy days even better.

Glad it is almost spring!

5 things buyers & sellers should know

As we kick off the 2018 real estate season, here are a few things buyers and sellers need to know:

Buyers:

  1.  Make your best offer the only offer you write.  Everybody wants a deal, but the odds of you getting a bargain are slim.  You want to give your best offer because the market moves fast.  Plan on negotiating with the seller and odds are somebody else will make an offer while you and the seller are going back and forth.  This is especially true if it is a new listing.
  2. Get preapproved.  You want the seller to want to deal with you.  In a slower market, they would have to deal with you even if they didn’t feel like it.  In a fast market, they know there is always another buyer out there.  Don’t make them wonder if you can buy their house.
  3. Don’t write a letter telling the seller about yourself.  Most of the time when I have gotten those, we have multiple offers and the seller never gets around to reading it until after they have sold the house.  And do you know what most of them say to me after reading it?  “If they loved the house that much, they should have made a better offer.”  You want your offer to stand out?  Let the seller pick the closing date if you can, or do the type of inspection where you can inspect it but won’t ask for any repairs.  The seller will find that much more exciting that seeing a picture of you with your dog.
  4. Don’t ask for anything that wasn’t included with the house.  Sellers think it is strange that you went shopping for their personal items.  Also, if you write stuff that wasn’t offered in the listing that the seller doesn’t want give up, you force the seller to counter your offer without those items.  Meanwhile that gives time for another buyer to make an offer.  You might lose the house because you were trying to get the sellers coffee table or patio furniture.
  5. Don’t try to rush the seller.  If it is a new listing, odds are they are getting multiple offers.  The saying is the squeaky wheel gets the oil, but in real estate that just means you are annoying the seller.  Most agents know that if you are annoying now, you will likely be annoying throughout the entire process.  Think of it like a job interview.  The seller has a big decision to make and is going to decide based on how you present yourself through the offer and your actions.

 

Sellers:

  1.  Usually your first offer is your best offer.  When I was a new agent, I was told this and really didn’t believe it, but 13 years experience in all types of markets tells me it is true.  I might alter the saying to say the first “Reasonable” offer you get is usually your best.  Occasionally I do see these crazy buyers who must be watching reruns of real estate shows from 2007 when sellers were desperate to sell…..but they aren’t living in reality.
  2. Don’t feel rushed.  Buyer’s agents like to do things like give you 3 hours to respond to their offer.  They do this hoping to get the house before anybody else does.  The truth is in this time of having more buyers than houses, that buyer isn’t going to walk away.  Only a few times in 13 years have I seen where a buyer has two houses they want and needs a fast response because they want to buy their 2nd choice house if it doesn’t work out with you.  They usually will wait though since your house was their 1st pick.
  3. Think about what is most important to you.  Everybody wants the most money, but sometimes a slightly lower offer that closes sooner, or lets you stay in the house for a few days after the closing, is appealing.  Also, think about what you will accept before you get an offer.  Most sellers don’t think about this until they get an offer and they have a lot of stress trying to process it.
  4. Don’t over price your house.  Your house will eventually sell for what it was worth.  Starting out with a realistic number accomplishes two things.  One, it makes the process go faster.  That means less time cleaning up your house and having to leave for showings.  Two, you create a bit of a frenzy when it is a new listing.  Buyers flock to new listings.  They are afraid of losing it and will likely make their strongest offer.  Once you get past that new listing period, buyers know there isn’t a risk of another offer and will try to negotiate more.
  5. That surround sound system you are so proud of?  Leave it off during showings.   It isn’t as important to buyers as it is to you.  Don’t stink up every room with Glade Plug-ins.  Buyers think you are covering an odor.  People with allergies just want to leave your house.  The average person can only hold their breath for like 40 seconds, and that is not enough time to see your house.  Keep your house the cleanest it has ever been.  Seeing those dried up specks of toothpaste in the sink is sort of like looking at used cars and seeing coffee stains around the cup holders or a french fry under the seat.

 

Happy buying and selling!

Why one house sells fast and another doesn’t

I sold two houses yesterday.  Been a while since that happened.  Always fun.

One was a new listing of mine and the other was a house for one of my buyers.

Two totally different situations.

I put my listing on at a competitive price.  Not so high that it would scare off buyers, but just a bit over the recent sales with the hope that somebody would be afraid of losing the house and pay full price.

Four showings the first day and three offers.  The first offer was a little under the list price.  The next offer was the list price.  The next one wasn’t the list price.  The people who made the first one raised their offer and got it….but they came close to losing it.

The first people should have thrown out their highest and best offer right off the bat.  It would have saved them from potentially losing it.  For me personally, it would have meant eating a warm dinner.  It was taco night and I love tacos.

When a new listing is priced right in this market, you should always make your best offer.  You want to send an offer that the seller just wants to sign.  Going back and forth takes time, and time is what other buyers need to prepare their own offer.

The other house I sold had been on the market for quite some time.  Nothing was wrong with it at all.  The only problem was the price.  The seller started nearly $30k over what the sale price will be.  They reduced it slowly all winter.  My buyers almost didn’t look at it just because of the price. We made an offer.  It was countered.  We countered.  They countered again.  We went out and looked at more houses.  They came back at a lower price and it all worked out.

I really think that if this house had been listed at a realistic price, it would have sold quickly and probably for more money.

Two houses in Lexington.  Two totally different outcomes.  Price makes all the difference, even in a hot market.