I’ve been at this for nearly 15 years. Never had an issue with either of the things below. Until recently. Both were so bad that I am just not going to ever do them again.
1. A Post Closing Occupancy Agreement. I don’t like these at all. Never have, but in some situations they can help you get the house in multiple offers. There is always risk though. I’ve had dozens go okay. They usually do. But not this time.
I had a buyer for a townhouse. We had agreed to possession with deed, meaning the seller is out by the closing. About a week before closing, the listing agent tells me that the seller doesn’t have the cash to move. This seller has equity and will be able to pay movers after the closing. As much as I didn’t liked being boxed into a situation, if the seller didn’t have the money, they don’t have the money. We agreed to let the seller stay for 2 days.
The seller was supposed to have been out. They moved out on time. That wasn’t the problem. The problem was that they left about 20% of their stuff at the house. NEVER AGAIN!
2. A contingency to sell contract. I have never liked these either, but sometimes, especially in a slow market or with a house that is tough to sell, you’ve gotta entertain them. The problem is that most are written in a way that assumes once the buyer’s house sells, it will remain sold.
I just had a situation where we had a buyer who wanted one of my listings but needed to sell their old house in order to buy. The buyer’s house sold. We thought we were in good shape. Then it fell apart. Even after involving a really good real estate attorney, it was unclear what needed to happen next. Did we still have a contract? Did we not? Nobody knew. What made it worse was that the buyer still reaaaaaaally wanted the house and was trying to hold it hostage as they grasped at straws to find a way to get it.
If I ever have to take one of these again, I think I will add some verbiage that says something like if the buyer’s sale falls apart prior to closing, the seller has the option of voiding the contract immediately.
This time of year is always tough for comps…..which is the term we use for recent comparable sales used to determine the value of a house. Realtors use comps to determine a list price. Appraisers use them to justify a contract price. The thought is that the recent past will tell you what the market is doing now, but it really doesn’t work that way in a really good or really bad market when prices are either going up or down.
This reminds me of my old dog Julie. She was a beagle. She loved to go out in the yard and sniff around for critters. I remember one time she was on the trail of a rabbit. She had her nose to the ground and was on the trail of where that rabbit had been. What she didn’t know was that the rabbit was right behind her. That is how appraisals work. They always know where the market used to be and never where it currently is.
Part of what makes this time of year tough is that the market for the new year is kicking off and we are looking back at late fall and all of the winter to determine value. Sales are usually down in the winter and most of what sells are the leftovers from last summer.
So, we are looking at the worst times to sell to determine a value during the best time of the market.
I personally have a house that I sold for $200k. It only appraised for $185k. The best comps for my house were from 6-12 months ago. So we have a big gap between what a real buyer with money will pay for a specific house and what an appraiser, whose job is to determine market value, says it is worth.
My current dog Sherpa is a dachshund-Jack Russell mix. She has no problem keeping up with critters in the backyard.
I wish we had a system of determining value more like Sherpa than Julie.
Sometimes things just work out perfectly.
A friend of mine referred me to one of his friends. This seller needed to sell his house quickly without having to do a lot of prep work.
I’ve always got a long list of people who are looking for something specific. I’ve got a guy wanting a ranch on a golf course. I’ve got investors looking for various houses to fix up or rent. I’ve got people looking for their ideal move up house. I’ve got people looking for rural properties in very specific spots. None of these buyers are actively looking. They are just waiting for me to call them up and say “I’ve found it!” I’ve also got plenty of sellers in my pipeline who may sell sooner than later if the right situation arises.
I also have a buyer who has been looking for a similar house in the exact neighborhood as the one that this new seller has.
So, I arranged a viewing.
Then a deal was made.
The seller got the fast sale they wanted without all the prep work before listing.
The buyer got the property they have been waiting to buy, including the huge dining room she wanted.
I get the satisfaction that I brought two people together whose needs were met perfectly by what the other party had to offer.
You know, I’ve been doing this for a long time. You start to see patterns after a while. I guess that is called wisdom?
Here are some things I have learned that are typically true in real estate:
- If somebody says they are going to make an offer, every hour afterwards that you don’t have it in hand reduces your chances of getting it at all.
- If you are a seller and decline a showing, few buyers ever reschedule a time. They say they will come see it later, but never do.
- Usually the best offer you are going to get is the first offer. The times it isn’t the best offer, it will be the worst.
- If you get 10 offers on your house, 8 will be practically the same, one will be crazy low, and one will be the best.
- If 20 buyers have seen your house and given the same feedback about the condition and list price, odds are the next 20 buyers will say the same thing.
- If you get a full price offer the first day, that means you priced it just right. Don’t wonder if you should have asked more. When a house is priced too low, almost always does it get more than one offer and both will usually be above the list price.
- If you feel like you got a good deal on a house, most likely it is because it was a house nobody else wanted. You will have to give a good deal when it is your time to sell.
- Crazy realtors have the craziest clients. You can often tell a lot about a buyer by who their realtor is.
- The more complicated the deal is, the more likely it is to fall apart.
- The longer the time between contract acceptance and the closing date, the more likely it is to fall apart and not close at all.
I had an appointment to show a house this evening after my client got off work.
The listing hit the market at 7:38 this morning. By the time the buyer and I worked out a time, the house already had multiple offers on it. By 1:PM, the house sold.
I’ve got an out of town client who has been driving down from Ohio whenever a really good house comes on the market. We had an appointment to see a house the first day on the market. When my people had just crossed the state line into Kentucky, I got word that there were multiple offers and the listing agent wanted to present all the offers at the exact same time as my appointment to show it. My people turned around and went home.
I had another client make a contingency offer on a house they loved. The seller accepted it with a 48 hour kickout clause. A couple days later, the house had a non-contingent offer. Fortunately my people were in a spot to remove their contingency and purchase the house without first having to sell their old one. This house is in a small rural community, not exactly where you expect houses to sell fast.
Meanwhile, every night before I go to bed, I catch up on news from an app on my phone. Many articles say the market is slowing down. They usually quote some statistic about the declining number of sales. The reason there is a declining number of sales is because it is so hard for a buyer to actually get a house these days. Last week I blogged about a house that had 14 offers. Only one person will get the house. That means there are 13 buyers out there waiting on a house. Does that sound like a slowing market?
Unless sellers get in the game this spring, we are shaping up for another crazy year. When 14 people want a house and every house goes in multiple offers, we will see prices go up.