Random Real Estate Thoughts

Zillow, PLEASE stop doing this

by John Rice

Okay Zillow.  I can deal with you saying every house has a carport.  I can deal with your inaccurate Zestimates.  I can deal with you often messing up school districts.

What I can’t deal with though are the Pre-Foreclosure listings.

Why?  Because they ARE NOT FOR SALE!

Zillow, people see a house on your site and think it is for sale.  Why do you confuse the public and leave it to us agents to explain to our clients that the house you just posted is not for sale?

Here is what is going on with those Pre-Foreclosure listings.  The person who owns the house is far enough behind on their mortgage payments that the lender has filed a lawsuit.  As soon as that happens, Zillow posts it as a Pre-Foreclosure.  Since the person who owns the house is not the bank, you cannot go see it since it has not been foreclosed yet.

If the lawsuit goes the way the lender wants, the house will eventually be sold at the Master Commissioner’s sale.  The Master Commissioner is who is appointed by the court to sell the house.  Anybody with 10% down and proof of the remaining funds can go bid on the house.  You have to have the funds available.  You can’t go down there with 10% down and a preapproval letter for a mortgage.  You have to show proof that you have the balance of the money available.  You also can’t see the house.  You have to buy it without any type of inspection contingency.

There are two types of buyers at the Master Commissioner sale:  Investors and the Lender for the house.  Sometimes investors get the house.  Most of the time the lender buys the house.  Well, we call it a sale but in all reality what is happening is the money the lender pays for the house goes to settle the debt the seller owed them so they are getting it right back.  Picture a dollar getting pulled out of your left pocket and going into your right pocket.

If an investor buys it, most of them either flip it or rent it.  If the lender buys it, it eventually goes on the market for sale.  This time when you see it on Zillow, it will really be for sale….and it will probably say it has a carport.  And the Zestimate will be inaccurate.

The worst part of being a Realtor

by John Rice

I bet you are thinking I am going to talk about being on call 24/7 and other things realtors complain about.

Not quite.

To me, the worst part of being a realtor is seeing your client make a mistake you know they will regret later.  It is easy to do.  I mean, no buyer or seller really know the market like a realtor.  They only know what they read in the paper or hear their friends discuss.  Often buyers and sellers don’t totally trust their agent.  I recently told a client a truth about our market.  This client said none of her friends believed me.  I asked if any of them had recently sold a house in our area.  None of them had.

Here are the biggest ways clients can make a mistake:

Buyers:  There is nothing worse for a buyer than the first house they see being the most totally amazing house that has come on the market all year.  When this happens, buyers often assume every house is just as good.  They often decide to wait for a better one.  When they do this, they quickly realize the house they passed on was so much better than the other houses in their price range.  I dread it when this happens because I know that the buyer is thinking I am just trying to get them to buy the first house they see to make it easy on myself.

Another big buyer mistake is wanting to negotiate in multiple offers.  I often have buyers tell me they want to come in low and let the seller counter.  I tell them that if they had two offers, and one of them was lower than the other, which one would you counter if you were even going to counter at all?  When you are in multiple offers and you make the weakest offer the seller got, they simply do not counter your offer, even if your agent tells their realtor you are open to a counter.  I mean, they already have other offers that are better than your offer, they have no need to counter.  Always come in with your best offer in multiple offers because  you only get one chance at getting the house.

Sellers:  I feel for sellers.  I think they have it the worst.  I mean, they see in the news that prices are going up.  They know their neighbor got 5 offers the first day on the market.  They see what their Zestimate is on Zillow.  They often think their house is worth more than it is.  Like in any market, the most you can get out of a house is what a buyer will pay.   You can never get more than market value for your house.  It is just in a hot seller’s market, you might have 5 people all willing to pay market value for your house instead of hoping and praying that just 1 buyer will in a buyer’s market.

When a seller overprices their house, they lose the frenzy of having more than one buyer wanting their house.  When a house hits the market, all the buyers in that price range rush out to see it.  Buyers are afraid of losing it.  Once the house has been on the market for a bit, buyers are no longer afraid of losing the house, so they make less than full price offers.

Sometimes a seller will think the realtor isn’t doing enough to market the house.  Exposure is never a problem these days.  Houses get thousands of views on just zillow.  Once a house is listed you can google the address and see several pages of places the listing can be found.  There is no way there is a buyer out there for a specific house who does not know it is available unless they don’t have internet or don’t have a realtor.

So, those are some of the worst parts of being a realtor.  The 24/7 thing is something you get used to after a while.

What’s it like being The LEXpert?

by John Rice

I guess I have been busy.  I’ve closed 15 sales and have 9 pending sales, plus a few buyers out looking for that perfect place.

I feel like I never work and at the same time, I feel like I am always working.  It’s a strange thing.  I guess where it doesn’t really “Feel” like a job, I don’t notice how much I do it?

9 of these clients were referred to me by people I know and/or past clients.  8 were people I knew, some of whom have used me multiple times.  6 were past clients wanting to use me again.  Only 1 was a brand new client.  This family found THIS blog you are reading and called me.

What’s it been like this year for me?  Pretty nice.  I really enjoy working with people I know and those who are referred by people I know.  There is a level of built in trust that comes with being referred.  I normally don’t have to put on a polished presentation to try to win over a new client.  They’ve usually already decided to use me based on a recommendation of a friend, who I assume has told them I am a car crazy, short and sandal wearing, big guy who wants the best for his clients.  While most realtors are always looking for new work, my work always finds me first.

This comes so natural to me that I honestly sometimes feel like I don’t deserve the commission checks I get.  I mean, I wake up, look at houses, tell people what I think they should do, determine what a house is worth, come up with the best strategy for achieving a client’s goals, talk a lot, drive around in my cars a lot, listen to 80s music, see people I know.  Go to bed.  Rinse.  Wash.  Repeat.  It’s really just a nice way of spending your days.

Two things I will never do again

by John Rice

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.

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I wish my dog was an appraiser

by John Rice

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.