Random Real Estate Thoughts

Real estate match-making

by John Rice

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.

Real Estate Proverbs

by John Rice

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:

  1.  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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. Crazy realtors have the craziest clients.  You can often tell a lot about a buyer by who their realtor is.
  9. The more complicated the deal is, the more likely it is to fall apart.
  10. The longer the time between contract acceptance and the closing date, the more likely it is to fall apart and not close at all.

What’s the market like right now?

by John Rice

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.

Is cash still King?

by John Rice

Many years ago when the market was terrible, a cash buyer had the upper hand when buying a house.  Lending was tightening up.  Appraisals were coming in for less than the purchase price.  Having a cash buyer made a seller feel like it was a sure thing.

Today having cash is not as impressive to most sellers.  Lenders are happy to loan money.  Few deals fall apart due to financing.  If cash makes a deal 100% solid, a preapproval letter make it 99% solid to most sellers.

Also, having cash is fairly common.  25% of my 2018 sales were for cash.  I am not making that up or rounding up or down.  I was hoping the percentage would come in at a more random sounding number, but 10 of my 40 sales last year were paid for with cash.  All were owner-occupant buyers.  None were investors.

I had a buyer write a cash offer last week on an awesome house.  There were 14 offers.  My buyer’s offer and 3 other offers were cash.

In 2019, when does having cash really matter?  If the house is such a fixer upper that it may not qualify for traditional financing, having cash is still King.  If the seller wants a fast closing, cash is still King because a loan will usually take 3-4 weeks.  A cash sale can close within days.  If a seller is worried about the appraisal, then cash is still King because there is no appraisal unless the buyer just wants one.  Short of these 3 situations, having cash doesn’t really tip the scales in your favor like it used to.

The real reason why sales are down

by John Rice

I’m seeing a lot of news articles with accurate data.  My issue is that I think most are drawing the wrong conclusions.

Most seem to want to make you think the sky is falling in real estate because sales are down.

You know who needs to care about the number of sales?  Appraisers, realtors, mortgage people.  Those of us who make money on each transaction.

As a buyer and/or seller, the number of sales isn’t really important to you.  What you care about is supply and demand-the ratio of buyers to sellers in the market.  If there are 3 buyers in the market and only 2 listings, then we have a seller’s market.

I am seeing a lot of articles stating that sales were down in November of 2018 versus November of 2017.  Of course they were.  It happens every election year.  The market pauses until we see which set of morons we will be stuck with.

The ones that really bug me are the ones that say the affordability crisis will hold the market back.  I think they have it backwards.

Sure, we have an affordability issue.  Many people can’t afford to buy a house with rising prices and interest rates.  All I know is that every house under $200k in this town seems to go very quickly, which allows that seller to buy up to their next house and that seller to buy up to their next house and so on.

Back when the market was terrible, I said that it was like a baseball game where the bases are loaded.  The seller on first base needed a buyer without a contingency to buy their house so they could buy the 2nd base seller’s house, who could buy the 3rd base seller’s house.  The first time buyer needed to hit a home run and push all those sales through.

Back then a buyer had a ton of choices for their next home.  The issue was selling their old one.

Today, no buyer really has a huge selection of houses.

For that reason, I think our current market is the opposite.  There are a ton of first time buyers eager to hit a home run and push all those deals through, but what is happening is that the person on 3rd base doesn’t like home plate and has decided to just stand there until they feel like running.

The buyers with the most selection are the people buying their pinnacle home.  The one they stay in forever until they begin to downsize.  These are mostly Gen Xers.  They are in their 3rd base home, which is probably a fairly large home in the $250-350k range.  They want to move up to the $400-600k range, where there are plenty of houses for sale.

Their only problem is that most are just tarted up versions of their current house.  These buyers aren’t getting a better house, a bigger house, or a bigger yard.  They are just getting prettier finishes.  They find the houses in this price range, well, boring.  And we have a TON of them for sale.

So what do these Gen X buyers do?  They wait for the right house to hit the market.  Since they already have a nice house, they are in no hurry.  Because they aren’t in a hurry, that means the people looking to buy their house are in the same position….all the way down to that first time buyer eager to bid their heart out on their first home.

And, that is where we are today.  Sellers wanting to sell but not finding anything they want to buy.