Random Real Estate Thoughts

Do you need wiggle room?

by John Rice

This is one of the questions I get asked a lot when I list a house.  Just listed 3 in the past week, so that is why it is on my mind so much.  I think I probably always freak out my sellers when I tell them that they don’t need to price their house way over what we anticipate it will sell for.

I guess the biggest fear, and I can understand it, is that people will assume that there is wiggle room, and that they are going to have to sell for less…..and that just isn’t the case.

Sure, there may be people who come along and offer waaaay less than you are asking.  But you know what?  I don’t consider them to be real buyers.  When I was a new Realtor, I had some people that would just go from listing to listing making crazy offers.  Eventually I would see the writing on the wall and I’d let them keep perpetuating their hobby without me.   I doubt any of them ended up actually buying a house.  Why price your house based on nuts like that out there?  Doesn’t it make more sense to price it where it will be attractive to the people who may actually buy your house?

Check this out.  Back in about 1997 I had a lawn care business.  I had grown it to the point where I needed a dedicated truck.  I saw an ad in the paper for a 1993 Ford F-150 with 48,000 miles on it.  The price was $5980.  I knew that was a good price.  Took it for a test drive.  Wanted it.  Sat in the little cubicle with the sales man and made him an offer.  He blew his chance to remind me that was a fantastic price.  What he did was make it a battle.  Dude told me that they “Couldn’t sell that truck for one nickel less than that price!!”  I was floored.  Don’t you always haggle when buying a car?  I left to see what else was available since I couldn’t go back there without feeling like I had lost to that guy.  After looking at more trucks, I realized THAT truck was by far the best one and was at the best price anywhere in town that day.  I just didn’t know what to do.  Soooo, I called the wisest man I know…..my Dad.  I told him that the truck was the best deal and that I wanted it, but just couldn’t go back there.  Being the wise person that he is, he told me to go back and offer them a nickel less.  Yep.  Offer $5979.95.  I did and I got the best truck at the best price that was available that day anywhere in Lexington.

Guess what?  Real buyers will recognize the value of your house.  They are looking at every house in their price range just like I did with that truck.  Sure, we are accustomed to wiggle room, but people don’t mind paying near or full asking price if the house is worth it.  I have done this with several of my listings will great success.  I had one where they came back twice with lower offers.  We just politely said “No thank you.  Take a look at the comps.  We’ve priced this house for what it is worth.”  They, like me with the truck, knew it was the best available house at the best price.  Here’s the difference though, I didn’t get an attitude with the other agent like my salesman did with the nickel issue.  We ended up selling the house for 99.2% of the asking price.  We came down just a little so the buyer would feel like they won…..but in reality, we all won that day!

A Tale of Two Clients

by John Rice

I thought I’d blog about two folks that I have represented recently.  Little disclaimer here:  No names, addresses, etc.  This isn’t really gonna be about them personally.  More about how a seller’s perception of reality affects the sale of their house.  It’s about Client “A” and Client “B”.  One got their houses sold quickly and everything went well, and the other hasn’t sold their house and is mad.  What is the difference?

Client “A” hired me to sell their house.  At first I thought we were a good fit for each other.  They wanted to price their house for what they needed out of it since they had only been in it for just over a year.  In all reality, that was the kiss of death.  All the things I do that have succeeded in getting houses sold quickly are rendered useless if the price is too high.  Think about it.  You are a buyer, looking at houses, and there are either better houses for the same asking price or equal houses for less.  What are you going to do?

Client “A” thought everything I did wasn’t working since nobody bought their house quickly, even though the average days on market were well over 6 months for their town and price range.  They got nervous and wanted to micro manage the deal……but without reducing their price.  They kept trying to come up with “Things” I should do to bring out all those buyers that didn’t know their house was for sale.  Eventually I told them I would release them from the listing agreement early if they wanted to find somebody else.  They took me up on the offer.  Get this though,  in the 60ish days I had their house listed, we had 4 showings.  Want to know how many houses sold in that time frame?  Yep, 4.  So I think we got showings from all the serious buyers out there looking for a similar house.  Hmmmmmm.  I got the buyer’s to come out to see the house and they didn’t want it.  In real estate it is all about price, location, and condition.  They had a fair location, a great house, but the price was wrong.  Anyway, these people probably won’t be writing kind words on my testimonial page like a lot of my clients do.

Client “B” is somebody that I have dealt with 5 times so far.  They have used me 3 times as a buyer’s agent and twice as a listing agent.  I am about to list their old house since they just closed on their new one, so that will make 6.  Six.  Yeah, 6.  Pretty rare to get that much repeat business from somebody you aren’t related to!!

Client “B” trusted me to be the realtor.  They knew that even though they have bought and sold a lot, that I am the one that spends all day, sometimes everyday, doing this.  They listened to my suggestions on what to do to make it show better.  They also let me price and market the house the way I saw fit.  Get this:  The first house I sold with them (Summer 2007) went in 9 days.  The other one I sold with them (Winter 2008) sold about 6 hours after I put it on the MLS. 

Both Client “A” and Client “B” are great people.  Fun.  Exciting to be with.  I like them both.  But that is where the similarities end.  Client “B” was realistic on what to expect.  They knew they needed to price their houses based on comparable sales data.  They are happy, got their houses sold, and have moved on.  Client “A” is still sitting on a vacant house, waiting for somebody to pay him what he needs out of it, and is mad.

My Dad always says reality is the only place we have to live in, so we may as well get use to it.  Good advice.

Did you pick the right house??

by John Rice

How do you know if you’ve picked THE right house?  What IF a better ones comes on the market after you make a decision?  How do you know you WON’T regret your decision?  Welp, if you think I can reaaaaally answer those questions, I must be a better Realtor than I think I am.

There is no way that you or I can really answer those questions, so I am not going to try.  But, what I can offer are some tips based on my experience. 

How do you know if it is THE house?  I think that any house you are afraid somebody else will buy out from under you shows it is pretty high on your list.  If you can just totally see yourself  living in the house, it may be the one.  Same thing with comparing other houses to it.  If you are doing that, it means that one is at the top of your list.

How can you prevent regretting your decision.  I think the best thing you can do is to take your time in reaching your decision.  Granted, sometimes when everybody else wants the house too, you don’t have that luxury.  I like it when people want to see a house for the second time.  You always notice more of the bad stuff on the second visit.  It is even better if you come back at a different time of day.  Rooms will look different with the sun on the opposite side of the place.  Something that I’ve always told buyers to do, and not many actually have done it, is to drive around the neighborhood on a nice warm Friday or Saturday night.  That will bring out anybody that will be annoying, so you won’t have any surprises there!  Tough luck if it is winter.

There are a couple other things that bring on the regret:  Having a tight timeline and getting so tired of looking that you just want it over with.  If you have a tight timeline, preparation is the key.  I do a lot of work for people moving to town.  They’ll only be in town for a few days and have to pick a house.  I try to work with them as soon as I know they will be coming.  It all usually happens  by e-mail, but we chat about neighborhoods, parts of town I think they’ll like, etc.  Then I’ll start previewing houses, even taking videos of the houses to send them.  At this point it is all about eliminating houses.  You’re not really looking for the right one, you’re trying to whittle down the list to a manageable amount for them to see when they get here. 

Now, about getting tired of looking.  If you find yourself here and can do it, just take a break.  It is really a scary place to be.  Take a week off from looking….even online.  If you can’t take a week off, have your agent preview houses.  By the time you get to this point, your agent should really know what will work for you and what won’t.  Of all the questions I asked at the beginning, this is the one I see the most.  It’s like a sunburn.  It’ll sneak up on you and you’re not aware of what is happening.

Okay.  One more question left?  How will you know a better house won’t come on the market as soon as you sign a contract?  Simple answer.  You won’t.  I tell people to quit looking at houses online once you get past the inspections.  If you don’t look, you’ll never know.  And if you are the type that won’t take this advice, remember that sometimes houses look better online than they do in person.  You are comparing your house in reality to the select pictures that the listing agents wants you to see……So that other house probably isn’t as good in reality as you are picturing it in your head.  You got a good house….now just enjoy it.

When Location Takes a Back Seat

by John Rice

This may surprise you, but there are sometimes that I don’t always advise people to make location the main priority.  I know, almost all my posts say to pick the neighborhood first, then the house.

So, when do I switch up my logic?  When I have buyers who want to buy in Lexington for under $120,000, especially under $110,000.  Most of the time they are first time homebuyers.  Let’s face it, it is hard to get into a house you’d even like in Lex for under that, and there isn’t that much of a difference between most of the neighborhoods.  Sure, there are ones to definitely avoid, but for the most part, there isn’t much difference in this price range between Masterson Station and McConnell Springs, Skyview and Southland, and any other neighborhood of similar age and style of houses.

When I’ve been out with first time buyers, they are most interested in a house they like and can live in…..And I can’t blame them.  I think I would opt for less of a location to get a house with a 2 car garage and 2 bathrooms verses a slightly better location with only 1 of each.  Which is more convenient:  Driving further to places you go or waiting for somebody to get out of the only bathroom in the house?   When you got to go,  the only “Location, Location, Location” you’re thinking about is an available potty!

Which leads me to mention something I read the other day.  It said that young folks and first time buyers are heading towards the suburbs, which is contrary to what was predicted just a couple years ago.  Now, Lexington doesn’t really have suburbs.  The closest we come to the burbs are newer neighborhoods on the edge of town.  Not always the most convenient location, but full of affordable houses with more than one bathroom and garage.

I guess I was amazed that was even newsworthy.  I mean, that is how it has always been here, and should be obvious to anybody who has ever lived in a one bathroom house.

I’ve worked with enough first time buyers that I know they want the most house they can get, and are willing to compromise on a convenient location.

One of my favorite examples of this was recently.  I had some first time buyers who were in this price range.  We looked at several houses.  Many were older houses with one bathroom and were too small.  Others were newer, but had no yard.  Like a lot of first time buyers, we started looking on the edge of town for good deal.  This was actually better for them since it was easier to get to their jobs.

We got lucky and found a foreclosure.  They got a lot of house for the money.  All they really needed to do was paint and address some carpet issues.  Not everybody gets this lucky.  What I like for this couple is that they aren’t going to outgrow this house in a couple of years.  That is another reason I tell first time buyers to get the most house they can for the money.  See, when a lot of them are coming out of an apartment, 1200 square feet seems big to them.  Then a baby comes along, and they are maxed out.  They call me,  I sell their house, they pay commissions, new closing costs, and moving costs to get into a bigger house.  When houses were appreciating rapidly, that was okay.  They aren’t now.  It just makes more sense to make long term plans these days.

Another reason getting the best house regardless of location makes sense is…..when they go to sell, the next crop of first time buyers will also be wanting to get the most livable house for the money, even if they are on the edge of town or close to nothing.

So, that is one of the few times when focusing on the house more than the location works.

What Kind of Realtor would Yoda be?

by John Rice

 

I get soooooo much junk in my inbox.  In real estate, there is a class or program for everything.  Most of it is how to get more leads.  That is the big one.  I have always thought that if Realtors would spend as much time being good at their jobs as they do trying to be on the first page of google, people would come to them.  Speaking of which, I am on the first page of google for a lot of things, but I have done it accidentally.  Hopefully everything has to do with real estate.  I read other agent’s blogs sometimes and am amazed that they write about the best cupcake place in town, or a day at Keeneland, or their newest listing.  Don’t know about you, but if my dentist had a blog, I wouldn’t go there expecting to see a post about eradicating crabgrass from my lawn.  Or if my accountant had a blog I wouldn’t expect a post about the best place to have LASIK surgery……Sorry to get off track here, but I’ve been waiting to say that for a while. 

Back to the class thing.  Now I am all for education.  I learn stuff everyday and really like it.  What I am getting at here is that all these courses I have seen just give you information, but they don’t teach you how to use it.   Especially designations.  Agents are pretty much just playing Wheel of Fortune and buying letters:  CRS, C-CERC, ARB, etc  (etcetera, not another designation!)  I think what we are needing is something to teach agents how to think.  Guess I call that wisdom…..putting the info you have to good use.  If Yoda were a Realtor, he would tell you to use the Force and “Search your feelings, you know it to be true.”

Things are changing everyday in real estate.  You can’t just default to what worked in years past.  For example, in the boom days, you would, as a default, use multiple offer situations to force a good deal for your seller.  Now I think it can actually hurt you to boldly proclaim to a buyer’s agent that there is another offer on the table and they have an hour to give you their highest and best offer.  I have seen several times recently where one buyer will say “I’m not going to get into a bidding war,” then walk away.  One of my buyer’s recently said just that.  I think what a listing agent in this situation needs to do is look at this like chess…..If I do this, then what will happen?  If it goes this way, what will likely be next, if it goes that way, what do I think will result.  I am not that good at chess, but I totally respect the fact that the good players have the next several moves planned way in advance.  That is thinking!

I’m in a deal right now where we made an offer, and another offer was going to be coming in.  My peeps wanted the house, so we went up a little.  We were doing a good job at thinking things through.  We decided to check the box on the contract that says we want an inspection, but we won’t ask for repairs.  We also left the closing date open for the seller to pick.  Why did we do this?  The seller was an elderly gentleman who had recently lost his wife and was moving in with family.  We thought that making it simple and easy for him would appeal to his family more than top dollar.  The other agent (who is one of about 10 in Lexington that I think is any good) was also thinking too.  See, he didn’t wait around forever to get the other offer.  He knew we had a good offer and didn’t want to risk losing us.  A bird in hand is better than two in the air as they say…..whoever they are.    The seller took our offer.  That was a wise decision in today’s market.

Each deal is unique because of the people involved.  The more info you have about the other party can really help you to come up with a good strategy, but you have to use wisdom to know what to do with all the info you have collected.

I think it would be cool to have Yoda for a Realtor.  You’d have 900 years of wisdom and experience.  He’d be like “Remember selling this land on Richmond Road to Henry Clay, I do.”  He could sense if the house was right for you, “Knew you would not like Hamburg traffic, I did.”   And most importantly, he could use his lightsaber during negotiations to get you the best deal.