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Do you need a realtor to sell in a hot market?

by John Rice

A seller-client of mine posted on Facebook that she was about to list her house.  We had two showings before it officially hit the market and sold it.

If you think all a realtor does is find a buyer, then I would be considered totally useless in this deal.  Getting paid for nothing.  Unfortunately, the public seems to think that the realtor’s work is done once we get to this point……heck, some realtors think their work is done at this point too!

All that was left to do on this deal is negotiate the offer, then negotiate the inspection repair list.  Coordinate the closing and be done with it.

But it didn’t go that smooth.  The appraisal came in very low.  In fact, it came in LESS than my people paid for it almost 3 years ago.

The deal was about to fall apart.

I tried to get the appraiser to up his value since one of the comparable sales he used was 11 months old and there was a non-listed sale that was only two weeks old.  He refused to budge or consider using the newer sale.

The buyer’s agent and I discussed alternatives.  I knew getting a new appraisal with the buyer’s same lender would not work.  Assuming the new appraisal would have come in higher, the underwriter for the loan would be forced to pick between a lower and higher appraisal.  Underwriting is all about minimizing risk and covering your own rear end.

The buyer had a big down payment.  I thought maybe she would be willing to pay the difference in cash.  Nope.

So, here I am in a hot market with a lousy appraisal.  I don’t want to lose this buyer, but the only chance we had of getting a higher appraised value would be to have a new lender.  Any other option was too risky.

I sent the release to void the contract.  The buyer decided to change lenders.  Bingo!  That was what we needed because the underwriter for the new loan would never know about the low appraisal.  (And I was sort of hoping sending the release might make the buyer realize that she was about to lose the house she wanted.  The release shows the other party that you have really done all you can do.)

My client was concerned about the appraisal.  She wondered if we should lower the price to make it more likely to appraise.  I said no, that I would rather have the appraiser shoot for the contract price.  If he could justify that value, then all would be well.  If it came in lower than the contract amount, we could renegotiate with the buyer at that time.

There was another listing up the street that was 100 square feet bigger.  I called that listing agent to see how it was going.  She told me that her seller had turned down two offers close to the list price (which was similar to my listing) because the seller wanted to move out after the end of the school year.

Armed with that information, I told the new appraiser about the other listing getting offers well above the first appraisal we had.  I told him that the market value of the neighborhood has outpaced the recent sales.  Keep in mind, that market value is right NOW.  Recent sales just tell you what the market was doing in the recent past.  That helped him out, and also told him nicely that I wasn’t going to be easy to deal with if the value came in light.

The value came in just fine.  Crisis diverted.

Not every deal has a big problem like this to navigate.   This deal would have fallen apart if it wasn’t for the right combination of experience, wisdom and luck.

So yeah, even in a hot market, it is good to have a realtor.

How to get a house in a tight market

by John Rice

Let’s just jump right in:

  1.  Obviously, the first step is to go see it as soon as it hits the market.  Many houses are selling immediately these days.  You wait until it is convenient to see and you will likely lose it.
  2. If it is a new listing, there is a higher change of there being multiple offers.  Don’t make a lower offer and see what the seller counters back with.  In between your offer and the seller’s response, odds are another offer will come in.  Seal the deal ASAP because nothing is settled until all parties sign a contract.
  3. If you find yourself in multiple offers, go in with your best terms.  Keep in mind that there is more to this than just price.  The closing date and when the seller has to be out are often just as important.  Remember, everybody moving out is going to be moving in somewhere too.  They have to coordinate their move just like you do.  I’ve seen sellers accept or counter a lower offer because the closing date and/or move out date were more favorable.
  4. Sellers get nervous about the home inspection.  I would only suggest doing this if the price is right or it is your dream house, but you could buy it totally “As-Is” or agree to limit what the seller might spend on repairs.  You could maybe just inspect the major systems too.   I’ve been on hundreds of inspections.  Most of the time the repair list amounts to no more than $1000 and is full of minor items that you would not walk away over……so in a super tight market for the house you really love, why risk losing it?  This is funny for me to write, because when the market was so terrible, I was suggesting sellers do anything they could to hang on to the few buyers in the market!
  5. You could raise the earnest money amount.  Personally, I don’t care how much the earnest money is.  The buyer gets it back for just about any reason short of giving you the middle finger and saying they just changed their mind.  Some agents and sellers get excited about the amount of earnest money though.
  6. Most people have a personal attachment to their home.  They want it to go to somebody they feel good about.  So yeah, we are back to the days of writing a personal letter to the seller and maybe including a picture of you/your family.  Everybody else will just be a name at the bottom of the offer.  You will be a person.

Of course, every situation is a little different.  Having an agent who can help determine the best course and to what extent you need to do all this will help the most.

BIGGEST factor in picking a house

by John Rice

A friend of mine called me last week.  Her son was about to buy a house sight unseen in a different state and she wanted to know what I thought.  While I did not have any specific knowledge or experience in a market that was a 10 hour drive from Lexington, what I chose to tell her should help insulate her son from making a bad decision.  It will do the same for you.

The biggest thing to think about is how a house fits in with the other homes in the neighborhood.  If almost all the houses have a 2 car garage and the one you want only has a 1 car, that is bad because buyers will view your house as inferior to others.  You don’t want a small lot when most are bigger.  A smaller house when most are bigger.

About the only way being different normally helps is if a house is better than most in the same neighborhood.  Like, having a 3 car garage when most have 2.  Having a bigger lot when most are smaller.  These things make the house superior to the rest and help with resale potential.  (When buying though you have to make sure you are not spending a lot more than the typical house in a neighborhood-these superior features do add some value but it is generally not a good idea to be the most expensive house in the neighborhood.)

Resale potential is about how appealing a house is in the market place…..not to be confused with resale value.  Values fluctuate.  Appeal is consistent.  In a hot market, all houses sell.  In a bad market, only the best sell.  When the market was in the toilet several years ago, the better houses kept more of their pre-crash value and sold faster than others.

Pick a good one.

7 reasons I love being a Realtor

by John Rice

The title pretty much says it all, so I’ll just get started.

 

  • I like helping people.  When I was in college and didn’t know what I wanted to do for a career yet, I remember thinking “I wish there was a job where you just did favors for people.”  I’ve been able to take that attitude and apply it to being a Realtor.  I get to help people plan, coordinate things, advise them, help them save money….even after we close, I still get to help because many of my clients are always asking me what they should do to improve their house, for contractor recommendations, etc.
  • I like houses and neighborhoods.  Ever since I got my driver’s license, I have been cruising around checking them out.  Now I get to do that and making a living at the same time….only I am much older and my car is much nicer now.
  • I like numbers.  My dad can tell you that the best thing he ever gave me was a calculator.  Even now, it is the most used app on my phone.  I get to crunch numbers to figure out what a house is worth for both my buyers and sellers.
  • I like being on the move.  It about killed me in school and jobs I’ve had where you sit in one room all day.  I like being all over town and seeing what is happening.
  • I like seeing the pictures my clients post on Facebook.  There is no greater pleasure than to see people enjoying the home that I helped get for them.  I’ve got to see bland rooms transformed into nurseries, kids grow and all the life that happens in a home.  I also get to see clients move on to bigger and better things in their lives too.  It is sad when they move out of town, but it is nice to know that I was able to help with the transition.
  • I like writing.  I had a newspaper with I was a kid.  That was before there were copiers at home.  Fortunately I had a circulation of about 4 neighbors so making each copy by hand was not that big of a deal.  I did the newsletter when I worked at UPS.  I’d post my favorite movie quotes, I’d ask my co-workers random questions and have their replies.  Everybody had a great time reading it.  That is when I learned you can get people to read stuff IF you make it fun for them.  That is why I try to be creative in my marketing remarks for listings.
  • And the last reason is because being a Realtor has allowed be who I am and enjoy doing what I do.

LEXpert’s top picks for around $250k

by John Rice

Okay.  You want a 4 bedroom house in Lexington.  Nothing too old.  Maybe you have kids.  Maybe you don’t.  Either way you realize a house in this price range and size should be in a good performing school district to keep the resale potential up.

Here are a few neighborhoods I always suggest and why:

Andover Hills-I know, I know.  I am always talking about Andover Hills.  I lived there for several years and it has been my absolute favorite place I’ve ever lived.  You are close to Hamburg, but since you are on the southeast side of it, you do not have to pass through Hamburg EVERY time you go any place else in town.  Since I now live on the northeast side of Hamburg and must get past Hamburg to get anywhere, I am always aware of this.  Andover Hills has a nice vibe.  Upscale without being pretentious.  $250k is the low end for this neighborhood.  An added plus is having Andover Golf and Country Club so close for golfing and the pool if you wanted to join.  There are a lot of businesses that you use regularly that are very close too.

Chilesburg-This neighborhood would not have been on my list many years ago.  It has always been nice, but the school district change finally put all of Chilesburg in the elementary school that sits in the middle of it.  It is just a few minutes past Andover Hills, so it shares many of the same perks.  One cool thing Chilesburg has is a bunch of walking trails through the neighborhood.

Willow Oak-This is one neighborhood few people know exists.  It is tucked away behind Millpond Shopping Center on Boston Road.  If you’ve been out there and seen a park with a pool and a big pond, that belongs to this neighborhood.  There is only one way in and out, and it is across a picturesque bridge.  Anything you want in South Lexington is close, and you could walk to Starbucks.  The streets are lined with huge pin oaks.  This neighborhood has one of my highest “Good vibes per dollar” ratings ever.  You could spend twice as much elsewhere and not get as much neighborhood character.

Copperfield-This is one of the most desirable neighborhoods in this price range.  It is upscale in a classic sense like Andover Hills and has all the character that you find in Willow Oak.  It is also on the edge of the Dunbar High School district, which is one reason it is so popular.  The neighborhood has it’s own pool and clubhouse too.