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Changing Realtors? Do it for the RIGHT reason!

by John Rice

I was flipping through listings the other day and I noticed a house I have seen before is now listed with a different agent.  Having seen the house, I knew exactly why it didn’t sell with the first agent:  Price.  It was a nice house, but it didn’t have anything that would put it at the top of any buyers list.  The deck was smaller than you typically see in that neighborhood,  the driveway was sloped, and it had an unfinished basement when most you see in that neighborhood are finished.  Another house around the corner just sold for a mere $15k more than the asking price on this one.  It had a finished basement, an extra bath, and granite counter tops.  Which would you pick?

Since the house didn’t have anything to WOW buyers, about the only thing a realtor has left in the arsenal is price…..and it was clear the sellers weren’t budging since the new agent had it at the same price that didn’t attract buyers with the previous agent.  To me, it was sad since the original listing agent was actually quite good at marketing houses.

I see this all the time.  Sellers think switching realtors is somehow magically going to convince a buyer to make an offer on a house they don’t want.  I mean, if your agent is actually doing a decent job and you are getting showings, the problem is either with the house or the price……..both of which are something only the seller can fix.  If you get no showings, buyers/agents knoooooooow your house is over-priced.  You get showings, but no offers?  That means that buyers/agents think your house could be worth the asking price, but change their mind when they see it……meaning your house has some fatal flaw or doesn’t show well.  All a seller can do is improve the house or reduce the price.  No amount of marketing can convince a buyer to want your house as long as there are better houses out there for them.

Want to know some reasons when it is a good idea to switch agents?

*When you look online and notice your realtor has not only your neighborhood WRONG, but the zip code too!

*When you look online and the house number is WRONG!

*When you look online and your realtor hasn’t posted pictures after MORE than a week!

*When your realtor NEVER calls back an agent who wants to show your house!

*When the showing instructions for other realtors says to give notice so the seller can remove a dog and the house has been vacant for months (and your agent still doesn’t change it even after another agent brings that to their attention.)

Can you believe I ran into all of these situations just in the past couple of weeks?  Just yesterday I was at a house with a cash buyer.  The house number was wrong, but I found it.  The showing instructions were to “Leave Message & Show”, which I did.  When I got to the lockbox, there was a special code I needed to enter after my PIN number, which wasn’t mentioned.  Of course, when I called the office, I gave them the actual address for the house rather than the one the agent had online, so the office couldn’t find it.  Meanwhile, my clients are just wondering around the outside of the place, hoping we can get inside.  What did we do?  We left.  We went back later when the agent called me back.  That seller almost missed a showing all because their agent made a lot of careless mistakes.

So, A Buyer, A Realtor, & An Appraiser Walk into a House…….

by John Rice

I just got off the phone with a seller who was wanting me to list their house.  The seller’s house has been on the market for 6 months with another agent.  I looked at the comps and had to tell this seller that the house was never going to sell anywhere near it’s current asking price and even if it did, would never appraise for an amount a buyer getting a mortgage would need it to.   The seller decided they might pursue refinancing rather than sell.  When I got off the phone, I was pretty mad.  Not at the seller, but at the current listing agent.  See, had that agent explained how real estate works, this seller would not have wasted the past 6 months thinking the house might sell.  I don’t know why realtors won’t explain how it all works to people.  I guess they are afraid that if the typical buyer or seller understands our business, then they won’t need us.  I find the opposite to be true. 

So, here are some things that people need to know, especially sellers since they seem to have it the hardest these days:

1)  Today’s buyers are more savvy than ever.  They know if a house is overpriced as if it were a sixth sense.  They are going to look at every house in their price range and pick the best one.  (In fact, most buyers out there have a keener sense of the market than a lot of realtors!)

2)  Let’s say you do find a buyer who is willing to pay too much.  I’ve only seen it happen a few times, but here is a series of events that all must happen in order for you to sell for over market value to a buyer getting a loan these days:  A stupid buyer must end up with an equally stupid or lazy realtor and they get a mortgage from somebody with an appraiser who will “Make the numbers work.”    I can count on one hand how many times I have seen that since the market slowed and we now have all these new laws that try to minimize this type of activity.  (In other words, don’t count on it happening for you!)

3)  Which brings us back to how things roll these days.  Once a buyer and seller agree on price, any buyer getting a mortgage is going to need an appraisal for at least the contract amount.  An appraiser is going to pick the 3 best comparable houses that have sold within the neighborhood in the past 6 months.  In a pinch, they’ll go back a year and/or about a mile from the house.  If the house doesn’t appraise for the contract amount or more, the buyer has the option of basing their loan on the appraised amount and paying cash for the difference.  That happened some in a better market, but few, if any, buyers are willing to do that today.

4)  Realtors guesstimate value by doing what we call a CMA or Comparable Market Analysis.  It is similar to an appraisal….I actually think it is more realistic since we are trying to determine an actual sale price.  An appraisal is mainly to justify a sales price.  We pick 3 or more houses that have sold in the same neighborhood too.  We then cut and paste dollars for differences between the subject house and the recent sold listings.  This is where things like square footage, finishes, condition, etc come into play.  Generally, the less you have to cut and paste the better.  It pays to pick the most similar comps.  Why do we do this?  Basically it is a prediction based on recent buyer behavior.  We are saying “Hmmmmm, if a buyer recently paid this much for a house that was so many square feet bigger than my listing, then my listing should be worth so many dollars less……But my listing has a fenced yard and that one didn’t, so I need to add a few bucks for that.”  I keep the appraisals of recent deals I’ve been in and will use the same values that appraisers use when I do a CMA or have somebody about to write an offer.  That is one reason I have NEVER had a house not appraise for enough.

So, a seller really needs to price their house close enough to the market value in order to attract a buyer, and will also need to convince an appraiser that the contract price is okay.  Keep those two things in mind and if you have a realtor that hasn’t or won’t explain that to you……fire ’em!!

SI Drive? Level Side walks? Curtains that Convey? Really??

by John Rice

About a year ago, my wife decided she wanted a Subaru Outback.  We looked at a few on used car lots.  I did a lot of research to find out what trim level we had to get for her to have the sunroof and heated leather seats that she wanted.  There really weren’t a lot of used Outbacks in or around Lexington at that time.  Then, one day, I found a classified ad that said “2008 Subaru Outback, SI Drive” with the price and the seller’s phone number.  Not a lot of info to work with.  Definitely nothing to make the guy’s phone start ringing.  But to me, this car having “SI Drive” told me a whole lot more about it.  Having done a lot of research, I knew that was only offered on the top trim level, having the giant sunroof, heated leather interior, and the bigger engine.  When we went to see the car, all the seller kept talking about the “SI Drive”.  I could tell it was very important to him.

A lot of home sellers are like that too.  They want to focus on what is important to them when selling their house, rather than focusing on things that are important to the buyer.  I see it a lot in marketing remarks of For Sale By Owner houses.  I once read a flyer where the seller spent a lot of space talking about how level the sidewalks are and never mentioned that his model of house had an open floor plan, which is something that is important to most buyers these days……especially since anybody picking up the flyer can see what is outside of the house, but knows nothing about the inside yet?

I sold a house to a family that I have since become friends with.  They found the house by driving around the neighborhood.  They would have never come to see it if they had only seen it online.  Why?  Because of the marketing remarks.  Instead of mentioning the hardwood floors, instead of mentioning that one of the upstairs bedrooms was huge, or that there were bedrooms on both levels of the house, or that the backyard was an awesome park-like oasis, the agent used that space to tell you that the exterior was maintenance free, that the curtains stayed with the house, and that there was an allowance for water-proofing the basement as well as mitigating radon……..Hardly anything to make somebody fall in love with a house that had a leaking basement and a high radon level!  The marketing remarks could only have been better if they said  “Must see!……You get to keep the seller’s curtains AND fix some major problems with this house, but at least you’ll never have to paint the outside!!  NOT a drive by!”

The hardest thing about real estate is getting sellers to think like a buyer and a buyer to think like a seller.  I think if that ever were to happen, I’d probably be out of a job!  Being a realtor these days is as much about mediation, negotiation and understanding differing perspectives as it is about houses.

BTW, “SI Drive” is a feature that has 3 settings for throttle response and transmission shift points.

What I like about a Contingency Contract

by John Rice

Well, I don’t really like them.  Sure, EVERYBODY would rather go ahead and close in the usual 30-45 days, but there is a good side to this type of contract.  Guess what it is?  The buyer will typically pay you more with a contingency to sell their house first than they would if they could close without having to first sell.

I don’t really get it, but I see it all the time.  A buyer with a house to sell gets really nervous about not knowing where they will be living once they sell their place.  What they do is go out and find a place they like, and kind of “Reserve” their spot in line.  Now, unless the buyer already has a contract on the house they are selling, I always counterback with a kickout clause.  That basically means the IF the seller would like to sell the house to another buyer without a contingency, they give the contingency buyer a certain amount of time to remove the contingency or back out of the deal. 

Another thing I like is that IF the contingency buyer can and does remove their contingency,  you have a back up buyer.  Sometimes it helps you when negotiating repairs after the inspection if the buyer knows there is somebody else wanting the house if the deal falls apart!

I don’t really care for this kind of contract though when I am working with the buyer…..for all those reasons.  When I have a buyer who wants to write a contingency offer, I usually try to get them to just wait until we sell their house first…..unless of course we are just using it to buy time and they are able to remove the contingency if another buyer comes along for the same property.  Here is why I don’t think they are a good idea for the buyer who can’t possibly remove the contingency if needed:  Any decent realtor is going to counterback with a kickout clause.   So, that means that if another buyer comes along they will lose the house.  If no such buyer comes along, that means that the house would still be there when their house eventually sells, and they could probably strike a better deal at that point.