Updating Advice

How long will it take for my house to sell??

by John Rice

I get asked this question on every listing appointment I’ve ever been on.  I normally don’t reply with an amount of time, but with a sequence of events that needs to happen to attract a buyer.  The honest to goodness truth is that any house should sell pretty quickly if the seller will do everything on the list I give them and price it correctly.  Granted, there are exceptions…..million dollar house?  Will take time since there aren’t many buyers in that price range.  A unique house?  May need a unique buyer.  An overpriced house?  Will usually only sell to an idiot with a careless/stupid Realtor.  A normal house in any neighborhood in Lexington Ky?  If done right, it won’t take long.

I’ve been doing this long enough that I know how it usually goes with a seller.  I see the house.  I ask the sellers if they are willing to do any work that needs done to attract the buyers that are out there right now.  Sometimes they don’t/can’t/won’t do anything.  If they don’t/can’t/won’t, I tell them the price I think their house will sell for just like it is.  Usually though, the seller picks a few items from the list.  We put it on the market.  They get positive feedback for the things they have done.  They get negative feedback for the remaining items on the list.   After awhile, the seller starts to realize that they are going to have to do more items on that list.  They do one more item.  Still doesn’t sell or offers are way below where they should be since the buyer has subtracted about 5 times the cost for the remaining items on the list.  I’ve been on the buyer side of this.  They almost always say something like “If I have to paint this whole house I’m not paying a penny more than $XXX,XXX!!”  or “I would need to replace all the carpet and I like hardwood, so let’s just subtract the cost of hardwood from the asking price and go from there.”  Can’t blame them, after all, it is their market these days.

Eventually, the seller plugs away at my list until it sells (And sometimes being realistic about the asking price has been on the top of that list since day one).  See, there is the sequence of events I mentioned at the beginning of this post.  Now that the house is ready, it is going to sell because it is competitive and will almost always fall on the short list of a buyer.

But what happens to the people who do everything on the list from the beginning and price it correctly?  Their house usually sells in a matter of weeks.  Why?  Because buyers want the best house for their money.  Make your house THAT house, and start packing.

Playing “Bang for Your Buck” & it took longer than 30 minutes!

by John Rice

Ever watch that show on HGTV called Bang for Your Buck?  Let me let you in on a secret…..the winning house is ALWAYS going to be in a neighborhood that will best absorb the amount of money invested on whatever the improvement was.

I recently had a chance to play “Bang for Your Buck” with a client, only they were wanting to pick the house that had the best change to have been the winner.  They narrowed down their short list to about 8 houses.  I ran the comps, took what I knew about the neighborhoods and the market, and told them which ones would be the best bet to get back the $20-30k they want to spend on improvements.  Of the eight houses, most were at or near the top of the range for their neighborhood.  That never works for getting anything back on your improvement dollars.  If the range for the neighborhood is $150-200k, you can spend a million bucks on a house, but you aren’t going to get much more than $200k for it.  See, once you over-improve a house, you end up making buyers pick between the best house in an inferior neighborhood or an average house in a superior neighborhood…….and sometimes those people have a realtor like me who will tell them they can improve any house, but they can’t do a ding dang thing to change the whole neighborhood!

So, my folks picked a house in the lower end of a neighborhood that ranges from $200k up to well over $500k.  That should give them the room they need in the value range to get back most or all of the money they spend.  It is also in an area where it is the preferred neighborhood due to character and school district.  You’ve got to consider what other neighborhoods any future buyers may also consider.   We ruled out several good houses just because there were so many similar neighborhoods all in the same part of town.  In fact, we saw about 10 houses that were all pretty much the same floor plan within a quarter of a mile from each other.  You don’t want a future buyer to be playing “Where’s Waldo” with your house when it is time to sell!

 I also gave them some ideas for what would be the best things to do to the house.  Pretty much, what you want to do is offer a buyer just a little more than what they expect to see in your neighborhood.  Some people (and amateur Flippers) go over board.  I think I blogged about a Flipper who put granite and travertine all over a house in a neighborhood where 30-year-old laminate was typical.  That dude could have done just as well with a nice new laminate counter top and 89 cent tile.  Sure, who doesn’t like granite and travertine, but it was wasted money from an investment standpoint……especially since his higher material cost drove up his asking price and he couldn’t sell it.

Here are some things that never go out of style:

-Adding a fireplace

-Hardwood Flooring

-Crown Molding

-Plantation Shutters

-Adding a deck or patio or making the one you got larger

-Fencing a yard

-Landscaping

For things that a buyer will want to rip out in 10-20 years, (tile, counter tops, backspashes, carpet, light fixtures, cabinets, etc) you are only going to get a return on your investment as long as what you bought is not only still stylish, but in good condition.  For example, when your maple glazed kitchen cabinets are beat to heck a few years down the road, don’t expect a buyer to pay you back for them.  And in 15 years, they don’t add any value.

If you can’t tell, I really want my own reality show.

When 2 negatives together seem like 3

by John Rice

Sometimes a bunch of negatives are overwhelming when you have to see them all together.  This is something I learned when I bought a fixer upper house that was worn out, out-dated, and in disrepair.  I was broke back then, so I had to live with it for a couple of years.  Man, that was rough.  I remember thinking that the carpet wouldn’t look so bad if the walls weren’t so bad, and how together they really make the light fixture unbearable.  I guess that is when it first hit me how 2 or more negatives seem to compound their effects when viewed in the same room.

This is something that has really helped me out in real estate.  Let’s face it, very few houses are totally updated showplaces.  Just about any house has something old and/or worn out.  My current house, even though we have done a lot to it, still needs new carpet upstairs and our green laminate counter top needs to join the rest of 1998 in the landfill.  When we bought the place, it was all original, which meant not only that once trendy green counter top, but also a green vinyl floor.  I can’t believe I am telling you all this, but what the heck, the kitchen also had wall paper with fruit on it that one of my friends said looked like something Willy Wonka would make.

While the counter top is still around, the wall paper has been replaced with fresh paint and the green vinyl is now  Brazilian Cherry.  It looks so much different that you hardly notice the counter top is still green, when you use to feel like you were in Emerald City from the Wizard of Oz.  It is still a negative, but less of one now when viewed without the others negatives.

I’ve got a listing in my pipeline that I have been working on for a little bit.  In general, it just feels like a rental grade property.  It has a nice floor plan and all, but just doesn’t feel like something that a buyer will fall in love with.  Like I have always said, a seller has more power in the deal if the house comes across as something special.  The market is currently flooded with “Average” houses.  This house already has some pluses that could easily be over looked.  It has a couple of nice ceiling fans and brushed nickel fixtures……Things that I bet most buyers wouldn’t even remember after leaving the house if we didn’t do anything to it.  So, what is the plan?  We have just had the place painted.  Now the whole house is a nice warm beige.  That will unify the space to a buyer.  Buyers like to see all the rooms the same color.  You have to remember that buyers are going from room to room in a 20 minute window.  They like it all to be consistent.  The next step is going to be to replace the vinyl flooring in the baths and kitchen.  Then we’ll clean the existing carpet and stage it.

Now, when a buyer comes in this place, they will see fresh paint on all the walls and ceiling, clean floors, and new vinyl in the kitchen and baths.  They will also probably now notice the ceiling fans and nickel fixtures.  See, the goal is to make it the best house any buyer can get in that price range.  After all, as long as there is one buyer out there, you know they’ll pick the best one.

What about the “Average House” in a slow market?

by John Rice

Know what I have been thinking a lot about lately?  The “Average House” that is on the market.  I get a lot of statistics thrown at me that I have to analyze, but there is nothing more depressing to me than the “Average house.”

See, there are a TON of houses on the market right now and not many buyers.  The last number I heard was that there are 13 buyers for every house available.  Do you know what that really means?  The other 12 houses per buyer aren’t going to sell.  What are those houses like?

They are the ones that don’t stand out in any way shape or form.  There is nothing special about them.  Average location.  Average condition.  Average price.  Not that there is really anything wrong with any of that, it is just that there are sooooo many of them on the market right now.  I hate to be the bad guy, but they probably aren’t going to sell.  Sure, there is a sign rusting away out front, and an MLS listing that is getting as much attention as I probably would on a dating website, but really, it might as well not even be for sale.

I’ve been in plenty of these houses with my buyers.  They normally just walk in, walk out, then tell me the house was okay with the enthusiasm they might have when picking out toilet paper at the grocery store.  Heck, I bought one of those houses….kind of.  Sure, I picked a good location, but everything else about my house was…..well, like everything else in every other houses in my price range.  There was really nothing great to say about it other than the fact that it was in a nice neighborhood.  The floor plan is one that is scattered over pretty much any neighborhood in town, the lot is nothing to write home about, and it wasn’t in move in condition.  In fact, it was what I call “Move-Out” condition, meaning the seller’s had moved out and left the nail holes, the indentions in the carpet where their furniture had been, their kid’s finger prints on the walls, etc.  Now, I have done a lot of updating, so I think my house would now stand out due to location and condition if I had to sell today……but without the work I have done, all I could do to sell it today would be to price it lower than other houses currently on the market.

I think the sellers who have it worst are those who are in newer neighborhoods where a buyer can even pick from multiple versions of the same house.  I’ve shown several houses back to back that were the exact same house, but with different finishes…..”Oh, this one has berber carpeting and the last one had plush.”  “Oh, this one has beige vinyl and the one around the corner has blue.”

I got a phone call from somebody last week about selling their house.  I was pleasantly surprised when I got there to see that it was in move in condition, would show well, and had new laminate flooring throughout.  In the price point the house is in, that is an attractive perk to any buyer.   It helps too that they are willing to price it competitively.    I have no doubt that when it hits the market, one of the first buyers to see it will want it because it is better than the “Average House.”

So, what are you to do if you find yourself in a house that doesn’t have anything any different that any other house available?   First, don’t feel bad.  In the hot market of yesterday, people routinely settled for their second or third choice house and felt lucky to get it.  Now those peeps are trying to sell in a market where most buyers get their first pick.  Here are your options…..there are only two (trust me, there is no third option here!)  You either make it attractive to a buyer by pricing it lower that the competition or make it better than the competition.  If you are in a neighborhood where vinyl is common, put down tile, if carpet is common, go hardwood or laminate.  Increase the size of the deck or patio.  Fence the yard.  Add stainless appliances.  Leave a nice washer and dryer.  It is all about one upping the other seller and stealing the next buyer away from them.

Granite doesn’t make people buy a house full of negatives

by John Rice

Man, I sure have been talking to people about listing their houses a lot this week.  I’ve never had so many people all at once call me to come critique their house.  Gave me the idea to blog about my thoughts though…..Especially since so many sellers think it is better to add a positive rather than subtract a negative.

When somebody wants me to check out their house and make suggestions, I always wonder what is going on in their heads as I give my two cents.  I don’t go in and tell them to tear the whole thing down and rebuilt it in whatever the current style is.  I’m not one who thinks that putting granite on the counter tops is a shoe in for getting it sold.  So, what do I do?  First, I think about what a buyer would expect who is looking at other houses similar in age, condition, and price.  If you read no further than this, take this thought with you:  All you are wanting to do to your house is make it a little better than the second best one on the market.  Yep.  That is all.  Anything more than that is wasting money.  Like I always say, as long as there is a market, the best one will always sell first.

I also often get asked what improvements can be done that give the most return.  I think a lot of folks are hoping I will say new flooring, new counter tops, stuff like that.  I only say to do those if they are common for your neighborhood.  Let’s say it cost $5000 to put down granite, and you can jack your price up by $5000.  Was it worth it?  Not only have you taken the time to get the job done, you are also paying the realtors another 5-6% of that amount since the sale price is now higher.  So what is the highest return on your investment when getting your house ready to sell?  Paint.  Nobody ever gets excited when I tell them that, but it is true, especially if you can do the work yourself.  Fresh paint always make any house feel better.

Another thing to remember is that a bland house with no negatives is a whole lot better than a WOW house with a few negatives.  Why is that?  Most people freak out over negatives.  I would take a ” Builder Basic” listing with nothing to hate versus a WOW house with something wild like a crazy floor plan, backing to a busy road, only one bathroom, or anything that people don’t want.  I have had two old house listings that both had fabulous features.  One of them had a reaaaaally narrow staircase to what had been the attic.  It had a new kitchen, great deck, and 2 great bathrooms.  Another listing had the smallest living room I have ever seen, but had the whole upstairs brand new.  I mean take the roof off and rebuild new.  It had a walk-in closet and master bath like a new high end house, which was totally superior than any other house in the neighborhood.  Both of them took a while to sell.  I would call the agents that showed them for feedback and they would go on and on about how much the buyer loved such and such and what a nice job the sellers had done with this or that.  I was always tempted to interrupt them and remind them that the house was for sale.  But I let them finish and they always started their last sentence with the work “But”.  It was like this: “Buuuuuuuut that living room was too small.”  Or “Buuuuuuut they just couldn’t handle those stairs.”

What are you to do if you are getting ready to sell?  After you have decluttered and all, deal with the negatives before adding any positives.  Get rid of anything worn, stained, or so outdated that it is tacky.  Deal with everything that needs fixed.  Then, see what is common for your neighborhood.  If everybody has old cabinets, you can keep them.  If everybody has updated their faucet fixtures, you had better too.  Once you know what is typical, take a look at what you have to work with.  I mean something you have that other houses don’t.  The Friends/Clients that I talked to today have a huge covered and screened deck.  I am guessing that this feature is something that will separate their house from the others.  Whatever your unique item is, do stuff that brings attention to it.  Like for that covered deck, I would paint it, stage it, maybe put some potted plants out there.  If you really wanted to go wild, mount a flat screen out there.  Ever watched HGTV?  All those design peeps always get giddy when they see a TV on a patio/deck…..And ALWAYS start with addressing the biggest negatives first.  Most people only have a limited amount of time and money to spend.  You don’t want to run out before you are done.  FYI, just about every seller ends up so exhausted that they never get it all done.