cash buyer

Best advice when buying a home

by John Rice

It is amazing to me to think about the extreme markets I have seen.

I spent most of 2011 until COVID giving advice based on my experience of seeing how hard it was to sell ANY house during the Great Recession.

I think I will spend the next decade giving advice based on my experience of seeing how easy it was to sell ANY house right after COVID.

We are now back to a more normal market. Inventory is up a little, but seems really high compared to the days of only 3-4 houses being on the market in any price range.

I recently had an out of state buyer. It is always fun when somebody rolls into town with a mission of finding a house. I get to literally see almost any house worth considering, and all within a few days.

I sorted through about 90 houses in their price range. I narrowed it down to about the best 15 houses. Man, it sure was nice to be able to do this. I haven’t been able to do so in many years. Just not too long ago, there were not 90 houses for sale in all prices ranges in the whole Bluegrass area.

Many from this list were new listings. Most sold immediately. We ended up finding an ideal home that was clearly the nicest in it’s price range since there were multiple offers. After going over the list price, waiving inspections and paying cash, I am happy to say it closed last week.

The whole time I was out with these buyers, I was thinking about those other 75 or so houses for sale. I am sure none of them had back to back showings like practically every house I showed my clients. A couple of years ago, any of those houses would have gotten multiple offers the first day and possibly sold for over the list price…….but not today. Today they are nothing anybody wants. They all had some bigger negative like being on a busy road, in poor condition, a bad lot, etc.

Which takes me back to some timeless advice I have been giving for years: Buy a house that will be easy to sell in a bad market. Buyers in any market all want the best house available to them. I remember getting multiple offers on listings in 2009 when there were literally hundreds of houses available to those buyers who all wanted my listing. What house is that? One with a good floor plan. One with a good lot. One that is in a desirable location. One that fits into it’s neighborhood nicely. One that has no big negatives. One that has at least one unique feature that gives it a little pizzaz. How will you know this house when you see it? Take me along and I will let you know.

How I learned a great real estate lesson from a video game

by John Rice

Ever play Sim City? I must admit, I haven’t done it in like 30 years, but I always loved to watch what happened when you built a neighborhood beside an industrial zone, or watch a neighborhood grow when you added a commercial district beside it.

Sim City is a lot like real life in the way something outside a neighborhood can have an impact on what happens within a neighborhood. 

One day many many years ago, I was talking to a neighbor who bought her house brand new back in the early 70’s. We were talking about all the traffic on Pimlico Parkway. She told me that before they opened Man-O War, the only traffic on Pimlico Parkway was just people from the neighborhood. It was just the main drag through the neighborhood, like any other entrance and exit  in your neighborhood…..until something changed.

And I guess that is what is on my mind. How things are always the same, until something changes.

Another example of a road like this is Autumn Ridge Blvd. I remember when it was a new neighborhood. You took Autumn Ridge all the way back, turned on Pleasant Ridge just like you do today, only back then it ended before you got to Andover Forest…..and oh, there was also no Hamburg back then either.

Next thing you know, Hamburg is built and you can get to it straight through Autumn Ridge. It really worked out great for everybody….except those folks that lived on the cut through streets.  They saw a lot of traffic and watched as their houses became less desirable than the same house on a different street in the neighborhood.

So, here is my advice: Don’t buy a house on a road that ends at an undeveloped area.  SOMETHING will eventually be there….just like on Sim City, and odds are it will change the vibe of your neighborhood. Sometimes it changes it in a good way, but most of the time it means increased traffic, which usually means increased crime…..just like Sim City.

Here is some more advice: When you are considering a neighborhood that has roads like that, take a look at a satellite view of the neighborhood. You want to see what is on the other side of the vacant land to see what may eventually be connected to your neighborhood. Also, don’t rely on zoning. I hear people say things like, “Oh, that is zoned for single family, so we’ll be okay.”  Well, lets say that it stays zoned as such. That doesn’t mean that it will be a single family neighborhood similar to your neighborhood? But even more of a big deal is that there are zoning changes all the time.

And you know what usually happens when there is a big change in the neighborhood don’t you?  All your neighbors decide to move at the same time.  Never a good thing for resale value……and Game Over for you!

Are Investors ruining the market?

by John Rice

Are real estate investors who buy single family homes ruining the market for other buyers and driving up rent?

Unpopular opinion, but I say no.

Sure, many of these investors might make terrible landlords. None of us like the robocalls we get asking to sell our houses to them…..but they are not ruining the market and driving up rent. I am by no means defending them or their actions. I am just saying that they are not the root of the problem.

I spent a couple weeks in Florida recently where I read an article saying how large scale investors were ruining the market. They were outbidding other buyers. They were reducing the number of homes available for owner-occupant buyers. They were raising the rent and making housing unaffordable.

This type of logic drives me crazy. Let me pick apart a few things here:

For every house for sale, that means there is both a Buyer and a Seller. If one Buyer is outbidding another, that means there are not enough houses for sale. This is a Supply and Demand issue. Also, the never mentioned seller who is about to become a buyer is happy with the terms they got.

Are they reducing the number of homes for sale? Yes, but isn’t the same true for anybody who buys an available home? Again, the issue is the imbalance between Supply and Demand.

Are they raising rent and making housing unaffordable? This one always amazes me. We have all just survived a crazy period of inflation where the cost of everything went up. Somehow most people single out housing, as if that shouldn’t have also been affected by inflation. Like we are shocked and appalled that housing costs, whether renting or buying, went crazy at the same time when everything else did too?

What this article seems to forget is the tenants. Where would they be if all the sudden there were no properties to rent? It isn’t like investors are buying these houses and keeping them empty. There is just as much demand for single family rental homes as there are for people wanting to buy them and live in them. If rent exceeds market demand, houses will sit vacant and investors will have to lower the rent to get a tenant. Again, Supply and Demand.

Are you seeing a theme here? Supply and Demand. There is a short supply of houses for sale for investors and owner-occupants. There is a short supply of houses for rent for those who cannot afford to buy or choose not to. Having more demand than supply is the problem here.

Some say that the issue is sellers just aren’t selling these days. Okay, true. But let’s think this through. We have far more people wanting to buy AND to rent houses. If all the sudden everybody decided to move, we would still have more people than houses because everybody living in their current house would also need another house. What’s that? Supply and Demand.

Building more homes is the only real solution to this. It is what the writers of the article I read should be encouraging if they honestly feel like everyone should be able to afford to buy or rent a home. The demand is there. The supply is the issue. Until there is a better balance, prices for buyers and tenants will not change.

Well Played Sir, Well Played….Sort of

by John Rice

After nearly 19 years in this business, you sure learn to read the signs. Watching what people do (or don’t do) can often tell you a different story than the one they are telling you with their lips.

I had a buyer interested in a property. We made a formal offer. It was verbally countered. Verbal counters happen. They can be a way of making the negotiations move along faster. They can also be used to “Not” formally counter. See, if a Seller formally counters an offer, they can’t accept another offer without withdrawing their counter. Sometimes a verbal counter is made to keep the other parties options open.

My Buyer decided not to budge from their original offer. I assumed the deal was dead.

A couple of hours later the Seller’s realtor texted saying the Seller maaaaay accept my Buyer’s offer amount if we could close in 3 days. I immediately told the other realtor exactly what my Buyer would do in response. We could not close in 3 days but could within 10 days.

Then I hear nothing.

This is when I start getting suspicious because normally, when a Seller and Buyer agree on a price, everybody usually get really motivated to make a deal work out.

Then I ask again for a reply.

I still get radio silence.

Then out of the blue, exactly what I suspected was happening came to light. There was another offer. The other realtor said another offer had been made which was better than the one my Buyer had made.

So here is what really happened:

  1. By verbally countering our offer, this agent kept our offer alive and could legitimately tell the other Buyer’s realtor that there was another offer on the table. This used our offer as leverage to get the best terms for the Seller from the other Buyer.
  2. By not replying to us in a timely fashion, it hedged the Seller’s bets because if the other offer didn’t work out, they had us as a backup plan.

Was there anything wrong in doing this? Yes and no.

I am not at all upset about the other agent trying to get the best results for his client. I do the same for mine. Kudos to him for this part of his actions.

The only thing I am salty about is that he made a counter and then ghosted me for almost two full days. I think he should have told me in a reasonable amount of time that there was another offer, or that his Seller was either accepting/rejecting/countering the revised terms I had proposed.

“Are any of the offers cash?”

by John Rice

I went to an open house with a buyer client this past Sunday. We were already out looking at two other listings. This one had an open house so I thought we’d hit it rather than schedule a time to see it before or afterwards.

We got there about 5 minutes early. The realtors were not there yet and there was a line of people waiting to get in.

Once the realtors opened the house, the first thing I asked was how many offers did they have. One of the two that were there said they had 10 offers and were expecting more.

I then asked if any of them were cash. One of the realtors said “We aren’t allowed to say whether or not we do.” That isn’t exactly true in general. It could be that the seller instructed them not to disclose that type of info. If that was the case, kudos to the seller’s realtor for saying this.

But more than likely, they just didn’t want to say.

Why would they not want to say?

Because if there were any cash offers, disclosing so would deter any buyer who would be financing the purchase from making offers. What these realtors want to do is get as many offers as they can, hoping to get one with a higher price or better terms than the cash offer, then go to the realtor with the cash buyer and say “If you can match these terms from the better offers, your buyer can have the house.” Nothing at all wrong with that. They are representing their client’s best interest in doing so. It is what I would do for my sellers as well.

These two realtors were a lot of fun. I enjoyed meeting them. They didn’t know I was a realtor at first, so my response was “Don’t worry about it, I’m a realtor too and I can read between the lines.”

So yes, they did have at least one cash offer.