first time buyer

Sold for 25% OVER list price!!

by John Rice

I listed a manufactured home in a tiny town in northern Scott County on 15 acres last week. I have had it in my pipeline for close to a year so I have been watching the market in the area for a while. Prices have gone up quite a bit, but lately similar properties have all been listed for about $160k.

So we got pictures and put it on for $160k. I fully expected it to sell for a little more since the market value is no longer determined by recent sales. It is determined by how desperate the buyer is.

Turns out they get more desperate every day.

We got 8 offers. 10 actually but two were for a financing type that did not do manufactured homes so we can’t really count those.

One offer was $155k. I always laugh at those buyers and scratch my head. What rock have they been hiding under that they and their realtor don’t know that practically every house in multiple offers goes for at least list price.

Five of the offers had escalation clauses. That is where the buyer pretty much says they will pay so much more than any other offer up to a certain price.

I got one offer for $200k. My mind was blown. No escalation clause. Just a flat $200k.

This gave me the chance to tell the buyer’s agents with the escalation clauses that they might want to up their amount if their buyer really wanted the house.

Fortunately one buyer whose offer had some better secondary terms raised their escalation clause to be $200k. I have seen where people throw out some high number on an escalation clause to get their offer noticed but they have no intention of every going that high. I called that buyer’s agent to confirm they were legitimately willing to go that high. They were. They got the house for $200k. Next step is to convince the appraiser it is worth that.

When it seems like it was meant to be

by John Rice

I sold a house this week that I wanted to tell you about.

The buyer is a first time buyer who was sent to me from two separate past clients. She works with a client who has become a friend of mine…..Thanks David! Her mother works with another friend who has used me before too……Thanks Doug! I don’t have this happen often when somebody is asking for realtor references and I get mentioned twice. It always makes me feel twice as good that somebody would take their time to connect two people they care about. Close to 100% of my work is getting referred to new people or people coming back to use me again. That is why I don’t ask for reviews and don’t advertise. I just don’t need to do either to attract new work!

The buyer was going to be in the super tight $150ish market. There is almost nothing ever for sale and when something hits the market, you are competing with cash buying investors who sometimes don’t even look at the house before making an offer. This was going to be a tough one.

Right after I started working with this buyer, I get a text from another client who was wanting to sell their house.

The sellers are past clients who I have thoroughly enjoyed working with several times. They bought a house to rent many years ago and it was time to part with it. The sellers did a lot of work to it themselves and it looked really good. The price point was going to be around $150k, which is very hard to find in the current market.

I just knew this was the house for my buyer. I mean, I had recommended it to the sellers when they bought it so I could certainly recommend it again to my buyer!

I told the sellers what I thought it was worth. I told them that I had somebody that was interested in it. I also told them that they could put the house on the market and possibly get a little more than the price range I thought it would sell within since you never know what a desperate buyer will do in this market. They liked the idea of me managing the entire transaction and keeping it simple, so I showed it to my buyer. Of course she wanted it. It was a gorgeous home in one of the most desirable neighborhoods in her price range.

The buyer is happy she didn’t have to frantically make an immediate decision and that she got a great house. The sellers are happy because they know I am managing the whole transaction and made it so easy for them. A win for everybody.

I seem to be having this happen several times a year now. A seller will tell me they are wanting to sell soon and then shortly afterwards I have a buyer tell me what they want and they describe exactly the house my seller has. Happens the other way too. I will have a buyer tell me what they want and then I will have somebody tell me they are ready to sell the exact house the buyer described. It’s sort of cool when this happens. It makes me feel like I am a small part of a bigger story.

How you do a price reduction in a Seller’s Market

by John Rice

Okay, so you have made a mistake and overpriced your house. No worries. The market is strong enough that you haven’t shot yourself in the foot, you’ve just wasted a little time.

Back when the market was bad, it was even more critical to get the price right from the get go. The reason was because there were so few buyers entering the market. If they came to see your house and didn’t like it, a small price reduction wasn’t much motivation to come back and see it. About all you could do was made a big price reduction or wait for new buyers to emerge into the market.

Today, there are new buyers out every day. I don’t think in this environment that you need a huge price reduction to get your house sold. While it is true a lot of the same buyers who saw your house probably haven’t bought anything because there is literally nothing else to buy, your best bet is to catch a buyer who just started looking.

I think right now, I would suggest a small price reduction. That could serve two purposes. The first is that it might just cause a buyer who is tired of losing out in multiple offers to come back to you. It also makes it attractive to those brand new buyers. Every buyer loves a price reduction.

If your house makes it past the first day on the market and you didn’t get an offer, something is wrong. Whatever the issue is, a lower price always helps. If you reduce the price a bit and it still doesn’t sell, keep reducing the price a little until it does.

Of course, the best way to prevent needing to drop your price is to start out with the right list price from the beginning. Pricing it correctly usually means a faster sale and a far greater likelihood of getting multiples offers.

Want to know where the market is, TODAY?

by John Rice

I like to do these market updates every once in a while. When I do, I do them in real time. What do I mean by that? I meant that the info is right now. Most of the time when you are hearing about the real estate market, it is from sources that are a month or more behind, or it is from a national source that is giving you a dated snapshot of the market for the entire country. My data is taken from the MLS in the past 20 minutes and is specifically for the Bluegrass area.

I won’t geek out and break down all this data into price range, which town, or property type, but there were 24 existing home sales that went pending in the past 24 hours. Do you want to guess how many of them sold within 2 days of being listed? You would think it would be all of them based on what your realtor friends post online, or what you read in the news. But, of those 24 houses, only 4 of them sold in less than 2 days. There were 8 that sold between 2 and 10 days. 4 sold between 11 and 30 days. 4 sold between 31 and 60 days. And 4 sold between 61 and 90 days on the market.

Let’s look at the houses that closed in the past 24 hours. While pending sales give us a snapshot of what the market is doing right now, freshly closed sales give us a snapshot of where the market was a month ago since it usually takes 30 days or so to close.

How many of the closed sales do you think got full price, or over full price offers when these sales went pending last month? Again, you would assume all of them, right? Of the 23 closed sales posted today, only 8 of them sold for the full list price. 5 sold for over the asking price. One sold for $10k over the list price in a neighborhood where I have seen this happen frequently. That means 10 of the closed sales went for LESS than the full asking price.

I could go a lot of ways with this blog post, but I think I will take this chance to say that you really need an agent that knows when you need to offer the full price, when you need to go over the list price, and when you can make an offer for less than the list price. The market is so fast right now that I think a lot of buyer’s realtors are not looking at comparable sales in the neighborhood. They are just so focused on getting an offer in fast that they don’t really take the time to figure out what the house is really worth. To me, that is the most important bit of info we have to offer a client. I have had many listings in the past year where I had a ton of showings and didn’t get an offer on the first day on the market. Then the next day a realtor is frantically trying to reach me saying they are about to send a full price offer and are so glad the house is still available. Well, if I had 12 buyers look at the listing and didn’t get an offer, truth be told the house probably wasn’t worth the list price……but I am not going to tell the buyer’s realtor that, I just tell them where to send the offer.

That’s the data. I am by no means saying the market is slowing down. It is after all the middle of winter which is usually the slowest time of the year. I do think the market will stay strong for quite some time. I just wanted you all to know that not every house sells the first day on the market for full price or more. I want to help separate the perception of what the market is like compared to the reality.

Why I knew this house would come back on the market

by John Rice

I showed a house a couple of weeks ago.  It was a great house in a desirable location.  The price was sort of low for the neighborhood due to it being a bit outdated and having some expensive deferred maintenance items.

I told my people I thought it would need a new roof soon, that the disclosure said the HVAC units were original and we could clearly see the wood rotting on the windows.  I also told them that I didn’t think it was that good of a deal.  By the time you got all that addressed, you would have in it what a better one on the street was worth.  That’s just not worth it unless the property has some unique feature such as a fantastic lot or the perfect floor plan.

I gave all this feedback to the listing agent to help him out.  Within an hour or so, I saw that the house had sold.

I remember thinking to myself “I bet it will come back on the market after the home inspection.”  Sure enough, it came back on the market.

It is easy for most buyers to fall in love with a house only to be heartbroken by the end of the home inspection.   Most buyers don’t know how long a roof lasts, how long HVAC units usually last, how much windows will cost.  A lot of realtors out there don’t think about this either.

I can see the buyer for this house walking in for the home inspection, excited to again see what they were expecting to be their new home.  They have a big smile on their face.  The inspector begins reviewing the report.  The big smile is now a grin.  The inspector keeps going.  The grin turns into a blank expression.  The inspector gets to the end of the report and the buyers now have a frown.

Then the buyer has their agent write a huge repair list that the seller refuses to do.

It all ends with the buyer looking for a much better house and the seller hoping to find another buyer.

I try to prevent this outcome for my clients.  It wastes time, money and even more so, is emotionally draining for the buyer.