first time buyer

3 ways to win in multiple offers

by John Rice

Almost all my listings this year have sold in multiple offers.  That was something to brag about several years ago, but now it is pretty much the norm if the house is priced right from the beginning.

One listing had 7 offers the first day on the market.  Everybody wants the same house these days.

Since only one buyer can get the house, that means that there are others buyers who lost out.  It’s a tough time to be a buyer.

Since my work is almost always split 50-50 between sellers and buyers, want to know how to get the house you want and send all those other buyers off to fight over another one?

  1.  To begin with, go in strong.  There is a difference between overpaying for a house and offering 100% of what it is worth.  An agent should look at the comparable sales and know the value. You are going to pay top dollar for any decent property right now, so write an offer that the seller is likely to just accept.  The more time you waste on negotiating gives other buyers a chance to take the house from you.  Your battle is with the other buyers, not the sellers.  On my listing with 7 offers, we didn’t even consider any of them that had a contingency to sell or those that came in less than full price.  When you have so many good choices, a buyer can often be rejected over something minor.  When I have the buyer, I like to ask the listing agent how they want to receive the offer.  Most of us use an electronic signature program, but some agents don’t.  I mainly ask to show that I am going to be easy to work with.  Keep in mind it is like speed dating for the listing agent-they only have so much time to deal with each offer and the buyer’s agent.  I want to make it as easy as possible for them to pick my client.
  2. Don’t do anything wonky.  If the seller didn’t offer to leave their curtains, then don’t ask for them.  Don’t ask for early possession.  Don’t ask for more time than is normal for the inspections to take place.  This market is not one where you test the seller….unless you want to remain homeless.  A good, clean, simple offer is what all listing agents are wanting.
  3. Think like a seller.  Most sellers these days expect to get around full price for their houses, some even get a little more.  Believe it or not, few sellers actually care about the absolute highest offer.  Usually, the highest offers are really close, so what becomes important are the secondary terms.  The seller is concerned about your financing, so have a preapproval letter from a reputable lender.  They care about how the inspection goes, so schedule it as soon as possible.  The less time they have to worry about that, the better you look.  They care about the closing date, so be as flexible as possible.  I always ask the listing agent when the seller would like to close.  A lot of the time the seller has another closing to coordinate.

You know, I’ve been doing this for 11 years.  It is still awkward for me to write this advice.  It wasn’t too many years ago I was telling sellers how to attract buyers in a tough buyer’s market.  I was telling buyers how to bring a seller to their knees and beg you to buy their house for probably less than they paid for it.  Times change though, and this is where we are now.  And this is what you’ve got to do to get a house today.

 

What bugs The LEXpert

by John Rice

Know what The LEXpert is thinking about today?  Termite inspections….well, there is more than just termites.  You’ve got Carpenter Ants, Carpenter Bees, Termites, Powder Post Beetles and maybe even more.  Those are just the ones I’ve encountered over the past  11 years.

Most people only get inspections when they buy a house.  That means that when you see on the PVA or a Seller Disclosure that the seller has owned the house for a long time, odds are that there miiiiight not have been a termite inspection since then.  It isn’t rare for a house to need a termite treatment in our area.  Seeing a lot of damage is rare though.  And the times I have seen the most damage have been when a seller has been there for a mighty long time.  A termites first bite might have been the night the seller watched the last episode of Cheers.  Now they just watched the season finale of N.C.I.S and the original termite’s great-great-great-great-great-great grandkids are half way up the first floor.

Now that I have scared you into having YOUR house inspected, there are a few things I want to share about how we Realtors handle wood destroying organisms in the Bluegrass area.

The contracts we use say that the buyer may get a termite inspection at their own expense (except for VA loans where the seller has to pay for it for some reason), and IF there is evidence of live or dead insects, or any damage from them, the seller has to pay for a treatment.

Our contracts also say that if there is any damage, the seller is automatically on the hook to pay up to 1% of the contract amount for repairs.  Anything above that amount is to be negotiated.  The attorney who wrote our contracts but have been about to be a buyer, since it sure favors the buyer.

So, if you are a buyer, you definitely want to do a termite inspection.  If you are a seller, you really hope nothing is found.  Speaking of that, there is a place on the standard Wood Destroying Insect Report (WDIR) where inspectors write a bunch of numbers.  If you look down at the key, those numbers are all the places the inspector can’t get to, such as behind drywall, under carpet, behind insulation, etc.  I like to point that out to my people because a clean report really just means no insects were FOUND.

The best time to do a termite inspection is after you have negotiated the normal home inspection repair items.  That way you don’t end up spending the money on the termite inspection until after you have any home inspection repairs resolved.  Our contract just says that it has to be done before the closing if one is going to be done.  The termite inspection does not fall under the same paragraph/time line for the normal home inspection.  Another reason to wait is this:  Since the seller has already agreed to a treatment and repairing damage up to 1% of the contract price if needed, you want to drop that news after you have worked out your normal home inspection repair list.  The seller is only going to spend so much money on repairs.  You want all of the budget for the home inspection repairs.  Let the seller know there are termites at the same time you present the repair list and you get fewer inspection repairs because he is now subtracting the termite treatment/repairs from his budget.

LEXington market trends

by John Rice

Ok, we all know there is a shortage of inventory and houses are selling fast….but there is more going on in this town than just that.

Here is what I am seeing in 2016:

  •  Waiting.  Lots of waiting in line to see a new listing it’s first day on the market.  Everybody is so focused on new listings.  Granted, you do want to see them before they sell, but I think there has been more of a shift in how the public gets listings.  Everybody has saved searches and gets alerts when there is a new listing.  If it doesn’t interest them at that very moment, they rarely will consider seeing it later.  They just wait for the next new listing.  That is bad news for sellers who don’t sell their houses immediately, and proof that starting out with the best presentation and the right list price is critical.
  • Not ALL houses are selling as fast as you would think.  Only the good ones are selling immediately.  In Fayette County, there are 555 houses for sale priced between $100k and $500k.  Of those, 152 have been on the market for more than 90 days.  That is almost 1/3 of the available houses.  Savvy buyers go back and look at those 152 to see if they can get it for cheaper and avoid the multiple offer frenzy.
  • New construction on the edge of town isn’t doing so well.  I think Lexington is finally big enough that people see a big difference between being closer in town and on the edge of town.  I am seeing more and more people wanting to be closer in to town….heck, I feel that urge too since I live just past Hamburg and am always stuck in traffic.  One of the most successful new construction neighborhoods has been Summerfield.  I think it is about location more than anything.  You are 10 minutes from downtown and 5 minutes to Hamburg.  The best of both worlds really.
  • Smaller ranch houses in nice neighborhoods are getting amazing money.  I’m seeing 1200-1400 square foot houses getting close to $170k in neighborhoods like Cooper Trace, Ashbrooke, Wyndham Hills, Wyndham Downs and Harrods Point.
  •   Lots of people retiring in Lexington…..even Clint Eastwood is moving here, if you believe everything you see on Facebook 😉  An area super popular with retirees is Brookhaven and Lansdowne.  There are lots of nice ranches on good lots in this area.  You are close to downtown, can hop on New Circle at Tates Creek and go anywhere, cut across roads like Regency, Larkin, Zandale or Reynolds to get to anything on Nicholasville Road.  Plus you have cool places like The Lansdowne Club, Lansdowne Shoppes and are 1o minutes to Chevy Chase.

It sure will be interesting to see what comes for the rest of this year.  I am hearing from other realtors that they are having a hard time getting on a photographer’s schedule.  That either means we have a lot of new listings about to hit the market or realtors are just really impatient to get a house on the market!

 

NEVER do this when buying a house

by John Rice

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I got an offer on a new listing this week.  We negotiated it to the exact number I told the seller to expect.  There was one thing that made me nervous about it though.  The buyer wrote on the contract that they wanted the master bathroom shower door replaced.  It worked and was not ugly.  You just had to lift up a little on the handle to open it.

Before I get to why that freaked me out a little, let me tell all the buyer’s out there that doing something like this is NEVER a good idea.  Sure, this buyer wanted a new shower door and for some reason didn’t like the existing one.  If the seller would have considered doing this, we would have just added the cost to the counter offer, effectively making the buyer pay for it anyway.  Then there is the issue of what the buyer is expecting it to look like.  The seller having to find out how much it would cost to install.  Those things take time and slow down negotiations.  In a fast moving, hot market like we have right now, the last thing a buyer should do is cause a delay in the seller responding to their offer.  It just gives too much time for another offer to come in.  So, this is never a good idea.  The buyer never benefits from it.  Don’t do this.  Period.

What writing this in the offer showed me was that these buyers expected way too much and would absolutely kill us on the home inspection.  Any time I have had a buyer for one of my listings write repairs or things like replacing flooring, repainting a specific room or anything like that, the buyers have been a nightmare to work with.  Most of the time the deal falls apart because they expect the seller to repair everything on the repair list.  If the roof or HVAC are older but functioning fine, they are the buyers that ask for brand new ones despite signing the seller disclosure that told them the ages.

In the end, this buyer sent us a clue about how they would be to work with…..and we said no thanks.

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.