Why I knew this house would come back on the market

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  The price was sort of low for the neighborhood due to it being a bit outdated and having some expensive deferred maintenance items.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.

Best way to negotiate

Most people think negotiating is making the other party do what you want.   That works when one party has the power to force the other into submission.  Like if you’re an 18 wheeler trying to make a slow car get out of your way.  If you’re the President and can threaten nuclear war.  Fist fights.

Not in real estate.  That behavior typically is counter productive because the other party can usually find somebody nicer to work with and still come out better.

It is a seller’s market now.  Sellers have the upper hand since there are fewer houses for sale.  But they still can’t make a buyer do more than the buyer is willing to do.

Negotiating is getting the other party to do the most they are willing to do for you.  You get them there by thinking of which terms are the most important to them.  In a sale, you have price, inspection repairs, what stays with the house, closing date and possession date.  You also have to know which terms you have some wiggle room on.

Sometimes the timeline is more important than a little more money.  When I bought my current house, there were several other offers.  To compete, I asked the listing agent what plans the seller had made for moving.  They had not found a new house yet.  Since I was keeping my old house as a rental, I did not care when they moved out.  They had lived in the house for 20 years and taken good care of it, so I was not worried about them trashing the place.  I wrote the offer with us closing in 30 days and agreed to let the sellers rent back from me until they found a new house.  They stayed for 3 weeks after the closing.  Now, I know not many people can be THAT flexible, but it is a prime example of giving the other party something really appealing that was really of no value to me.  Conversely, I’ve had clients who needed to be in or out of a house on a short timeline.   I’ve even had clients who had a new fridge and let the seller take the one in the house for agreeing to a better price.

I sold a house last night and it is a prime example of good negotiating.  The buyer had a price in mind.  My seller had a price in mind.  It wasn’t the same price unfortunately.  We were $1000 apart.  This was a cash sale.  The house was sitting vacant.  The buyer offered to close sooner than originally stated and agreed to not ask for any repairs unless there was something majorly wrong with the place.

To my seller, this meant less interest to pay for a house to sit vacant.  Less to spend to insure and heat the place in the dead of winter.  No concern for having to do repairs.  All in all, it probably added up to $1000 in saving for him.

So, the buyer got his price and the seller effectively got his price too.  All because the buyer gave the seller something that was not important to him, but was of value to the seller.

This is how it should be done.


The house that made me a better realtor

There is nothing wrong with this house that can’t be fixed.”

Being a young, inexperienced home buyer, these words were soothing to hear from the home inspector.

What I didn’t realize was that fixing everything would take all my time and all my money.

It was April 1st 2002.  Closing on April Fool’s Day should have been all the sign I needed.  I bought what was called a “Fixer Upper” back then.  Now we seem to have shortened it to just “Fixer.”  This was before HGTV, but I had the same aspirations as the home buyers always do at the beginning of the renovation shows.

My house had T-111 siding, which is like grooved plywood and lasts for about 30 years if maintained.  My house was 29 years old.  And it hadn’t been maintained.

It had the old crank out Pella replacement windows.  The kind that after about 20 years, you one day crank to open and the aluminum mechanism inside snaps.  That day had happened on all the windows long before I had ever seen the house.

The roof had two layers on it.  On a positive note, the HVAC was only 2 years old.

As if all this wasn’t enough, the house had a lot of settlement.  That is a nice way of saying STRUCTURAL ISSUES.  The seller gave me an $8k credit for putting piers under the foundation.  The structural engineer (A.K.A.-SALES PERSON) told me the house needed 20 of them.  They were $1k each.  I told him there was no way I could do that since I only had $8k to work with.  Suddenly, he decided that 8 piers would be just fine.

I got what I thought was a bargain. I paid $118,200 and other similar houses were going for $145-150k on the street.

The evening of April 1st, after moving in all day and getting the boy’s beds set up, I decided to take a shower.  As the steam from the shower filled the bathroom, the pea green tiles in the shower slowly started to fall off the wall.  Many had been glued on to what little drywall was left behind them.  It kind of looked like a pizza commercial where the cheese is stretching as somebody pulls out a slice.  The shower had some goofy accent tile that must have been trendy in 1973.  I keep the tile that is pictured below in my office.

Tanforan Tile

Then there was the time we had family over.  I slept on the couch in the basement.  I woke up, ready for my first cup of coffee.  I knew it wasn’t going to be a good day when I heard a splashing sound and my left foot felt wet.  Turns out the basement leaked too.  The seller said they had never had a water problem, although all the neighbors knew otherwise.

But I got a great deal, and there was nothing wrong with the house that couldn’t be fixed.

Oh yeah, now that I am a realtor, I realize that all the other bidders I was up against for this house were investors who were probably offering no more than $90k and wanting to flip it.

So, over the course of several years, I gutted all 3 bathrooms and remodeled them.  New roof.  Some new windows.  New siding. Added a fireplace. Completely gutted the basement since it was wet and moldy.  With some help from my dad and uncle, we turned 2 paneled rooms into one massive space with all new drywall, can lights, new electric and all new trim.

To solve the water issue, I had the leafguard gutters installed, the basement waterproofed with two sump pumps and brought in 3 dump trucks full of dirt and regraded the back and side yard.  Now the house next door gets water in their basement.  I didn’t feel too bad though.  If the builder had graded my yard properly, he would have been getting the water for 30 years.  It was his turn now.

I have always hated this house.  It is sort of funny that I still own it.  We moved out in 2007 and I’ve been renting it ever since.  Part of that is because houses were not selling back then.  Part of it is because after doing all this work to it, I wanted to be the one who benefited from it.

This house was sort of like real estate college for me.  I am a much better realtor having having had these heartbreaking, time consuming and costly experiences.  Having had a house that had just about every problem a house can have and fixing it all has benefited every client I have ever worked with.

And I will never recommend a home inspector who says “There isn’t anything wrong with this house that can’t be fixed.

Before and after (Circa 2008):