John Rice

How to WIN in multiple offers

by John Rice

Had a client who wanted to see a house this weekend.  Called the listing agent.  The place already had 3 offers on it.  That is happening more and more these days.  So much so that I thought this might be a good time to talk about how to WIN in multiple offers.

Most people think in terms of outbidding somebody.  Sure, more money is always nice, but when there are two offers that are very close in the offer amount, I normally see a seller look to secondary things.  If Buyer A and Buyer B are $1000 apart, most sellers start asking things like:

  • “How solid is their financing?”
  • “When do they want to close?”
  • “How much of a down payment do they have?”

The seller then picks whichever buyer seems most likely to get this deal to the closing table.

What are some things you can do to make your offer more appealing in this situation?

  • Inspect the house, but let the sellers know you will not be asking for any repairs.  ALL sellers hate doing repairs.  They are too busy packing to deal with it.  Most of the time, a seller just does $500-1000 worth of repairs anyway, and they usually don’t care much about how well the job was done.  It is just something they want to cross off their to-do list.  Just do those yourself and brag to your friends how you beat the other buyers and got the house.  IF the house is a hot mess, you walk away from the deal after the inspection just like you would have done anyway.
  • Find out when the sellers ideal closing date would be.  If possible, give them the time that is best for them.   Sellers are under their own stress from moving and packing.  Making it easier on them makes you more attractive to them.
  • Let’s face it.  If you are in multiple offers and really want the house, you are already going to your max offer…may as well add some personal stuff in a letter to let the seller know how much you like the house.  Sellers usually love their house and want to see it go to somebody that they think will love it too.  In multiple offers, you have no room for negotiation so I see nothing wrong with showing your cards as long as it benefits you.
  • And some stuff that seems obvious:  Don’t ask for personal items like the seller’s grill or patio furniture.  Don’t ask for things that were not listed as coming with the house.  Don’t try to pressure them to respond quickly because in multiple offers, it is their world and you are just living in it.

This is soooooo different than it was several years ago when I was blogging about how to squeeze the desperate seller out of every last penny.  Times do change.  Sometimes you are the bug and sometimes you are the windshield.  That’s why it is always important to buy a house that will be desirable in both a good and bad market.

Time is the enemy of Location

by John Rice

Location sure is a funny thing.

I showed a property in Gardenside this week.  It was on the street behind the shopping center on Alexandria Drive.  I was thinking, that when the house was new, it was probably a great bonus to be so close to one of the premier shopping centers in Lexington.  That was in the 50’s and 60’s.  Now, being so close to that shopping center is more of a negative than a positive.  It use to have businesses like Dawahare’s Department Store and Lexitalia Restaurant.  Now it has a strip club.

My family moved to Kenwick in the mid 80s.  There was a super neat house on North Hanover that we loved.  We didn’t buy it because it was just a few houses down from all the scuzzy commercial sites on National Avenue……which is now a trendy spot with cool restaurants and businesses.

Part of the whole “Location Location Location” mantra is what desirable commercial areas are close.  Schools are another big one too, but that is another post.  Can you imagine what would happen to Townley Park if that shopping center in the middle of it was half vacant, and the rest were the same businesses you see in every failing shopping center?  Nobody would want to live there.  On the flip side, look at the NoLi District on the north end of downtown.  Al’s Bar gets discovered by hipsters, then we get a lot of other cool businesses like North Lime Coffee & Donut and suddenly what use to be a scary part of town is now desirable.  I just sold a house on Rand Avenue.  Just a few years ago NOBDODY wanted to live on Rand Avenue.

It is kind of sad to see some locations lose their luster, but seeing other parts of town be transformed makes up for it.

Location is never static.  Time usually makes it better or worse.

LEXpert advice on buying rental property

by John Rice

I met with an old friend and former neighbor last night.  He is interested in buying rental property.  Thought some of what I told him might be a good post.

When I first meet with somebody wanting to buy rental property, I like to let them know what I think the pros and cons are of each type, so here we go:

1)  Commercial-Good return, a bit more volatile than others.  When you sell, your only market is another investor or a business owner.

2)  Multi-Family-Good return, a lot of work, and typically more turnover!  The only buyers for this property will be investors.  I have never seen an investor that was willing to pay top dollar.  Also, most investors only sell their properties when they have cash flowed them to death and they are in dire need of repairs/updates.

3)  Single Family Houses-Not a huge return, less turn over.  When you go to sell, you can market it to an investor or an owner occupant.  An investor wants a deal based on the numbers.  An owner occupant will pay retail.  I think this model is the best for most people.

Unless you find a super bargain, entry level single family homes are a better choice than more expensive ones.  The numbers just work out better.  If you ever need to part with one of these houses, you can sell it to a first time buyer in a good market, or somebody downsizing in a bad market.  There were a lot of people selling their bigger houses and buying smaller houses during the Great Recession.

My personal favorite is a simple, one story house on a slab.  One story because it makes it easier to repair or clean gutters and you don’t have windows up high.  A slab because you eliminate the risk of rotting wood and mold under a toilet or tub if there is a leak the tenant doesn’t tell you about.

Picked my listing to buy sight-unseen…..WHY?

by John Rice

I’ve always told people the goal of a listing’s pictures and marketing remarks was to sell a showing, not to sell a house.  LOL, looks like I have been a little wrong because I just had one of my listings sell to a buyer who has NEVER SEEN THE HOUSE.

The buyer is from out of town and only based his purchase decision on pictures and marketing remarks.  I had plenty of professional pictures.  Besides putting comments with each picture, this is what I said about the house:

” Ok, so I’m with the photographer getting pictures for this house, and you know what I’m thinking about? I’m thinking about how easy it would be to live here. This one isn’t just about good looks & move in ready condition. I can really see you living here & appreciating the seldom seen features that you would grow to appreciate more & more. Like what? Look at the kitchen. Count the cabinets. Not only a lot of them, but you’ve got drawers for big pots & sheet pans. Eating? Options are the island, the breakfast area or the dining room that offers a panoramic view of the whole first floor. Big Laundry room. HUGE bedroom upstairs that could really be used for anything….even an upstairs Family Room. The wide tiled hall between the garage & kitchen would be a great spot for cubbies. The driveway is flat & there are no houses behind you. You’re all the way back at the end of a Cul-de-sac. Listen. Silence because you back to a farm, but, you’re 5 minutes away from the by-pass.“

This house had been listed with another agent right before I got it.  It is a very nice place, but like I usually do, I asked the sellers to make a few adjustments.  We rearranged some furniture, cleared out a few things.  The bathroom had stained wood cabinets and matching panels around the garden tub.  The edges of the wood were a bit worn.  Not bad…..unless you are trying to sell your house in a market where buyers think a house has to be perfect.  Simple solution was to paint them white.  What a huge difference it made.  I think I told them to paint the bathroom a beachy blue color too, unless I am starting to confuse my listings!  Any way, the bathroom and the whole house looked amazing once the seller got all the work done.  (I think my next blog post might be about how the seller has as much to do with the success of selling their house as anything else.  Even in the terrible market of the past, I could sell any house if the seller would take my advice on price and presentation.)

I am sure this buyer studied every house that looked interesting to him.  I can’t help but think that the extra effort I spent to present the house and explain its unique features made it easier for him to make a decision.  Don’t you feel sorry for the sellers whose houses were poorly presented?  They might have been perfectly nice houses, but to a guy who was going to buy without seeing it, they didn’t stand a chance.

Want to know what LEXington buyers are doing??

by John Rice

The real estate scene in Lexington sure is changing.  Guess it always has, but this years it seems to be doing it quicker.

What’s hot and what’s not has been pretty static around here for a long time.  Other than Kenwick getting trendy and all the flopped new downtown condo projects, this town has always been about the middle of the road, safe and predictable neighborhoods in decent school districts.  People who wanted older houses wanted in 40502 or the older neighborhoods on the south end of town that were inside New Circle.  People who wanted newer homes looked around Man O War.  There was always plenty of new construction going on all over town.

Now it seems that new construction has slowed down.  You’d think since we are running out of room inside of Fayette County, that new construction would be on fire right now.  Especially after all the slow years of the bad market.  It did bounce back strong in 2013, but has slowed since.  All the national news I read about it indicates the same is happening everywhere.

I am seeing more and more people wanting older houses.  They are rejecting the cookie cutter neighborhoods.  Many are considering neighborhoods on the north end of town.

All this is pretty interesting to me, both professionally and personally.  I have to keep up with it so I can give my clients the good advice they deserve.  I also like to think about why we are seeing this shift?

I think a lot of this has to do with shows like Property Brothers and sites like Houzz.com.  People want a house with character more than ever now.  After several years of a bad economy, people now feel safe to renovate their houses.   I think people are spending more time at home due to being so connected online.  It only makes sense that people want to create their own oasis to be in while they spend all their time connecting with the world through their phones.

I once had an out of town client tell me that the Lexington market is very broad but not deep.  We tend to have the same 10 floor plans build by the same builder throughout all of Lexington.  It is almost like 3 easy step:  1)  Pick your floor plan.  2)  Pick which part of town you want to be in.  3)  Pick if you want that house to have been build in the 90s or 2000s.   I had another client from New York tell me he wanted a contemporary or modern house.  He didn’t get one because we have so few.  People today are just not excited about living in a modern day Levittown.  (Google that if you don’t know what I mean.)

Lexington doesn’t have the sprawl like a real city does.  We keep adding people but we don’t expand the geographic boundaries of the town.  That means more density, which means more traffic.  People are wanting more than ever to be closer to amenities they frequently use.  That is one reason the older neighborhoods are doing so well right now.

As prices have returned to 2005 levels but wages have not, you don’t get as much for your money.  That is why we are seeing some people look on the north end of town.  You get more for your money there.  This is especially true for many first time buyers.  An older house on the north end of town is a real bargain today.   Also, the north end of Lexington is a great spot for younger buyers who want to be close to all the new spots along North Limestone.

Well, I’m over 600 words now.  I could go on and on.  Bottom line is that buyer tastes are shifting in this town and it is kind of exciting to me.