list price

This house stinks (Literally & Figuratively)

by John Rice

I showed a really loser house to some friends of mine today. It stank. Literally.

This place looked okay in the pictures. A little 2005ish but nice. It had a huge sunroom and was on an absolutely gorgeous 1.5 acre lot with a lovely view on 2 sides.

I got to this vacant house about 45 minutes before my people. I had plenty of time to work on getting my daily allotment of steps. As I was walking around the house for all that time, I concluded that the floor plan was especially terrible.

It had a nice kitchen and great room. The sunroom was really nice although it had a strong cat urine odor. There was a flex room with a closet with french doors right off the great room by the front door. It had two bedrooms and two baths downstairs. There was a staircase leading to a finished room over the garage. This room did not have a bathroom or a closet and had limited headroom.

SO BASICALLY THIS WAS A 2 BEDROOM HOUSE!

Sure, somebody could use that flex room on the front of the house as a bedroom since there was a closet, but who is going to do that? Sure you could use the room upstairs that didn’t have a closet or bathroom as a bedroom, but who wants to do that? The closest bathroom is downstairs on the opposite side of the house.

When my friends asked what I thought of the house, I told them it was a waste of a really nice lot. I told them that even if this floor plan could work for them, it isn’t going to work for 90% of the buyers when they would later attempt to sell it. They agreed it was a hard no for them. There really should have been either a true third bedroom downstairs or a closet and full bath upstairs.

While I am all about people finding a house they love, there is an investment side to buying a house. One day you will need to become the seller…….so start with a house that most people would want to buy.

Which is better? Older or newer homes?

by John Rice

I often get asked by buyers if they should buy an older house or a newer house. My usual response is to say that it depends on what kind of problems they want to have. I get crazy looks when I say that, but it is just my way of telling them that all houses will have problems. If you don’t have one now, just wait because your newer house will become an older house quicker than you think. Basically, it is your house verses Mother Nature and Father Time……and those parents usually win.

I have lived in both older and newer houses all my life. When I was a kid, I went from a 1910ish four square to a 3-year-old ranch. Next, my parents bought a house in Kenwick  from the 1930s. My first house was built around 1915. My second was 1973. Then from 1997 and 1986, plus a collection of rentals built from the 1940s through 2006. All of them had things to deal with. 

There seems to be this misconception that old houses were built better. True, MOST were built with more care than today’s homes are. I say most because my first house, the one built around 1915, was nowhere near as well-built as my parent’s Kenwick house from the 1930s. I thought it would be, but once I moved in, I started to realize it wasn’t.

Old House misconception #2 has to do with today. Many people think that any older house is better than any newer house is today. After living in a lot of older houses and showing a bunch to my clients, I can tell you that what it comes down to is maintenance. Even the best built house from yesterday will be nothing but trouble today if somebody didn’t keep it up. Remember, an older house has been in the ring with Father Time for more rounds than a newer house will have.

Here are some of the common old house issues: Inadequate electrical, plumbing, insulation, lack of maintenance, and poorly done improvements to any of those prior items.

Newer house issues: Rushed construction by unskilled/uncaring workers sums it all up the best. I have a friend whose house was practically rebuilt after a fire. It had no insulation on one side of the house because the drywall contractors showed up before the insulation contractors were done. On my house from 1997, poor mortar joints on a brick window sill allowed water to run down the inside of the brick veneer and rot some of the sill plate. I only found it out when I did the demo for a new floor in 2010 when it was only a 13 year old house. If today’s workers would apply to their trade the same care they use to draw naked women in their potapotties, we would have the best built houses of all time!

Occasionally I do see both a really well-built newer home and a fantastic older home. I represented a builder who did a great job of making decisions that the buyer wouldn’t even begin to appreciate for years to come. He did a lot of little things way above minimum code. I also just sold an older house that had been well maintained and had recently been overhauled by a good contractor. That combination made it a pretty unique older home and a good pick…..I guess that buyer got the best of both worlds and none of the negatives!

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.

19 0ffers and $40k over list-Fun getting the most for my seller

by John Rice

It’s been an exciting past few days.

This story begins one rainy Friday when I was on my way to a Radwood Car Show in Cleveland with my son. I got a text from a repeat client who I have become friends with. She tells me that her mother is going in assisted living and she wants me to sell her mother’s house.

After a few months, the house was ready to list. Unfortunately the market had really started to cool off since we first discussed the sale.

Full disclosure here…..I don’t think any realtor right now really knows how to price a house unless there are good comparable sales from the past 8 weeks. We usually look back 6 months for comparable sales. Six months ago the market was on fire. That market doesn’t exist today. Gone. Interest rates have nearly doubled. We are all, if we were to be honest with ourselves and the public, shooting from the hip on pricing right now. The market has changed so fast that we lack good data on pricing from this “New” market.

Since the absolute worst thing you can do in any market is to overprice a house, I suggested we put it on at a number I was 100% sure we could get and also expect multiple offers. That number was $185k. I was really hoping we might get multiple offers and I could drive the price up to maybe $200k but I didn’t tell this to my friend.

One investor heard about the upcoming listing and contacted me. I let him and his realtor show it the day before it hit the market. I told them that we wanted to expose the house to the market before deciding. They of course wrote a full price offer and wanted an immediate response. I told my seller that I was sure we could duplicate that offer from anybody since it was nothing special. She agreed.

I put the listing on the market very late Friday night. Immediately it started getting showing requests. By 9:AM the next morning, more than a dozen showings were scheduled. I spent all day Saturday, Sunday and Monday texting and talking to the 72 agents who had scheduled showings on this house. It was overwhelming.

Once the offers started coming it, I went to work on pushing the price up. With every new offer we got, I told the realtor if there was another offer with better terms for price, inspection type, financing type and closing date. The goal is to create the ideal terms for your seller by getting one buyer to change something on their offer so you can use that for leverage to get another buyer to change something.

We ended up with 19 offers. We had two cash ones that were very close (especially after I nudged each one of them to go higher to be competitive.) I think one of them figured out I was using their offer to push the other one up higher, and then come back to push them up again. This agent send me a Confidentiality Agreement. That is where one of the terms of their offer is that you can’t disclose any of their offer terms to anybody else. I won’t violate my integrity. In addition to experience, all I have to offer people is trust. I felt like both would go a little higher. What to do? How could I squeeze a little more money out of them for my elderly seller who needed it to live on? I decided to tell each of those two buyers they had the best offers and to send me their highest and best offer. They had one shot. The seller would pick the best one. This move ended up getting about another $4k for the seller.

In the end, the house sold for $225,750. Just over $40k more than the list price.

Telling people what they need to hear

by John Rice

Back when I was so overweight, I dreaded going to the doctor. They would always tell me all the ways being overweight would affect my health. It’s not like I didn’t know that. I just didn’t want to accept it.

A lot of buyers are in the same situation today. The reality of what it takes to get a home seems overwhelming. It is easier to just hope somehow it will all work out and you’ll get a house somehow if you submit enough offers.

Reality checks are never fun. One day I accepted everything the doctors had always told me. Once I did that, I knew what I needed to do if I didn’t want to have health issues as I aged.

I sold a house over the weekend to a new client who had lost several houses previously with their last realtor. I didn’t really do anything special. I did my usual good job in trying to make our offer the most appealing to the seller. The hero of this story is the buyer. I was just like the doctors telling me the reality I didn’t want to here. He took in all the information and chose to do something about it.

Like all houses these days, it got several offers the first day on the market. It is normal to go over the list price these days so we did an escalation clause up to a certain amount. The buyer was a little anxious about going that high. I explained that odds are we would not need to go that high, but that he would have hated to have lost the house by just a little bit. He agreed.

Once the offer was sent and I told the Seller’s Realtor a few things, I got a question about not having an appraisal gap waiver. I knew this meant that our offer was one being seriously considered. If we were not the best or one of the best offers they had, why would he ask about it?

I told my buyer this good news. He didn’t really want to risk having to put out more cash should the house not appraise for the sale price. I told him that this is getting more and more common with every house I’ve sold. If we didn’t do it this time, odds are we would be in the same situation on the next house when prices and interest rates might be higher. He agreed.

A few hours later I got a text that he got the house!!!!!

The hero here is my client. All I did was tell him the reality of what would most likely happen just like all those doctors did for me. My client accepted the reality of today’s market. He realized he wasn’t going to magically escape some of these uncomfortable things and end up winning a house in multiple offers. Once he saw that, he knew what he had to do just as I saw what I had to do.

My Dad always said “Living in reality is never fun, but what other choice do you have?” to which I will now add “Plus living in reality with a house is better than not doing so and waiting for the next new listing to hit the market and do it all over again and again.”