The first rule in real estate

The first rule in real estate today is that there are no rules.

In the past, there was a general thought that certain times of the year were better to sell, you had to do a lot of prep work before listing your house, and other things that HGTV still perpetuates.

Back when the market was terrible, I would give people huge lists of things they needed to do to sell their house.  Now sellers are amazed when I tell them to do as little as possible.  I’ve had clients who were planning on putting on new roofs, replacing front doors, replacing old carpet.  I tell them not to worry about it.  As long as these items are in at least average shape, buyer’s don’t mind.  An average house is appealing when there are only like 12 other houses for sale in your price range all over town and you’ve lost out in multiple offers on the last 3 you wanted.

We are so starved for listings that even if a few people don’t like your house, there will be several more that do.  About the only time I see a house not sell is when it is grossly overpriced.  It’s a Seller’s Market for sure, but you still can’t sell your house for more than it is worth…..although if you wait long enough, it will have appreciated into your asking price.

When the market was bad, the value in having a realtor was in knowing what all you had to do to sell and presenting the listing so that it stood out among the multitude of other listings.  Now, having a good realtor is about knowing the least you have to do and the most you can get for your house.  I’ve often paid for myself by saving the seller from spending money that they did not need to spend.  Back then, working with a buyer was showing them 40 houses and helping them pick the best one and getting it for as cheap as possible.  Today, working with buyers is about getting them in a house ASAP and coming up with a winning bidding strategy.

So, as long as it is a Seller’s Market, put your house up for sale any time of the year.  Fix anything that is broken and give it a good clean, but there is no need to sweat the details like you had to when it was a Buyer’s Market.  Today’s buyers can’t afford to be too picky.

I needed them to accept our counter offer…this is what I did

I love thinking.  It’s one of my favorite things about this job.

I put on a new listing a few days ago.  We pushed the pricing envelope a little.

We didn’t get any showings the first day, which is a good sign of how far we pushed it.

The second day we had several showings scheduled.

We got an offer from the first showing.  It was for less than the full amount.  Another sign we were pushing the asking price a bit.  It was still a really good offer though.

My sellers asked about countering for full price.  We really didn’t have much to lose by asking, so I said sure.  I had a few things running through my mind though.  I was thinking about how soft the market responded to this house at this price.  I was thinking about how the buyer’s agent is somebody I know.  She is a great agent.  She knows that in this market, you have to make your best offer right off the bat…and their offer was below the list price.  I was thinking to myself “What can I do to motivate these people to pay full price and not weaken our position to negotiate later?”  I was afraid they would stick with their original offer and wait and see if we even got another offer.  If we hadn’t gotten another offer, they would know that their offer was at least the best one we had or why would we be countering it?  I also know the buyer’s agent would have asked if we had multiple offers.  By saying no, it would be further proof that their offer was still the best and maybe the only one we would get.  The buyer’s may have said no to our counter.

So, the only thing I could do was create a situation where they had to respond to our full price counter offer BEFORE the remaining showings happened.  Once the last showing happened, we didn’t have anything to motivate them if we had not gotten another offer.

Then all the sudden, a thought popped in my mind.  I asked my sellers if I got the buyers to go full price, would they be willing to sign off on it immediately.  They said yes.

I then told the buyer’s agent that if her people would go full price, I would cancel the remaining showings and my people were holding their phones in their hands right now ready to electronically sign off on the deal.

A few minutes later, it was all done.  The sellers are happy.  The buyer gets a house in a tight market.  And I get to work with an agent I trust and respect.

THE most perfect deal ever

Sometimes things just work out perfectly.

I had a client/friend send me a family that ended up buying a new house that was not finished yet.  They had a house to sell in Cumberland Hills.  The new house was at the foundation stage when they bought it and we had nooooo idea when it would be ready.

I had another client/friend send me their sister and brother in law.  They wanted to be close to their family in Cumberland Hills.  The only obstacle they had was that they were locked into a lease for several months.

Back when I was a kid, there was a commercial for Reese Cups where somebody was aimlessly walking down the street eating a chocolate bar.  Around the corner, another person was walking down the street eating peanut butter.  They run into each other at the corner.  One says “Hey, you got your chocolate in my peanut butter!”  The other says “Hey, you got your peanut butter in my chocolate!”  They each take a bite and realize what a wonderful thing just happened.

The buyers and I looked at a few houses.  The houses were nice, but nothing great.  The market in this price range moves so fast that some sold before they could decide if they wanted to make an offer or not.

I arranged a time for the buyers to see the sellers house.  They liked it.  We negotiated the terms.  Sold.

My seller probably sold it for a little less than they could have, but they had a buyer who was in a position to wait until their new house was complete before closing.  That kept my seller from having to potentially move twice and gave them the peace of mind that their old house was sold.  The buyer was using a lender I know, so that made it feel even more secure.

My buyers got the house for a little less than it’s full market potential and did not have to compete with other buyers, which is a real luxury in this market.  They also were able, of course, to buy a house on the same street as some family members.

It was very satisfying to be a part of making this work so well for both of my clients.  Everybody got what they needed out of the deal.

I think I’ll go eat a Reese Cup now.

My very first listing

Back to the summer of 2005 on this one.

I had already sold my first house, which you probably read about in my last blog post.

I was eager to list a house and see what that part of being a realtor was like.  Most new agents end up working mostly with buyers.  It’s later in your career when you tend to get more listings.

I had gone to the paint store for a house I was remodeling.  While the manager was mixing the paint, he asked what I did.  I said I was a realtor.  He told me how he was having a house built in Versailles and would need to sell his old house soon.  We made some other small talk.  He helped me load the paint in the back of my SUV.

Just as I was about to put the key in the ignition, I remembered that I WAS A REALTOR?!?

I went back inside to talk to this guy.  He said he was interviewing agents and would be happy for me to see his house.  I was so excited and nervous.

I was scared to death they would ask me how long I had been a realtor.  I was trying to decide if it was more impressive to say just over 3 months or say 96 days.

I was with what was then the biggest brokerage in town.  I had no experience.  All I had to offer was the perceived value of the company.

I got all dressed up and went to their house to meet them.  As they gave me the tour, I noticed there were two calendars from different realtors on their fridge.  That’s why you’ve never gotten a calendar or sports schedule magnet from me.

I sat down with them and showed them everything that had sold in their area.  I took a copy of the previous week’s Homeseller.  I showed them that the first several pages were my company’s listings. I showed them where their listing would be when it was a new listing.  I told them I would do open houses every week until it sells. (And shortly after all this, I realized that NONE of these things help sell a house at all.  Even back then, print advertising was in decline and I learned open houses do much more to help the realtor than they do the seller…..but I was new and I thought all this meant something.)

I did open house after open house after open house.  I met lots of people.  One of whom bought another house from me and has used me two additional times since.

The showing that resulted in a sale happened one Saturday afternoon.  I was working in the basement of that house I was remodeling.  I had drywall dust all over the place.  My phone rings.  I dust it off.  An agent wants to see it.  I tell him to go ahead, it is vacant.

That evening I get an offer.  My first listing sold!

The house gets inspected.  It doesn’t need much.   The buyer noticed some gardening tools in the garage he wanted and proposed we trade repairs for tools.  The buyer’s agent and I worked hard on this.  Finally, we reached an agreement for something like an electric weedeater, a rake and two shovels.

That other agent was new too.  It was his first sale.  We had coffee one day after the closing and he’s been my best friend ever since.  In fact, he is the one that suggested I start blogging.

And once everybody got on Facebook, I found out that this first seller was related to my Dad’s former secretary who is like a little sister to me.

I thought it was a seller’s market?

It’s been an interesting week.

I wrote an offer on a house in Frankfort that was listed at $159,500.   Looked at the comps.  Thought it was about a $147-152k house.  Seller wouldn’t budge from $156,950.  It’s been on the market for two weeks now, which is a life time in today’s market.  Even at $152k, it will be the most expensive house to ever sell in it’s neighborhood.

I showed a house last night that is listed for $187k.  The exact same model house sold 6 months ago on that same street for $180k.  Sure, lets add 2% or so for appreciation and subtract a bit because that house that already sold had granite and was nicer.  Oh, the house I showed had a 22 year old roof.  The shingles were the 3 tab kind, which usually are good for about 15-20 years.  It needs a new roof like now.  So, this one is overpriced and needs a $7k roof.  That’s a hard pill to swallow for the first time buyers in this price range, which is why it is still on the market.  BTW, in Lexington, a house in this price range would normally get multiple offers, possibly over the list price if the list price were anywhere near realistic.

I showed another house that was super nice, super pricey and only had 2 bedrooms.  I think the listing agent expected lots of offers since most houses under $200k in Lexington go fast.  The agent even put a deadline for submitting offers.  About 20 minutes after that deadline, that statement was removed.  The house is still for sale, so I guess no offers came.

So, we have 3 listings that aren’t selling in the hottest price range in the hottest market ever.

Why?

Price.  Even in a great market, you can only get market value for your house.  Market value is what a ready, willing and able buyer will pay for a house.  You can’t get over market value, which is exactly what these 3 sellers are wanting to do.

I am sure all 3 of these sellers are thinking “But I thought this was a seller’s market??”  It is, but when your price is above market value, most buyers opt to just wait for the next batch of new listings.  Dear sellers of these 3 houses, you are not drunk with power, you are just drunk.