neighbohoods

The market is changing

by John Rice

No doubt, there has been a shift this year.

Few sellers have to move. Most just want to. None of them are excited about being a buyer if they need to finance their next home. They don’t want to give up their very low interest rate they got during COVID. They are upset that they can no longer expect to sell their house the first day on the market, get above list price, and the buyer waive a home inspection.

Buyers are only buying if they really need to move. They don’t like the combination of high prices and high interest rates. They have more choices and power in the transaction than ever, but they can’t see the forest for the trees.

First time buyers account for the lowest percentage of buyers in forever. Most first time buyers seem to want to skip the small, boring most affordable houses and rent until they can afford what we used to call the “Move up” house. This is leaving most houses under $250k to investors. Almost every super affordable house I have sold this year has been purchased by an investor. Even in multiple offers, they are easier to work with and will often pay the most for a house.

Basically nobody is happy.

This is the first time in my 20 year career of seeing such pessimism from both sellers and buyers in a fairly good market. The only other time I have seen both parties this discouraged is during the Great Recession. It was an extreme Buyer’s Market so sellers were unhappy. Buyers were worried their house would be worth less than they paid for it after the closing. Nobody was happy.

I think we are stuck here for a while. I don’t see prices going up much in the near future and I don’t see them going down either. I don’t see interest rates going down enough to make much of a difference. I think this is just the new normal.

Negotiating is a lot like playing poker

by John Rice

When I was a little kid, my dad had this old set of poker chips. There were red, white and blue ones built into a little round thing with a handle on top. I remember playing poker as a pre-teen with my friends. I also remember winning a lot. I didn’t do it by bluffing or anything that actually had anything to do with the game itself. What I got good at was studying my friends. It’s pretty darn easy to win when you can tell if your pals have a good hand or not. My dad always told me I was pretty good at reading people and seeing their motives. That has been a useful skill in my career as a realtor. 

I remember a sale many years ago with a great realtor. He did everything he should have done. My clue about the buyer’s motivation was the closing date.  It was the Friday before school started back after Christmas break. Sure, most real estate deals close on a Friday. What made this one stand out to me was how soon it was. Not the usual 30-45 days out. This one was just about 2.5 weeks out. So, I hit Facebook, and sure enough there was a person with the same name with school aged kids who lived in the same surrounding town that was on the check for the earnest money. I also knew that most seller’s wouldn’t want to be moving out of their home the week between Christmas and New Year’s Day. We stood firm and got our price.

I had another deal like that. My listing was in the only neighborhood in its price range to have the very desirable school district that it did. We got an offer so low that we didn’t even counter. The buyer’s realtor told us the reason for the low offer was due to the perceived poor condition of the house. I figured they must really want to be in this school district. I mean, there were tons of new/newer houses within walking distance of this one, but they were in a different school district. I don’t know why somebody would pick a house they didn’t like that much when they can get a better house for the same money. It had to be school district. I went online to see what all choices this buyer had in that school district. The only other house was one with a crazy steep driveway…….so I knew we could hold firm to our price. We did and we got it, despite the other realtor’s great effort to get it for less.

From the lines of that old Kenny Rogers song, “You gotta know when to hold ’em.  Know when to fold ’em.  Know when to walk away.  Know when to run.”

Two or more negatives are hard to overlook

by John Rice

Sometimes a bunch of negatives are overwhelming when you have to see them all together. This is something I learned when I bought a fixer upper house that was worn out, out-dated, and in disrepair. I was broke back then so I had to live with it for a couple of years. Man, that was rough. I remember thinking that the carpet wouldn’t look so bad if the walls weren’t so bad, and how together they really make the light fixture unbearable. I guess that is when it first hit me how 2 or more negatives seem to compound their effects when viewed in the same room.

I’ve got a listing in my pipeline that I have been working on for a little bit. In general, it just feels like a rental grade property. It has a nice floor plan and all, but just doesn’t feel like something a buyer will fall in love with. Like I have always said, a seller has more power in the deal if the house comes across as something special. The market is getting a glut of “Average” houses. Now is the time to make your house stand out.

This house already has some pluses that could easily be over looked. Things that I bet most buyers wouldn’t even remember after leaving the house if we didn’t do anything to it. So, what is the plan? We just had it painted. That will unify the space to a buyer. You have to remember that buyers are going from room to room in a 20 minute window. They like it all to be consistent. The next step is going to be replacing the vinyl flooring in the baths and kitchen. Then we’ll clean the existing carpet and stage it.

Now, when a buyer comes in this place, they will see fresh paint, clean floors, and new vinyl in the kitchen and baths. They will also probably now notice the few updated items. See, the goal is to make it the best house any buyer can get in the price range. We do not have to make it perfect, just a little better than the second best house currently for sale. After all, as long as there is one buyer out there, you know they’ll pick the best one.

The repair list shouldn’t be like playing Marco Polo

by John Rice

Most people think all a realtor does is open doors, fill in the blanks on the paperwork and cash checks. Sad thing is that there are a lot of realtors who think this too.

Not me.

The ultimate goal is the get the best terms for my clients and make the process as smooth and drama-free as possible.

I recently had a situation where my drama radar was going off so I made some moves to prevent it.

I got a repair list on one of my listings. The issue was the wording on the repair request for an air conditioner. The other realtor stated what the inspector found and pretty much just said fix it. The inspector stated that the air conditioner was only producing a temperature difference of 9 degrees. Now, I knew what the intent of the buyer’s request was. They wanted a normal working air conditioner. But at what point would they find a repair acceptable? If my buyer fixed it and it was only 10 degrees, would that be okay? Who knows? I never liked playing Marco Polo when I was a kid. I don’t like finding Waldo. I also don’t like the “I see something you don’t see and the color of it is” game. I am definitely not going to play those games with a repair list.

My Dad is retired now from being an attorney, but he is still a brilliant man. Back in 2005 when I was writing my first ever repair list, I consulted him on the wording. I think I did what most realtors do, which is to state the problem and just say fix it. He told me two things which I have never forgotten and try to share as often as I can with other realtors so our industry improves:

  1. Write a repair to be done to achieve a goal rather than for a task to be performed. Why? You can sometimes do a task which doesn’t achieve the goal. When that happens, you have no recourse because you asked for a task to be performed and it was done as you requested.
  2. Write EVERYTHING so clearly that a third party could read the contract, addenda or repair list and know exactly who was to do what and what the agreed upon outcome should be. That third party could be a judge or mediator.

So, when I read this one repair item, I knew there was no specific outcome requested. There was no verbiage saying that “If the seller does this with the air conditioner, the buyer will accept it.” The effort to get this right at this point may have saved some last minute drama right before the closing. When my seller has packed up and moved out, and the buyer has packed up and made moving plans is NOT the time to discover that we had a difference of opinion on what was expected.

Ultimately we agreed upon wording that said the air conditioner had to cool within industry standards, which is a minimum temperature difference of 15 degrees.

Decor can make or break the sale of your house

by John Rice

This past weekend, I was out with a young couple. We went in two houses in the same neighborhood that happen to be the exact same floor plan. There were some minor differences. One had a tiled backsplash, trendy furniture and finishes.  The other was very plain and was decorated with an older vibe……..guess I’d call it Early American Yard Sale. Guess which one my young couple liked with the most? When the agent for the “Older House” asked for feedback, I told her about this and suggested the seller make some changes. The most likely buyers in this price range and neighborhood are first time Gen Z buyers.

So, if you are selling, think about your buyer and make any needed changes that will make your house more appealing to them. First time buyers are mostly buying houses from Millennials, Millennials are buying houses from Gen X and Boomers. It is important to make your house appealing to each group as they move up the property ladder.