neighborhood

What do these 3 sellers have in common?

by John Rice

I’ve got a busy week coming up. I have 3 people who the only thing they have in common are that they have houses to sell and have picked me to be their realtor.

Two of the clients have used me before. One of them is a family member.

The house in the first block of Kenwick is owned by a person whose mother used me to sell a house in Palomar. I don’t even remember how they found me. They were great to work with. I had lost contact with the daughter. I had often thought of her since she lived in Kenwick, and I did too when I was much younger. One day out of the blue, she calls me and says she is buying and selling. She didn’t think I would remember her since it had been close to 15 years, but I couldn’t forget her. She had to do a little digging to track me down since I had gone out on my own several years ago. It has been great catching up with her and working with her on her new home. She is fun, laid back and very wise.

The house in Beaumont is owned by a very special family to me. They used me to buy the house many years ago. I thoroughly enjoyed working with them and was very excited when they told me it was time to move again. We found their perfect home within walking distance of their old home. We had quite a dramatic time buying the new place since it was in multiple offers. This family is just so nice and pleasant to work with. It has been one of the highlights of my summer to work with them again.

The house in Landowne Merrick is owned by my cousin’s family. It has served them well but it’s time to move up to something that better fits their stage in life now. I don’t get to see my cousin all that much so it has been a lot of fun to go look at houses with her and her husband. Sometimes my aunt and uncle show up to for the showings so it is like a family reunion but at some stranger’s house.

I’ve got two more listings in the pipeline that should be ready before long. It’s been a great year and an especially great summer. Selling these three houses for these three fantastic sellers will be a nice way to wrap up my summer.

Are prices going to drop?

by John Rice

I’m reading a lot of headlines and seeing YouTube videos about the market crashing.

Is it going to happen? Short answer is NO.

Is the market slowing down a little right now? YES. It always does this time of year. People go on vacation and those with kids like to be in their new home before school starts. I always like this time of year because I can catch my breath and enjoy a break before it picks back up a little for the rest of the year. When I go to a track and I get used to doing 120 MPH in a straight, hopping on the interstate on the way home and doing 80 feels slow. Right now we are all so used to a crazy fast market, that even a strong but not super strong seller’s market feels like a major slow down.

Are we seeing more houses come on the market right now? YES. I think this is because all the sellers who would have sold during COVID now feel it is okay to put their house on the market. We started seeing more listings hit the market after the vaccinations rolled out. This makes me think that the sudden increase in inventory hit all at once. We will see if it keeps up. Really though, I sort of hope it does. I would love to see a balanced market where there aren’t 5 offers the first day on the market for a loser house and 15 offers the first day for an HGTV worthy house. Simple economics tells us that as long as there are more buyers than sellers, that it will remain a seller’s market. As long as it is at least a balanced market, meaning supply is equal to demand, prices will remain the same.

The worst thing you can do in multiple offers

by John Rice

This one always drives me crazy. There are a lot of bad things to do during multiple offers when you are the buyer’s realtor, but trying to rush the listing realtor is the worst.

What I mean here is where a realtor sends you over an offer and puts something like a 2 hour deadline for acceptance. I get it. Their goal in this is to make you hurry up and accept their offer before another offer comes in but I have NEVER seen it work in their interest. It usually backfires.

There are three reasons why:

  1. Do you know what happens once that short time frame for acceptance passes? The offer has technically expired. I don’t know about other realtors but the last thing I want is for the listing realtor to think the offer I sent is dead because the time has past. In this market, I usually do the opposite. I know listing realtors are wanting to get several offers and it is common for a seller to not even review all the offers until 2-3 days after the listing went live. I like to give them plenty of time. Why? Because I know I am not going to get them hurry up. They are going to do whatever they want and I want my client’s offer to be valid whenever it is presented. I also want to come across like we will be easy to work with.
  2. It makes the seller not like you. This is an even bigger one. Nobody likes pushy people. We don’t like it when somebody keeps pushing their grocery cart too close to us in the check out line. We don’t like tailgaters when driving. And in the hottest seller’s market in all of history, we sure don’t like it when buyers try to exert some pressure on us.
  3. It makes you question their commitment. I recently had this happen to me. I got a really good offer on a listing the first day on the market. I told the realtor, who was also the buyer, that we were planning on reviewing offers on the following Monday. She pointed out that she had given us a two hour window. I suggested she extend that until Monday. She fought back and said she didn’t know if she was still interested in the house if she couldn’t buy it that day. That tells me two things about her. She was either bluffing or was serious. Both are bad signs to me. If she was bluffing, it tells me she is going to try to manipulate us through the entire sale process. If she was not bluffing, she probably wasn’t totally in love with the house and there was a greater risk of her backing out of the sale before it closed. I told this to the sellers and they agreed that the only way we were gonna sell the house to her was if her offer was the only one we got. Fortunately we got 3 other offers and I was happy to tell her she didn’t get the house…….and I did it before her precious deadline.

Does location matter any more?

by John Rice

I guess a lot of people think being a realtor is about opening doors and cashing checks. I guess there are a lot of realtors who think the same so that is probably the source of the perception.

You don’t need me to help you pick a pretty house. You don’t need me to be there to tell you what you like or dislike about a house. You don’t need me to find houses for you. You don’t need me to walk into the only room with a chandelier and announce it is the dining room. You don’t really even need me at all…….unless you view spending the most money you have ever spent as an investment that you know you will sell someday and want to maximize the return. Oh, I guess you also need me to make sure you don’t pay too much since you won’t really know if you overpaid until you go to sell it.

So here is a quick lesson on how I go about helping people pick a neighborhood. We have all heard that real estate is about location. It is, but I don’t think people really know what that means. I normally break down neighborhoods into 4 categories:

The “A” Neighborhood-These neighborhoods are the ones people know and love for a variety of reasons. Some might be close to something desirable, some might have a lot of charm, some might have lower crime. Almost all “A” neighborhoods have a good performing school district. These are the ones that people know by name. These are also the ones that will always be easy to sell in even a bad market.

The “B” Neighbhorhood-Is like the “A” but may not be as well rounded. It’s popular, but often viewed as an alternative to another “A” neighborhood that is close by.

The “C” Neighborhood-This is one that no buyer has ever mentioned as somewhere they would love to live. It is just average in everyway. Nothing really is wrong with it. Nothing is really great about it either. It is just a neighborhood full of houses.

The “D” Neighborhood-These are like the opposite of the “A” neighborhood. These are neighborhoods where 16 years worth of buyers have told me they DON’T want to live. It is often because of high crime in or around the neighborhood or due to a combination of poorly performing schools. Let’s face it, if buyer’s are telling their realtors they don’t want to live in specific neighborhoods, there’s your sign that it isn’t the best investment.

Why does this make any difference if you’ve found a pretty house you like in your budget? Shouldn’t you be happy just to have found a house in this crazy market? Isn’t finding a house in a less than popular neighborhood better than not finding a house at all? The answer to all of this is that it doesn’t matter at all when you buy the house. It matters a lot when you decide it is time to move on and you want to sell it.

Right now, let’s say there are 100 buyers in the market. There are 20 houses in each of my categories for sale. That means there are 80 houses for 100 buyers. Oh no! That means all 80 sell for at least full price in multiple offers the first day on the market.

But markets change. I am no doomsday person. I don’t think the market is going to crash. It will however, over time, swing back and forth between being a buyer’s market and a seller’s market.

This is what it looks like in a buyer’s market: There are 80 buyers in the market. There are 100 houses for sale, 25 in each of my 4 categories. How do you think this pans out? The “A” neighborhood houses sell first, then the “B” neighborhood houses, then the…….well, you get it. When there are more houses for sale than there are buyers, buyers get pickier. Buyers can’t be picky in today’s seller’s market but they will be able to again. I am sure of that.

My first house was in a “D” neighborhood. I was in my mid 20s and didn’t know anything. Like a lot of first time buyers, I was focused on just finding a house I liked. As I improved my house, I would look out my window and realize that I had no control over my whole neighborhood. Many of the houses around me were owned by investors. There was some crime. I loved the house but not the neighborhood. I sold it for about what I had in it, which meant I didn’t have a lot of equity to carry over to the next house. That is another reason to always pick a winning neighborhood. You will use the equity you’ve built in your old house as your down payment on your next house. You want to maximize that.

So do yourself a favor and always pick the best neighborhood in your price range.

Why I knew this house would come back on the market

by John Rice

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.