neighborhoods

Want to know what BUGS me about a house?

by John Rice

You know what scares me when I see a house for sale and the seller has lived in the place for a very long time?

Termites.

For most people, the only time they think about getting termite inspections are when there is a sale involved.  While I don’t think you need annual inspections unless you just want to help your pest inspector generate revenue, you should do one at least every few years.

I was in a house last weekend that my buyer is considering making an offer on.  Well, I guess they are still interested.  I haven’t heard from them since I pointed out all the termite damage.

And there was a lot of damage.  Fortunately most of it would be easy to fix.  All you’d need is to sister a few new joists to old ones.  The damage didn’t look any higher than that.  I figure there is about $2-3k in work to be done.  A termite treatment back in the 90s would have been much cheaper.

As the husband and I were walking around in the basement using our phones to look at all the joists, he said “This is why we like you.”

Who knows if they will make an offer on this house.  If this isn’t the one, no worries.  I know I am their realtor.  I want to sell them the right house, not just any house.

 

It’s like the most boring baseball game ever

by John Rice

I have always said that first time buyers grease the real estate market.  Not that I’ve played much baseball since I was a kid, but I always pictured the market this way:  The bases are loaded with people who needed to buy and sell, then a first time buyer hits a home run and lets everybody else move.  Being the person who didn’t have anything to sell kept the market moving.

That wonderful analogy that I have been using my entire career doesn’t work any more.

First time buyers are struggling to get a house.  The person on first base can’t find their second base house, the second base person can’t find their third base house, etc.  They know selling their old house will be easy, but they dread the thought of being a buyer right now.  So they stay put….and that first time buyer keeps striking out.

Now that I think about it, being a realtor feels just like when I went on a 7th grade field trip to see the Reds play.  There was a lot of waiting for something to happen, and then a brief moment of excitement.  That is how the market is today.  A lot of waiting.  A lot of checking for new listings.  A lot of networking to find houses not on the market yet.  Then when a house that meets your buyer’s criteria hits the market, a lot of excitement.

How I won in multiple offers

by John Rice

I was working with a client for several months who was buying in Nicholasville.  The market there is even worse than it is in Lexington for a sub $200k buyer since there are only about 8 neighborhoods to choose from.

A great house came on the market.  I scheduled a showing.

I just knew this would be the one.  I checked out the recent sales in the neighborhood to get an idea about what this house was worth.  I even prepared all the docs my buyer would need to sign so we would be ready to go.  All I needed to do was fill in the offer price and have her sign it from her phone.

We looked at the house.  It was a winner.  I call to tell the listing agent that I just sent an offer and was told that there was already one offer on the table and another one was coming.

We revised our offer to be slightly over the list price.  I asked all my usual questions that can help with getting an offer accepted……When would the seller like to close?  Do they need delayed possession?  Would they like the inspection type where the buyer either takes it or leaves it after the inspection?  Other than price, what would the seller’s ideal offer be?

The seller didn’t need anything special, so I knew this one would come down just to price.

A few hours later I get a call telling me that the third offer arrived and it had an escalation clause.  That made me pretty nervous.

I tell my buyer this and suggest we also do an escalation clause.  I tell her that the default setting for most agents is to offer $1000 more than the highest offer, so we better do more.  Otherwise all we would accomplish was knocking out the third buyer.

She agreed to a number we discussed and that she would pay that much higher than any offer up to certain price.  The list price was $192,900 and all the offers were higher than that.

I was a nervous wreck all day.  I really wanted to see my buyer get this house.  It was perfect for her and she had been waiting so long to get a house.

Finally, I get the call that she won the house.  Turns out all the offers were $194k, and the other offeror’s escalation clause was the predictable $1000 that I suspected.

It was sort of funny for me because it was the first time I had ever called to tell a buyer they had just bought a house and they didn’t yet know what they were paying for it.  I tried to make her guess, you know, like she was a contestant on The Price is Right, but she was so anxious that she said “JUST TELL ME THE PRICE!!”

 

Do this if you never want your house to sell

by John Rice

I showed a pretty nice house last night that is going to be very hard for the listing agent to sell.

It was one of the lower prices for a huge house on a gorgeous lot in a very desirable neighborhood.

You’d think that would be enough in any market, yet alone one starved for listings.

This is what it was like seeing the house.  You walk up to a freshly painted facade with recently mowed grass and fresh mulch.  You are feeling good about it.  You go inside.  The foyer is nice.  It is a little strange that you can’t see any rooms from the foyer, but not the end of the world.

You go towards the left and see the dining room.  Wall paper from the 90s.  You go into the kitchen next.  Red wall paper from the 90s.  You go into a really nice sunroom.  What do you see?  Murals painted on the walls.  You go back through all those rooms and then you enter the great room, which was super nice.  Then you see a bedroom.  Ok.  Then you see a bathroom that not only has wall paper, but wall paper boarders on the ceilings and top of the walls, as if they were making crown molding.  The shower curtain is heavy, like the dress Scarlett made in Gone with the Wind.  Then you enter the living room which is set up as an office and has way too much furniture in it.

Heading upstairs, you notice that all the bedrooms are painted a different color.  The basement is pretty normal.

The sellers furniture was nice, but they probably bought all of it when the house was new in the early 90s.  I am not bashing anybody’s stuff because my own house is probably the most boringly decorated house in the whole world, but I am not trying to sell it.  I would need to stage my own house if I were selling because my stuff would make my house feel as dated as this one did.  All of my furniture is stuff my parents gave me and that my wife and I put together from a box.  I’m just not into decorating……maybe that is why I can always see the house past the decor.

It sort of made me sad because I could picture the house vacant and with a coat of fresh paint.  It was nice.  Sure, the house would have still been a little outdated since it was about 25 years old, but it wasn’t terrible at all and typical for the neighborhood.

There was a stack of realtor cards on the table in the foyer.  That means all those people in addition to my buyers said “No” to this house.

What sellers never realize is that a buyer will walk through their entire house in about 20 minutes.  Having too much furniture in a room may suit the sellers needs, but it makes the rooms feel smaller to the buyer.  It is also hard to see the room past the furniture.  I always say that when you live in a house, the room exists to show off your decor.  When you are selling, the decor should show off the room.  Also, colors make a big difference.  A seller may be in one room of their house for a while and then go to another.  The buyer, when walking through the entire house, gets sensory overload if every room is drastically different.  A uniform color can also help when the house has a choppy floor plan too.

I am sure all the feedback on this listing has been that it needs too much work.  If this were my house, I would remove as much furniture as I could stand.  I would put a fresh coat of neutral paint everywhere.  People ask me all the time what is the biggest bang for the buck.  I always say fresh paint.  Nothing makes as big of an impact as fresh paint.

With all the wall paper gone, most of the dated furniture out, and a coat of fresh paint, the house would feel so much better.  The 25 year old finishes were neutral enough that buyers would find them acceptable in the absence of the 25 year old furniture and wall paper.

When I go to sell my current house, I am taking my own advice since my place is very similar to this one.

Where are you going to find anything better for that price?

by John Rice

I remember the day.

I was in a two week class for new agents.  One of those days the topic was CMAs.  That stands for Comparative Market Analysis.  It was how to figure out what a house is worth based on recent sales of similar houses.

Long story short, you start with the subject house.  If a comparable recent sale was better than the subject house, you deducted money from that sale price.  If the comparable recent sale was inferior, you added money to the sale price.  In the end, you had a bunch of debits and credits for the differences that you either subtracted or added to the sale price of the recent sales….. and then you know what the subject house is worth in comparison to the recent sales.

Very logical.  This is how it has been done for years.  This is how appraisers do it too.

In that class, one of the other newbie realtors asked how it was done before CMAs became the standard.  The teacher said that you just guessed a value.

I sort of feel like we are back to the guessing days now.

I’ve seen recently remodeled houses sell for up to 50% more than what the second highest sale price was in the neighborhood.  Granted, a remodeled house SHOULD sell for more than the average house, but not by 50%.

I sold a house for $160k.  The comps pointed to it being worth about $143k.  We got several offers between $137k and $143k…..then we got one for $160k.  That is $17k MORE than the second highest offer.  Those buyers were desperate.  They had lost several bidding wars and were not going to lose again.

There’s definitely been a shift in how we calculate value, and it appears that it has less to do with logically analyzing recent sales and more to do with it being a tight market.  Something I hear buyers and agents say a lot these days is “Where are you going to find anything better for that price?”  So, value is now determined by availability, just like the lobster prices at a restaurant.  A good day on the water might end up with lower lobster prices.  The very next day the fishermen aren’t as lucky and you pay more for the exact same dinner.  That is sort of scary to me because what happens when the market slows a little and there are more houses for sale?