out of town buyer

Harsh reality of renting instead of buying

by John Rice

Sometimes when I tell first time buyers that they should buy a home as soon as they have a down payment and know they won’t be moving for several years, I wonder if they think I am just trying to get a sale.

Here is a harsh reality. Even if you are renting, you are paying somebody else’s mortgage.

In 2013, I bought a house to rent out. My mortgage was $543 a month including taxes and insurance. I rented it for $1100, which was a fair price at that time. Last year, I raised the rent to $1450. That is still under market value. When I raise rent, I try to keep it at about 85-90% of full market value since I am benefiting from the continued relationship. It is a win-win for everybody.

When I bought this place, I think I made the first 5-6 payments while I was renovating it. Do you know who has made the payments for the past 12 years? The same tenant. If that tenant could have bought the house in 2013, their mortgage would have been a little higher since I had to have a larger downpayment and I paid cash to do some work to the house. Their mortgage would have been more than mine, but still a little cheaper than the rent. Do you know what their monthly expense would have been today had they bought the house back then? THE SAME AMOUNT ALL THIS TIME. Ok, technically their taxes and insurance would have gone up a little, but what they pay for interest and principal would have been the same all this time. My point is that had they basically had a down payment and decent credit, they could have bought the house, had a fairly stable payment, been building equity for themselves instead of me, and would have the house more than half paid off by now.

This is why I encourage first time buyers to buy as soon as they can. I know it is tough right now with higher rates, prices, tariffs, inflation, etc. It is not impossible though regardless of how discouraging it may be. I think anybody is better off in the long term buying most any house they can afford verses renting.

Selling a house is like middle school gym class

by John Rice

I was that kid in middle school that was always picked last in gym class. You know the drill. Two team Captains (Buyers) pick their team (Houses) until there is only one left and that person gets picked by default. Don’t feel bad for me though…….I’m sure the past 40 years has been better for me than for most of those picked before me.

The real estate market is very similar to what we’ve all experienced in gym class. Buyers organize the houses in order of preference. Naturally, they are most interested in move-in ready houses that are priced right. Then they move down the list to those that are less desirable.  Sellers want to be picked sooner rather than later. Think “Days on Market.”

Once the Captains are chosen, that is like the beginning of the house hunting season. The Captains pick those they think will be the best. Once those kids are on a team, they are “Sold” and not available anymore. All a Captain can do is pick the most desirable kid from what is left. Once the best one has been picked, the second best one becomes the new best choice. That is until it was just me standing there and the Captain says my name with the enthusiasm as if he had just heard the cafeteria was serving goulash for lunch.

Right now, we are in the time of year where not many new listings are hitting the market. It’s kind of like when there are only about 6 kids left from the whole class. These are the ones that maybe nobody really wants, but the next kid that gets picked is going to be the best of those that are left. There are many sellers right now with average to below average houses that will get contracts simply because there are no better choices for a buyer right now. I always say that fall is the best time to get rid of  house that nobody has wanted all spring and summer, which I guess is my whole point.

 On a side note, the only time I ever got picked any higher than dead last was when it was for volleyball. See, I am left-handed. When I serve, the ball always goes on the opposite side of the court from where it lands when most people serve. Everybody on the other team was always caught off guard. Nobody ever noticed the pattern of where the ball would go when I served. Come to think of it, that is one of the first times I ever realized the benefit of zigging when most people zag and zagging when most people zig.

#1 biggest mistake a seller can make

by John Rice

Often, when talking about pricing a house with a seller, they say something like “Couldn’t we price it at this number and won’t people just make an offer if they like the house?” Makes a lot of sense to the seller, but doesn’t when you look at it through the buyer’s eyes.

Why? Let’s say a buyer is shopping for a $400k house. You have a house that is worth $350k, but are asking $400k because somebody will make an offer if they like it, right? The buyers are viewing every house that is priced at $400k, most of which are really worth about $400k. To buyers your house will seem like the worst house they have seen with a $400k list price. Why? They are comparing it in THEIR mind to the better houses they viewed that are worth $400k. The buyer is either going to get a better location, a bigger house, or one in better condition……They are never going to like your house enough to make an offer. On the flip side, the person who is going to spend $350k is never going to see your house because they aren’t looking out of their price range. So, you have a situation where the people looking at your house aren’t going to buy it and the person who would buy it isn’t going to see it!

Here are some tips to keep this from happening:

1) If you must price on the high side, never go more than about 5% over the recent sales of similar homes in your area. Sometimes an over-priced house will get a lot of showing, which makes the seller think they are priced right. You can still get a lot of showing on a slightly over-priced house, but no offers. When you get showings and no negative feedback, it means you have a price issue. I say if you have a $350k house, it needs to priced around that number.

2)  Avoid the temptation to have a high price and have your agent tell people you are motivated. When I see a steep asking price and the agent says the seller is motivated, what comes to my mind is that they are motivated to get their price. A truly motivated seller will price their house at or less than what it is worth. In 2025, the days of testing the market are a thing for history books.

3)  Realize how the market works. You have so many buyers and so many houses. The buyer gets to pick whichever house they want and they always pick the best one. Even in a sloooooow market, I have been in multiple offers. It is human nature to want the best. The buyer is comparing all the houses available. Make your house the best one by pricing it right.

Trust me on this…There is no magic in real estate.

“How long will it take to sell my House?”

by John Rice

I get asked this on every listing appointment. It is hard to believe that a couple of years ago, it was rare for any house in any condition to make it past the first day on the market. I usually don’t reply with an amount of time, but with a sequence of events that need to happen to attract a buyer. The honest to goodness truth is that any house should sell pretty quickly if the seller will do some prep work. Granted, there are exceptions…..Two million dollar house? Will take time since there aren’t many buyers in that price range. A unique house? May need a unique buyer. An overpriced house? Will usually only sell to an idiot with a realtor who thinks we are still in the 2022 market.

I’ve been doing this a long time. This is how it usually goes in this changing market. I see the house. I ask the sellers if they are able to do any work that needs done to attract buyers. Buyers want as move in ready as possible and for the best price right now…..well, I guess they always have but now they have more listings to chose from and sellers can no longer just put their house on the market without a little prep work. Sometimes the seller can’t/won’t do anything. If they can’t/won’t, I tell them the price I think their house will sell for just like it is. Usually though, the seller picks a few items from the list. We put it on the market. They get positive feedback for the things they have done. They get negative feedback for the remaining items on the list.  After awhile, the seller starts to realize that they are going to have to do more items on that list or reduce the price. Often, buyers subtract about 5 times the cost for the remaining items on the list. I’ve been on the buyer side of this. They almost always say something like “If I have to paint this whole house I’m not paying a penny more than $XXX,XXX!!”  or “I would need to replace all the carpet and I like hardwood, so let’s just subtract the cost of hardwood from the asking price and go from there.” Can’t blame them. After all, it is turning into their market these days.

Eventually, the seller plugs away at the list until it sells. See, there is the sequence of events I mentioned at the beginning of this post. Now that the house is ready, it is going to sell because it is competitive and will almost always fall on the short list of a buyer.

But what happens to the people who do everything on the list from the beginning and price it correctly? Their house usually sells very quickly. Why? Because buyers want the best house for their money. Make your house THAT house, and start packing.

NEVER sell your house “As-Is”

by John Rice

Why? It can keep people from wanting to see your house. Plus, nobody knows what it really means!

Let’s clear the air first about what it means. Did you know that ALL houses are sold “As-Is”? The contracts all the realtors use in my area say on line 202 that the buyer is purchasing the property “As-Is.” That means just as they see it and where they see it. The house is going to stay there and no warranties, no promises of something happening differently in the future are expressed or implied……So reason #1 to NEVER sell “As-Is” is because you already ARE selling “As-Is.”

I have had several buyers in the past tell me that they were interested in a house but saw the seller was selling “As-Is” and didn’t know why. A lot of buyers think that means there is some big issue the seller knows about and wants to pass their problem on to the buyer…..So reason #2 to NEVER sell “As-Is” is because it scares off buyers from even coming to see your house. It is hard to sell a house to somebody that won’t come see it.

Somehow, “As-Is” has come to mean that the seller prefers to not negotiate any repairs after a home inspection. Wise realtors say something like “Seller welcomes inspections but prefers to not do any repairs.” Still, I say there is no need to even do this. Just as the price is negotiable, the inspection terms are negotiable as well. The contracts in my area say that if the buyer elects to do a home inspection, they have the option to ask for repairs. It also says the seller has no obligation to do any of them…..So reason #3 to NEVER sell “As-Is” is because you as the seller do not have to do any repairs. There is no need to state this to a buyer before they even see your house and know if they want it. This is something that can come up during the contract negotiations. If you were on a dating app, would you put on your profile that you’re lactose intolerant and have bad breath? Of course not. The goal of presenting the listing is to get a buyer to schedule a showing. Nothing else.