The market wearing you out? Here is an easy way to buy a house!

Let’s face it. A buyer in today’s market is going to pay top dollar for any house. There are two methods of home searching.

The way the home search usually goes for most buyers is like this: They have a search set up on Zillow alerting them when a new listing hits the market. Then they rush out to see it. Also rushing out are the 20-50 other buyers who set up the same alert. You wait in line to see it. You have 5 minutes to make a decision. You write a crazy high offer promising to do anything the seller wants short of naming your next child after them….then you lose the house in multiple offers to the buyer who was willing to name their next child after the sellers.

It is crazy out there!

Part of the reason the market is like this has nothing to do with a shortage of listings. Part of it, a small part of it, is that buyers are so focused on new listings. These days, if a house doesn’t sell immediately it is forgotten. Buyers forget about it and opt to just wait for the next round of new listings and repeat the process.

I recently had a friend looking for a house in the $250k range. We got outbid on every offer we wrote. AND WE WERE GOING WAY OVER THE LIST PRICE TOO! One house sold for $30k over the list price and got 17 offers. For that house, all you were doing was trying to outbid some crazy desperate buyer.

Know what I told my friend to do? I told her to stop focusing on new listings. I said let’s look at houses that have been on the market for at least 4 days. There are plenty of them out there. They are the ones that for whatever reason got passed over as a new listings. Sometimes it is because the presentation sucked. Sometimes it is because the price was high. Sometimes it was because the house sucked. Knowing why it was passed over is why you need a good realtor.

So, the next house we see, she decides she wants. And guess what happened? We wrote a full price offer. We put our preferred closing date on the offer. We were able to do a home inspection. It was a pleasant experience. We were also the only offer so guess what? The seller accepted it!

What’s a Buyer to do in this evolving crazy market?

When the market started heating up, the smart buyer’s agent knew to get an offer in ASAP to try to beat other agents to the punch.

Then we all started doing something like saying “Reviewing offers on such and such date and time.” That was nice because you knew that you had time to show the house. If your client couldn’t break away to see it immediately, you could tell them you could do the next day.

Now it has evolved to the point where we are saying “Reviewing offers on such and such date but the seller reserves the right to accept any offer at any time.” So we are back to dropping everything and rushing out to see a new listing ASAP.

What is a poor buyer to do right now to get a house? Make such a strong offer that the seller will want to accept it immediately. Turn the tables and make the Seller chase you! That usually involves 4 big things: Price, inspection, closing date and possession date.

Obviously for price, that means a stupid high number. I can’t believe after spending so many years blogging about not overpaying in a Buyer’s Market, that I am now suggesting people do this. But in this market, it is the difference between getting a home and not getting a home. Instead of “Go big or go home”, it is “Go big to GET a home.”

Inspection…..waive it totally if you can let yourself do it. Having dealt with probably close to 1000 inspections over the past 16 years, I can tell you that I rarely see a house with a deal breaking problem. Most of the issues that would make you want to walk away from the house are typically visible if you look. If it has old HVAC units, well, you know you will have to eventually replace them. Roof have a shingle blown up or need some flashing around a chimney? That’s not worth losing a house over. Plus, most of the time all you can get a seller to do these days is spend $1000 or so on repairs. Most of the items found on a home inspection will probably also be found where you are living now: Some electrical oddities like reversed polarity or an ungrounded outlet in older homes. Various plumbing leaks. A roof, HVAC units or water heater somewhere between new and needing replaced. Most of what is found on a home inspection is deferred maintenance.

A lot of sellers have already bought another home and know when they will be closing on it. Ask their agent what the ideal closing date would be for the sellers. If you can make it work, you have just made your offer much more appealing to them.

Same with the possession date. It’s a pain in the rear to have to be out of your old place the same day you get in your new place. If the house was in reasonably clean shape when you saw it and you don’t think the sellers are terrible people, ask if they need a couple of days to stay in the house after the closing. Some breathing room is always nice. The worst I have seen when this happens is that you often get left some garbage or a dirty house. Most sellers are eager to get to their new place so you don’t really have to worry about them not moving out.

All of these things are a little risky to a buyer. I know. I get it. But the people that do these things are the ones who are going to be moving into that house you fell in love with and were outbid on.

A good realtor is like using the Waze App

I’ve seen a few sellers lately make some bad decisions.

I get it. Selling your home is something you only do so often and I don’t expect them to understand the market and all the obstacles between sticking the sign in the yard and the closing. All they know is that the market is hot and selling your house is easy.

What they don’t know is that keeping it sold can sometimes be a lot of work.

I recently had a friend decide to list with some less experienced agent who was going to reduce the commission. I was going to reduce my commission to ZERO since this person was a friend and they had some circumstances that required them to move, guess I should have told them that sooner. I had been giving advice and working towards getting this done for close to a year. To this seller, all they were thinking about was saving money. Well, you only realize that savings when you close the sale. The house sold and is back on the market. Usually when a house comes back on the market, it doesn’t get the same attention from buyers. Most buyers in the market have already seen it and either said no to the house or made an offer that obviously wasn’t the best one or they would have gotten it the first time. This is where experience is worth every penny, even though I wasn’t planning on getting any pennies from this sale.

I am currently working hard to keep a deal together for a house where the buyer went to do the final walk through before the closing and found the ice maker had been leaking and has caused $12k in damage to the house. I know if my listing goes back on the market, we will never again catch such a fantastically qualified buyer who was the highest bidder, so I better put on my thinking cap and get this done.

These are just a couple of current examples of where experience can make or break a sale. The goal is to get to the closing. I am thinking about the entire process, not just the beginning. Not just the next step.

As I was making my second cup of coffee and thinking about writing this post, it reminded me of the early days of GPS. You’d enter the destination and take off. I think that is how most sellers view this process…….”I’ve got a realtor and they just stuck a sign in the yard. It’s all downhill from here!” If nothing goes wrong, then that is very true. But how often have you had your GPS take a crazy route or not know about construction, wrecks or other annoying delays? It’s the same with real estate. A lot of inexperienced agents don’t know what to lookout for along the way or don’t know how to negotiate. Sometimes you have to take an alternate route. Sometimes you need to change lanes along the way. A good realtor is more like the Waze app……not only are we watching out for delays, we are looking for speed traps and doing it all in real time as we get you to the final destination, which is the closing.

How I have benefited from having the smartest Dad in the whole world.

It’s been a good week.

It all started when I had two buyers make offers on houses and they both got them. Both went over the list price of course as that is becoming far more common.

One of them was a house that had come back on the market after a sale fell apart. I called the listing realtor and asked why it fell apart. She told me that before the seller put the house on the market, he had a specific home inspector look over the house and repaired everything the inspector found. Well, the first buyer used a different home inspector and decided they didn’t want the house. The listing agent thought the buyer just cold feet and used the inspection as a way of getting out of the deal. That happens unfortunately.

I know nobody likes it when a house comes back on the market. The house often doesn’t have the same momentum the second time. I also know that sellers start getting nervous about selling their house even in this crazy hot market. It turns out that my buyer had told me who she was planning on using for the inspection and it was the same inspection company the seller had used. I saw this as an advantage. I knew it would be a huge deal to the seller and listing realtor if they knew we were planning on using the same company since there would be no surprises.

So, instead of writing an offer with an escalation clause, I called up the listing realtor and pretty much said “Hey, how about we give you so much above the last contract you had on the house AND we agree to use the same home inspection company your seller used before they listed it? Would that keep you from waiting to get more offers and just sell it to us right now?” Fortunately it was and my buyer got the house. She later told me she was prepared to go to a certain number if needed and that I saved her a lot of money. Close to $18k to be exact. Had it gone into multiple offers, odds are she would have paid much more than she did. I just knew what to do to make the seller accept our offer. My dad always said “Think like the other person’s perspective.” I knew the seller was anxious about the home inspection after the sale fell apart and having the same company he used do our inspection would make him feel like the house was really going to sell this time……thanks Dad and Happy Father’s Day!

What happens when we do see more houses for sale?

I read a lot of news about real estate. It is always a little funny to me to see what people who are not realtors have to say about the market. There are two things that I have read this week that have me rolling my eyes.

The first one is the headlines about how the number of sales have been declining. Gee, that’s just what happens when there are so few houses for sale. This does NOT mean that buyers are deciding not to buy a house. It means that they can’t get a house.

The other one is that it seems there is a projection that we should have more houses for sale later this year than we have in a long time. That would be great but let me tell you what it doesn’t mean. It doesn’t mean that prices are going to drop. They might stabilize prices a bit but when a hot new listing in Lexington can easily get 15 offers, we would need 15 times the listings for a balanced market. There is going to be more buyers than houses for a while.

A lot of the people who are fantasizing about what that market might look like are not old enough to have lived through the housing crash during The Great Recession. Back then we had more houses for sale than ever and do you know what? The best houses still sold fast and often in multiple offers. Do you know why? It is because everybody wants the best house in their price range. We could triple the number of houses for sale today and it wouldn’t change much. What would happen would be that the best houses sell fast and for top dollar while every other house languishes on the market. This flood of new inventory does not mean that every buyer will be able to get their ideal home.