real estate agent

The hardest house to sell is….

by John Rice

I showed a house to a family last night. It was in a desirable neighborhood. Had a nice lot. Had lots of square footage and a nice floor plan.

What was the problem?

There wasn’t any one feature of the house that was amazing and there wasn’t anything to hate either. It was all just okay.

Most houses have a combination of things you love and things you dislike but you can live with. The normal thought process for deciding if you want the house is weighing back and forth between what you like and dislike. When the house has nothing you like and nothing you dislike, it is hard. People want to fall in love with their house. Often it is easier to sell a house with an amazing kitchen and a bad lot. Or an outdated house with an incredible lot.

You would think such an inoffensive house would be ideal, but it is not. Showings for these type of houses usually take a little longer. Buyers typically walk through the house several times hoping they have missed that one feature that they can get excited about. But it isn’t there. And there isn’t anything to walk away from the house hating. So most of them just walk away.

Never thought I would see this

by John Rice

I woke up Monday morning with not really much to do. That is how a lot of days go in real estate with so little on the market for buyers to view.

Also like a lot of days, things can suddenly change. As I was standing in an isle at Lowe’s, two new listing had hit the market and I was suddenly trying to schedule showings from my phone.

One was a $620k house near Albany Road/Shady Lane. The lot was fantastic. That area was outside the city limits when new and probably felt like a semi-rural area when built. The house had a bonus garage which would have been great for my car loving client. The house was, how can I say this…..STRANGE! It was sort of like somebody decided to throw every trendy 1980s design at the house and see what stuck. Well, ALL of it stuck. It was an old house that had been added on to on 3 sides. The kid I was in the 80s would have loved this place.

The other one was a $900k house off of Chinoe. Really nicely done. Fabulous patio and backyard. Nothing really odd about it other than it only had 3 bedrooms and there were cabinets above the kitchen island that made the kitchen feel small.

It wasn’t too long ago that a seller at these price points expected to wait an average of several months before selling. Like that famous video of a news clip where a lady was being interviewed about a fire in her apartment and said “NOT TODAAAAAAAAAY”, the same can be said about the current market.

The $620k house sold that evening. The $900k house that hit the market about 3:PM got an offer by 9:PM that the seller accepted the next morning. Neither were a good fit for my clients so we are anxiously awaiting the next batch of new listings.

How a Seller can protect themselves in a Seller’s Market

by John Rice

What?

It’s their market. Why would they need to do anything? Aren’t they the ones holding all the cards?

Yes, they are. However just because it is their time right now doesn’t mean they don’t need to do things to ensure they got the best terms possible and had a smooth transaction.

So here we go!

DO NOT SELL YOUR HOUSE OFF MARKET-I know this is very popular right now and us realtors love it because it is easier. It has become sort of a status symbol. Sellers feel like their house was more exclusive that it was. Buyers feel like they got an invitation to the after party. It isn’t a good idea though. The market is crazy right now. Buyers are tired of making offers that don’t get accepted. They want a house. I have seen numerous times where I will get multiple offers on a house and one buyer will go way over the list price to get it. Let’s say you get five offers. Four of them are pretty much the same and then there’s one that is waaaaay better. Come to find out, they had lost several houses and were just tired of it. Their attitude was that they were not going to lose another one again. Long story short, you never know what your house is going to sell for until you expose it to the market.

DON’T TAKE THE FIRST GOOD OFFER-There is no question that if you have a decent house and don’t overshoot the value with the list price, you are going to get multiple offers. Too often I see sellers in a rush to accept one. They know it is a sellers market but since they don’t buy or sell houses all that often, they are afraid of losing a buyer. It is up to their realtor to let them know that the buyer is not going to suddenly rescind their offer if it is not accepted within a few hours of receiving it. The only time you want to be in a hurry to accept an offer these days is when it is the ONLY offer you got. I think it is best to give the market at least 24 hours to see the house and let everybody know the cutoff for sending offers. That deadline implies you have multiple offers even if you don’t and makes buyers in a rush to decide if they want the house.

DON’T SELL THE HOUSE “BY OWNER’-I know this one sounds self serving. The temptation to save paying real estate commissions is appealing for sure. I see more for sale by owner sellers having deals fall apart or selling for less than they could have gotten for their house. This could be an entire blog series so I will just skim the top. To begin with, few sellers take good pictures of their houses. That makes people less interested in seeing it. Then they can usually only show the house when they are available. That means fewer showings. Then they don’t leave for showings. Buyers ALWAYS feel awkward when a seller doesn’t leave. They think they need to be in a hurry or can’t open closet doors. They feel like they are invading the sellers personal space. Even worse are the sellers who want to lead you around and tell you unimportant details about their home like telling you what the kitchen looked like before remodeling it. Newsflash, painting a picture in the buyer’s head of the old ugly kitchen does not help to sell your house. Then they go with the highest offer, which on the surface sounds good, but the buyer has to sell their old house first and they were preapproved by “By-Pass Mortgage and Bait Shop” which is located somewhere in Arkansas. Then they feel like they shouldn’t do any home inspection repairs since they have been living there and that leaking roof has never bothered them. In the end, few for sale by owner sellers know if the offer they have is the best one and if it is likely to close. They often kill their own sales since they don’t know what they are doing.

ALWAYS ASK FOR THE TERMS YOU WANT, EVEN IF IT WASN’T IN THE OFFER-If you have several offers, try to combine the terms you like from all of them. Sometimes it works. Let’s say you like the price of one offer, the closing date of another, the possession date of another, and the inspection type of another. What you do is pick the one that you think has the best chance of closing (cash or preapproved with a lender your realtor knows is good, bigger down payment, etc.) Then you see if that buyer can match the other terms you like. You might say to the buyer’s agent that you really want to work with their buyer but you also would like to close on such and such date like one of the other offers you got, and that you’d like the buyer to not do a home inspection like one of the other offers you got. It is a friendly way of letting them know that while you like them the best, you might just go with another buyer who has already agreed to those terms. My experience is that most of the time a buyer is more than willing to alter a closing date, possession date and possibly change their inspection type to get the house.

How you protect yourself when buying in a Seller’s Market

by John Rice

We all know the market is hot. Who hasn’t heard about houses selling for over the asking price, buyers waiving the chance to inspect a home. Lots of crazy things happening these day. People feel lucky just to get a house. Any house!

How can a buyer protect themselves these day?

Know the value of the house before you make an offer. The market is moving so fast right now that I don’t think many buyers or their realtors are looking at recent sales in the area to see what that hot new listing is worth. You can’t rely on the Zestimate. You can’t think that it must be worth it if it appraised. Appraisers are not buyers. The criteria they use to justify value is different that what a buyer uses. They don’t care about fancy finishes. They don’t appraise a view. To them it is all about numbers like square footage and room count. They have a 1-5 ranking for condition. Almost all houses you see are either a 3 or a 4. Buyers care about trendy finishes like how wide the planks are in the wood flooring, if the counter top is quartz or granite, what the tile in the shower is like. The tile in the shower could be carerra marble or green ceramic tile and the appraiser is going to value it the same.

Know the neighborhood. Let’s face it. When you buy a house, you are also buying the neighborhood. That means the part of town it is in, the amenities that are close, the school district, the parks, how close it is to a grocery store….all impact the value. Right now with such demand, there is not a lot of pricing difference between the most desirable neighborhood in any price range and the second most desirable neighborhood. There will be though in a cooler market. Picture this. There is a time in the future where houses stay on the market for more than a day. There are 3 houses for sale in the most desirable neighborhood and 3 for sale in the second most desirable neighborhood. There are 4 buyers. I think you know how this goes. There will need to be a pricing difference between both neighborhoods to make anybody pick the second most desirable neighborhood. That is how all markets work. If the store brand Mac & Cheese was the same price as the Kraft Mac & Cheese, nobody would buy the store brand with it’s grainy fake cheese and unattractive packaging.

Keep calm and think about your exit plan. You will one day want to sell the home you just fought so hard to purchase. Unless you are the luckiest person in the world, odds are you won’t have it as good as the seller did when you were the buyer. I cannot tell you how many people called me to sell their homes in the Great Recession who told me they paid full price in multiple offers for the house that nobody wanted when they needed to sell. If a house is totally average, has an average floor plan, has an average lot and is in an average neighborhood, don’t pay above average money for it. Personally, I think the only house I would yield to the will of the seller would be one that had something special that will also make it rise to the top of any buyer’s list in any market.

That is how you protect yourself in these crazy time.

How do you know when you’ve found the right house?

by John Rice

Sometimes people ask me how they will know when they have found the right house. On the logical side, I usually tell them that if they can 90% of everything they want in a house, that is probably the one. On the emotional side, I tell them you just know it when you see it.

I always have been more of the logical buyer when purchasing my own properties. I mean, I do this for a living. Seeing houses is an everyday thing to me. Being a realtor, my job is to help people make a decision. I am also an investor so for both of those reasons I tend to view it more as a logical decision.

All of which made my recent purchase really special to me. I just bought the 5th house I’ve lived in that I owned. I loved my first house. The second, third and fourth ones were just logical decisions. The floor plans worked. The locations worked. The prices was reasonable. Check, check, check.

My 5th house is one that I didn’t even know I was looking for, and wouldn’t have looked where it was if I had been looking. It literally slapped me in the face.

A client who is a financial planner had referred one of his clients to me to sell their house. They called me and we set up a time for me to see it. All very routine. I pulled into their driveway. Knocked on their door. Introduced myself. Sat down in their sunroom and began to talk to them. I was thinking “Man, this is really peaceful sitting here….oh, look, there is no house right across the street and that view out the back is incredible.”

Then they showed me the two garages. I told the seller that I would love to have garage space like that since I had a lot of cars.

Then they showed me the house. I think I remember telling them that it is hard to find a rural property where the house isn’t either tiny or a McMansion.

Then I went home and told my wife about it. We were not in a position that day to move but she seemed interested. About a week later, a family member who we needed to stay close to was now going to move in with other family. All the sudden we were in a spot to be able to move. Next thing I know I am telling the seller that I want my wife to see it. She saw their chicken coup and was sold before even seeing the house.

I’m embarrassed to say this, but I think I paid too much for it and I don’t care. The sellers thought it was worth a little more than I did….and I think I probably have a little more experience knowing what a house is worth, lol. But, I did not care. My wife and I were in love with the place and it wasn’t worth it to us to risk losing it. Plus it was waaaaaaaaaaaaaaaaaaaaay under what I thought I would have to pay to get the features I wanted. Waaaaaaaaaaaaaaaaaaaaaay under budget.

So, in the end, I knew it was “The one” and on the logical side, it did have more than 90% of everything I wanted.