real estate listings

The market is crazy but being a realtor isn’t

by John Rice

Everybody knows how crazy the real estate market is right now. Everybody I meet wants to talk about it. Everybody assumes every realtor is crazy busy right now. We are not. The reason is because you need houses to be on the market in order to sell one.

It’s super easy being the listing realtor right now. You put a house on the market and have a busy couple of days getting offers, then it is over. Being a buyer’s agent these days is a lot about waiting for a house to come on the market, then rushing out to see it. I used to show houses 3 nights a week and all day long every weekend when it was a Buyer’s market. I think the last house I showed was mid last week. Back then, people would look at 20-30 houses before making a decision. Today a lot of people are viewing 3-4 houses and picking one. I have sold many where the buyer bought the first house they saw. I’ve got plenty of buyers. Some of them are looking for a very specific home in a specific school district or neighborhood. I have worked with one of them for about a year and only shown them 6-7 houses. That’s because so few houses have hit the market in their price range and in the neighborhoods that will work for them.

So being a realtor right now is a lot of waiting. Waiting for sellers to get their homes ready to list. Waiting for the right house for your buyer…….waiting for something interesting to happen so you can blog about it.

How to price your house in this crazy market

by John Rice

Everybody knows that it is the craziest seller’s market ever.

Everybody knows houses are selling for over the list price.

What a seller does with this information is often all wrong. Sellers think they need to price their house as high as they can to get the most out of it. That is totally wrong today.

Today the list price is really just an opener, similar to an auction. Imagine if you went to an auction and the auctioneer began with the number that would be the same as the sale price at the end of the auction? How many bidders would you have? Maybe one? Maybe none? This is effectively what a seller does when they start too high.

I showed a house a few days ago that was listed for $185k, which is pretty high for what it was. There was a line of people waiting to get in to see it. This morning I got an email from the listing agent that they had “An” offer. A few days on the market and they get one offer from all those showings. Had they started at something more reasonable like $175k, they might have ended up at $185k or more. Why? Because buyers are used to going over the asking price these days. When you start at the number they would be willing to pay, they assume they would need to go over that to get the house and are not willing to do so. To a buyer, a list price of $185k means expect to pay $190-195k or more.

The best strategy today is to price the house in line with the most recent comps and create a multiple offer situation. The only way to take advantage of the buyer frenzy is to have two or more people trying to outbid each other for your house. Pricing it high and only having one buyer would be just like going to an auction where there is only one bidder in the room. This is why the success of an auction depends on having maximum exposure for a brief period and then setting a deadline for the sale.

Sold for 25% OVER list price!!

by John Rice

I listed a manufactured home in a tiny town in northern Scott County on 15 acres last week. I have had it in my pipeline for close to a year so I have been watching the market in the area for a while. Prices have gone up quite a bit, but lately similar properties have all been listed for about $160k.

So we got pictures and put it on for $160k. I fully expected it to sell for a little more since the market value is no longer determined by recent sales. It is determined by how desperate the buyer is.

Turns out they get more desperate every day.

We got 8 offers. 10 actually but two were for a financing type that did not do manufactured homes so we can’t really count those.

One offer was $155k. I always laugh at those buyers and scratch my head. What rock have they been hiding under that they and their realtor don’t know that practically every house in multiple offers goes for at least list price.

Five of the offers had escalation clauses. That is where the buyer pretty much says they will pay so much more than any other offer up to a certain price.

I got one offer for $200k. My mind was blown. No escalation clause. Just a flat $200k.

This gave me the chance to tell the buyer’s agents with the escalation clauses that they might want to up their amount if their buyer really wanted the house.

Fortunately one buyer whose offer had some better secondary terms raised their escalation clause to be $200k. I have seen where people throw out some high number on an escalation clause to get their offer noticed but they have no intention of every going that high. I called that buyer’s agent to confirm they were legitimately willing to go that high. They were. They got the house for $200k. Next step is to convince the appraiser it is worth that.

A pleasant surprise this morning

by John Rice

Like always, I woke up, made a cup of coffee and checked out the new listings. I saw what prices got reduced, then viewed the pending and sold listings. Pretty routine. Lately it takes about 30 seconds to go through the 15-25 new listings every morning.

Today I woke up to more new listings than I have seen in a while. Many of them were under $200k!

I am really hoping this is the beginning of a new trend. There has been speculation that a lot of sellers were holding off on listing there homes until COVID got under control and they felt okay about letting people in their homes. Today might have been the first day of that.

I am starting to hear from a lot of sellers that it might be a good time to sell their homes. Of course, it has been for a long time. However, when many sellers feel like prices have gotten crazy and decide to cash out, it could mean a shift in the market a little. While I think it will remain a Seller’s Market for quite a long time, I totally welcome a more balanced market. It is good for everybody.

Or it could just be that it is the first big spring day when all the sellers begin to put their homes on the market. Sellers usually need the first couple of warm weekends to spruce up their yards before listing.

We’ll see how the next few weeks pan out. All I know is that it got me excited to think about so many new listings hitting the market!!

2 wrong ways and 1 right way to win in multiple offers

by John Rice

I recently got to experience a part of real estate that I don’t do often. I got to be a seller. In all of my life, I have only been a seller 4 times. I sold the first house we owned a long time ago. I sold two rentals in the past several years. And just this week I sold another rental property.

The first sale of this house fell apart and it came back on the market. Two of the offers I got were from people who had seen it when it was first on the market.

Wrong way #1

I got an offer from somebody who had lost in multiple offers the first time it was on the market. It was the exact same offer with just the dates changed. The buyer’s realtor seemed a little upset that I didn’t take it the first time and was a little snarky in letting me know that I should have accepted it then. Here is the thing. If I didn’t pick your offer the first time when I had other offers, why would I pick it again when I also had other offers. They should have changed some terms to make it more attractive to me. I even told the buyer’s realtor what I didn’t like about the offer.

Wrong way #2

I got a phone call from a realtor who had a couple of questions about it. This realtor asked if I did “Escalation clauses.” I wasn’t totally sure what he meant but I did tell him one of the offers I had in hand did have an escalation clause, so I guess I do them. He then told me how they were not fair to buyers and that he wouldn’t show my house to his buyer. Since I had two other offers in hand, I really didn’t care. He called me later that night and said his buyer wanted to offer $150k for the house that they hadn’t even seen yet. The list price was $130k. Both my offers were $130k and $130,500. If he had submitted an offer earlier, and done the escalation clause he was opposed to, his buyer might have gotten my house for something like $131,500 instead of $150k. He dropped the ball. Instead of riding his high horse about a perceived injustice in the market, he should have shown her my house and written an offer. But no, he lost his client the house and was willing to let her overpay for it.

Right way #1

I get a phone call from a very wise agent. She tells me how her people saw the house the first time it was on the market. They currently live on that side of town and want to stay. That tells me these buyers really want the area. She tells me that they are preapproved with a local lender. Always the best choice. I asked her who she usually recommends for a home inspector. One of the inspectors she mentions is one I personally use when I buy houses. I tell her that and the next thing I know, they have scheduled an inspection with the inspector. So, I am a seller and a realtor. What am I looking for when examining offers? The best terms I can get from a buyer that I feel will mostly likely get the deal done. This agent recognized my concerns and adjusted. In the end, her ability to think about what she could do to get the house for her buyer is what got it.

This is what you need a realtor for. Today’s market is like a traffic jam. You can have a realtor who sits there not moving and complains, a realtor who just stays stuck in the same lane, or one who figures out how to get around obstacles. I feel sorry for the buyers represented by the first two agents.