real

What I like about a contingency contract

by John Rice

Well, I don’t really like them, but there is a good side to this type of contract if you are the seller.  Guess what it is? The buyer will typically pay you more with a contingency to sell their house first than they would without it.

I see it all the time. A buyer with a house to sell gets really nervous about not knowing where they will be living once they sell their old home. Now, unless the buyer already has a contract on the house they are selling, I always counter back with a kickout clause.  That basically means that IF the seller would like to sell the house to another buyer who does not have a contingency, they give the contingency buyer a certain amount of time to remove the contingency or back out of the deal. 

Another thing I like is that IF the contingency buyer can and does remove their contingency,  you have a back up buyer. Sometimes it helps when negotiating repairs if the buyer knows there is somebody else wanting the house if the deal falls apart!

I don’t really care for this kind of contract though when I am working with a buyer…..for all the same reasons. When I have a buyer who wants to write a contingency offer, I usually try to get them to just wait until we sell their house first. Here is why I don’t think they are a good idea for the buyer who can’t possibly remove the contingency if needed: Any decent realtor is going to counter back with a kickout clause. That means that if another buyer comes along they will lose the house. If no such buyer comes along, that means that the house would still be there when the buyer’s old house eventually sells, and they could probably strike a better deal at that point.

Happy 20th Realtor Anniversary to me!

by John Rice

This month marks my 20th year as a Realtor.

I had always wanted to be in real estate. I wanted to do it all. I wanted to be a Realtor, renovate houses, be a landlord and build houses. I have done all of those other than building a house. Guess there is still time.

When I was in high school, one of my favorite things to do was skip school and drive around neighborhoods all over town. I got to where I knew most every street. One day a friend of mine and I were talking about where something was and I started naming streets and talking about the area. He said I was quite “The LEXpert.” Thank you Bo List. I had no idea that one day I would trademark that name for my brokerage.

Many other realtors back then didn’t think I would make it. Why? I did not want to waste my time doing the old school versions of making Tiktok reels, which were mailing people stuff throughout the year like UK sports schedules, calendars and junk to remind them you are a realtor. I remember saying that if my clients didn’t remember me when it came time to buy or sell, or when their friends or family asked for a recommendation, then I didn’t deserve to be remembered. Guess it worked since I rarely have a client who hasn’t used me before or hasn’t been sent by somebody who has.

Those early years were fun. Everything was an adventure and new. I sure learned a lot about myself, others, houses, mortgages, title work and about everything else a good realtor needs to know about.

I’ve been told I should write a book someday about my adventures. Maybe I will. I could go on and on about many of them here but I’ll save you the time. I’ve been stuck in an elevator, opened doors in houses and found people asleep, I’ve chased pets that have escaped, I’ve been chased by pets, my car has been keyed while showing a house, and I once found a naked guy playing guitar in a house that was supposed to be vacant. Sound like a book you might buy?

I could not have gotten here without a whole lot of people. Clearly my parents are at the top of that list. My wife put up with me being gone many evenings over the years and always having to reply to calls/texts during every vacation we have ever been on since I got my real estate license. Many friends would watch my two sons when they were young so I could go show houses when my wife was at work….the Ponders, the Boyds, The Davises, The Jones, The Leahys, Amanda Brady. I have Kris Vanzant and the whole Vanzant family to thank for giving a loud and obnoxious guy in shorts and sandals a chance to work with them and learn from their real estate wisdom. I also have my best friend Shaun Ring to thank. He is the one who said back in about 2009 that I should do this new thing called blogging. He has also said I should have a podcast, but nah. He is a realtor who got into this about the same time I did so Happy 20th Anniversary to him as well. His first sale was my first listing. It has been a great 20 years with him. And then there is you. I reckon if you are reading this, you are a friend, client or just somebody who cares enough to get this far into this post.

I will be a very old man 20 years from now. I plan on still being here though to write a little about what the next 20 years holds for me.

Things you hear when I am your realtor

by John Rice

1)  “Don’t buy a 2 bedroom house.” They are harder to sell when most every buyer and their realtor enters “3” for the minimum bedroom count on searches. A two bedroom listings is like playing Marco Polo alone. You’re shouting Marco, but there is nobody listening to reply with Polo.

2)  “If you buy a house that had been on the market for a long time and was realistically priced, you will have the same thing happen to you when you go to sell.” I find usually that means there is something odd about the house that most buyers don’t want, or else it would have sold sooner.

3)  “It is good to be in multiple offers when in a slow to balanced market.”  My experience tells me that when this happens in a slow to balanced market, you either have a fantastic house or one that is priced below market. When you go to sell you will either have a house that everybody wants or are buying it right, or maybe both!

4)  “If you have to use the word ‘Except’ when you describe your purchase, it was a bad one.”  “Except” means there is some major negative that will bite you on the bum if you need to sell in a slow market. “We got a great house…..EXCEPT for the tiny yard…..EXCEPT for backing to the loading docks of a grocery store…..EXCEPT for being on a busy road.”

5)  “Avoid a bad school district.” There are exceptions here, such as a condo complex that appeals mainly to empty nesters. However, if you have a house where the target buyer will likely have kids, it will be important to them even if it wasn’t to you. And notice what I did not say. I did not say to buy only in the best district. Why? Because most buyers with kids are okay with an average or better performing school, they just don’t want a poorly performing one.

6)  “A fixer upper isn’t always a bargain.”  I learned this one the hard way long before I got into real estate. If you buy a house for 80% of the potential market value, but must spend the 20% savings to make it just as good as any other house on the street, all you have gained is experience that will help you if you ever decide to become a realtor.

7)  “Buying the least house in the best neighborhood doesn’t always make sense.” This one runs contrary to what most people think. The reality is that the typical buyer for the nicer neighborhood is going to find your house plain or too small. I see it all the time where people will pick the better house in a lesser neighborhood over the lesser house in the better neighborhood for the same price.

So, follow these rules and you should be on a good start to not losing your shirt when you need to sell!

Why you shouldn’t care about average days on market

by John Rice

I met with a cool family a few weeks ago. They were going to interview a handful of realtors. I’m always a little freaked out at listing presentations. See, there are agents that come with power point presentations full of market wide data available to every realtor in town, and then blurt out something like “After looking at the statistics for this neighborhood, your house will sell at 5:46 P.M. next Tuesday.” That impresses some people I guess. I’m not one of those that throws out a bunch of statistics. I kind of like to look at the house, assess the positives and negatives that I think buyers will see, then do a market analysis to find what I think the house is worth. I usually do all this wearing a pair of shorts and sandals, often forgetting to give the people my business card. I ordered 5000 back in 2016 and still have about 4983.

Why don’t I worry much about DOM and other statistics? It is because I am only dealing with one house. Yep. That’s right. The only numbers I care about are the ones for your house. We never really know when your Buyer will arrive. All we can do is price it realistically, make it look as great as possible, and present it well online.  When I get such a seller, their house usually sells quickly.

So, back to the listing appointment. I’m on the tour of the house and the husband asked me the average DOM question. I told him that I didn’t even look at that because I don’t care how long it took other houses to sell in the recent past, I only care about how long it is going to take his house to sell right now. As soon as I said that, I knew I either had this listing or I had just totally blown it.

Fortunately this cool couple saw my point and went with me.

What are escrows & WHY did my mortgage go up?

by John Rice

Welcome to homeownership.

If you are new to this, there is a day coming in your future that happens to everybody who owns their home.

You will be having a perfectly ordinary day. Your life will be going swell. You’ve been excited because the value of your home is going up according to the zestimate, which you frequently check.

Then you go to the mailbox or check your email. You’ve got something from your lender. It’s called an escrow analysis and has a bunch of numbers all over the place. It is almost as confusing as your cell phone bill and all those stupid docs you signed when you bought your house. You have no idea what it all means. All you know is that it says your mortgage payment is going up starting in a couple of months.

There goes that perfectly ordinary day you were having.

Can they do this to you? Yes they can. Here is why and how it all works:

In case you didn’t know, the escrow account is for money you give the mortgage company within your monthly payment to budget for the property taxes and homeowner’s insurance. When those annual bills come due, the mortgage company pays them on your behalf.

Here are the reasons why your mortgage payment may increase due to escrow accounts:

1. The assessed value of the house increased. This is when the PVA looks at houses that have sold around your house and thinks the value of your house has gone up. It’s a good news/bad news thing when this happens. It means your net-worth just went up but also means you’ve gotta pay more in taxes when they increase the assessed value. You will get a letter from the PVA when/if this happens. They have the right to do so annually and there is an appeal process.

2. The tax rate increased. The amount of taxes you pay is a simple math problem. It is your assessed value multiplied by the tax rate. If your assessed value did not change but the tax rate went up…..well, you’re paying more in taxes.

3. Your homeowners insurance went up. (This is happening all over due to the crazy storms we have had.)

4. There was a shortage of funds in the escrow accounts to pay the taxes and homeowner’s insurance. 

The mortgage company collects this money over the course of the year so they have enough in the escrow accounts to pay the property taxes and homeowners insurance on your behalf. If the projected expenses for next year exceed what you are currently paying into those accounts, they can raise the amount you pay into escrow every month to make sure they have enough to pay those bills when they come due. Should you have one year when there is an excess amount left over, the amount you pay for escrow accounts could go down, making your mortgage payment less.

5. And the last reason is sometimes it can be a combination of any of the above reasons.

I sure hope this helps make sense of something that is not at all fun to deal with!