I sold a house this week that I wanted to tell you about.
The buyer is a first time buyer who was sent to me from two separate past clients. She works with a client who has become a friend of mine…..Thanks David! Her mother works with another friend who has used me before too……Thanks Doug! I don’t have this happen often when somebody is asking for realtor references and I get mentioned twice. It always makes me feel twice as good that somebody would take their time to connect two people they care about. Close to 100% of my work is getting referred to new people or people coming back to use me again. That is why I don’t ask for reviews and don’t advertise. I just don’t need to do either to attract new work!
The buyer was going to be in the super tight $150ish market. There is almost nothing ever for sale and when something hits the market, you are competing with cash buying investors who sometimes don’t even look at the house before making an offer. This was going to be a tough one.
Right after I started working with this buyer, I get a text from another client who was wanting to sell their house.
The sellers are past clients who I have thoroughly enjoyed working with several times. They bought a house to rent many years ago and it was time to part with it. The sellers did a lot of work to it themselves and it looked really good. The price point was going to be around $150k, which is very hard to find in the current market.
I just knew this was the house for my buyer. I mean, I had recommended it to the sellers when they bought it so I could certainly recommend it again to my buyer!
I told the sellers what I thought it was worth. I told them that I had somebody that was interested in it. I also told them that they could put the house on the market and possibly get a little more than the price range I thought it would sell within since you never know what a desperate buyer will do in this market. They liked the idea of me managing the entire transaction and keeping it simple, so I showed it to my buyer. Of course she wanted it. It was a gorgeous home in one of the most desirable neighborhoods in her price range.
The buyer is happy she didn’t have to frantically make an immediate decision and that she got a great house. The sellers are happy because they know I am managing the whole transaction and made it so easy for them. A win for everybody.
I seem to be having this happen several times a year now. A seller will tell me they are wanting to sell soon and then shortly afterwards I have a buyer tell me what they want and they describe exactly the house my seller has. Happens the other way too. I will have a buyer tell me what they want and then I will have somebody tell me they are ready to sell the exact house the buyer described. It’s sort of cool when this happens. It makes me feel like I am a small part of a bigger story.
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.
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.
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.
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.