The #1 thing to do when picking a house

Don’t settle. There, I said it.

As the market becomes somewhat more balanced, buyers now have choices. A year ago, the choice was to buy any house available or not buy a house at all. Buyers said things like “I don’t really love it but I don’t want to loose it. How much over asking price should we go to get it?” Today’s buyer has the choice between several houses in their price range.

There was a lot of settling going on during the past year or two. I get it. You wanted to move and on Friday there were 15 new listings to be greeted by 75 buyers who were just like you.

During this time, I would always tell my clients what I thought of each house. Most of the time I would say something like “In a softer market, this house will be hard to sell. I would wait for a better one if I were you.” Most of them did.

Here are some big things to not settle on when picking a house:

  1. The location. As more houses come on the market, the houses in the preferred neighborhoods will not only sell faster, they will always hold their value better. It’s worth waiting for a preferred neighborhood, part of town, school district, etc because one day YOU will be the seller and you want to make that as profitable and easy on yourself as you can.
  2. The lot. It is easier to sell a terrible house on an amazing lot than it is to sell an amazing house on a terrible lot…..in a balanced market. In a true Buyer’s Market this is even a bigger deal. That amazing house on a terrible lot will one day be outdated and be a subpar house on a subpar lot. A good lot never goes out of style and never needs updating.
  3. Floor plan. If there is something odd about a house, chances are any buyer is going to notice it too. Don’t buy the “If Only” house. That is what I call a house where you really like it but there are one or more major flaws and you walk out the door saying “If only that 3rd bedroom was larger” or “If only that kitchen wasn’t so tiny.”

How every Buyer picks their house

I often get a Buyer who gives me a very long detailed list of all the features they want in a house. It’s usually things like how many bedrooms, bathrooms, what type of floor plan, what type of kitchen cabinets or flooring they must have.

Then they buy something totally different from what they described?

Why is that?

It is because people pick the home they ultimately purchase based on how they feel while inside a house. It’s the vibe the house gives them. It is an emotional decision.

When I work with a Buyer, I try to notice how they respond to a house. Did they tell me it was too dark inside? Did they think the yard was too bare and needed more trees? Was the backyard not private enough? Did they not like the floor plan and why? Or did they even care about any of this?

These are the type of things people use when making their decision. If a Buyer feels groovy inside the house, they can overlook items such as not having a pantry, not having the flooring they prefer, or if it is missing one of those specific features they said they could not live without. In houses they feel good about, they say things like “We could always change the counter tops later.”

All of which is why I try to create that vibe when I list a house. Buyers also respond to colors, decor, cleanliness and clutter. You can have the most amazing house but if you have wild paint choices, it is going to be harder to sell. Why is that? Truth be told, few of us have vision. We ALL think we do but trust me, there have been so many times where I have told a Buyer that all a house needs is a fresh coat of their choice of paint and they don’t see it. Or I’ll say imagine this house with the flooring you want and they can’t see it. Or maybe I’ll say “Those cabinets could be painted and that mauve counter top could easily be replaced.” And even worse is a cluttered or dirty house. Nobody can imagine what it would look like in better shape.

So the lesson here for Sellers is that you need to make your house feel a certain way for a Buyer to fall in love with it. Another important thing to keep in mind is that people who totally fall in love with your house will pay the most since it is an emotional response and not a logical one.

How can a Seller do this?

The most crucial and obvious ones are to declutter and clean. Not to your standards but to the Buyer’s standards. Then think about how your house looks. Think about how Buyers will tour your house. Ever been in a Builder’s model home? Next time you go in one, notice that there is just enough furniture to make the space feel good. You want your furnishings to compliment the space, not fill it. You will notice that the furniture often has narrow legs and you can see more of the floor. Seeing more of the floor always makes a space feel larger. There is thought about how people will walk around a space. You don’t want to block parts of the room off with furniture nor do you want to make pathways seem narrow. Those things create the vibe that the house is small. Buyers get that same vibe from this as you do when you’re stuck in a traffic jam.

Something else you do NOT want to do is have Buyers leaving the showing with a To-Do list of repairs. If you have unfinished projects, finish them. If you have a stain on your ceiling from a repaired leak, paint it. Buyers will respond to those things logically instead of emotionally. They begin to think about what it would cost to repair it, and they usually estimate high. You want your buyer to leave your house thinking only about how wonderful their lives will be in your house and how they need to rush home and sign an offer.

Having a hard time selling your house?

Now that we have returned to a much more normal market after a brief period of utter craziness, it’s time for a refresher course on what to do if your house didn’t immediately sell.

Real estate has always been about price, location and condition. All three of these must be in balance for a house to sell. Since you can’t change the location of a house, all you can control is the condition and price.

Here is what over 17 years of experience in good, bad, terrible, average, great and crazy markets have taught me:

When you get lots of showing but no offers

This usually means that buyers think the price is realistic based on what they see online so they schedule a showing and come check out your house. If you don’t get any offers, that means their expectation did not match the reality of the house. Sometimes this can be caused by having pictures that make the house appear to be in better condition than it is, bad curb appeal of the surrounding properties, or some negative thing omitted from the listing that buyers won’t discover until they get there. 99% of the time it is just because the house didn’t “Wow” the buyers in person as much as it did online.

An old school rule of thumb is that when you have had 10 showings and no offers, it is time to reduce the price. Sometimes if the feedback from showings is all the same, you can keep your old price and improve whatever negative thing buyers mentioned. I usually prefer a price reduction because often you can spend money correcting that one big negative only to have subsequent buyers find the next big negative. There is nothing more frustrating than spending money solving a problem only to later discover you’ve got another one to solve.

When you are not getting any showings at all

Usually when this happens it is because buyers know the price is way too high and don’t even bother to come see the house. Occasionally buyers can overlook your house if the presentation of the listing was terrible but I don’t see that happen often. Sometimes it can be because you’ve got too much junk all over the house and the pictures, while good, just show a cluttered mess. The thing to do here is reduce the price to be competitive with similar houses buyers may also be considering. Something that is hard for sellers to understand is that buyers are looking at more houses than just their home. To a seller, their home is all they are thinking about. To a buyer, it is just one of several homes they can buy. Buyers have options now. You’ve got to make your house become their first choice if you want to sell.

Over the past 17 years, I have seen sellers refuse to reduce their price or do anything to make their home more appealing to buyers. They usually think the issue is with their realtor…..if only the realtor would do more open houses, if only the realtor would advertise the house, if only the realtor had glossy brochures inside the house for buyers to take home. These sellers usually let the listing expire then pick a new realtor. It is at this time that the new realtor suggest dropping the price. It is also at this time that the seller cooperates. And guess what, with a lower price, the house sells.

Selling a house is not rocket science. All you are trying to do is make your house a buyer’s first choice. Back in 2009-2011 when the market was the worst ever, I would sell houses the first day on the market and have multiple offers. Many people thought I had a magic wand back then. I put the same effort in all my listings. It wasn’t me. It was my sellers. They were realistic and took my advice.

Hey First Time Buyers-Here is how to pick a house

It wasn’t all that long ago that the typical buyer’s choice was between the one house on the market in their price range and no house at all.

We are now back to a much more normal market. Today’s buyer has the luxury of picking the best house among all that are on the market.

This post is mainly aimed at first time buyers, but holds true for any buyer really……its time for a refresher course on how to pick the right house and why!

To most of us, our home is our biggest asset. It’s how we build wealth. It’s where we live. It’s an expression of ourselves.

It can also be a noose around our necks if we need to sell in a tough market.

I got my real estate license in 2005. Many people who had used another realtor to buy their home would call me to sell it for them in the middle of the worst market in history. Back then I wondered why some of them chose the house they did. After seeing the frenzy of having no inventory for the past couple of years, I now see that their choice was the loser home they purchased or no home at all.

Back quickly to why the first time buyer needs to get it right. Most first time buyers are younger. Younger people tend to meet somebody and marry, start a family, climb the corporate ladder, accept a job somewhere else, etc. This means first time buyers typically don’t stay in their homes as long as they will for their subsequent homes. Also, the equity you have when you sell your first home will be used to buy your next home. You want to pick a house that will always be another buyer’s top choice because it will be easy to sell and will net you the most equity to apply towards your next home.

So let’s look at The LEXpert’s Guide to Picking a Home:

  1. NEVER compromise the lot. Things like a very steep driveway, the backyard with the Eiffel Tower looking electrical thing, a backyard that sharply slopes up or down hill, a house that backs to stuff like apartments/commercial/busy roads are big negatives. Try to find a fairly flat lot whose size seems normal or better than average for the neighborhood.
  2. NEVER compromise location. Within every price range, there are preferred choices for neighborhoods. Most of the time the preferences are for things like having shopping/dining/retail/parks close by, school district ratings, crime ratings. Try to pick one of the more desirable neighborhoods.
  3. NEVER buy the house that doesn’t somewhat conform to the other houses in the neighborhood. Buyer’s are usually looking at other houses in your neighborhood and know what is typical. If your house is lacking in something that is considered typical for your neighborhood, it can keep it from selling.

I could go on and on for days but I have found that these top 3 items will eliminate about half the houses on the market.

Why does it matter? Shouldn’t I just pick the house I like best? Because when a buyer has choices, they get pretty picky. If two identical houses are for sale for the same price and one has a steep driveway, which one are you picking? If two identical house are for sale for the same price and one backs up to the interstate, which one are you picking?

I know it is tough to do when your goal is finding a place you love, but think about that day when you need to sell it.

19 0ffers and $40k over list-Fun getting the most for my seller

It’s been an exciting past few days.

This story begins one rainy Friday when I was on my way to a Radwood Car Show in Cleveland with my son. I got a text from a repeat client who I have become friends with. She tells me that her mother is going in assisted living and she wants me to sell her mother’s house.

After a few months, the house was ready to list. Unfortunately the market had really started to cool off since we first discussed the sale.

Full disclosure here…..I don’t think any realtor right now really knows how to price a house unless there are good comparable sales from the past 8 weeks. We usually look back 6 months for comparable sales. Six months ago the market was on fire. That market doesn’t exist today. Gone. Interest rates have nearly doubled. We are all, if we were to be honest with ourselves and the public, shooting from the hip on pricing right now. The market has changed so fast that we lack good data on pricing from this “New” market.

Since the absolute worst thing you can do in any market is to overprice a house, I suggested we put it on at a number I was 100% sure we could get and also expect multiple offers. That number was $185k. I was really hoping we might get multiple offers and I could drive the price up to maybe $200k but I didn’t tell this to my friend.

One investor heard about the upcoming listing and contacted me. I let him and his realtor show it the day before it hit the market. I told them that we wanted to expose the house to the market before deciding. They of course wrote a full price offer and wanted an immediate response. I told my seller that I was sure we could duplicate that offer from anybody since it was nothing special. She agreed.

I put the listing on the market very late Friday night. Immediately it started getting showing requests. By 9:AM the next morning, more than a dozen showings were scheduled. I spent all day Saturday, Sunday and Monday texting and talking to the 72 agents who had scheduled showings on this house. It was overwhelming.

Once the offers started coming it, I went to work on pushing the price up. With every new offer we got, I told the realtor if there was another offer with better terms for price, inspection type, financing type and closing date. The goal is to create the ideal terms for your seller by getting one buyer to change something on their offer so you can use that for leverage to get another buyer to change something.

We ended up with 19 offers. We had two cash ones that were very close (especially after I nudged each one of them to go higher to be competitive.) I think one of them figured out I was using their offer to push the other one up higher, and then come back to push them up again. This agent send me a Confidentiality Agreement. That is where one of the terms of their offer is that you can’t disclose any of their offer terms to anybody else. I won’t violate my integrity. In addition to experience, all I have to offer people is trust. I felt like both would go a little higher. What to do? How could I squeeze a little more money out of them for my elderly seller who needed it to live on? I decided to tell each of those two buyers they had the best offers and to send me their highest and best offer. They had one shot. The seller would pick the best one. This move ended up getting about another $4k for the seller.

In the end, the house sold for $225,750. Just over $40k more than the list price.