sellers market

5 things buyers & sellers should know

by John Rice

As we kick off the 2018 real estate season, here are a few things buyers and sellers need to know:

Buyers:

  1.  Make your best offer the only offer you write.  Everybody wants a deal, but the odds of you getting a bargain are slim.  You want to give your best offer because the market moves fast.  Plan on negotiating with the seller and odds are somebody else will make an offer while you and the seller are going back and forth.  This is especially true if it is a new listing.
  2. Get preapproved.  You want the seller to want to deal with you.  In a slower market, they would have to deal with you even if they didn’t feel like it.  In a fast market, they know there is always another buyer out there.  Don’t make them wonder if you can buy their house.
  3. Don’t write a letter telling the seller about yourself.  Most of the time when I have gotten those, we have multiple offers and the seller never gets around to reading it until after they have sold the house.  And do you know what most of them say to me after reading it?  “If they loved the house that much, they should have made a better offer.”  You want your offer to stand out?  Let the seller pick the closing date if you can, or do the type of inspection where you can inspect it but won’t ask for any repairs.  The seller will find that much more exciting that seeing a picture of you with your dog.
  4. Don’t ask for anything that wasn’t included with the house.  Sellers think it is strange that you went shopping for their personal items.  Also, if you write stuff that wasn’t offered in the listing that the seller doesn’t want give up, you force the seller to counter your offer without those items.  Meanwhile that gives time for another buyer to make an offer.  You might lose the house because you were trying to get the sellers coffee table or patio furniture.
  5. Don’t try to rush the seller.  If it is a new listing, odds are they are getting multiple offers.  The saying is the squeaky wheel gets the oil, but in real estate that just means you are annoying the seller.  Most agents know that if you are annoying now, you will likely be annoying throughout the entire process.  Think of it like a job interview.  The seller has a big decision to make and is going to decide based on how you present yourself through the offer and your actions.

 

Sellers:

  1.  Usually your first offer is your best offer.  When I was a new agent, I was told this and really didn’t believe it, but 13 years experience in all types of markets tells me it is true.  I might alter the saying to say the first “Reasonable” offer you get is usually your best.  Occasionally I do see these crazy buyers who must be watching reruns of real estate shows from 2007 when sellers were desperate to sell…..but they aren’t living in reality.
  2. Don’t feel rushed.  Buyer’s agents like to do things like give you 3 hours to respond to their offer.  They do this hoping to get the house before anybody else does.  The truth is in this time of having more buyers than houses, that buyer isn’t going to walk away.  Only a few times in 13 years have I seen where a buyer has two houses they want and needs a fast response because they want to buy their 2nd choice house if it doesn’t work out with you.  They usually will wait though since your house was their 1st pick.
  3. Think about what is most important to you.  Everybody wants the most money, but sometimes a slightly lower offer that closes sooner, or lets you stay in the house for a few days after the closing, is appealing.  Also, think about what you will accept before you get an offer.  Most sellers don’t think about this until they get an offer and they have a lot of stress trying to process it.
  4. Don’t over price your house.  Your house will eventually sell for what it was worth.  Starting out with a realistic number accomplishes two things.  One, it makes the process go faster.  That means less time cleaning up your house and having to leave for showings.  Two, you create a bit of a frenzy when it is a new listing.  Buyers flock to new listings.  They are afraid of losing it and will likely make their strongest offer.  Once you get past that new listing period, buyers know there isn’t a risk of another offer and will try to negotiate more.
  5. That surround sound system you are so proud of?  Leave it off during showings.   It isn’t as important to buyers as it is to you.  Don’t stink up every room with Glade Plug-ins.  Buyers think you are covering an odor.  People with allergies just want to leave your house.  The average person can only hold their breath for like 40 seconds, and that is not enough time to see your house.  Keep your house the cleanest it has ever been.  Seeing those dried up specks of toothpaste in the sink is sort of like looking at used cars and seeing coffee stains around the cup holders or a french fry under the seat.

 

Happy buying and selling!

Why one house sells fast and another doesn’t

by John Rice

I sold two houses yesterday.  Been a while since that happened.  Always fun.

One was a new listing of mine and the other was a house for one of my buyers.

Two totally different situations.

I put my listing on at a competitive price.  Not so high that it would scare off buyers, but just a bit over the recent sales with the hope that somebody would be afraid of losing the house and pay full price.

Four showings the first day and three offers.  The first offer was a little under the list price.  The next offer was the list price.  The next one wasn’t the list price.  The people who made the first one raised their offer and got it….but they came close to losing it.

The first people should have thrown out their highest and best offer right off the bat.  It would have saved them from potentially losing it.  For me personally, it would have meant eating a warm dinner.  It was taco night and I love tacos.

When a new listing is priced right in this market, you should always make your best offer.  You want to send an offer that the seller just wants to sign.  Going back and forth takes time, and time is what other buyers need to prepare their own offer.

The other house I sold had been on the market for quite some time.  Nothing was wrong with it at all.  The only problem was the price.  The seller started nearly $30k over what the sale price will be.  They reduced it slowly all winter.  My buyers almost didn’t look at it just because of the price. We made an offer.  It was countered.  We countered.  They countered again.  We went out and looked at more houses.  They came back at a lower price and it all worked out.

I really think that if this house had been listed at a realistic price, it would have sold quickly and probably for more money.

Two houses in Lexington.  Two totally different outcomes.  Price makes all the difference, even in a hot market.

The happiest 2 days of homeownership

by John Rice

Two of the best days of owning a house are these:

1.  The day I call you to tell you that the seller has accepted your offer.

2.  The day I call you to tell you that we just got a really good offer.

When you hire me to be your realtor, I am thinking about both days.  You may not be, and that is okay.  That is what I am here to do for you.

We are currently in a market where everything sells.  You can have two identical houses across the street from each other.  Both exactly the same.  One backs to green space.  The other backs to the loading dock of a strip mall.  Both sell fast and for the same price.  Why?  Because there are three buyers for those two properties.  It was like this too back in the early 2000s.

But what do you think will happen when the market slows down.  Maybe there is only one buyer and both of those identical houses are for sale again?

The seller backing to the green space sells their house for top dollar in record time because even in a bad market, the best houses still sell.

The seller backing to the loading dock watches the SOLD sign go up across the street.  Then they watch the new neighbors move in.  Their house is still on the market, even after reducing the price several times.  They really need to sell because one of them starts their new out of state job next month and they can’t afford two mortgages.   Then they wake up listening to an idling diesel truck at that loading dock.  They remember how lucky they felt to get their house.  How they beat out that other buyer in multiple offers by bidding as much as the green space house cost.

It is only now they realize that they made a bad decision all those years ago.  That is how real estate works.  You never know whether you made a mistake or not until you go to sell your house.

When you look at houses with me, I will always point out the negatives so you know what you are getting into.  I’ve been doing this for a long time.  I know what things buyers like and don’t like.  I don’t want anything to be a surprise to you when you go to sell your home.  What you do with that info is totally up to you, but I will always let you know because one day, you will be the seller and not the buyer.

 

Selling “By Owner”

by John Rice

It’s a hot market.  Many people want to go the For Sale by Owner route.  I have no hard feelings towards them.  It is their house after all!  They can do with it whatever they want.  My only real problem with this whole For Sale By Owner process is that the buyers who look at these properties and the sellers BOTH want to save the commission that would be paid to a Realtor.

Okay, the seller is thinking, hey, I can save as much as 6% if I do this myself  The buyer is thinking, hey, I can make a low offer on this FSBO house since they don’t have to pay a Realtor!  That is where the fun begins.  Both parties are viewing the savings as THEIRS!!!!!!!

And let me stick this little bit of trivia in now.  Usually the seller thinks their house is worth more than it is.  Often, they interview several agents who all tell them their house is worth about the same amount.  The seller of course disagrees and puts their house on the market for way more money because you know, they think their house has some magical aura that adds value.  I often call FSBO sellers for my buyers.  Their interest usually ends the moment I tell them the seller’s list price.

Usually the buyer writes an offer than insults the seller.  The seller then says something like, “But I need to get this much out of my house so I can buy my next house on the terms that I want!”  The Buyer then tries to justify their offer by saying something like, “Well, we just can’t pay any more for your house since we are going to have to repaint your baby’s room and replace that ugly carpet in your family room.”  By this time both parties have gotten away from the fact that the goal is to change who owns the house, not to win a battle.  While I did exaggerate things a bit, this type of thing is what keeps agents in the business.  I think this is more the norm than a pleasant FSBO experience.

I have always said that the day people can negotiate without taking things personally, when they can see how the other party thinks, when sellers realize that their house may not be the best one in town, and when buyers realize they don’t have to put the seller in a chokehold, that it will be the end of the road for realtors.   I use to worry about this, but now I know that day will never come.

The hardest houses to sell

by John Rice

I’ve been at this for a long time.  I’ve sold a lot of houses.  In a good market.  In a bad market.  In Lexington.  Outside of Lexington.  In neighborhoods.  In the country.

Want to know the houses that are the absolute hardest to sell?

The ones that are partially updated.

Why?

You would think that a buyer would view a house that has some parts really nice to be a big bonus.  They don’t.  The nice part of the house just makes the rest of the house look worse to a buyer.  Too much contrast between the nice and the average bits of the house.

Who comes to see these houses?

  1.  The buyer who sees the nice new stuff in the pictures.  They get excited but almost always say that the rest of the house needs too much work.
  2. The buyer who see the part of the house that needs updated.  They get excited because they want to renovate the rest of the house, but not give any credit for the work that has been done……meaning they want it for free.
  3.  All the other buyers who come mainly because it meets some or all of their search criteria.  They don’t buy it because they say it needs too much work.

What you have to do with a house like this is try to make the non-updated bits look as good as possible.  You want to minimize that contrast.  You don’t want the buyer to walk in one room and be unhappy, then walk in the next and fall in love, then walk in the next and be unhappy.  The goal is to make them at least feel neutral, then love, then neutral as they walk through the house.  Less contrast is good.

You also have to really emphasis the other features of the house, hoping that the right buyer will see all the other pluses and feel like they can live with the house like it is or take on the updating.  If the house is the best bargain in the neighborhood, walking distance to trendy places, has a park nearby, a desirable school district, is the most square footage for the money…..whatever the house excels at, and all houses have something unique, that is what you want to emphasize.  Anybody looking for one or more of those unique features is usually the one who buys the house.  Why?  Because they don’t have as many choices