sellers market

Common mistakes sellers make

by John Rice

Besides thinking the people on HGTV really know a lot about real estate, below are the most common ways sellers shoot themselves in the foot.  Granted, we are in a hot market and buyers are easier to please these days, but there are 228 houses in Lexington in the $100-500k range that have been on the market for more than 60 days…..not EVERY house in town is selling in multiple offers the first day on the market.

Here goes:

1. When sellers don’t finish moving out. If you are no longer living in the house, get ALL of your stuff out. You know you are going to have to do it anyway, right? It will make your house look better. Better looking houses sell quicker. Time is money.

2. When you don’t paint because you think you are somehow doing the buyer a favor by leaving it up to them to paint. I hear this a lot: “I don’t know what color the buyer will like and most buyers always paint after they move in anyway.” I can tell you that bad paint keeps a buyer from making an offer. If it doesn’t look good, they don’t want it. Fresh neutral paint is the cheapest thing you can do you make your house easy for a buyer to say YES to.

3. Leaving a lot of room for negotiating. An over inflated price usually drives buyers away. I see all the time where a seller will list for far more than the house is worth and eventually sell it for a little less than it is worth. The best model is to price it right from the start. If a house has been on the market for a long time, buyers assume there is no risk of losing it so they make a low offer just to see what you will take.

4.  Not doing any obvious repairs.  As a seller, your goal is to make it easy for a buyer to say yes to your house.  You want them to be excited and fall in love.  If a buyer walks in and immediately sees work that needs done, they begin to subtract whatever they think it would cost to change it, and they usually overestimate the cost.  You want your buyer to be walking around your house falling in love with it rather than subtracting repair costs off your list price.

I hope this helps you when it is time to sell.  The worst thing that could happen if you did all of this is that you sell your house for top dollar in multiple offers the first day on the market.

3 ways to win in multiple offers

by John Rice

Almost all my listings this year have sold in multiple offers.  That was something to brag about several years ago, but now it is pretty much the norm if the house is priced right from the beginning.

One listing had 7 offers the first day on the market.  Everybody wants the same house these days.

Since only one buyer can get the house, that means that there are others buyers who lost out.  It’s a tough time to be a buyer.

Since my work is almost always split 50-50 between sellers and buyers, want to know how to get the house you want and send all those other buyers off to fight over another one?

  1.  To begin with, go in strong.  There is a difference between overpaying for a house and offering 100% of what it is worth.  An agent should look at the comparable sales and know the value. You are going to pay top dollar for any decent property right now, so write an offer that the seller is likely to just accept.  The more time you waste on negotiating gives other buyers a chance to take the house from you.  Your battle is with the other buyers, not the sellers.  On my listing with 7 offers, we didn’t even consider any of them that had a contingency to sell or those that came in less than full price.  When you have so many good choices, a buyer can often be rejected over something minor.  When I have the buyer, I like to ask the listing agent how they want to receive the offer.  Most of us use an electronic signature program, but some agents don’t.  I mainly ask to show that I am going to be easy to work with.  Keep in mind it is like speed dating for the listing agent-they only have so much time to deal with each offer and the buyer’s agent.  I want to make it as easy as possible for them to pick my client.
  2. Don’t do anything wonky.  If the seller didn’t offer to leave their curtains, then don’t ask for them.  Don’t ask for early possession.  Don’t ask for more time than is normal for the inspections to take place.  This market is not one where you test the seller….unless you want to remain homeless.  A good, clean, simple offer is what all listing agents are wanting.
  3. Think like a seller.  Most sellers these days expect to get around full price for their houses, some even get a little more.  Believe it or not, few sellers actually care about the absolute highest offer.  Usually, the highest offers are really close, so what becomes important are the secondary terms.  The seller is concerned about your financing, so have a preapproval letter from a reputable lender.  They care about how the inspection goes, so schedule it as soon as possible.  The less time they have to worry about that, the better you look.  They care about the closing date, so be as flexible as possible.  I always ask the listing agent when the seller would like to close.  A lot of the time the seller has another closing to coordinate.

You know, I’ve been doing this for 11 years.  It is still awkward for me to write this advice.  It wasn’t too many years ago I was telling sellers how to attract buyers in a tough buyer’s market.  I was telling buyers how to bring a seller to their knees and beg you to buy their house for probably less than they paid for it.  Times change though, and this is where we are now.  And this is what you’ve got to do to get a house today.

 

When do you know you’ve found the right house?

by John Rice

“We pretty much know as soon as we walk in.”

I was covering for an agent that was on vacation this week.  This is what one of her buyers said to me when I commented that they didn’t spend much time in the first house I showed them.  I often hear this from my own buyers.

You know what this means?

A lot of people base their decision on how they feel.

I’ve always said you could find a house with all of the items on a buyer’s must have list, but they still might not buy it.

This is why that first impression when a buyer walks through the door is so important.  If your house isn’t perfect, you are better to have the the rooms a buyer sees in the first few minutes looking better than the last few rooms they see. If a buyer likes what they see at the beginning, they are more forgiving of little things they don’t like later.  It doesn’t work in reverse.

I recently sold a house in one of my favorite neighborhoods.  It sold for about $3-4k more than it should have.  Sure, the market is hot, and we did get multiple offers…..but I think we got TOP TOP dollar for it because the seller’s decor was so attractive.   They had the right colors, the right furniture and everything else just right.  The house felt good.

And I bet the two buyers who made offers the first day on the market both  knew they wanted it as soon as they walked in.

 

Where is the market RIGHT NOW

by John Rice

Ok.  It has happened.  I think we have hit a ceiling with real estate prices in and around Lexington.

The market has slowed down a bit in the past few weeks.  You can get a photographer or home inspector quicker than you can a neurosurgeon lately.  Could be because 15% of the whole town is on vacation on any given week this summer.  Could be more than a normal seasonal slowdown?

Slowing down isn’t a bad thing, so don’t freak out.  This is kind of like when you are doing 100 MPH and slow down to 80.

I am starting to see more price reductions than I have in the past 6-8 months too.  I don’t think that values for those houses have declined.  I think that sellers were pushing prices higher and higher and buyers are pushing back a little now.  Mr. Overly-Optimistic Seller, you won’t be getting above market value for your house.

It all reminds me of early 2013.  That is when the market made a sudden shift from bad to good.  For about 6 months there it seemed like houses were selling as soon as they hit the market and prices were going up for the first time in years.  The market changed so fast it reminded me of being a kid on a swing and somebody giving you a swift push that causes you to hold on tight as your neck snaps backwards.

The rest of 2013, all of 2014 and 2015 were good markets, but less frenzied.  Then early 2016 gets crazy again.  It was the first time in my career of over 11 years that I waited in line to show houses.  If the frenzy is over, that is one thing I won’t miss!

Good deals in a seller’s market? (Depends on the seller)

by John Rice

The market isn’t hot enough for buyers to accept two things:

  1.  A nasty house.
  2. An over ambitious asking price.

If your house is nasty, no buyer is going to be able to imagine themselves in it.  I’m talking if it is dirty, messy, desperately needs paint or stinks.   Trust me, buyers just want to exit a house like this.  Even if you slashed the price in half, I bet most of the buyers would still say no.

I recently sold a nasty house.  It had been on the market for quite some time.  It was in a desirable neighborhood and actually priced right.  It has more updates than most in this nice neighborhood.  Problem?  It smells like dogs and has one of the nastiest bathrooms I have ever seen in a house for sale.  It was hard to get excited about the expensive tile in the remodeled bathroom when there was urine and hair all over the toilet.  Sorry to be so graphic…..I have a picture but decided not to include it, so I am holding back a little for those with weak stomachs.

My buyer is one of the rare people who can see past that and is getting a super nice house for a really fair price.  Added bonus:  It was one of the few times recently that I haven’t been in multiple offers with a buyer.  The house was so nasty that my client called me after the home inspection asking if I thought the seller was going to clean it when they moved out.  He just met with a home inspector and heard everything wrong with the house and the thing that was on his mind the most was how dirty it was.

Moving on, the next item is the overly ambitious list price.  A client bought a house for $400k that had been listed originally at $445k.  Nice house, just not a $445k house.  Maybe $410-415k based on the comps.  LOL, the way the market is going, it might be worth that now!  Anyway, it was reduced, reduced and reduced again.  By the time 170+ days had passed, it wasn’t on anybody’s radar.  Nobody cared?  Buyers today are focused on new listings.  If a house doesn’t catch their attention on Day 1, few will go back and reconsider a house.  They’d rather wait for tomorrow’s new listings.

My client actually passed on this house two times, then came back to it.  They were worried because it had not sold.  In today’s market, 6 months is an eternity of buyer’s saying “No” to a house.  Ironically, a house two doors down just sold for $405k the first day on the market.  It was 1200 square feet smaller and had a marginally more updated master bathroom.

While it is one of the hottest seller’s market ever, not all houses are selling immediately in multiple offers.  I always encourage buyers to seek out these good houses that are being held back by the sellers.  You can avoid multiple offers and get a good deal, even in a seller’s market.  My buyer with the nasty house might pay $400 to have it professionally cleaned but saved much more than that.  My buyer who made a reasonable offer on an overpriced listing didn’t have to immediately make a decision to buy it since there were no other buyer’s around.  It felt like a buyer’s market to them.