While it seems to be a fad to track inventory, reality is that most times in January, and this year is no exception, there are plenty of buyers. They simply do not want the homes that are currently listed for sale for a myriad of reasons, nor should they.
Last Thursday a group of us went to Broker’s Open Houses. We did not see any homes on the tour that we would recommend to our clients. We did pick the ones we thought would sell first, even though we would not likely suggest that our clients buy them.
Here’s how it played out:
House #1 – We all walked in, it took about 3 minutes to determine that it was not priced right and was not good at any price for any of our clients. There was a busy street close enough to be visible from the home. The house was very “cookie cutter” and not “commanding” the asking price by style alone, before considering the busy road negative. Tacking on the busy road issue, we went upstairs. The master suite was on the busy road side. Had the master suite been on the quiet side and the odd bedroom on the busy road side, the value would have been different.
A few agents talked about the quality of the windows, the gorgeous granite counter tops, when I started clapping my hands and saying: Out of Here…NEXT! It’s $200,000 over on the asking price and there are better houses to be had at this price. Not necessarily for sale today, but clearly within any buyers future timeframe.
It’s a NO! Let’s GO! (the open house agent was not present nor were any agents from other offices, so we could speak freely like this at the first one, since we were early and the Open House hadn’t started yet.)
House #2 – Great house; how much is it? Too much. But a great house if it were priced $75,000 less. NEXT! Agent asked about the old windows. I said irrelevant. Lots of updates needed, so price it at good condition in need of updating. No need to calculate each why and how much, let’s go, it will be a long time before this seller gets real, and you can’t make an offer until the first number is a 6 and not a 7, you will still be $35,000 over value even with the best of negotiation skills. Start price has to be lower, wait for the price reduction.
House #3 – We got out of the cars and everyone proceeded to the front door of the house. I stayed standing in the middle of the street. I told everyone to come back and stand with me and tell me what they observed. Big dog barking incessantly. I said if the dog is in the yard of “the subject house”, no biggeee as he’s moving. No, it was a vacant house. So Big Dog Barking is next door. Everyone made a note of it in case they had a buyer client at a time when the dog was sleeping or not home. We then proceeded into the house.
I stayed at the front window. What is THAT?! Elementary School and Middle school next to it. Every Mom and Dad dropping off kids would be line up out front every day. Car doors slamming. Shouts of “You forgot your lunch!” Envision what isn’t visible. NEXT!
House #4 – Gorgeous remodel. Great price. Open House agent present. Directly behind the Open House agent I could see out the window. The next door neighbor’s house, or part of the accessory of it, was smack up against the fence of this house. The Open House agent should not have planted himself at the home’s worst negative. I couldn’t even concentrate on what he was saying because of the view behind him. I said that’s tough; he said yeah. NEXT!
WHTF house (investor bought “Wrong House to Flip”). Now we can just say WHTF on any similar houses. Saves on time. Walk in say Great Remodel BUT “WHTF”. Still, all in all, I dubbed it my pick for “Best House of Day” as it was priced well and looked good and the cheapest good home in all of Bellevue at the moment.
I picked it as the house that would sell first without a price reduction needed. These “picks” go into an envelope, and we check back on them later to see how well we evaluated the properties. The agent who picks the most right gets a prize, they get to become a really good agent and stay that way.
There were two other houses, similar to house #2. Good houses, but priced out of range. One only needed a $10,000 reduction to get in range, so that was my second pick and some other agents’ first pick.
Even if you have been in the business for over 17 years, like me, you never stop doing Broker’s Opens to stay on top of the market and keep sharpening “the tool”.
Buyers can do this with Sunday Open Houses. It’s great fun and a valuable exercise.
I’ve been saying for a long time that a lot of houses on the market are not really in condition to sell. I’ve usually thought more of cleanliness, but these other factors do fit in too.
For the most part, nice houses in nice areas continue to sell. But when you’re dealing with a market with so many choices, even a small issue can keep a house from selling for a period of time.
Kary,
Good location and priced well with good flow can sometimes afford to be “dirty”. Dirty is not a value factor unless it suggests that the home has deferred maintenance, which is often but not always the case.
If there is a severe negative, like on a busy road, they can’t support any other negatives. But clearly a buyer would not rule out a house simply because it wasn’t clean. It could be the bargain of the market, if cleanliness were the primary and only issue.
We also developed a hand signal in case there were a lot of agents from other offices within hearing range. We just point at Jeremy Keener and that means WHTF 🙂 We’re developing non-verbal signals so we can get in and out of the Open Houses more quickly as more and more come on market. My goal is to do 12 houses in 2 hours each Thursday.
That is the reason to have food at Broker’s Opens, BTW. If Open houses are from 12 – 2 (as they should be) with lunch inlcuded, then agents go do them instead of going to lunch and grab a bite here and there along the way. Multi-tasking.
What a great visual of how you tour homes, Ardell. Years ago when I was in title insurance and when this was allowed, I toured homes with a real estate office and took digital photographs of each home. It was a real eyeopener (and sometimes a nose-opener, too!). 🙂
Ardell wrote: “My goal is to do 12 houses in 2 hours each Thursday.”
Did you use to work for UPS too? 😉
On the dirty comment, it depends on how good the buyer is at visualizing, or how much work they want to do to move in. It will deter some buyers, but not all.
We can pretty much do all of Kirkland, Bellevue and Redmond on Wednesdays and Thursdays. Checking on that. This way we will always know which is the best on market house for all three Cities for our clients.
Kary,
I did a lot of relo. If a buyer and an agent can do 15 -20 houses in a day, agents should be able to do 12 in two hours.
I saw one agent looking in a closet and quietly and discreetly called him aside and said “you’re not buying it, and there’s nothing in that closet that is going to help you value this property.” 🙂
Training agents to stop when they’ve got the value and YAY or NAY down is hard, but efficient. Newer agents tend to look at property as if they are the buyer vs. the agent. It takes a little training and practice.
Kary,
I never let a client bypass an excellent value because it is dirty. That may be WHY it is an excellent value. Better to send a cleaning crew as your closing gift, than to let a buyer shoot themselves in the foot that way. An agent is the one who “has their back” and prevents them from making silly mistakes.
I just checked my email and I have three that are looking for properties that are “going to be coming on market”. So much for too much inventory.
Ardell, I’ve found clients want what they want, and they don’t always tell you that. Some say they want a fixer, but the ones the like are the cleanest turnkey units out there.
Ardell and her hand signs… Be careful if you are every around anyone who is either hearing impaired or deaf.
As a hearing impaired baseball coach, I often pick up opposing coach’s signs by putting each sign in words and further sentences. Once coach’s signs ended up reading.
1. Dirty
2. B-st-rd
3. *B-tch*
His play was a hit and run.
My baseball players got a kick out of it when I told them what the opposing coach was saying with his hands and after realizing he had signaled his players to execute a hit and run. One of my players finally came off the bench and said, “If I was a dirty b-st-rd and dating a *b-tch*, I’ll hit it and run too.”
I thought that was the funniest thing ever.
Clearly it depends on their objective. If they tell me their goal is to sell it within a few years, and then say they want the cleanest turnkey property, I warn them that they may be selling at a loss if they do that. Then they get to choose between losing money and hiring a cleaning person. Hands down, hiring a cleaning person wins everytime.
If they are planning to stay for 10 years, and many do tell me that, the issue is not as important. Often people want it all, and to pretend that they can get it all is…well, let’s just say not good for them.
Often I say, sure you can buy that one, but you better plan on dying here LOL, meaning there’s no way in hell I’m going to be able to come back and get you this price down the road.
Sometimes a client is willing to lose 5% plus cost of sale, on resale to have that turnkey house with everything they want. That’s OK, as long as they know that when they are buying it, and don’t hear it for the first time when they are selling it.
Just like my closet full of nothing to wear, the market is full of houses that have nothing to offer a buyer … $100,000 overpriced is not uncommon, and those houses are not overpriced because the market has “changed”, 99% of them never stood a chance of selling at those prices. Never.
Sellers should think about getting on the market right now and not waiting till spring. Rates are so great (5.375% fixed on Friday), that timing is everything, and the time sure seems good to me today.
That, and I have some very frustrated buyers I’m working with :-). We’d like to pick something to buy, but average just isn’t good enough.
LOL! YES! Love the analogy. Just like the closet full of nothing to wear!
The biggest problem I see is that many sellers are pricing off of the other homes that are not selling. Well if THAT house is $600,000, than my house is easily $700,000. What they are not taking into consideration is that no one is buying THAT house at $600,000.
This creates a big string of everyone being overpriced by the same amount.
Well, yes, that is happening, but at the same time, there are a ton of houses ou there that have MYSTERY pricing … who knows where they got that figure?! 🙂
Being too demanding is sometimes obstruct you to get your perfect home. I was too fussy for the first time during the discovering process of the Toronto houses but afterwards my husband convinced me that the environment is the most important and you can always make some improvements on your home. Then you can be even more proud of it having it renovated, putting a lot of efforts in it.
Thank you, real estate in Toronto, and YES! YES! YES! You add value to a good location. Often it doen’t take a lot. Stripping wallpaper. Some paint and carpet. Buy the best floorplan in the best location. Newer roof is good. Heater you can cover with a home warranty.
I personally like homes owned by older people for a long time that kept it well maintained, but didn’t change the carpet or drapes for years.
Pick where first. Then pick what. Pick best lifestyle and good schools for your children. Get value from the cosmetics, and even smell, being less than perfect.
Good for your husband. Smart man!
Ardell, I ran across this instance of people pricing off one another last year:
http://blog.seattlepi.nwsource.com/realestate/archives/121731.asp
The 1.75 bath or more were selling, but the 1.5 bath weren’t because they were all pricing against one another (and the 1.75 bath units).
Fortunately the woman I met there (a friend of a friend) did end up selling shortly after I wrote that piece, albeit at a greatly reduced price. The interesting thing was–she was apparently the one pushing the agent for price cuts, not the other way around.
The other point I’d made about pricing against the competition is that’s what most people think of when they say consumers have the information to sell on their own. They’re thinking of websites listing active listings.
Kary,
Most people use Zillow and County Tax records, in my experience.
Ardell, I think most people use Realtor.com and Windermere.com because they don’t know what they’re doing. And assuming they do use Zillow and the county tax records–how cumbersome would that be?
I find sellers often don’t even know the right price a house sold for when they mention that a house nearby recently sold.
Kary,
My clients know what they are doing 🙂 They have huge google spreadsheets or excel spreadsheets full of data when I meet them 🙂
Ardell , I think between you and my wife I dont think we will find that perfect house to move out in Bellevue in the next 3 years. Just make sure you keep those parameters in mind when you are looking at houses.
I thought my wife was picky on houses(since we have a gorgeous one right now) but Ardell is more picky.When we went with Ardell for some house hunting, she would walk out of the house in 2 mins.
I am sure she will find something for us before my little one graduates from college
Srini!! You are making the house more beautiful…she’ll never leave! 🙂
It’s a lot harder to find something better…when someone loves what they have. At least I come into the property. Kim sometimes says “why are you even bothering” 🙂
It’s hard to duplicate the neighborhood feel of further out, closer in.
Did you take down that wallpaper yet? I’d love to see the finished product. You have such a lovely and well built home in a great neighborhood. I don’t blame your wife for not wanting to trade it away to cut her commute.
Great hearing from you. I’ll upgrade my sensors 🙂 Stop by my Bellevue Office (12207 NE 8th) one day and we’ll make sure we’re on the same page heading into 2008. Spur of the moment is fine, just ring my cell phone before you head out. I’d say lunch, but I’m on a Jenny Craig diet. Lost 9 lbs since last Wednesday!
wallpapers are long out … and now even the bathrooms have updated titles(remodeling is not cheap). Just waiting on getting the new shower door to be fixed.
That is what I was telling Rhonda while talking about refi, that once I refi the loan that i have(my 5 yr ARM is reseting in Aug) with 30 years fixed, I am sure Ardell will find that perfect house and we will end up moving 🙂
We shall get you in to see the finished product soon after we finish up some more updates.
I think it will be April 20th 🙂
srini and I discussed that his current rate is too good to refi…it would increase dramatically and since srini is looking for a new home and the rate will not adjust until August…there’s presently no need to do it. 🙂
Good! He scared me there…but I think we can meet the deadline. Waste of money to refi just before you sell.
Ardell wrote: Kary,
My clients know what they are doing They have huge google spreadsheets or excel spreadsheets full of data when I meet them ”
I was referring to FSBOs–people who think they don’t need agents to assist them.
Some of my clients are kind-of FBOS’s. I have people who do a large part themselves and are immensely capable of doing so. There’s lots of in-between full and none, Kary.
Just out of curiousity, what do you consider a WHTF? Or is it just a bad time of the market to flip? I have some relatives who lost their pants on a couple flips recently, and they did most of the work themselves. Even sweat equity didn’t add up for whatever reason.