Andrew Wetzel's Musings

July 10, 2017

Are you actively looking for a house??? Part 2 of 2 (the search!)

Filed under: Uncategorized — awetzel @ 4:59 PM

Based my previous post, let’s assume that you have hired an agent, been pre-qualified for a loan (cash buyers are always welcome!) and have determined at least basically what you are looking for in a home, where do you go from here? The goal is to access fresh information as quickly and easily as possible so that you can decide whether to make a purchase offer or not. Unless your taste in housing is rare or unique, you must understand that you will have competition. If the information you get is stale, you may miss out. If finding property information involves a lot of effort, you may move slowly. If your offer is weak or poorly constructed, it may not be competitive. An agent can help you with all of these but, unfortunately, buying Real Estate is like “playing poker” in that neither side truly knows what the other is thinking so having an experienced negotiator is critical to minimizing the uncertainty and cutting through any drama.

Another point to consider is that you may only get one shot at purchasing the house you really like. You may lose to a more aggressive offer. Again, a good agent can help you here but some sellers do not like the “back and forth” that accompanies many offers. Even sadder, many agents are ill-equipped to manage such a negotiation and most transactions require some negotiating whether it be with the purchase offer or with responding to inspections and anything else that may come up.

The “search” consists of doing anything and everything you can do to present yourself with as many realistic options to consider as possible. Will you learn about every available or upcoming listing? Probably not but you need to have as many choices as you can handle so that you will not wonder what you missed or what the future may bring. The single most productive tool for readily identifying property listings is the MLS:  well over 90% of houses are listed with agents and most of them (not all!) will post their listings in the MLS even if they do not post them on the Internet. An agent should set up an automatic search that will regularly email you listings matching your criteria. This can be readily adjusted if and when you change your search parameters. My MLS offers several options for emailing property information to my clients. The most popular involve my sending listing updates to my clients once a day (am or pm) or twice a day (am and pm), depending on what they want.

The search results, meaning what I email, are only as good as (a) what buyers tell me to search and, equally importantly, (b) how accurate the listing information is within the MLS. On the listing side of the business I prospect expired and withdrawn listings (meaning they did not sell) and find that most of them had at least one flaw that made them not appear in “search results” where they belonged so buyers and their agents may not have ever known they were available. For example, if a property listing has the wrong zip code (yes, I have seen this), is a row listed as a single (yep!), displays the wrong number of bedrooms and/ or bathrooms, has the wrong features or incomplete features, it will NOT come out in the proper search results which means it may sit on the market longer than necessary driving up the “days on the market”, get reduced for the wrong reason (this is very costly to sellers!) and have the contract expire without a sale or have the seller pull the listing from the market wondering why it did not sell. Some of these properties will still be “found” and sold but, since they were not made available to every possible buyer prospect, the seller may have gotten in a lower sales price than expected (this can be nice for the lucky buyer). Why do I mention this? An experienced agent understands the potential and limitations of the MLS and is better equipped to unearth more potential property listings than a less experienced agent.

Many buyers will “shop” online even after hiring an agent. Some do this to check what their agent is sending them, some to explore beyond their established search criteria, some just to stay active. That is all fine but it is important that they keep their agent aware of any changes they make as far as what they are searching for. Add an area to your list? Tell your agent. Adjust your price or features you think important? Tell your agent. If a buyer and their agent are searching using different criteria, no matter how close they may seem, they will get different results. If the Internet search is the more current model, unless the buyer sets up a “profile” to send themselves updates, they will miss whatever happens when they are NOT actively searching online. The search should be, pardon the humor, SET IT AND FORGET IT! It is so simple and yet so important to our success!

There are other ways to find houses to consider which may never hit the MLS or Internet and they involve some work. Do you tell people you know that you are looking? They may hear about something before it gets listed or they may know about a property that will never get listed. There are a small number of property transfers that happen without an agent such as those within families or between friends as well as private sales where the principals want to avoid paying a fee (that poses a different set of potential concerns). Of course an agent can get involved as long as someone knows that someone is looking to sell a property. Some of these can be found online (be wary of some sites that are used by scammers!), by print ads, lawn signage and any other way that someone might communicate to others without using the MLS. Keep in mind that these listings represent a small portion of what is sold each year.

Generally speaking, the MLS is what I have had the most success with. Here is how it works:

  • I ask my buyer-clients what they are looking for. I try to get them to separate the “MUST” haves (needs) from the “LIKE TO” haves (wants). The more you add, the fewer the choices and the higher the price. This list will likely evolve depending on how many choices they have and what happens as the search moves forward. If my initial search generates few options to consider, chances are a buyer may be expecting too much for where they want to live and what they want to spend. On the other hand, if there are many options, they can add more “goodies” to the list. This is all very general but, as an example, what would do if you went to buy ice cream and were only offered 2 flavors?;
  • I send my buyer-clients an initial list of search results after which the automated process takes over. The buyer’s job at that point is to check their email regularly for updates to see if there is anything they like;
  • when they see something they like, I prefer buyers to visit a neighborhood before we schedule a showing. Buyers need to understand that they are “buying a neighborhood” and a lifestyle, not just a house. If they do not like what is next door, across the street, behind a house or near it, they probably will not want to buy it. You can fix up a house but you are stuck with the neighborhood/ location. Some buyers may want to jump right into showings (that is the fun part, isn’t it?) and many of them will be discouraged by “obvious” external factors that make them not want to see inside or consider a specific house meaning that a showing could be a waste of time. However, while many “judge the book by the cover”, many houses that appear “rough” on the outside are actually quite nice inside which can be seen if an agent uses multiple pictures. Of course, in fast moving markets or markets with low inventory, driving by may not work as properties will move more quickly than normal. In fact, some buyers will make offers “sight unseen“. That can be risky but there are ways to do that if that is what you want to do;
  • as quickly as possible buyers should determine whether they want to see inside a house. Until then, the search cannot move forward.

Keep in mind that when buyers get notified of an update, other buyers are also getting the same update. As an example, I have had buyers get upset because they found that houses they wanted to see had competition or were sold before we could get in. This will happen but I have seen situations that were very avoidable. In one case, I found that a buyer was not checking her email regularly, that she was waiting to do a drive-by until there were a couple of houses in an area (trust me, I understand that this can be very inconvenient for some) and then she was slow to ask to see inside. While she was unconsciously slowing the process, others were seizing the opportunity.

Let me focus on the initial list at this point. Assume I have provided 15 houses. While I show many buyers a house or two at a time, I have shown as many as 17 on one tour (ughhhhh!). I have found that the optimum number to see is 5 or 6, depending on the situation of course. When the number to be shown exceeds 5 or 6 many buyers tend to lose focus and start forgetting what they saw.

We could take the 15 and set up 2 or 3 tours to get through the list but I have found that unproductive. For example, suppose we schedule 5 on day 1 and you really like a specific house. What do we do? In my experience most buyers will be reluctant to make an offer since there are 10 houses on the list that they have not seen. Sure they have seen them online but perhaps there are few or no pictures and/ or the write up is poor:  they will not really know whether the one they like today is the best of the 15. If I write an offer that gets accepted, will the buyer remain committed throughout the process or wonder what they might have missed? This gets tricky when home inspections reveal blemishes that most houses have.

This is where driving by maximizes the effort. If they commit to driving by the 15, most likely they will eliminate some from the list which may get us closer to their finding their dream house. Perhaps they will like all 15 or not like any of them. The next step is to prioritize what they liked. I ask them to focus more on the neighborhood/ location than what is in the MLS especially if the MLS may be lacking enough pictures/ text to really tell you what the house has to offer.

Suppose you like 10 houses and can rank them 1 to 10. I want to show you the top 5 or 6 so that, if one is really appealing, you will not fear missing something you think you might like. There will be times when you need to see a house a second time such as when we need another tour to get through the remainder of the “preferred” list or to see newer listings that are now available. Perhaps you want someone to come with us to help you decide (such as a family member or friend) or you would like a contractor to give you an idea about the cost of doing something. The goal is to get you to a point where you are comfortable making a decision before someone else buys a house you wanted.

Let me add two other possible benefits to driving by houses before seeing inside. If you are considering unfamiliar areas, driving through them will help you evaluate whether to keep them on your list or remove them and even take you through areas you are not presently considering but find that like. Most buyers stay within 15 miles of where they grew up. While that seems nice and keeps families and friends close, perhaps they do so because they did not take the time to explore other areas.

Also, you may also identify houses that are not on your list. One of my favorite stories involved a couple who did not have a computer (this was years ago). I had an agreement to sell their house so when I came over to have them sign it, I brought a one-line address list containing 40 properties that matched what they were looking for. They were pre-qualified and very reasonable with their list of “needs” and “wants”. They knew the area well enough that they looked over the list and were able to eliminate a number of houses right away. They committed to driving by the rest over the weekend and said they would call me early the next week with a list of houses they wanted to see inside.

They were going to provide me with the wife’s sister’s email address so they could use her computer to see what I was sending them. As it turned out, they did not need to do that. They called me on Monday to say that they had reduced the list of 40 down to 5 and that they saw a “For Sale” sign on a house that was not on the list. They gave me the agent’s name and phone number so I could call to see what the asking price was and what the house offered. The house was not yet in the MLS but it matched their criteria so I scheduled showings for that one and the others that interested them. They ended up buying the one that was not on the list and have lived there ever since. A “For Sale” sign is just as likely to be on a sold property, one out of a buyer’s price range or one that does meet their needs but you never know until you ask and, unless you make the effort, you may not wander into this type of situation.

I tell sellers that the selling process is NOT like living in a house:  there will be a degree of inconvenience and frustration as you expose your “castle” to people who may or may not be qualified to buy it or who may not be serious about buying a house. They may even have nasty things to say. I wish it were easier to “get to SOLD”!

I tell buyers that the buying process is different from their normal routine. Doing it right takes time, may cause frustration when they either cannot meet a seller’s demands or defeat their competition and that there are a number of steps that have to be completed to take possession. Their effort will largely determine how long it takes to achieve the goal.

To conclude, buyers have an endless number of avenues they can travel. Are they serious buyers or preoccupied with the “shopping experience”? If they are serious, they will succeed sooner rather than later but even the best prepared buyer cannot control everything. However, marching into the process on your own, is probably NOT the best way to tilt the odds in your favor!

HIRE WISELY!

 

 

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