When
a real estate agent hears the term “low inventory” these days, 9 times out of
10 you’ll see them make a face like they’ve just been told they’re about to
receive a mandatory colonic. (Quite
often, that tenth person really enjoys colonics, so it’s sort of hard to gauge
how they feel about . . . all that.)
We’ve reached sort of a weird spot in the housing market right now:
house values are on the rise, the economy is displaying signs of good health,
interest rates are still really good, down-payment-assistance options are more
abundant, and yet the availability of houses is relatively scarce. THIS is where we separate the GREAT agents
from the good ones!
If
the local housing market were represented by a pie, let’s keep it simple and
cut it up into four pieces: great homes, good homes, bad homes, and worse
homes. Because inventory is so low, the
first two slices –
great and good homes –
are getting gobbled up, if you will, straight out of the oven. As the pie sits on the counter, there are
some who are taking a bite here and there at the third slice –
the bad homes. All of that is leaving
about 40% of the pie on the table –
and this is not only where we see the great agents separating themselves from
the good ones, this is also where buyers are able to get a little more house
for their money (even in a seller’s market).
In
a market like this, you’re going to be walking into homes with less-than-ideal
elements. Just to name a few things:
you’re going to find a living room where the carpet has been pulled up, peeling
paint on a gutter or fascia board, and outlets with exposed wires. Obviously, these are issues that can be fixed
and used as leverage for negotiation –
there’s nothing earth shattering about that, right? But it’s how the agent handles the situation
once the negotiation is completed and the house is under contract that REALLY
matters.
Using
FHA appraisal inspection requirements as guidelines, the GREAT agent knows that
the appraisal is what can really mess things up and either delay the deal or
completely derail it but will take the next logical steps to ensure it doesn’t. In
the case of the missing carpet, the agent is going to get with the seller’s
agent and say, basically, “Look, we’re perfectly fine with the bare floor. My clients are planning on putting in new
carpet, but you and I know it’s not going to fly with the appraiser. Please have your client go down to True Value
or Home Depot and get ANY color paint –
the cheaper the better –
and paint the concrete. It doesn’t have
to be pretty. They just need to make
sure there are no bare spots.” Same
thing goes for peeling paint: scrap off the flakes and paint over the bare
spot. As for the outlets, a GREAT agent
is going to have a couple of plate covers (it doesn’t matter what color or
style they may be) in her/his car and a screwdriver handy to slap one on when
it’s called for. None of these
suggestions is designed to “trick” the appraiser –
she/he is given specific instructions on what will and will not pass, that is
all. And no one is being unethical
because all parties, during the negotiation of the purchase, knew about the
bare floors, the pealing fascia board, and the uncovered outlets. The GREAT agent is just making sure that
close of escrow isn’t blown by someone who gets paid regardless of whether the
home sells or not (and may or may not care what happens in the
transaction).
While
there are no signs that inventory is magically going to appear tomorrow, a
GREAT mortgage company is prepared with options/products that both agents and
buyers WILL and SHOULD want to know about.
We’re offering classes now, but we don’t offer colonics –
at least 90% of you will be happy!
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