June 29, 2019

Getting to Sold Episode 2

Getting to Sold - Episode II

Jason Bramblett Real Estate Show Podcast 

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Jason: Good morning, Triad.  I hope everyone is doing well today. You are listening to the Jason Bramblett Real Estate Show. Got your Fourth.  Got your fireworks.  Your diesel fuel, gasoline, road flares, whatever it is you are going to be throwing up into the sky.  Just whatever you do, be careful.  Do not burn any of our listings down please.  We need those houses.  We have got to sell those things.

Mikell:  Absolutely.

Jason:  It is challenging to sell a house with some sparkler residue on the roof.

Mikell:  I believe so.

Jason:  Most people are not looking for scorched homes even though it has been hot enough to just scorch them on your own out here.  It has been crazy.  We are going to continue this week with getting that house sold.  Really what we are talking about is the reasons why.  A lot of it has to do with deferred maintenance.  Things that we have kind of put off.  I just saw a picture on my Facebook feed of a client, past client of ours that is an HVAC business, Southern Homes, and he was sharing some neglected HVAC systems.  They do have filters, folks.  You do need to change those things.  Just taking them out, that is not a good plan either.  They are actually there for a purpose. Not just to drive you nuts, right?

Mikell: Right.

Jason:  And also, you definitely want to make sure that you get those things taken care of.  We talked last week about the market being a price war and a beauty contest, and so that is exactly what it is. It is the right price with the right product and having the thing that the market is looking for is key.  The folks that are out there buying today are not looking for problems.  They are not looking for fixer uppers. They are not looking to take over your issues. So today we are going to break that down.  Make it real simple, real easy.  Give you a plan.  You can go blow up Home Depot and Lowe’s.  Get your to do list together.  But if you have got two left thumbs, you may want to call a professional in.  Take on what you can do.  I am all about taking care of stuff yourself.  Some of you need to hire professionals.  That is a key thing.  We see a lot of homes with a lot of DIY or do-it-yourself stuff, and sometimes it is really the re-do that we are looking at.  We have talked about paint. We have talked about all these things that well some of you guys get a little creative with.  That is fine for you.  But just understand when we go to market the home, we want to put the property in front of the people and what they are looking for and not what you like. Sometimes those are two different things. So grab your pen and paper. We will get started.  If you have got any questions, you can shoot them over to Jason Bramblett dot com.  Just click on the email link, and we can share your questions on the air.

So we are going to dig into that price war.  Here is the key.  Prices have moved up all across the United States, and what we are seeing now is a major pullback, a major slow down, which is good, because if you rise too quick, you create an artificial ceiling, and when that happens, and at some point in time, the banks will either slow it down or the market in general.  This is actually both.  Folks are being hesitant now because they are seeing the prices are going up too quick and everybody is still remembering the last housing crash.

Mikell:  Absolutely.

Jason:  And so, people are not wanting to go as high as the market will bear, and of course, the banks have really put the breaks on in that they are not going to stick their necks out like they did last time.  Or get real creative like they did last time.  You will notice that there is I can breathe so give me a loan loans out there as if there was in the past.  You actually have to prove that you, outside of being physical in living, you have to prove that you can actually pay back the loan.  That was a problem back in oh-four, five, and six is that they just did not really care.  And they just made up a lot of stuff.  I say they.  It is not just the banks.  It was pretty much everybody was involved in that from real estate people to appraisals to banking systems.  But there were no rules either.

Mikell:  Okay.

Jason:  And when there are no rules, it is just kind of whatever reality you live in. The good thing is we have those today.  Hopefully, they will stay in place and not everybody will get desperate to sell.  But this beauty contest part is the real issue that we see. The buyers in this market just do not want to take over these problems, so they are looking for finished product.  And this is why you will see new construction is doing very, very well right now.  As a matter of fact, they cannot even get enough homes started to meet the supply and demand.  It is not so much that, a little bit of it is there is a shortage in some product.  But really it is what is available is not what they want, so they migrate to new.  But you cannot just go tear down trees and start throwing up houses.  We have planning and zoning and all these different ordinances and things that we have to do, and it can take a year, year-and-a-half, two years, and sometimes even three years to get a project off the ground.

Mikell:  Wow.

Jason: It takes a while to get those things moving forward. If you are going to do something of a substantial project of say 50, 60, 70, 100 homes, that is not the world that you can control, and that is not the world that you are living in.  What you are living in is what is around you, your house.  So we are going to dig into what in the world can I do to get my home ready. Think about what you, what I train our agents on is always put yourself in the other person’s shoes. All right?

Mikell:  Okay.

Jason: So if you were buying a home or selling a home, think about it from that perspective. Because if you think about it from that perspective, then it is really easy to relate the situation that the folks are in.  Even if you have not been in it, and a lot of you have not been in those situations before. Remember, most people have either never done this or they did it ten years ago.  Right? 

Mikell:  Right.

Jason:  They have never bought a home or they did it so long ago they really do not remember what that process was.  It is like asking you what you had for lunch last week.  No clue.

Mikell:  No clue.

Jason:  Unless it was really, really good or really, really bad, you might remember that. But if I said on July, no this is June still.

Mikell:  Still June.

Jason: I am in the future, man.  I am ahead of the game.

Mikell:  I like it.

Jason:  June 28th, right?

Mikell:  Right.

Jason:  Feels right.  That sounds right. So if I said what were you doing on June 28th, 2016 –

Mikell:  Whoa.

Jason:  Most people will not have any idea.

Mikell:  Not a clue.

Jason:  Very, very few will have an idea, and the same thing with buying or selling cars, homes.  We do not do it frequent enough to really have the memories of that experience. As you go through this, you need someone to coach you through the process, someone that is dealing with buyers every single day.  A quality real estate company to help guide you through that.  Since we are dealing with hundreds and hundreds of transactions a year, I feel we are very competent to be able to give you good advice because we have our ears to the ground, and we know what people are looking for. So we can give you very clear advice to say yes, do this, no, do not do that. Do not spend your money there. It does not matter. Or spend your money in this area.  It makes a huge difference.  Some of what has been done in the past and things that people used to want, it is an irrelevant point. What a lot of buyers are wanting to have taken care of are big ticket items.  Roofs, HVAC, hot water heaters.  Those kinds of things.  Most home sellers migrate to simple things.  Paint, carpet, changing out door knobs, those type of things. And that is all well and good. It may need to be done as well, but you really need to take a look at these systems.  The most difficult homes on the market to sell are always the ones in that 15-19-year range because everything is starting to get to end of life.  The roof, the heating and cooling.  These are not small-ticket items, and they are not really items that are fun to put your money into.

Mikell: Not at all.

Jason:  Nobody really wants to put seven, eight, $10,000 in a roof, but if it is leaking you do. And that is what the buyer is looking at. The buyer is looking at going you told me you had a 25-year shingle.  It is year 19. I am living here ten years. Guess who is putting the new roof on?  They are. And so they have got to factor those things in.  They are thinking about those.  Now, does that mean you have to pay the entire amount of the roof?  Not necessarily.  But this is where the negotiation comes in. But it does to make it difficult. Those 15-19-year old homes are the most challenging to sell, no question about it. It simply comes back to they know they are going to have to have cash to do this.  Now, most of the home buyers today are not paying cash.  Most of them are financing the properties, and most of them are putting down as little money as possible.  It is not because they are choosing to put a little money.  It is because they have no money to put down. Okay?

Mikell:  Absolutely.

Jason:  If I am looking at home and somebody is bringing say $10,000 to closing, and it took them three or four years to save that up, and the roof is going to be $9,000, right, down the road.

Mikell:  Right.

Jason:  Now, we want to help you create what we call a sinking fund. A place you put your money that way you will have the cash to do that. And we will coach you how to do that as a new homeowner. However, the other issue that we have is that people buy all that they can buy, and then there is no room to squeeze out anything for a budget for repairs coming down the road.

Mikell:  Okay.

Jason:  The broker you are, one you have to ask the question why are you even buying a house, first of all. But if you still choose to move forward with that, you really need to look at a new product. All right?

Mikell:  Okay.

Jason:  So the broker you are, the newer the house.  Why?  Warranties.

Mikell:  Absolutely.

Jason: Things are not going to break, hopefully.  If they do, they are covered by a warranty.  If you buy a new home, you do not have to worry about a roof probably for 25-30 years.  Okay?  If you do, something bad happened, and you probably have insurance that would cover it.  So the less money you have to put down, the newer or better condition of the home you need to buy.

Mikell: Really it just helps you because really what is going to happen is you get the home and then like you were saying on the last show, it sets you up to go ahead and get that home equity line because you are going to need it in a year or two.

Jason:  You very well could.  You very well could.  So hopefully, that is for improvements –

Mikell:  Only.

Jason: -- on the house. Not the Suburban.  Okay?  Not the private school. Although those things, there is nothing wrong with any of those, but how you pay for them does matter. Okay?

Mikell:  Absolutely.

Jason:  Because the worst thing for us to walk into a situation is we see if somebody has been in their home for ten years, and then we pull the data that we have, and we see that they have an equity line on there, and then we drive up to the house and they have an equity line because there is a 2018, 2019 $75,000 vehicles sitting in the driveway.

Mikell:  Absolutely.

Jason: That was not really a good plan because now you are probably upside down on your house. You cannot turn the car back in --

Mikell:  No.

Jason:  -- and get anything for it, and now you have got a situation in which who is coming up with the money to sell?  Now, you could say well, I just will not sell. And that is fine.  But what if you just got a job transfer?  There are certain things that are outside of your control.  In this market, having a good, solid-paying job is premium.  So when the boss says hey, I have got great news, we are going to give you a promotion or we are just going to transfer you to Texas, and there is a great opportunity for you there.  Some people cannot do that because they are upside down on their house.  Not because the house is worth less.  It is because they sucked all the equity out of it.  We see that time and time again. Then they come to us and they say well, we do not want to lose money.  Well, you have already taken all your profit out of the deal.

Mikell:  Absolutely.

Jason:  All I am trying to do is get you do zero and I cannot do that because you over-leveraged the house.  Some people are like well, how can that happen?  I had an appraisal. The house should be worth X.  And you can check with the bank, check with an appraiser. The type of appraisal done for a home equity line versus a purchase are totally different, totally separate underwriting guidelines. The purchase appraisal is always scrutinized much more than the home equity line appraisal.  Why?  Ask a banker.  I do not know.  I have a suspicion it is called we want to do the loan. All right?  So we want to make the math work. You have been there for ten years. You have paid on time every month.  You are probably not going anywhere.  Speculative, but let’s just assume that.  So they are more liberal in that, and for most people, it works until it does not.

Mikell:  Absolutely.

Jason: Until an opportunity comes up that you cannot take advantage of.  So, you have got a 19-year-old roof.  You have got an old heating and cooling system, and what we are seeing today is the folks do not want to deal with those issues.  So you need to take a look at is it time to upgrade that system or systems in order to get the house sold.  Some people use the terminology lipstick on a pig.  Right?

Mikell:  Yikes.

Jason:  And that is where you come in and you have a nice home in as far as appeal and paint and fresh carpet and nice floor coverings. But then we look beyond the lipstick and we see a 21-year-old roof, a 19-year-old heating, cooling system, a 21-year-old hot water heater or whatever the case may be.  The deck is 17 years old. Right? All these things wear out over time.

Mikell:  Absolutely.

Jason:  The appliances may not be whatever, the best. Those things change so fast I cannot even keep up with them. We have got TVs with the milk now so you do not miss anything. That way when you are going to get your ice cream you can watch the TV in the frig or whatever.

Mikell: Do not miss a second.

Jason:  Do not miss a second. Whatever.  It is a bell.  It is a whistle, and some people got sucked in.  I am seeing refrigerators, $7000 for a refrigerator.

Mikell:  Absolutely.

Jason: It is unreal.  The idea was to keep the food cool or frozen.

Mikell:  Yes.

Jason:  That was it.

Mikell:  But it shows you what you have in your refrigerator so you will not stand there for five minutes.

Jason: Right.  Because you might waste 16 seconds or 16 cents of power –

Mikell:  Yeah.

Jason:  -- opening the frig. It goes back to turn the lights off.  Do not stand there with the refrigerator open. All those kinds of things because we are just throwing food out by the truckloads from leaving the refrigerator door open too long.

Mikell:  Absolutely.

Jason:  You stood there so long the ice cream, now you have got milkshakes and not ice cream.  Right?

Mikell:  Definitely.

Jason:  Some of that, I think that story does kind of speak to how we are programmed though.

Mikell:  Absolutely. 

Jason:  The repetitiveness of show me anybody that has retired wealthy by turning the lights off.  I would love to meet them. I would love to meet them who saved a whopping $4 a month on their power bill by turning off the extra bedroom light.  I have yet to meet them.

Mikell:  No.

Jason:  But our parents and grandparents turned the lights off.  Do not stand there with the refrigerator door open. Why?

Mikell: Why?

Jason:  Is it going to change my life? 

Mikell:  No.

Jason:  How about this?  Just go make more money. Take the door off the refrigerator. If you go out there and earn enough money you do not have to worry about some of these trivial things that our parents and grandparents told us.  So roof issues, people hate to put them on.  Just like septic.  I have a client right now they put a brand-new septic in the ground.  It needed it.  It is kind of required. Unfortunately, it just does not do a lot for resale.  Right?

Mikell:  Okay.

Jason:  One, you cannot see it.  You dug a hole and you buried it.  What is that worth? Right? Now, it is good to have the reassurance of hey, there is a new septic and hopefully nothing will go wrong again. Right?

Mikell:  Right.

Jason:  There are those things that are out there that do give you some assurances, but let’s face it.  Whatever money you put, you put it in the ground, and that is where it is staying. You are not going to be able to up the price of the home because of a septic or a roof or HVAC. All those things will make the home sell quicker.  You will outpace your competition, but you will never get 100% of your money back. All right. When we get back, we are going to take a quick timeout. When we get back, we are going to dig into what buyers are looking for. And I am going to tell you how to find out.  So do not go anywhere. We will be right back. You are listening to the Jason Bramblett Real Estate Show.

And welcome back to the Jason Bramblett Real Estate Show. So before the break, we were talking about well, lipstick and pigs.  You figure out which one you may need or may have, I should say.  So the question we get is I do not know what to do.  At the end of the day, that is the question that really hits home.  People calls us out like I have no idea. And if you do not, that is fine.  I am going to give you some tips and some ideas of some things to do, but if you know you are going to be selling your house in the next 1-5 years, give us a call.  We do not care when you are thinking about it.  It may be four years from now, five years from now.  Let’s get a game plan together now so you do not have to pack everything into the last 30 days.  So we can come up with a plan to help you. There are certain things you are going to want to do as you get closer to putting the home on the market, but let’s have that action plan.  Let’s come up with a game plan.

So what can you do to go ahead and get started taking a look at that.  And one of it is go visit model homes. Builders, especially the large builders, your national builders, they spend millions and millions of dollars on research.  They are not just throwing these boxes up on a street to see what happens. Okay?

Mikell:  Not at all.

Jason:  They have researched traffic counts, drive-bys, the employment in the area.  These guys have got this stuff down to a science.  The other thing that they have down to a science is what people are looking for.  So they have got a great team of people and designers that they are in communication with every type of store that is out there.  So every big box retailer, when you check out the item, it registers and it is in a database. We know that one million of these widgets sold.  We know that out of all the paint colors purchased at these big box stores, these were the three top colors.  Okay?

Mikell:  Absolutely.

Jason:  They are not what you have in your house probably. Okay?

Mikell: And you all do some of this research as well, right?

Jason:  Absolutely.  We keep our ears to the ground, if you will, and our eyes peeled for these opportunities because if you are going to go through all the pain and spending the money of doing the task, let’s make sure you are doing the right thing.

Mikell:  Absolutely.

Jason: It is horrific when we have to go over to somebody’s home and they just put carpet it, and it is like well that is what you put in a $100,000 house. Yours is 450. The only thing I can say about this carpet is it is new, and whoever buys this house is probably going to tear it out because it does not match.  The quality does not match. It would be like going, you have got a $70,000 BMW, and the steering wheel breaks and you go over and buy a Honda Civic steering wheel and put it in the car.  You are not going to do that.  Right?

Mikell:  Not at all.

Jason:  So if you did, it is going to change the value that somebody is going to want to pay even though it is a brand-new steering wheel. It does not match the quality of the vehicle or the house.  So you cannot go cheap when you are trying to get top dollar. This is a mistake that I see a lot of folks make.  Go to the builders and look what they are doing. It takes 30 minutes of your time.  Run through a subdivision.  Walk through the model home.  Yeah, there are salespeople there. That is what they are there to do.  They are there to sell and educate.  So they are going to educate you, and who knows, you may end up buying a new house. I do not know. That depends on whether you can say no or yes. I cannot fix that problem. You have just got to be able to go in there and look and see.  Most of the time there are open houses.  They are available to the public.  You can come in and check it out.  Greensboro and Winston-Salem have amazing home shows.  You can go there and figure out what is the trend.  What are people looking for. What is the up and coming color schemes and products and these things?  It would be like putting Berber carpet in your home today.  I can assure you that would be a mistake.  You can still buy it, and you can still get it new. The issue is nobody wants it. Okay?

Mikell:  Okay.

Jason:  So just because it was new does not mean it was smart. So we want to do smart and spend your money in the right place. Visit these model homes. Take a look at this stuff. Now, if you are going to sell in ten years, things will change.  You need to be ahead of time but not light year ahead of time. Do not be in July like me.  Back up to June.  If you are thinking about selling in ten years, well, okay, we can come up with a budget and help you get ready for that, but you may not want to change everything now because in ten years’ time, who knows what we will be looking at.  We were talking about TVs in refrigerators earlier. They may come with an assistant, a robotic arm that you push a button like a vending machine, and it gets the milk for you and then shoots it through the door telepathically or something. Who knows?

Mikell: That sounds awesome.

Jason:  The microwave changed the kitchen, and there are other gizmos and gadgets that have not even been invented yet that are going to do it again. So if you have no clue what to do and where to get started that is what we are here for.  We can walk you through the process.  We can help you make sure that you are spending money and investing money in the right things.  So many times I see owners that have spent thousands and thousands of dollars all in the wrong place.

Mikell: And real quick with the roof and the HVAC, what is the percentage you said you will get back on that in return?

Jason:  You are looking somewhere in the 60-70% range on a roof and potentially on the HVAC, and this will depend on what type of system it was to begin with. So if it was really old, like 25 years old, you will get a good 80% back.

Mikell:  Okay.

 

Jason: If it was seven years old, and it was just junk, well, you are probably not going to get anything back.  Some of it was generational.  How many generations are we skipping up in our process?  And then the efficiency rate of these heating and cooling systems makes a difference. So there is different what they call SEER rating in the industry.  So anyway, go to Jason Bramblett dot com. We can help you get a plan.  Remember, having no plan is still a plan.  All right?  Give us a call, 553-0796 or Jason Bramblett dot com.

 

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