Episode 10: Winning the Negotiating Game. Make it easy for the Buyer to Buy

Scott Williams: Sweet Home Santa Barbara where the skies are so blue. Sweet Home Santa Barbara, what’s worked for me, can work for you.

Jonathan : Welcome back listeners to Sweet Home Santa Barbara. I’m your co-host,  Jonathan Robinson. I’m with my friend and realtor-

Scott: Scott Williams. Hi there, Jonathan

Jonathan: Hi, Scott and welcome to all our listeners learning about how they can sell their house for maximum profit. In some previous episodes Scott, we talked about a lot of things that people could do for pretty little money that have a big return on investment and really maximize profit. But I’m wondering if there’s other things that people should know about to help them be able to sell their house rather quickly?

Scott: Good question, Jonathan. When we take a look at a house as we get ready to market it, oftentimes, we discover things about that home that might be a negative to a buyer. We need to talk a little bit about how to deal with these things.

Jonathan: When you say a negative to a buyer, what type of thing are you referring to?

Scott: Well, the seller may be thinking, “My sewer line is really kind of old or my roof had a leak last year in it, and I think it’s okay, but I know it’s getting really old.” We need to talk about those kinds of things.

Jonathan: So, these are mechanical systems of the house that most people are thinking, “They should be okay and if they’re not, that’s a problem.:

Scott: If you’re buying a house and you found out the roof, the sewer, the foundation, the house is a little bit out of level. These are the sort of things where a buyer might say, “Pass. I don’t think I want to buy this one.”

Jonathan: Right. Let’s talk about the roof. The roof is a very expensive commodity. What will people do if they have an old roof?

Scott: We want to know the condition as we go for sale and if we find out from a roofer that this is near the end of its useful life, we have a discussion about whether or not we can pass this along to the buyer. In the current market, we can. The buyer will accept a roof that is at the end of its useful life.

The market conditions will be really teaching us about whether or not we can go forward. But if we go to some other time, when it’s a little more balanced between buyers and sellers, this is an issue and this is an issue that might prevent a home from being sold.

Jonathan: I know that having just replaced my roof that there’s different roofing options, some expensive, some less expensive and that’s something that you can discuss with potential sellers as well.

Scott: Yes, there’s options, there’s different sets of costs. We’re going to be evaluating these things but the seller is used to, in the conversation and it’s the same one we’ve been having right here, “Oh, aren’t I going to make two hundred percent or eight hundred percent profit on this 15 or 50 thousand dollars that I’m spending on my roof?” The answer is probably not, but we have this friction if the marketplace is giving a little bit more power to the buyer that prevents the buyer from even buying the house.

We may want to do some of these things just in order to have a successful sale even though it’s not a big moneymaker.

Jonathan: Yes, depending on the market conditions at that time. Other than roof, what about a sewer?

Scott: Sewer is the same thing. I don’t usually recommend that a seller have the sewer line examined by a video camera, but I do recommend to a buyer that they should get a video camera down there because it’s five, ten, fifteen, thirty-five thousand dollars, depends on how long it is and what condition it’s in. A buyer should always examine this. For the seller, we wait for a buyer to do that. I caution them. We may have a discussion that’s got some big money on it.

Jonathan: How much does it cost the buyer to do that?

Scott: $250, $300. It’s a minor cost.

Jonathan. Right. Pretty important to do. How about the old drainage system of the house?

Scott: If a house is on a hillside, I know your home is on a hillside, many homes in Santa Barbara are on the hillsides, the water that’s coming downhill above your home towards your home. Where does all that water go when it’s raining like mad? May we have lots more rain, of course, let me put that in there. If the water is sliding under the house where it’s causing difficulty to the downstairs of the home or the sub-area, all of these are the sort of things that a buyer doesn’t want, and you may again have to deal with these things in order to successfully sell your house. You need to decide ahead of time whether you’re willing to do them or not.

Jonathan: You’re saying most people do not want a big river under their house.

Scott: [laughing] Nor do they want a pond, nor a lake [laughing].

Jonathan: The ocean’s nearby, they don’t need that either. Okay. How about the foundation?

Scott: Foundation is one of those things that a buyer just simply has an expectation that they’ll be in good shape. If they get the inkling that the house is not quite level, we actually have a rule of thumb about this. It’s interesting. I’ve noticed over the years. They will all tolerate a little bit off in a house. In fact, builders tell me that if a house is within one inch of flat across the whole house, then that’s considered a good-level building.

 I have found that most people are okay up to about two inches. There’s a pretty strong line at about two inches where the buyer says, “I don’t think I want to live with this. The doors don’t close, and cabinets fly open.” They just think, “I want the seller to fix this.” That’s become an issue at two inches. It’s an issue that a seller undoubtedly is going to have to deal with. Plenty of buyers are going to start to say, “I don’t want it.”

Jonathan: How do people, both buyers and sellers, find out the condition of the foundation that way?

Scott: You usually know. There will be cracks in your walls, and your doors won’t close, and your windows stick, and you have a lot of indications that something is amiss. If you’re a homeowner, you probably know that.

Jonathan: If you drop something and you notice that it goes quickly down to one side of the house then that’s a clue as well.

Scott: Yes. A marble can tell you if a house is really off. That’s all you need. You feel like you’re walking downhill. Sellers sometimes say, “I hope they don’t discover that.” Although the seller knows full well this house is slightly sloping downhill. We are in the land of disclosures. We will have to talk about these things. We can’t just pacify.

Jonathan: Okay. How about mechanical systems in the house?

Scott: Okay. Like the heater, a buyer has an expectation that the heater is going to work. If the heater doesn’t work, you will not make money on putting a new heater in, but you don’t lose the buyer either. Some banks, for instance, will not fund alone if the bankers know of some of these issues. If it doesn’t have a heater or the house is out of level, or there’s problems with the foundation or sewer lines. If you tell the banker they’ll say’ “We won’t make it a loan.”. We have to deal with this one way or another.

Jonathan: How about air conditioning? Do most houses in Santa Barbara have air conditioning?

Scott: About 25% of them have air conditioning and more people are putting them in, we’re in the age of heated air. We see it more often. The important thing is that if you’re dealing with friction items, these are all friction items with a buyer, we need to discuss them or they’re likely to actually stop the sale. And then we’d have to look at how good is the market. If the market is like it is right now, super-hot, we can just disclose all these items and pass them along and we’ll be fine. But as soon as we revert to a little bit more normal market, we go back to this as a serious discussion with the seller of might we need to fix a few of these things or we’re just going to lose 20% or 50% or 80% of our buyers to these issues.

Jonathan: The good news is when markets do get cooler, you’re an expert in working with all these issues. You certainly did that with my house and a seller can be really not hardly involved at all because you have a crew that can help with that.

Scott: That’s true. As a seller who’s listening to this, we know that we have buyers listening to the podcast as well. I’m sure they’re perking up and think, “Wow, I should probably investigate all these things before I buy a house. When we get to some of the sessions where we talk about buyers, that will absolutely be very clear that a buyer should be paying attention here.

Jonathan: Right. It’s great stuff to know about all these things that are really part of expectations or how to make sure your house is basically sellable to most people because people expect these things to be in some basic working order. Any last words on all these different systems?

Scott: The good news is, if you have something, like a roof that needs to be fixed and you say, “I don’t want to fix it and it’s $22,000” or whatever the number happens to be, we know we’re going to end up doing a reduction of the price of the house and then it’ll sell. We will have to deal with that.

Jonathan: Great. That’s nice that you offer a service where you can even potentially reduce your fee if it’s if you’re just working on selling the house right away or a more normal fee if you are helping to really fix up the house and spending a lot of energy doing that.

Scott: The fees are oftentimes based upon how much work needs to go into the project.

Jonathan: Great. Well, that’s a lot of good information for people. How do people get a hold of you?

Scott: The name is Scott Williams, and the email is scott@scottwilliams.com

Jonathan: Thanks for listening to Sweet Home Santa Barbara. If you know someone who is selling their home, have them listen to this podcast. You’ll be doing them a favor. Until our next episode. Enjoy Santa Barbara.

Scott Williams: Thank you for listening. Please subscribe to our podcast on your favorite app. If you know someone preparing to sell their home, please tell them about the podcast. Visit ScottWilliams.com to contact me and download the two free E-booklets. “Is My House Saleable Now?” and “How Not To Buy A Money Pit”. Thank you for listening.