Wrestling with Buyers in Key West - Part Deux

Two years ago I wrote a blog post titled "Wrestling with Buyers" where I related some frustrations I have had in selling real estate. I wrote  "I sell houses in Key West. I get most of my buyers and an occasional seller from what I write in this blog. People read what I write and ... probably judge me. Some buyers contact me to look at houses. Some buy houses.  Some do not. Some buyers ... are able to look at several properties and make a decision to buy and then negotiate a deal that is acceptable to them. Others struggle. Sometimes I get drawn into that struggle which can seem like I am wrestling with my buyers." Two years later the struggle continues. My purpose today is to share more examples of wrestling with buyers.

I meet most of my buyers for the first time when I pick them up at their hotel. Our day starts when they enter the car and introduce ourselves to each other. We share some small talk on the way to our first showing. After we have seen two or three houses and their resistance to me as a salesman starts to diminish, they start to ask a lot of questions about issues Key West - how long I have lived here, what do I do when a hurricane comes to Key West, what do I think of Cuba opening up. Then they ask about the cost of owning a place here - how much does insurance cost, what does it cost to renovate a house, are there good contractors here, why is a seller trying to sell his house - all questions that could have a myriad of answers. I'm not so sure that these buyers really care about the answers as much as they may be sizing me up. Or to put it differently, can they trust me.

Many of my buyers come to Key West with notebooks filled with printed copies of MLS listings accompanied by fact sheets they prepared. The reason these people can afford to spend $500,000 or more for a second home is a testament to how successful they have been at life. Super-achievers don't give money away. They are methodical and need to verify the worth of any property. I think that some buyers rely too much on data as a justification not to buy a property because the metrics don't work. Let me share a couple of examples.

TOO SMART FOR THEIR OWN GOOD  Back in 2010 and 2011 I worked with a couple who wanted to purchase a B&B. The gent had an MBA from the Wharton School of Finance. He shared that fact frequently - not so much to remind me how smart he was, but by creating voluminous business plans projecting how the business would fare five to ten years down the line. He used his data to prove that none of the properties was worth the asking price. Over 18 months the couple made offers on several properties, but were not able to purchase any. I looked back at the MLS to compare their offers to actual sales prices. All of the guest houses sold at higher prices than the offers they made expect one. And it did not sell. They refused to negotiate beyond what his analysis "proved" the value to be on each property. They decided to buy a small place in northern Florida where the weather is colder, the prices are lower, and the income is not as great. They settled for less.

A lot of potential buyers do the same thing. And so do a lot of locals who talk to strangers and give them an earful of opinions. I had a lady Realtor from up north who sought the counsel of her hairdresser to tell her what he thought about properties I showed to her. Not making this up, folks. She bought and sold three properties from me, but she listened to him. 

CAN'T KEEP A SECRET  Another buyer who bought a big house from me several years ago recently retired from a really big Wall Street firm. He decided he wanted to move here and live here full time He was from New Jersey and approached every investment with suspicion. We looked at many possible properties and found a few that interested him. Nothing ever worked out. That was until a specific property became available. He made a substantial cash offer on this property. When I learned there were several offers on the table, I told him his offer was too low. I also told him to never talk to anyone in town about his offer. He couldn't help himself. He told me he met a guy in a bar and the two started to discuss real estate. I wasn't there and don't know all that was said except that the guy he was talking to bought the business my guy made the offer on. Men should not cheat on their wives nor their Realtors. They shouldn't, but they do. 

BUDGET SHOPPERS  Some buyers set a budget (price limit) on how much money they are willing to spend. For some reason $500,000 is now the typical budget of most of the people who contact me about buying a home. I realize that you can buy a pretty fine house up north in America for $500,000 or less.  Many say they are willing to so some work so that they can build the house they want. They probably have watched too many shows on HGTV which promote that kind of thinking. These buyers have no idea how difficult it is to build or remodel here. They would save money by spending a little more up front or by looking in other less expensive parts of town or a few miles outside of Key West. 

CASH IS KING  I love it when I am working with a cash buyer because cash can make a sale go much more smoothly. When there are multiple offers on a property, the best offer may not be the highest priced.  A cash offer with few to zero contingencies may be preferred over a higher priced offer subject to mortgage loan approval, inspections, and so forth. Sellers expect buyers to come back after inspection with a list of issues they want fixed or given credit to accept. This often creates dynamic tension between the parties and sometimes between the agents.

NICKELS AND DIMES  A few months ago an agent in my office was a couple of days away from the closing of a pretty expensive home. Then the cash buyer announced he wanted the house delivered completely furnished. This did not go over well with the seller who had things all boxed up and ready to go. Threats to walk away and sue and so forth were made. The seller finally said okay you can have my sofas, chairs, beds, lamps, artwork, dishes, bedding, etc. But it was too late. The deal failed. 

One of my favorite stories involved a couple who owned a storybook house on a quaint Key West lane. The house was tiny but it had the requisite charm, parking, and pool. A completely acceptable cash offer was made with the condition the seller convey one piece of furniture that fit ever-so-perfect in that little house. The seller said no because of one piece of furniture that some aunt gave or whatever. That stopped that deal. It took a year later to find a new buyer who ended up paying $100,000 less.

WHATEVER WILL BE, WILL BE  Some buyers approach a negotiation as if they are Doris Day singing Que Sera, Sera - whatever will be, will be. I think that if you want to buy a property, you should actually try to buy it. Approach a negotiation to win it, not to set up conditions that make success unattainable. Buyers who watch the market have a rational basis to determine the worth of a particular property. If it is over-priced they may not want to even look at it because they know the seller is irrational and they don't want to waste time and money on something they cannot buy. (Buyer are often correct in these situations.)  When a price is reduced, word spreads across the internet and a lot of buyers pop out looking for bargains. I have numerous instances in situations like this when buyers make offers but then refuse to get into a "bidding war," Buyers see the the other potential buyers as bullies. They retreat even before a punch is made. You must engage to win. Retreat is not an option. The worst thing that can happen is that you don't get the property which is exactly the same thing that will happen if you walk away.

1030 Fleming St 2009

1030 Fleming St 2016

1030 Fleming Street was listed as a Bank Owned Property in late 2009 for $600,000. It appeared in my blog. The former owners made a lot of illegal renovations without obtaining building permits and caused substantial structural damage. But it had a killer location and a lot of street appeal. The damage could be fixed. The location was about as good as it gets here. I had a buyer who was a general contractor from a northern state. He measured the house room by room and knew how much he would spend to fix. My guy offered $500,000 cash. Several other offers were made. We were asked to make our best offer. His wife thought this property was too big a risk. They refused to offer anything more. They took the Que Sera, Sera approach. Another buyer got it for $530,000. That buyer hired a good general contractor, fixed the problems, and ended up with a really nice home in a AAA+ location. It is probably worth near $2 million today. You will find it difficult to find a one bedroom condo in Old Town for $530,000 in 2016. My buyer lost this house for $134.71 per month based on a 3.5% 30 year mortgage. That's the cost of a nice dinner in Key West for two people.

RISK AVERSE BUYERS  Risk averse buyers are often very analytical personalities who favor a known return which can be relied upon for years to come versus a potentially greater reward with a potential for loss. Some of these buyers approach buying a home as an investment.  I had one buyer who made offers on several properties over the years. He had a bunch of cash with which to buy the perfect dream home - a place on a good street with a pool and parking. He still has the cash that produces a 5% tax free return each year. The Key West market has grown way beyond his willingness to buy. He gave up his dream so that his heirs can enjoy his cash in their future. 

LOCATION VALUE Sixteen years ago a friend of mine who was a real estate developer from Denver came to Key West looking to find a place to retire. He considered houses in Old Town and Casa Marina areas. I told him not to buy a couple of different locations. He pointedly told me he thought I overstepped my job as a Realtor.  He said buyers can figure out for themselves what works for them. But I saved him from buying a vacant lot which had been on the market for years and that had not sold because of its location. I convinced him to buy an existing property just east of the Casa Marina. He tore down the original house on a beautifully landscaped lot. He built a new house. He ended up getting divorced. He moved away a million dollars richer. Someone else bought the lot he liked. They build a huge spec house there that took a long time to sell. The person that bought put it back on the market soon afterward. It has sat vacant and for sale for years. We all know this house and please don't comment on it. Location does matter. Bad locations matter a lot.

A lot of potential buyers refuse to look at houses located near the Key West cemetery.  Some of the best deals in town are for houses that are in this area. I don't know what they expect to see.

Other buyers refuse to consider houses on certain streets, or to look at homes near a church or school, or to even consider a house in a neighborhood or area such as the Key West Golf Club. Some buyers say they don't play golf implying that playing golf is either a requisite for buying there. Others say the ten minute drive to Old Town is too long - that they would prefer to be located closer to Duval. But most do not have the extra hundreds of thousand dollars to pay for that location.

If you are looking to purchase a place in Key West please call me, Gary Thomas, 305-766-2642 or send me an email at kw1101v@aol.com I am a buyers agent and a full time Realtor at Preferred Properties Key West. I have been representing buyers and sellers here since 1996. I have the knowledge and experience to help you find your place in Paradise.

German Class Cheater

I was never a super-achiever in high school. Nor was I super-achiever in college or even law school, although I did much better in law school.

During our office sales meeting a couple of weeks ago I was discussing agents in my community that are posting their new soon-to-be-listed properties on ZILLOW, TRULIA, and FACEBOOK. Our mls rules require that listings be posted immediately in our mls and they do not recognize anything like a future listing. The point of having an mls system is to share information and to provide an even platform among agents.

I then recounted an incident in my German class in 1964. We were taking a test and the girl who sat in front of me took out a crib sheet to answer some of the questions. She reached down toward her right foot and pulled a piece of paper up to her desk. She looked toward the teacher who was reading a book or something. Realizing she would go unnoticed, she cheated. I know a lot of people cheated in high school. This incident occurred more than fifty years ago and you'd think I wouldn't remember one person out of the many that I know who cheated in school. But I remember it clearly because she was a member of National Honor Society.

I took my time leaving class. I went up to talk to the teacher. I told her that I saw someone cheat, but did not say who. I told her it wasn't fair that people cheat to get good grades.  I don't know if I was making excuses about myself for not being a better student or that I was blaming the teacher for not watching the students better so that they could not cheat. I knew I didn't cheat, and I got mad when others got better grades by doing so.

A year ago when I was preparing to go home for my 50th high school reunion I looked through my old yearbook and saw her picture. I went to CLASSMATES dot com site and looked the cheater up. She is a REALTOR. I told the agents in my office "Once a cheater, always a cheater!"

PRICE REDUCTION - 611 Southard Street #5, Key West Florida

Years ago, when I owned what was then called Eaton Lodge (guest house on Eaton Street in Key West), a potential visitor called to inquire about making reservations. She asked "Is the island surrounded by water?"

A few weeks ago I wrote 611 Southard Street #5  located at the Hollinshed House Condominiums just one block from Duval Street in Key West. The unit has a highly desired transient rental license which means the unit can be rented nightly without any limitation as to the number of days or weeks that a vacationer might want to spend. The original list price was $525,000. The unit just had an $85,000 price reduction. Now it is priced at $440,000  or more than a 16% lower than the original price. I think this creates a real buying opportunity for a buyer who wants a place in Key West that he or she or they can come visit but that can also earn enough money to pay for itself through legal vacation rentals. The city is cracking down on illegal rentals and imposing extremely high fines to owners who violate rental laws.

This historic eyebrow house was built circa 1874. If you look up a the windows at the top of the house you will understand how the term eyebrow house came to be used to describe homes like this. These old homes were built before air conditioning and even electricity came into use. Back in the old days, houses were cooled through the use of natural ventilation and shading. Windows and doors were left open to allow breezes to flow through the home. The roof overhung the third rooms in this eyebrow house which allowed the windows to remain open in rainstorms. The photo below shows the inside of this unit with the windows shut. Today this space is air conditioned. The charm of the old house gleams through the painted Dade County Pine walls and ceiling. Guests who stay here step back into time just a bit. They pick places like this for a reason - they don't want to stay in a Motel 6 or a Hilton. They want character.

The Hollinshed House Condominiums are located at the tip-top of Solaris Hill in Old Town Key West. The main living area is the top floor of the of the original house. The old building was expanded years ago where the bedroom and bathroom exist just beyond the door at the rear of the kitchen. There is a small balcony off the sitting area at the livng room which is actually the rear fire escape. The views up there are great and totally private. The entrance is located at the top of the two story wrap-around balcony.

Three additional units are located next door at 609 Southard Street. The property has a nice pool in the large courtyard. There are two off street parking spots available on a first come basis. There is also a coin operated laundry for guests.

I just did a quick search of active transient licensed one bedroom condominiums in the Old Town (including Truman Annex) area and found there are six units with an average square footage of 432 1/2 sq ft. The average list price is $485,750.  The average price per sq ft of all units is $1,329. The Hollinshed unit is offered at $652 per sq ft. Three of the units do not have a pool.  The Truman Annex unit is restricted to 25 weekly transient rentals.

CLICK HERE to view the Key West mls datasheet and listing photos of 611 Southard Street #5. Then please call me, Gary Thomas, 305-766-2642. I am a buyers agent and a full time Realtor at Preferred Properties Key West. Let me help you find your place in Paradise. And, yes, Key West is surrounded by water. That's why it is called an island.

621 Catholic Lane, Key West ~ Charming Wooden Cottage with an Historic Past

Just Listed 621 Catholic Lane, a charming wooden cottage located near the "dead end" of one of the slowest lanes in Key West. The lane is entered off Angela Street, itself a one-way street from heading west from Frances Street to Margaret abutting the Key West cemetery to the south.

This simple home was once owned by author Evan Rhodes (The Prince of Central Park among others). I found a photo of Rhodes and other Key West writers taken at Higgs Beach in 1984, the first year I came to this island that would become my home. I borrowed the photo from the Key West Literary Seminar.

From top left: James Merrill, Evan Rhodes, Edward Hower, Alison Lurie, Shel Silverstein, Bill Manville, Joseph Lash, Arnold Sundgaard, John Williams, Richard Wilbur, Jim Boatwright. From bottom left: Susan Nadler, Thomas McGuane, William Wright, John Ciardi, David Kaufelt, Philip Caputo, Philip Burton, John Malcolm Brinnin.

Of this photo Arlo Haskle wrote:

"How many words is a picture worth if its subjects have penned more than many thousands of bestselling words apiece, already read by tens of thousands of readers? If in their beach bags are five Pulitzer Prizes, a few National Book Awards, two Bollingen Prizes, and office stationery from the U.S. Poet Laureate?"

In researching this house I found reference that Rhodes "finds he writes best in the garden of his house, wearing a bathing suit." As I was taking photos yesterday, I figured out why that was. The house does not have central air. The current owner relies on natural cooling (doors opened for cross ventilation). The heat yesterday was sweltering. The shade under the large canopy trees in the garden would provide cool relief for anyone be they a writer or not.

I have sold the homes of two famous writers, John Hersey (Hiroshima, A Bell for Adano) at the Key West Writer's Compound and James Leo Herlihy (The Midnight Cowboy) on Bakers Lane. There is something different yet common about homes where writers lived - they are set apart from the rest of the world and they are simple homes with quiet spaces where they can reflect and create. Tourists won't likely find this house, there isn't even a street sign to identify its existence. 

I found the above photo of 621 Catholic Lane which was taken a little over 50 years ago. The home sits high above the ground. The four front posts supporting the roof and the louvered door and windows and been replaced. The old aluminum awing was taken down. New thinner posts with balustrade were added as were pediments above the windows. The most striking feature is the bougainvillea hedge that insulates the house from public view. A new owner might consider taking that down to reveal how striking a home this place is.

The front door opens into a warm and inviting center hall that leads to the great room at the rear, the office to the left, and the master bedroom to the right. Dade County Pine and newer wood are evident throughout the house. While the house has been updated, the character of the original house still remains.

The great room has this big vaulted ceiling which adds so much dimension to this living space. The rear opens out to covered porches on either side which expand the living are greatly.

The first room I went into after I entered the house was the office. What an interesting place this is. Even though Mr. Rhodes preferred the outdoors, I could imagine this space to be a great place to read or write the next Great American Novel.

French doors open out from the ground floor master bedroom onto the front porch. Another set of louvered doors provide privacy from street view although I don't think anyone could see through the dense bougainvillea even if they tried.  Still it's nice to have the privacy in this little cocoon of a bedroom. The bath is located behind the closed door.

I assume a prior owner converted the attic space into a second floor bedroom and bath. A skylight floods the stairway with light and also introduces light to the great room below. A dormer was also added as were two rear second floor balconies. Our Historic Architectural Review Commission might not not allow a skylight or a dormer to be installed today. (They don't allow a lot of things that made Key West so eclectic and so interesting.) I snapped a photo of the guest cottage of the house next door. The views from the balcony are really sweet. Once you see this home, you'll understand why people choose places like this live. They are charming, quiet, and cozy.

621 Catholic Lane first appeared on the Historic Sanborn Fire Map of 1889. The house was not given a street numerator until 1912 when the street was still known as Fiat Ct. I was not able to find out when the street name was changed to Catholic Lane. Today there is not even a street sign to let passers-by that the street even has a name.

The house has 1542 sq ft interior living space under interior roof plus substantial covered outdoor space in front and rear. The current owner told me a previous owner added the rear porch. Most of the renovations look to have been added sometime after 1984 when Evan Rhodes sold the home to the prior owner. A new owner could leave this home as is and move in the day after closing. Or maybe a new owner might do something to recreate the interiors and re-work the back porch. I think this space could be magical. The lot measures 50.25' X 94.25' (4736 sq ft) which is quite large for Old Town. Much of rear lot is covered with brick. But it is the huge canopy tree with abundant shades that makes this space so interesting. A new owner might be able to obtain permission to add a pool. CLICK HERE to view more photos of the house and this pretty lane. You really need to look at these photos.

Located across Catholic Lane

621 Catholic Lane is offered for sale at $950,000 by Preferred Properties, that's where I work but this is not my listing. CLICK HERE to view the Key West mls datasheet on this home. Then please call me, Gary Thomas, 305-766-2642, to set up a private showing of this special home. I am a buyers agent and full time Realtor at Preferred Properties Key West.