Month: August 2012

What lobsters can teach you about real estate

by John Rice

Let’s face it.  There are basically 4 types of listings that all houses fall into:

1)  The house nobody really wants that is overpriced.

2)  The house nobody really wants that is priced right.

3)  The house everybody wants that is overpriced.

4)  The house everybody wants that is priced right.

Simply put, there are good and bad houses, with good and bad prices.

In any market and during any time of the year, the #4 houses will always sell fast.  The #1 house will not.  You can turn a #1 house into a #2 house just as easily as you can turn a #3 house into a #4 house with a price reduction.  Sorry if you feel like you’re ordering for the office at McDonald’s with all the numbers here.

A lot of sellers have a house that isn’t all that appealing and they want crazy high money for it.  I try to avoid those listings because I am not good at magic.  I am only good at being a realtor.

So, how does all this relate to the market?  Let me say this first.  The market is always changing, just like the prices of anything…..stocks, oil, lobsters.  It is all supply and demand.  Here it is August 28th.  We are on the downhill side of this year’s market.  Most of the buyers have bought and most of the good new listings have sold.  The buyers that are out there now don’t have as many terrific houses to see, so I am watching the ones that didn’t cut it in the spring/summer start to move now.  Many were either loser houses or ones that needed price reductions.   I checked the activity from the past week this morning.  I noticed that 3 of the 4 pendings sales in the $300-400k range were houses that I have either shown or looked at for myself earlier in the year.  Reason these finally sold is because there isn’t much that really screams AWESOME right now in that range.  Think of it this way.  It is 8:PM Friday night at a seafood place.  There is a 100 gallon tank with only 3 lobsters.  You pick the best of the three, knowing that if you got there at 5:30 you could have got a better one.

The only chance for that poor #1 or #2 house is to sell when that lobster tank is mostly empty.  That is from now until the grass starts to grow next year.  Once the grass starts to grow, the buyers come out.  A couple weeks later, all the listings start hitting the market and the cycle begins again.

 

What makes a location good?

by John Rice

We’ve all heard people say “Location, Location, Location”, and that location should be the top priority…..but what does it really mean?

In a nut shell, location has to do with a spot on the face of the earth that people want.  One person’s poor location is another person’s dream location……and the value goes up if more than one person considers it a good location too!

In Lexington, most long time Lexingtonians divide the town into north and south.  They consider the north a bad location and the south a good location.  Seems to me that anybody that has moved here since the early 1990’s divides the town into a few more categories:  North, South, Hamburg and Masterson/West.  Well, there is downtown too I guess, but it is still a niche market.  For really long-term Lexington folks, there is really only one spot they consider to be truly Lexington, which is inside New Circle Road.  To them, anything outside the circle is farm land that was pillaged to make room for me and you to ruin their fine town.

Just from my own experience, I see people who are drawn to each location for different reasons.  Some people like the Tates Creek area because it isn’t too far from anything.  Some people don’t want the Tates Creek area because nothing is extremely close.  Those folks tend to like Hamburg or closer to Fayette Mall.  Masterson Station is considered by many to not be a good location, but it sure works well for people who work on the west or north end of town and for those who need to be in Frankfort or Louisville.  Hamburg, which, btw, we use to call Andover back when Hamburg was only the farm, is hot with people who need to be by the interstate.  I could go on and on and on, but the bottom line is that different parts of town attract different people for different reasons.

Most people pick their location for access to work, quality of schools, the crime rate, proximity to shopping/dining/entertainment, and what the area looks like.  I rarely get an in-town buyer that doesn’t want at least several of those for their next house.  When you buy a place, try to get as many of those as you can.  The combination doesn’t really matter because I can tell you, houses sell all over town.  Take Hartland.  The school district isn’t all that, but it offers many of the other items.  There really isn’t much retail/dining/entertainment near Masterson, but I have several happy clients out there who really like it.  Parts of downtown don’t have any of that except good looks, and they sell too.  About the only places to avoid are neighborhoods that don’t have any of those desirable qualities….unless you plan on living there forever because nobody else will buy it.

 

Why would a Realtor go in a crawl space?

by John Rice

Why am I under a crawl space taking this picture?

Let me give you a little background of how I got here.  I just started working with a couple that will be first time home buyers.  Like many of the people who find me, they had been working with another agent that just wasn’t offering them much other than opening doors.

While they were checking out the place, I started looking around for things that could turn up on the home inspection.  I try to use my background in drafting, building materials, construction estimating and managing my own properties so my people will know if the place is a dump BEFORE writing the offer.  There is nothing worse than seeing somebody post pics on Facebook and tell their friends/family about a house they are buying and then to not buy it.  I don’t want that for any of my people, especially first time buyers.

So, one of the things I do when checking out the condition of a house is to push my foot down around the toilet.  There is a $2 thing called a wax ring that serves as a seal between the toilet and the flange in the floor.  When they deteriorate over time, you end up getting the subfloor wet every time you flush.  Replacing a section of subfloor and maybe sistering a joist to one that is rotting isn’t that big of a job, but jacking up the finished floor in the bathroom is a pain.  It is almost like a mini-remodel job.  This house had tile flooring.  When I showed the people it was soft, they could see the floor move under my foot (Okay, I’m big, but the problem was the floor, not me!)

So, to prevent my people from writing an offer and paying for an inspection before finding out how bad this was, we made another appointment to see the house wearing what my parents called “After school clothes”.  When we got to the spot under the bathroom, the picture is what we saw.  The subfloor is gone and both joists on either side of the toilet are rotting at the top.  BTW, the seller disclosed that the toilet had leaked and the floor had dried.  Sounds simple, huh?  That is why I always take anything the seller says about their house with a grain of salt.  I mean, they do want to sell it to you, right?

After this and a few other issues I discovered, my clients decided this wasn’t the house for them.  I think they may have felt bad about the time I put into it, but I really didn’t think this was the best choice for them either.  The search goes on.  (Gotta give a shout out to my client for realizing the crawl space had no vents before I did-that is awesome for a guy who has never been under a house before!!)

On the way out, we did find these two old beer cans from the days when there were pull tabs.

Vacation, Tear Downs & Big Lots

by John Rice

I just got back from vacation.  That’s why I haven’t posted much in the past couple of weeks.  Went to Hilton Head with my family.  We had a great time.  Wish we had been going there for years rather that just “Discovering” it now.  While I was gone, I did continue to think about real estate.  Here are some of my thoughts:

1)  Having an ocean in Lexington sure would keep our property values up.  Always funny to me how people will pay through the nose for something that there isn’t much of.  Whether it is land, a view or anything else that is desirable, it always cost more.

2)  Having just moved to an older neighborhood known for big lots that is where all the growth in town is heading, I can see people buying some of the older, outdated houses sitting on an acre and tearing them down.  This has happened in other spots in Lexington where you can get a large lot and a good location.  Probably the one that comes to mind the most is Lakewood.  Seems the pattern is you have a high end neighborhood with big lots that use to be on the edge of town.  Add 30-50 years to the mix and it gets awful attractive to buy the cheapest houses just for the lot.  The only thing more rare than ocean front property in Lexington is a house on a big lot.

3)  Right before I left, a client told me about 2 houses they found appealing.  One was about 20 years old in an established neighborhood on a nice lot.  Funny thing is, my wife and I considered this same house about 5 years ago, but it was over-priced then.  The other house was practically new.  It had all the trendy stuff you could want in a new house.  It was totally beautiful.  Better looking than any house I have owned.  It was on a crazy street and backed to the interstate.  I told my client that while the newer one would be nice now, once all that bling goes out of style, that house will just be another outdated house in a poor location.  The other one, while not as pretty, is always going to be desirable due to the lot and the neighborhood.  You can update any house, but you can never update a location.

4) Most of my real estate thinking over the past week has been how good of a job my wife does at picking vacation rentals.  She does a lot of research.  We have never been disappointed with a house she picked.  We stayed about a 5 minute walk from the beach in a house that backed to some type of lagoon.  It kind of looked like Gilligan’s Island to me with the water and all the trees.  It was nice to not have anybody behind us.  The house had a sweet pool and a covered/screened patio on the side of the house that was huge.  Google “13 Wren Hilton Head” if you want to see it.  I am sure that will get you to the property management’s site.  Maybe it is just me since I am a Realtor, but I always find that the real estate choices you make tend to impact how happy you are.  I mean, a view, features, location…..they all have a big impact on your day.  I think my wife would make a great Realtor.