Month: October 2017

A fun way to lose $100k

by John Rice

I had a client ask me about a gorgeously renovated house in South Lexington the other day.  It looked like something right out of HGTV.

What was the problem?

It was easily $100k more than anything in that neighborhood.  It was around $350k in a neighborhood of $180-225k houses.

It was too risky.

Now, it could be this was the first house to be totally renovated and many more will follow in this neighborhood.  Or it could forever remain the one house that doesn’t really fit in.  Only somebody with a crystal ball could tell.  For now, I think it is too risky to be that first person to pay waaaaay more than what any house in the neighborhood is worth.  If this isn’t the next “Up and coming” neighborhood, then the buyer for this house will find that in 10 years, nobody wants the 2017 trendy finishes they paid an extra $100k to have.  It will just be another outdated home in the neighborhood and no longer the best one……and will be worth about $180-225k adjusted to inflation.

The best place I have ever lived

by John Rice

HK for blog

 

Of all the places I have ever lived, this house was my favorite.

Somebody once told me that people either are moving away from pain or moving towards pleasure.

We were definitely moving from pain.  We were miserable at our old house due to two neighbors.  One held poker games several nights a week.  40-50 guys gambling and drinking until the middle of the night was going to eventually erupt into something scary.  The other problem neighbor was an animal hoarder who kept multiple dogs outside 24/7.

We had a contract to build a brand new house.  Then it turned out that the Army Corp of Engineers had not issued a required permit the developer needed.

My wife told me I had better find her a house fast!

I had shown the house we eventually bought to another client.  It didn’t really impress me.

The price had just been reduced so I told my wife we could go see this place but I had been in it and didn’t think she would like it.

She did though.

I wasn’t too excited about it, but it was better than where we were living.  We bought it on my oldest son’s birthday.  I remember having to leave his party early to go drop off the signed contract to the listing agent.  This was a few years before we all used electronic signatures.  Today, I would have been out in the backyard with he and all his friends doing it from my phone.

We moved in.  I woke up the next morning and it felt so good to have all the natural light flooding the two story foyer.    It also felt good being on a dead end street.  And knowing my boys were safe.

We had no idea what an awesome time was ahead of us.

There were lots of boys the same age as our two.  A family across the street was in the same magnet program our boys were in.  We carpooled a lot.  We didn’t realize it when we bought the place, but it was just down the road from my oldest son’s best friend.  My wife’s roommate from college lived about 200 feet down the road too.

It just felt like home.  We knew our neighbors.  Everybody was friendly.  Our kids and all the other boys could play outside.  The floor plan really worked well too.

It was…….perfect.

This is what I hope to find for all of my clients.  It feels really good when you touch base with somebody after they have moved in and they tell you they are loving everything about their new home.

 

Got $500k or more? It’s your market

by John Rice

Once a month the local MLS sends out the sales statistics.  Being into numbers, it is always fun to drop a K-Cup in the Keurig and check it out.

I guess the biggest news is that when you compare Fayette Co sales in September 2016 to September 2017, the number of new listings was down 16% and the number of sales were down 13%.   Hard to sell houses when fewer are for sale.

This whole year has been a frenzy.  Agents and buyers are struggling to find houses.  Everybody is talking about what a hot market it is…..but I think the word we use should be tight.  It’s a tight market.

The hot market was last year.  There were more sales in 2016.

January 2017 beat January 2016.  390 sales compared to 318.

Every other month in 2016 saw 40-90 more sales each month.

The fine line between a seller’s market and a buyer’s market has always been which side of 6 months of inventory we are on.  Less than 6 months is a seller’s market.  More than 6 months is a buyer’s market.  In Lexington, it is a seller’s market up to $500k.   It is REALLY a seller’s market under $250k.   Got $500k or more?  It is very much a buyer’s market.  That is why prices on houses in this price range have been pretty flat for several years.  It’s a great time to move into this price range, especially if you are selling something cheaper.

I just finished that cup of coffee, so I guess my closing remarks will be that it is an interesting time to be in real estate.

 

How good advice can be not so good

by John Rice

The first new car I ever bought was a 1996 Geo Prizm.  This was before the internet.  Back then, Consumer Reports was not only the most respected source for advice, it was about the only one.

They had a service where you could purchase the invoice cost to the dealer for whatever car you wanted.  They suggested bargaining up from the invoice rather than down from the sticker, and even suggested an amount deemed a reasonable profit for the dealer.

It all made perfect sense.

I thought I was being the wisest consumer ever.

I went into whatever the Chevy-Geo dealer in Winchester was called back then.  They had a dark green Prizm that my wife wanted.  We later brought our first born son home from the hospital in that car.

I sat down, told the guy what I would pay based on their invoice cost.  He immediately accepted.  Of course, it was about 7:45 PM by the time we got there.  I have since learned that showing up at a time when everybody is wanting to go home is the perfect time to walk into a dealership.

We got the car.

I felt like a hero for getting the dealer to accept my terms.

Later I realized that most of the Geo Prizms had been sitting on the lot for a long time.  This was when full sized truck based SUVs were gaining popularity.  There was a waiting list to get a Suburban since they couldn’t build them fast enough.  Gas was cheap.  A small economy car was not a hot seller.

I received great general advice that turned out being not so great for my specific situation, which is why the dealer was eager to accept my offer.

I see that happen a lot in real estate.

I wish there was a 3rd party in the deal that was looking out for me.  Somebody who could have given advice for my specific situation.  Somebody who would have told me that what I was wanting to buy was a car the dealers were having a hard time selling.  That they were more motivated to sell than I was to buy.  I wish there was somebody who would have told me that buying a small economy car at a time when everybody was buying Suburbans and Tahoes meant that it would depreciate rapidly.

I love being such a person for my clients.