Author: John Rice

Random thoughts on a busy week

by John Rice

Whew!  I have been on the go with 3 buyers lately and a few people that maaaaaay do something sooner or later.  I haven’t been home much at night or on the weekends.  I miss seeing my kids and wife, but I am glad to have the work!

I have had 2 big disappointments this week.  I found the PERFECT house for one of my buyers.  I mean perfect.  The area, size, layout and everything was just perfect!  It had hardwood floors in the main rooms, new carpet in the bedrooms, slate in the kitchen, and all the lighting and hardware had been updated.  I call the agent to tell her that it looks like an offer is coming.  She tells me that they just sold the place a few hours earlier.

Here is one house out of about 200 in its price range in Lexington and 2 people want it.  Can you blame them after my description.  It just goes to show that THE BEST house in any price range will sell.  My gut is that of the 200 or so houses in this price range, more than half are ones that NOBODY wants.  Yet, they are there and make the market look worse than it is.

The next house was totally awesome for under $100k.  The listing agent was new.   This was his 1st listing.  He under priced it by maybe as much as $7000.  Anyway, he told me it had a “Kickout Clause” .  That means that if the seller likes my offer better, the other buyer has a given amount of time to remove a contingency.  As it turns out, the wording on the other offer for the kickout clause was so vague, nobody knew what it meant?  The time to figure that out would have been BEFORE they accepted it, but hey.  My buyer ended up walking away in frustration.  The new agent didn’t have the experience to advise/guide his client with any more than textbook theory.  Oh well!  We found her another house that I think will be good for her, but it isn’t as nice as that one was.

I also got a contract on one of my listings this weekend.  I am totally stoked about it too!  This house is in a neighborhood where the builder is still building and about every 4th house is on the market.  To make matters worse, right after I listed it, an IDENTICAL house came on the market just 3 doors up the road…….FOR $5000 LESS!!!!  Well, I guess this is where marketing and staging comes into play.  I worked with my sellers (who are great BTW) to thin things out, arrange furniture, etc.  I had my totally awesome extrememly talanted (yeah, I am talking about you Shaun) photographer come out.  I know that when people are considering a house, they go back home and keep looking at the pictures as they make up their mind.  That is another benefit of having such nice pictures and marketing remarks that evoke an emotional connection to the place.  Don’t believe me?  Well here is what most agents do:  “Great 3 bedroom house in move in condition conveniently located.  AND THE DISHWASHER IS NEW!!!”  See?  Did that do anything for you?  I didn’t think so!

Well, that is my week so far…………..

More on the Market + A random thought

by John Rice

Alright!  I got the latest Rector-Hayden Report today.  I have been curious to see the stats from last month.  I know I was busy, but I wanted to see if everybody else was too.  Much to my surprise, there hasn’t been much of a change for Lex over the past month.  That is not a bad thing.  Being stable in a bad economy with increasing unemployment shows how resilient Lex really is!

The Lex market is pretty balanced up to about $250,000.  Over that, there are many more houses that buyers.  It looks like the surrounding counties are not doing as well as Lex.  Last year, people quit considering a cheaper house just outside Lex when gas it $4/gallon.  Even though it is much cheaper now, it looks like the sting is still there.  I can’t say that I blame anybody.  Who wants to save maybe $100-150 a month on a mortgage and spend more than that on gas.

I still think real estate is a good investment.  You get to USE real estate.  That is what I like.  I paid $220k for my house about a year and a half ago.  It is worth that still, maybe a little more if I were to time listing it when there wasn’t much competition in my area.  All the while I have been living in it.  I think that is pretty sweet.  If you want to get technical about it, even if I sold my house for the same price, I would be getting MORE for it.  How?  Well, while I have been living here, I have been using it up.  Furnaces, carpet, appliances, etc, all have a lifespan.  I have used part of that life span.  If I sold for the same price I would have gotten appreciation since I wouldn’t have to pay back the use.  Anyway, I guess that is another blog topic!

Here is a temp link to this month’s Rector-Hayden Report:  http://info.rhr.com/RH_Report/Report_Pages.php?Agent_ID=70294

Palomar Hills-A good pick!

by John Rice

I just sold a house in Palomar last month.  It had been a while since I had really taken a good look at that neighborhood.  Probably been about a year since I sold a house out there.  I really like Palomar.  That is easy to say, since there isn’t really anything to not like about it.

That neighborhood was new about the time I started college, so lets just call it the late 80’s.  Back then, it was kind far out.  Now it doesn’t seem that way at all.

To me, you can divide Palomar into about 6 sections.  All of them are good.  When most people think Palomar, I think they are mainly talking about the big expensive house part, which is around Palomar Blvd, Palmetto and Peppertree.  This part is a little more stately that the rest of the neighborhood.  Prices run from $300-500k.  Occasionally you can find one under $300k.

Another big house section is a little further down Palmetto towards Mangrove.  The houses are a few years newer.  The lots seem to be a little smaller and basements aren’t as common.  It is still a very nice area.  My favorite thing about this part is that there is only one way in and out.  Great for kids!  Prices are in the mid $200k range without a basement and up to about $325k with a finished one.

The next area is on part of Lyon Drive and Palmetto Springs.  A few houses on Lyon and all of Palmetto Springs were built by Peter Soteropoulos in the mid 90’s.  Most of these houses are in the $190-250k range.  I guess this is where I should mention a cul-de-sac at the end of Lyon.  There are a handful of almost new houses on this street.  They were geared more towards empty nesters, I think.  The yards are tiny.  Some of them back to the patio of the restaurant in that old house on Harrodsburg Rd.

Then you have a street called Valencia.  These houses remind me of something out in California.  Their lots slope down to Man O War Blvd, so they are built into the side of a hill.  This area hasn’t done as well lately as you would think.  There has been a lot of turnover.  I think you have to really want almost no yard to enjoy this area.  While it ain’t for me, I can see the attraction that a small slice of the market will have with these houses. 

The last single Family part is called “The Glades.”  These two streets, Maura and Glade, have houses built in the 90’s by Schneider Designs.  There is also a couple of buildings with townhouses.  I like this area.  It has a nice cozy feel to it.  Most of the houses have a first floor bedroom.  Since they are from probably 1200-1700 square feet, they are popular with empty nesters.  I know of several people who downsized from their big Palomar house to this area.  That is always a good sign.  The only thing I don’t like are the ones that face Man O War.  I have been over there really early in the morning and have heard the drive-thru at McDonalds!  Prices in this part are from about $140-165k.

The last part of Palomar is the condo/townhouse section.  There is a nice little cluster of them about in the middle of the neighborhood.  This seems to attract empty nesters and retirees.  The streets are Stone Garden, Terrace Woods, and Rockledge.  It is very well kept.  Some have a nice view of a small pond.  It is a short walk to the park/clubhouse/pool.

One of the things that makes Palomar unique is the park, clubhouse and pool.  A few neighborhoods like this have a clubhouse with a pool, but Palomar also has a really sweet park.  I think it would be a great spot to take walks, or take my kids to play.  It is really pictureque.  You pay $600 a year to join.  It is mandatory for most of the nieghborhood.

 The schools districts is one of the best.  Paul Lawrence Dunbar High School and Rosa Parks Elementary are 2 of the most sought after schools.   The airport is close.  You have a nice shopping center right across Man o War with a Wal-Mart grocery store, fast food, hardware store, gas station, bank, fitness club and Panera Bread.

I rate Palomar as a good value.  It has well defined boundaries, so the threat of a neighboring area negatively effecting values is a longshot.  Behind Peppertree, there is an agricultural piece of land.  Who knows what that will one day become, but there is no where for a road to connect the two areas.  

Like I said, there really isn’t anything to not like about Palomar.

25 Random Things to Know About Building a New House

by John Rice

Since these “Random Things” are so popular, I thought I would write one about the stuff you need to take into consideration when you are building a new house in a new neighborhood:

1)  Check the zoning of the undeveloped areas around you.  Agricultural could turn to residential, but industrial hardly ever changes to residential.

2)  Check to make sure that some of that land around you isn’t going to be high density apartments or commercial.  Neither will benefit the resale value of your house.

3)  Ask where things like utility stuff and telephone poles will be. 

4)  Verify the school districts for the neighborhood.

5)  Find out what the Home Owner’s Association will be like?  Rules? Fees?

6) Realize that things change.  Have you seen those nicer, bigger houses near Wilson-Downing as you approach Belleau Woods?  That whole neighborhood was going to be larger houses until the interest rates shot through the roof in the early 80’s.  The builders then built the smaller houses that were selling.  The same thing is happening now as sales of houses over $250k are slow.

7)  All those lines on the blueprint for the lot mean something.  Can you tell if there will be a storm sewer drain in front of your house?  Are there any easements for utilities that will prevent you from adding on to your house later?  Also, if the side yard setback is 5 feet, that means that likely the houses next to you will be 10 feet apart from your house.

8)  As you pick a lot, think about what the traffic patterns may be like down the road.  If there is a big street that abruptly ends, it is likely that it will keep going as more houses get built.  Autumn Ridge Drive is a prime example.  That was a nice quiet street, even though it was the main drag for the neighborhood.  Who would have ever thought 15 years ago that it would become a cut through to Hamburg?

9) Think about how the water will drain from the lots around yours.  You don’t want every body’s water to come to your yard.

10) If there are enough houses built, drive around and see what other models are built.  You don’t want to pick the 4000 sq ft model and find out that most of the neighborhood is going to be 2000 sq ft houses.

11)  Don’t go overboard with the upgrades.  Most of them don’t add any value to your house when you go to sell.  A few add value, but it is less that they cost.  Pick them only if you are content knowing this.

12) Think about the future as you make your selections.  Ever walk into a house that hasn’t been updated from the 70’s?  The reality is that all that stuff that you pay for now will be out of style sooner than you’d like.  Neutral is always better for resale.

13) These are tough times for builders.  Avoid giving them a bunch of money to start the house.  It is unlikely, but occasionally builder are robbing Peter to pay Paul.  When it catches up with them they have no cash left to finish your house.  Years ago there was a custom home builder who was taking huge sums of money from people to build their dream homes.  Turns out he was using that money to live large. 

14) If you don’t know much about the builder, ask for addresses of other houses they have built, check the BBB, check the PVA to see how many other lots they have, and check to see how many houses they have on the market.

15) Find out what kind of warranty they offer.  Most will either do a 1 Year Written Warranty that they provide, or they will buy a 2-10 warranty that is kind of like insurance.  It includes 1 year coverage for workmanship, 2 year coverage on the systems of the house, and a 10 year structural warranty.

16)  Before you write the offer, check to see how many other houses the builder has on the market.  They can only borrow so much money.  Sometimes you can get them to be a little more flexible on price if they need to sell something before they borrow more money, but not a HUGE amount.

17)  Read the contract!

18) Most of the contracts that I have see allow you to have the house inspected before the closing date.  Some use wording that says you can ask for repairs, but then go on to say that the builder will fall back on Building Inspector for the decision.  Guess what, the building inspector has already said it is okay if the city issues a Certificate of Occupancy.  That means that they really are saying that they DON’T have to make any repairs!

19) I aways recommend an inspection.  Occasionally something gets over looked in a house even with the best builders.  The worst case I have ever heard of is where a house had no insulation in the attic!  The owner didn’t find that out until he sold the house and the new buyer’s…………had it inspected!

20)  A lot of builders like to finish minor stuff after you close.  I always try to get them to get it all done before the closing.  It is the only leverage that you really have.  If it is a builder that I know nothing about, I insist. 

21)  Sometimes things don’t get done before the closing.  Sodding is one of the most common items since it is a seasonal thing.  Since the contract is consummated at closing, make sure that you put something in writing that will survive the closing.  Most builders will come back, but I am not that trusting when it comes to your money.

22)  Make sure that the builder has obtained a Certificate of Occupancy from the city.  If you are getting a mortgage, odds are that you wouldn’t even be at this stage if there wasn’t one issued.  The lender wants to make sure that the house can be lived in too. 

23)  I always recommend buying Owner’s Title Insurance.  Especially for people that will have a lot of equity.  Your lender has you buy Title Insurance when you get a mortgage, but it covers THEM!  It is rare that there is a title defect, but if it happens you will wish you had spent a few hundreds bucks to protect yourself.

24)  Close the deal

25)  Move in and enjoy!

Howz the market in Lex?

by John Rice

You’d never know it by the headlines, but the market here in Lex is really picking up.  Maybe it is interest rates being low.  Maybe people were waiting until after the election.  Maybe we are all desensitized to the economy.  Maybe there are just fewer agents this year to take care of all the sales.  I don’t know what did it, but every agent I know is pretty busy.  I know I have really picked up in the past few weeks. 

Now I know everybody expects a realtor to always say now is a good time to buy or sell.  I usually avoid riding that wagon since I know people take it with a grain of salt. BUT, now really is a good time to do something.

My thinking on this is that right now is near the bottom…….at least locally.  I think that years from now we will look back and see that THIS would have been a good time to make a move.  Prices are all about supply and demand.  New construction has been way way down in the Bluegrass for a couple of years.  There is less on the market right now than in the recent past.  (So there is what is happening in the Supply Side.)  Interest Rates are extremely low.  People ARE coming out.  Sales are happening.  (There is the Demand Side.)  Put all that together and it sure sounds like times are improving! 

Oh yeah.  Don’t be alarmed when you see in the paper that sales in 2008 were down from 2007.  As a consumer, what you care most about is supply and demand, which shows in how many months of inventory there is.  Right now, there is about a 5-6 month supply of houses under $250,000.  Over that, there is more.  6 months is considered a balanced market.  As long as supply and demand are in balance, prices are stable.  Realtors are the ones that are the losers when sales slip. 

I hope I have explained all this in a way that sheds some Truth and reality to the old “Now’s a great time to buy” pitch.