When is the best time to be a buyer or seller?

One of the first things I do every day is look at ALL the new listings, look at ALL the price reductions, look at ALL the new pending sales, and look at ALL of the new closed sales.

Want to know some things I have noticed over the years?

In the spring, the number of houses selling quickly is higher than any other time of year.  More buyers are out.  There are usually fewer listings early in spring since most sellers want those first few warm weekends to work on curb appeal.

In the summer, we start seeing more new listings.  Sales remain strong.  Overpriced houses get overlooked.

In the fall, we see fewer new listings.  The frenzy slows down.  There are fewer multiple offers and fewer houses sell the first day or two on the market.  In an appreciating market, I also see houses that have been on the market for a long time begin to sell.  Why does this happen?  They were the overpriced listings in the spring and summer.  With prices going up, they have appreciated into their list price and now are competitive with newer listings.  Also, in an appreciating market, most sellers get greedy.  They want what their house is worth PLUS $5-10k.  Yesterday’s overpriced listing looks really good to a buyer compared to a brand new overpriced listing.

In the winter there are far fewer new listings but this is the best time to be a buyer.  Most sellers have been beat into submission by the buyers of prior seasons and are the most realistic they will ever be.  For a seller, the benefit is that your competition is typically just the other listings that are left over from spring and summer.  You stand a better chance of catching a buyer.

So, when is the best time to be a seller or be a buyer?

If you are a picky buyer looking for something specific, spring and summer because you will have more choices.

If you are a buyer who isn’t too picky, then fall and winter may get you the best price.

If you are a seller with a house that has been a buyer’s second or third choice all spring and summer, then your best bet is the fall and winter.  The reason your house never made it to be somebody’s first choice was because there was always a new listing that lured the buyers away from your house.

If you are a seller with a nice house and are willing to price it appropriately, then you will sell quickly any time of the year.  Your house will always be somebody’s first choice.

Which builder would I pick?

Before I spill on which builder, let’s establish the criteria:  Priced between $200k and $400k and brand new.

Ok, you ready for it?

To keep me out of a lawsuit, lets just say it is the big one in town.  Four letters.  You know the one.

I can already feel the tension in the air.  It is because I get it all the time when people ask me who to use and I suggest this builder.

Sure, everybody in town knows somebody who knows somebody who knows somebody who has had a bad experience with this builder……but nobody ever knows “That” person first hand.  I own 3 of their houses myself and have sold 60 of them of all ages.

It has been my personal and professional experience that they build as good of a home as anybody.  Am I saying they are perfect?  No.  I am just saying that after selling new homes built by other builders and selling hundreds of “Used” homes built by other builders,  their homes seem to have fewer issues caused by the construction of the home.

Any house is something with thousands of pieces assembled by lots of different trades that has to withstand both time and mother nature.   Things go wrong with them.

I think one reason this builder has so many detractors is just because of their scale.  If you have build maybe 25,000 homes in the Bluegrass and 5% of those people had a bad experience, that is a lot of people.  If you are a smaller builder who has maybe built 100 homes in the Bluegrass, that same 5% complaint rate is only 5 people.

All I know is that if I were wanting a new home in the $200-400k range, I would rather go with a builder whose 50 year old houses are still standing verses somebody without much of a history.

Advice as we dig out of a housing shortage

I’m starting to see an interesting thing happen.

We all know that due to the lack of new construction for many years, we have a shortage of houses for sale.

Many people have said the way to solve this is to build our way out of it.

I am starting to see this happen.

In Nicholasville between $200k and $250k, 17 of the 30 houses for sale are new.  In Lexington’s 40509 zip code, there are 104 houses for sale between $300k and $500k.  48 of them are new.  That’s an incredible amount of houses for sale in the Hamburg part of Lexington.  No wonder sales are slowing way down in that price range and I am seeing $10k price reductions left and right.

So what does this do to sales of existing houses?

Most people who buy a new house are only looking at new or newer houses.  If you live in an older existing neighborhood, you are probably in good shape.  Few buyers will seriously consider a 20+ year old house on a bigger lot with mature trees AND a brand new one on a smaller lot with trees shorter than they are.  If you have a house that is less than about 10 years old in this price range, well, you may have a hard time competing with brand new houses.

Any time I have a buyer wanting a newer house in an area with a lot of new construction around them, I always tell them that it might be hard to sell and/or might not appreciate that much until the last new house has sold.  The longer they plan to be there, the better.  If they tell me they may only be there for 2-3 years, I tell them it might be wise to pick another house.

If you are buying in an area with lots of new homes around you, try to pick one that has some unique feature or has a super good lot.  In a neighborhood where most homes aren’t too much different from each other, these small things are the difference between your house selling and always being a buyer’s second choice house.

How to pick your first rental house

The first thing to know is that you want an exit plan.  You want to buy something that will be fairly easy to sell when that time comes.  That is why I usually suggest a single family home in a decent neighborhood.  When you sell it, your buyer pool will be owner-occupant buyers who will happily pay a full retail price.

The second thing to know is that you pick your tenants through them picking your house.  You have a crappy worn out rental, guess what type of tenant is going to be willing to live there?  You make your house one of the nicest ones in it’s price range and you will attract the best qualified tenants out there.  Also, if you have one of the best houses they could ever afford, why would they move?

Here are some things that I think make a house a good pick:

1.  A ranch house.  Who doesn’t like one?  They are suitable for buyers/tenants in all stages of life.  They are easier to paint by yourself since there is no staircase.  You can clean out gutters with a step ladder.  They are just easier to work on period.

2.  A house on a slab.  When the wax ring around the toilet fails and when water gets splashed out of the tub, there is no wood to rot.  Also there is no water to collect under the house and grow mold.

3.  A smaller house.  Fewer people can live in a smaller house.  That means less wear and tear.  While a 2 bedroom house has a little more limited market when you sell, tenants usually don’t care if a house is 2 or 3 bedrooms.

4.  A simple roof line with not much of a pitch.   The fewer ridges and valleys the better.  Not only are they cheaper to replace, there are fewer places to get a leak.

Here are some things I try to avoid:

  1.  Basements.  They all have the potential to leak.
  2.  Sheds.  They are just one more thing to maintain and tenants usually leave you stuff they don’t want when they move out.
  3. Huge yards.  When they get out of control, it takes a lot of time to bring them back.
  4. Big garages.  I’m talking more than a regular two car garage.  Usually tenants who are attracted to a huge garage have a lot of stuff to store or hobbies that need the space.  Either one means you might need a dumpster when they move out.
  5. Fireplaces.  Do you really want somebody starting a fire in your house?

Now a lot of this is based on paying retail.  If you get a great deal on a house with a huge lot or a basement, take it.  A good deal can make up for potential future headaches.

My ideal house would be a smaller ranch on a slab built after 1960.  It would be 2-3 bedroom and have 1-2 baths.  A normal sized, flatter yard for good drainage.  On the lower end, no garage is okay.  If the house is worth more than about $150k, I would want a garage more for resale than to make a tenant happy.

 

 

Zillow, PLEASE stop doing this

Okay Zillow.  I can deal with you saying every house has a carport.  I can deal with your inaccurate Zestimates.  I can deal with you often messing up school districts.

What I can’t deal with though are the Pre-Foreclosure listings.

Why?  Because they ARE NOT FOR SALE!

Zillow, people see a house on your site and think it is for sale.  Why do you confuse the public and leave it to us agents to explain to our clients that the house you just posted is not for sale?

Here is what is going on with those Pre-Foreclosure listings.  The person who owns the house is far enough behind on their mortgage payments that the lender has filed a lawsuit.  As soon as that happens, Zillow posts it as a Pre-Foreclosure.  Since the person who owns the house is not the bank, you cannot go see it since it has not been foreclosed yet.

If the lawsuit goes the way the lender wants, the house will eventually be sold at the Master Commissioner’s sale.  The Master Commissioner is who is appointed by the court to sell the house.  Anybody with 10% down and proof of the remaining funds can go bid on the house.  You have to have the funds available.  You can’t go down there with 10% down and a preapproval letter for a mortgage.  You have to show proof that you have the balance of the money available.  You also can’t see the house.  You have to buy it without any type of inspection contingency.

There are two types of buyers at the Master Commissioner sale:  Investors and the Lender for the house.  Sometimes investors get the house.  Most of the time the lender buys the house.  Well, we call it a sale but in all reality what is happening is the money the lender pays for the house goes to settle the debt the seller owed them so they are getting it right back.  Picture a dollar getting pulled out of your left pocket and going into your right pocket.

If an investor buys it, most of them either flip it or rent it.  If the lender buys it, it eventually goes on the market for sale.  This time when you see it on Zillow, it will really be for sale….and it will probably say it has a carport.  And the Zestimate will be inaccurate.