Buying Advice

Should I buy if I know I won’t keep the place for long?

by John Rice

Back when the market was bad, I would always tell people not to buy a house unless they did not know exactly how long they would own it. If they knew they would only be in town for 2-3 years max, my advice was to rent. Same for “Kiddie Condos” too where a parent buys a condo verses renting an apartment or paying for a dorm for 4 years.

Back then the only variable was the housing market. Inflation was flat. Today is a LOT different. The value of the property AND inflation are both variables that are poised to benefit you in this situation. All the major players are predicting both housing prices to continue to rise and inflation to rise in the near future. That’s a double bonus for you and really for anybody buying any asset right now. Buy now at today’s lower price and pay it back with deflated dollars through a mortgage. It doesn’t get any better than that.

Many people seemed to enjoy my last two posts about my weight loss journey. I’m thinking I might include a little bit more stuff that’s going through my mind these days. I’ve gone through a lot of changes and unfortunately I’m now old enough to want to share my experiences and wisdom gained along the way.

Growing up, I always had a lot of anxieties. Sometimes they would be really debilitating. Couple anxiety with a mind that never turns off and it gets worse. I know a lot of people with what is now called high functioning anxiety. I am hoping this helps them.

I think two things helped me out the most.

The first was that I was able to train my mind to separate my perception of reality FROM reality. When I would get anxious about something, I would tell myself “Okay John, this is what you FEEL is happening but this is what is REALLY happening.” It sort of switched my response from being emotional to logical.

Then I realized that most things that make you anxious are either things in the past or the future. We all tend to dwell on either since I sort of feel in general, humans suck at being in the present. If I was anxious about something in the past. Maybe dwelling on some awkward social situation where I worried if I said the wrong thing, I would just try to learn from it and go on, making the next awkward situation easier……because guess what, I can’t undo the past! For future anxiety, I would just try to focus on the present and remind myself again that how I feel about it is totally different than reality and reality always wins. If it was some sort of performance anxiety, I would make whatever I needed to do as basic as possible. That seemed to make it a manageable task. I still do this if I have a super stressful day ahead of me. If I wake up and have to take 3 different clients out to see houses, negotiate a repair list, write an offer, have a closing and otherwise have a crazy busy day, I might just tell myself “All you need to do John is drive around with people and look at houses, make a few calls and do some paperwork.”

I really think like any obstacle in your life, you need to realize YOU can train yourself to control your mind and your responses to things. It isn’t easy and it isn’t quick because you are basically battling yourself. Just slowly do these two thing and you will find your anxiety level decreases.

Why Zillow is selling homes for less than they paid

by John Rice

This may not be news to you, but Zillow got into the business of flipping homes in several larger metro areas. They recently stopped buying houses and are selling many of their homes for less than they paid for them.

If you read headlines or even worse, get on YouTube, you could conclude that the market is about to crash and Zillow knows it.

I don’t think that is why they are selling their homes for less than they paid for most of them.

I think they overpaid for them in the first place.

Zillow’s paper thin profit margins on these flipped homes was based on their data. I have always said you can’t argue with data. Data is always correct all the time. The conclusions drawn from data is not always correct though.

Their data told them what a house should be worth and they paid that for it. While I don’t know exactly what data they use, I imagine it is very similar to the data an appraiser would use such as general condition, square footage, features, etc. Once you have all that, you look at what houses have sold within a radius or within the same neighborhood, make adjustments for hard data differences and then whatever number is at the end of the equation is their Zestimate of value.

What Artificial Intelligence and computer algorithms cannot tell you though is what a buyer will like or dislike about a house. It cannot tell you that buyers tend to not like a backyard that slopes uphill. That they usually don’t like a steep driveway. That there are two Ball Home floor plans all over the Bluegrass that are same size and one of them always sells for more money. That there can be a huge value difference between two identical floor plans within the same neighborhood just due to where it is within the neighborhood. All of these things are subjective.

Zillow has been telling the public that they don’t need a Realtor any more. All you need is them. Sounds to me like Zillow could have used the local expertise that only an experienced realtor can provide.

Here’s why you’re not winning in multiple offers

by John Rice

Some offers are better than others. Some people think it is all about who makes the highest offer but there are other things to take into consideration.

Here is the hierarchy of offers:

  1. Cash offer.
  2. Conventional loan with large down payment.
  3. Conventional loan with smaller down payment.
  4. FHA/VA loans. (Because the appraiser for these loan types does a minor assessment of the house. If the condition does not meet minimum standards set out for each loan type, the Seller HAS to do the repairs in order for the Buyer to get their loan.)
  5. Any loan with down payment assistance where there are two loans that have to go through two different underwriting guidelines.

Then there is the offer amount:

  1. Offer over list price.
  2. Offer list price.
  3. Offer less than list price.

Then there is the home inspection. Three choices there:

  1. No home inspection at all.
  2. Buyer does home inspection but won’t ask for repairs. Will either accept the house or walk away.
  3. Buyer wants to negotiate repairs with Seller.

Then there is the appriasal:

  1. Buyer will cover any possible gap between sale price and appraised value in cash.
  2. Buyer won’t cover any possible gap between sale price and appraised value in cash.

Then there is the Buyer’s lender:

  1. Buyer will use a local lender that every realtor knows does a good job.
  2. Buyer will use a non-local mortgage company.
  3. Buyer will use a local lender that every realtor knows preapproves any buyer with a pulse.
  4. Buyer will use a bank that begins with the letter C that everybody knows will be difficult to work with and that it is unlikely to close on time.

Then there is the closing date and when the buyer can move in the house:

  1. Buyer’s realtor found out when Sellers want to close and put that date on the offer.
  2. Buyer’s realtor doesn’t know to ask this and that it can really help make their client’s offer more attractive.

Then there are contingencies:

  1. Buyer has no contingencies.
  2. Buyer needs to close their old house first in order to buy the new one.
  3. Buyer needs to sell their old house first in order to buy the new one, meaning it currently may not be on the market and definitely doesn’t have a contract on it.

Then there are closing costs:

  1. Buyer will pay their own closing costs.
  2. Buyer needs Seller to pay some of their closing costs.
  3. Buyer needs Seller to pay all of their closing costs.

What are your numbers? If you are a 1 in all of these, go out and make your offer. You will probably get the house. If you are a low number in any of these, best of luck. If you are the bottom of any or all of these, then you are wasting your time. Sorry, but you are. You are not going to get a house making an offer less than list price with an FHA loan, wanting to negotiate repairs with the Seller and needing to close or sell your old house.

Now that you know all the things a listing realtor is thinking about when they process all the offers, do what you can to make your offer the best it can possibly be. If you are doing a conventional loan and think you are going up against other cash offers, maybe waive the home inspection and offer to let the seller stay in the house briefly after the closing? If you have to close on your old house to buy, make your offer the highest one they get (realize too that moving twice costs money and it might be cheaper to pay the most for a house verses paying to move twice, live somewhere temporarily and then look for another house which will have gone up in value while you wait.)

When I moved in 2012, I was up against 4 other offers. Two of them were cash. That was unheard of back then but common today. I knew I couldn’t compete with cash so I went a little over the list price, waived the home inspection and offered to let the Sellers rent back from me until they found their new house. This was appealing to them since they had not found their new house yet.

Why now is the best time to buy all year

by John Rice

At the risk of sounding like the stereotypical realtor who is always saying that now is the best time to buy, it really is the best time to be a buyer since before COVID hit.

Why? Lots of reasons but the biggest single reason is that we are seeing more listings hit the market at a time when most everybody who was going to buy a house in 2021 has already done so. If the market were a restaurant, picture that time when you walk into a very popular place that is hard to get into at noon, but you have arrived at 12:45 and there is plenty of seating.

This won’t last long though, which is why I think now is a great time.

I put on a new listing for $185k last week. We had tons of showings, some interested buyers, but only one full price offer. That hasn’t happened all year. One of the agents that showed it gave me some feedback. She said that her buyer opted to buy another house that was closer to her grandparents whom she took care of. I read that and I was a little shocked. It was the first time in the past two years I have seen where a buyer had a choice between two houses. Lately the choice has been the one house on the market or waiting for the next new listing.

The week before that, I put 3 new listings on the market. Granted all sold the first day, but two of them sold for slightly less that the list price and only got one offer.

I think the market will remain strong for years to come. It might not be the frenzy we have seen but there is no doubt we will have more buyers than sellers for quite some time. We will see what next spring brings. That is usually when we see prices got up the most. That is why I think between now and late winter might be the best shot you have for getting a house!

5 things I like/dislike about country living

by John Rice

I never thought I would live in the country. I’ve always been a neighborhood guy. I like having pizza delivered. I like not having wild animals around, especially snakes. I hate snakes. When I was a kid, I was convinced that living in the country was the surest way to be murdered since nobody was around to hear you screaming for help. Or get eaten by a wild animal. I never investigated the statistics, but I was sure that living in town was MUCH safer than living in the country.

My love of seeing trees instead of concrete, hearing nature instead of traffic and leaf blowers, feeling calmness over chaos eventually convinced me that I could only get all that in the country.

So, here are my top 5 things I like and dislike about being in the country. I hope it helps you decide if country life is for you!

THINGS I LIKE:

  1. Peace. You can’t get this type of peace anywhere else. You wake up and everything is so calm. You notice more enjoyable little things like the wind blowing through trees.
  2. Space. I used to think having a big yard was space, but there is nothing like neighbors being 500 feet or more away from you.
  3. Sunsets. I have always loved the sunset. It is even better when paired with hills and trees than your neighbor’s roof and power lines.
  4. Being alone. I am either the world’s most introverted extrovert or the world’s most extroverted introvert. Whichever it is, I really enjoy when I am home. It recharges me.
  5. Being outside. When you live in the country, you tend to think of your property as land, not a yard. I don’t know if this makes sense, but when I was in a neighborhood, I thought my house was the property and it was just on a lot. Now I have switched it and think of my property being the land on which my house just sits.

THINGS I DON’T LIKE:

  1. Gravel. It’s usually all over the road and at the end of driveways. I am too into cars to not have this bother me.
  2. Snakes. I have only seen two of them but I did find a 5 foot skin that one left…..which means it is bigger than that now.
  3. Mowing. I actually love mowing. Always have. I just don’t like that it is a half day commitment. I especially don’t like it when you are half way done and it starts raining.
  4. Mowing.
  5. Mowing.

That’s it. Overall, being in the country has been super nice. The positives far outweigh the negatives. Every house in the country I have sold, the sellers have all missed their homes. Most of them moved back into town because they were driving more than they wanted to be. It can be a little tough for those with kids who are always needing shuttled to and from band practices, sports and other events.