Buying Advice

Old house/New house & my latest car

by John Rice

M3 S2

Cars and houses.

Those are my two things.  I can’t talk about too much else.  I don’t keep up with politics, pop culture or sports.  Get me on either of these two items though, and I am hard to shut up.

I recently added another car to my collection…..if you want to call a bunch of cars that aren’t old enough to be classics a collection.  Junk yard or used car lot is probably a more accurate term.

Sure, I’ve got a new car I use for work.  It looks good.  Is fast.  Gets lots of compliments.  But to me, it is sterile and generic.  It isn’t anything special because you can go to the dealership and buy one just like it.  I don’t feel anything but comfortable when driving it.

What gets my blood circulating is older BMWs.  I love the way they handle.  I love the way they look.  To me, the 90s-early 2000 BMWs were the high point for the brand.  An era I want to celebrate.

They don’t build them like they use to.

That is a phrase you often hear about older houses too.  Just like some people are into older cars verses new ones, some people also prefer an older house to a new one.  Old house people think all new houses are build poorly and lack any character.  The people who like new houses don’t want old house problems or floor plans that don’t work as well for today’s lifestyle.

Whether it is cars or houses, it is cool to like whatever you want.

As a realtor, the task at hand is getting in the mindset of your client and figuring out which they want.  When I buy a car, it is about what I want.  When I am trying to make a real estate love connection for a client, it is all about what they want.  Sometimes they don’t know yet and you need to help them figure it out.

After 12 years of doing this, I can pretty much tell if a client is really wanting to build a brand new house.  If you show them perfectly good move in ready houses and they don’t like any of them, they probably want to build even if they don’t realize it yet.   Another obvious sign is if their previous houses were brand new.  You would be amazed at how many people build a brand new house with each move.

The old house people will sometimes look at new houses, but they don’t like that the trees are small, or comment about the lack of character or perceived quality.  They walk in a perfectly good new house and don’t have any reaction at all.  It is just a structure with 4 walls to them.  Take them in an older house and they light up.

What do I like?  Both really.  In my dream world, I have an old house in a cool part of Lexington.  In that same dream world I have a super modern beach house.  The kind that is mostly glass.  In the garages of each place, I have a couple of older BMWs and also a new car because sometimes it is really nice to hop in a new car with really good air conditioning, comfortable seats and an awesome stereo with bluetooth.

 

Why NOW is the scariest market ever

by John Rice

I think right now is the scariest real estate market we have seen in a long time, for buyer’s at least.

I know, it seems crazy when prices are going up and there is a frenzy to buy any house as soon as it comes on the market……but that is what makes it scary.

When the market was so bad years ago, a buyer had their pick of dozens of houses.  They were able to make a good choice.  If the market dropped even further, you knew it would eventually come up.  You don’t have that luxury when you are at the top of the market.  You just hope it continues to go up more and more and more.  You never know where the peak is until it starts going down the other side of the hill.

I cut my teeth in real estate in the bad market.  Many people who did not use me as their buyer’s agent contacted me to sell their homes when times were tough.  Many of them had bought in the early 2000s when the market was hot.  They would tell me how they had lost several houses and they didn’t want to lose again so they bought the house they now wanted me to sell.  They’d say the market was booming so they didn’t think they could go wrong with a full price offer because that was the only way to get a house.  They were thankful to have even gotten their house.  The very house that at the time they were saying all this, had become a noose around their neck, preventing them from relocating for a better job, dividing families because one spouse had to start a new job while the other stayed behind praying the house would eventually sell.

The market they bought in was just like it is today.

While I don’t think we will ever see the market crash again any time soon, you know the market will go back and forth from being a seller’s market to a buyer’s market.

That is why I think being a buyer in today’s market must really make a wise decision.

Many buyers today, again, feel lucky to have gotten their house that backs to a business, is on a busy road, has a terrible lot.  They just feel lucky to have even gotten a house.  Period.  Many of them will call me when it isn’t as easy to sell because the agent that sold them the house is no longer in real estate.

I wish they’d call me now instead of using their uncle’s neighbor’s cousin’s babysitter who just got into real estate last month.

Here is what I would tell them:

“This market is tough.  There is no easy way to get a good house.  Yes, you will pay top dollar.  Yes, you may lose some houses.  Yes, you may even have to find temporary housing while we wait for a house that will be a good investment.  This market will cost you something-you can be burdened now and end up with a great house, or you can be burdened when you go to sell.  Whatever house you buy should set you up for your next bigger and better house.  You want to build equity to use as your next down payment.  You don’t want to have this house ruin your life should you have to sell in a buyer’s market.  So, let’s pick a winner that you will enjoy and that will be a solid investment for your future.  It isn’t going to be easy, but I am committed to making this happen for you.”

Real estate lessons from a bird?

by John Rice

Something happened in my yard yesterday that made me think about how important location is and why buyers need somebody with experience to guide them.

A robin built a nest in one of my bushes.  I have like 50 bushes in my backyard.  This poor robin picked the one right by my backdoor.  And she built it about 2 feet off the ground.

I am sure she thought it would be great to be over there by the dryer vent on these cool spring mornings.

She worked hard building a really nice nest.  It was a great place, she thought, to lay her 3 eggs.

If this robin had asked me, I would have told her I have a dog.  I also would have told her about the neighbor’s cat named Stewart that walks down the fence several times a day.  Stewart is the reason my wife can no longer feed the birds.  Our feeder area became an all you can eat buffet for that stupid cat.

Had she asked, I would have suggested one of the taller bushes at the back of my yard, on the far side of where Stewart cuts between my house and my neighbor’s house to get home.

But there are no realtors for bird houses.

You probably see where this is going.  My dog knocked the nest out of the bush and the eggs fell to the ground.  I can’t really blame my dog for being a dog, but we were looking forward to watching this robin’s journey to motherhood.

When you are buying a house, there is a lot of stuff to process.  It is easy to focus on what you like and assume you are seeing the whole picture.  Even more so when you have to make a quick decision in a fast moving market.  I always try to make sure my clients know everything I know about a location or house.

Some things I’ve told clients:

“I know you like that this house is right across the street from the school.  Between 2:05 and 2:50, there will be 500 moms parked in idling SUVs and minvans in front of this house.  Will that bother you?”

“I know you don’t mind that this house is on a busy road.  I know you’ll have 3 teenage drivers in the next few years.  I wanted to make sure you realized that they won’t be able to park on this street and this driveway is only one car wide.”

“I know this is a great house and any house will sell fast in this market.  I think that only having two bedrooms upstairs and the rest in the basement will make this house harder to sell in a soft market.”

I couldn’t do anything to help this robin, but I can help you pick the right place to live.

 

What amount should you put on the preapproval letter?

by John Rice

I was cutting edge back in the day.  I remember telling buyers and their loan officers why I wanted the preapproval letter to be made out for just the offer amount.  The logic back then was that it comes across better to appear like you “Can’t” go any higher than what you offered verses “Won’t” go any higher.  In fact, you can probably scroll through my blog posts from 7-8 years ago and read more about it.

Times change.

Now everybody does that.  When everybody does it, there is no point in continuing.  The strategy is lost.  Cliche.  Passe.

I don’t do it any more.

Now I spend my time telling buyers and their loan officers why I want the preapproval letter to be made out for the MOST the buyer could purchase.

Today’s market is not only hot, it is fast moving.  You often get one shot to make an offer.  You want to be as attractive to the seller as possible since they likely have multiple offers….and all the offers are good, so the winning offer often comes down to some secondary thing like possession date, waiving inspections or, wait for it, your financing.

All decent realtors know that your preapproval amount is based on your debt to income ratio.  You make an offer of $200k and produce a preapproval letter for $200k, the listing agent either knows you’re bluffing OR $200k is going to use all your debt to income ratio and the loan has more risk of not making it through underwriting.  You produce a preapproval letter that says $275k on that same $200k offer, and suddenly that listing agent knows that you aren’t eating up all your debt to income ratio.

Also, there isn’t any time these days to make an offer with a matching preapproval letter amount, then go back to your loan officer to revise the letter when the offer gets countered for more money.  You’ll lose the house while waiting to get a piece of paper that says you can go a little higher than your first offer was.

A couple of people have wondered if letting the seller know how much you have been approved for somehow means you’ll pay more since they know you could do more.  Well, I’ve been on both sides of that since I do list as many houses as I sell to buyers.  I have never had a seller think that.  And even if they did, you don’t have to pay more than you want……meanwhile it could be the thing that gets you the house in this time of so few houses on the market.

 

Best First-Time Buyer advice ever

by John Rice

A lot of my first-time buyers from 2008-2011 are beginning to sell their houses.

Most of them probably remember me telling them that I wanted to find a house that would be easy to sell regardless of the market when that time comes.  I would tell them that right now, they are just thinking about finding a house they like.  While I wanted that too, I’d tell them I was also thinking about their exit plan.  I would tell them that one day they may have some big life changing event that requires them to move.  I didn’t want the sale of their house to stand in the way of their plans……picking a house that would be easy to sell again and not paying too much for it would set them up for their next move.

See, back then I would see sellers who paid too much and would have to bring money to the closing just to get out of their house.  Since they didn’t have any equity, they ended up renting rather than buying when they moved.  I would see people turn down job opportunities because they couldn’t afford to sit on a vacant house while it was on the market.  I would see a couple where one stayed in their old house while on the market and the other was renting a small apartment in another state for a new job.

Real estate can be a real blessing to your life or a noose around your neck.

Right now we are back to the frenzy of the early 2000s where everybody is all rainbows and unicorns.  Buyers feel lucky to get any house these days.  It doesn’t matter if it has a steep driveway and backs to a loading dock.

But you know what I am saying to my first-time buyers today?  I tell them that I want to find a house that will be easy to sell regardless of the market when that time comes.  I tell them that right now, they are just thinking about finding a house they like.  While I want that too, I tell them I am also thinking about their exit plan.  I tell them that one day they may have some big life changing event that requires them to move.  I don’t want the sale of their house to stand in the way of their plans……picking a house that will be easy to sell again and not paying too much for it will set them up for their next move.

And this advice is all the more important in a seller’s market.