Buying Advice

LEXpert Neighborhood Video Tour: Water, Park & Golf Course…Oh My!

by John Rice

Got out in the Miata and shot a few cool areas under $200k.  Not the usual neighborhood tour…..more like a collection of a few areas in southeast Lexington.

First I went to Squire Oak/Hunting Hills.  There is a really cool park in a giant median out there.  Big trees.  A creek.  Nice. Some of the lots along Farmview back to a huge horse farm.  Houses out there run about $140,000 to $180,000.

Then I went to East Lake…..more specifically I went to a street called Cool Water and all the cul de sacs off of it.  What is cool about this area is that several of the houses back to a lake.  We just don’t have many water front houses in Lexington.  The few that there are tend to be much more expensive.  One house in particular has a panoramic view.  Houses out there go for $170,000 to maybe just over $200,000.  It has been so long since one of the fantastic lot houses has sold that there really is no data.

I then jumped across Man O War and went down Carriage Lane and Tanforan Drive.  These streets back to Tates Creek Golf Course on one side.  

I finished up at Lake Crossing, which is across the lake from East Lake.  I’ve done a full video tour of Lake Crossing, so just scroll through my blog or my YouTube channel to see it.

Well, I like these neighborhoods because they have something unique and are affordable.  When I am out with buyers, I always am looking for that “Thing” that is going to be appealing to the next buyer when it is time for my peeps to sell it.  Finishes can go out of style and get worn out.  What you really want to look for is a house with a fantastic floor plan, a great lot, or a great location.  Location is the real estate code word for an asset that is tied to the neighborhood.  Chevy Chase is always going to be a great spot to be even if all the trees die and granite becomes passe.  Beaumont will always have the best combination of public schools for the foreseeable future.  Houses that are in neighborhoods with a city park, golf course, or are on the water will always be desireable.

Stick to these principles and you won’t be like the seller’s of a nice house on a busy corner in my neighborhood.  They’ve just reduced the house to an amount that will probably be the cheapest that one has sold for out here in a loooong time.   Since nobody wants to be there, all you can do is drop the price to the point that somebody feels so good about the price that they temporarily forget the big negative.  And if you disregard my advice, be sure to buy it soooo right that you can afford to be at the bottom of the comps when it is your turn to be the seller.

100% of Real Estate Statistics Don’t Have Anything to do with Your House

by John Rice

I met with a cool family a few weeks ago.  They were going to interview a handful of agents to see what we all had to offer.  I’m always a little freaked out at listing presentations.  See, there are agents that come with power point presentations and go over a whole bunch of junk, crunch numbers, brag about how low the average days on market is for their listings, and then blurt out something like “After looking at the statistics for this price range, you house will sell at 5:46 P.M. exactly 43 days from now.”  That impresses some people I guess.  I’m not one of those that throws out a bunch of numbers.  I kind of like to look at the house.  Assess the positives and negatives that I think buyers will see, then do a CMA to find what I think the house is worth.  I usually do all this wearing a pair of shorts, and often forget to give the people my business card.  I ordered 1000 last year and still have about 993.

Before I get into statistics for selling houses, I’m gonna expose some tactics agents use to lower their own average days on market.  I was checking out another agent’s blog the other day and she quoted the average amount of time her listings take to sell.  The number she gave was very impressive……not at all accurate, but very impressive.  See, she didn’t bother to include the listings that she had deleted, then relisted with a new MLS number.  Where did that time go?  It wasn’t in her average DOM (Days on Market-I am already tired of typing all those words!)  I am sure to her clients that time didn’t disappear.  Another thing that often gets lost in their average DOM is the fact that it only includes houses that actually sell.  If the listing expires and never sells or gets relisted with another agent, that number doesn’t count.  It would be like quoting your GPA in college but not counting the courses you failed. 

 The same thing happens with the average list to sale price.  Say a listing expired after 6 months at $200k, was relisted at $190k for another 6 months.  Expired again.  Relisted again for $180k, then got a contract for the full asking price that very day.  The agent could say that she sold that place for 100% of the asking price the first day on the market.  But we all know it was a year and a day and 90% of the original list price.

Okay, now I’m going to tell why I don’t worry too much about DOM and list to sale price.  It is because I am only dealing with one house.  Yep.  That’s right.  The only number I care about is the one that will have to do with my listing.  The list to sale price isn’t much help either since that number will be brought down by the over-priced listings that sold for market value.  Also, like most averages, the low and the  high numbers have too much control over the whole.  Plus, there may be a darn good reason why one of the houses you’re using took twice as long to sell as the others in your test pool.  Then you have to look at the history to see if any of the listing agents for the other houses pulled the old delete/relist game to give a false DOM.

The bottom line is that you really never know when the buyer who is going to bite at your house will arrive.   All you can do is price it realistically, make it look great, and present it well online.  When I get a seller that will do all that, their house usually sells in less time that the average DOM.  My average DOM is lower than typical, and I don’t even bother to tell people my number.   I’ve sold several houses in less than 10 DOM and had a 3rd floor walk-up condo in an area that tends to attract retirees take just over a year.  I worked just as hard on all of them. 

So, back to the listing appointment.  I’m on the tour of the house and the husband asked me the average DOM question, and I told him that I didn’t even look at that because I don’t care how long it took other houses to sell, I only care about how long it is going to take his house to sell.  As soon as I said that, I knew I either had this listing or I had just totally blown it.

I think the statistics agent uses them to impress you at first, then uses them to justify why your house hasn’t sold.  C’mon, when you’re asking your agent why your house hasn’t sold yet, are you looking for advice on what to do next or wanting to hear about numbers?

Fortunately this cool couple saw my point and went with me.

Lexington Ky Real Estate: Want fries with your offer?

by John Rice

Okay.  I admit it.  I was watching a real estate show on TLC yesterday.  You’d think when I get a free Saturday, I’d do something that has nothing to do with real estate, but no.

What got me miffed was watching this buyer’s agent do like all of them do on those shows.  The agent is getting ready to write an offer and asks the buyer what they want to offer.  I call that order taking!  May as well ask if they want to super size their offer or if they need fries with that?  I just want to scream at them “Hey, why don’t you tell them what YOU think the house is really worth?”  You’d be pretty miffed if you went to the doctor and he asked you what you thought you should do about your own medical problem, right? 

You’ve just got to know what the house is worth.  Using a terrible agent can cause a lot of problems, but they usually all get worked out by the closing.   If you overpay for a house, that is the one mistake your agent can make that will survive the closing and haunt you later.

How do you know what a house is worth?  Order an appraisal?  Yeah, you could, but the only difference between what we call a Comparative Market Analysis (CMA) and an appraisal is a few hundred dollars and an appraiser’s license.  The steps and values should be the same. 

I always do a CMA before I let somebody make an offer.  I WANT to tell them what I think the house is worth.  After that, I’ll suggest some strategy, then they can tell me what they want to do.  You can’t assume that the asking price indicates the real value of a house.  I’ve had some folks buy a house for much less than the asking price because it was over inflated, and I’ve had people make near full price offers because it was priced on the low-end of the comps.  Neither paid too much.   Maybe this is why I have never had a house NOT appraise.  When the market slowed and lending got really tight, I was always hearing bad stories about houses that didn’t appraise.  Personally, I would be embarrassed if I had done a CMA and then not had the house appraise for one of my buyers.

Something else that bothered me about that show yesterday was that the buyer had flown in from out of town to buy a house.  The one he picked needed $70,000 worth of structural and plumbing repairs.   The buyer wasted his time and money on a trip that produced N-O-T-H-I-N-G!!  I’m not asking any Realtor to be a home inspector, but gez louise, know enough about houses to be able to prevent your clients spending their time and money, not to mention emotional investment, in a house that isn’t going to work.  When people start to get serious about a house, take a look at the roof, the electrical panel, the foundation, check the seller’s disclosure to see the age of the furnace and air conditioner.

Maybe I should have just watched Hannah Montana yesterday instead.

What advice do I give my friends??

by John Rice

I had a friend contact me on Facebook about the possibility of finding a new agent to sell their house.  Seems they haven’t had a lot of showings, and obviously no offers yet.  I’ve crossed out the name of the town that the house is in (and corrected some of my spelling), but I though this would make a good blog post.   I always say that I need to be as good to those I don’t know as I am to friends and family……so here is what I said for anybody with the internet to see:

“Sorry to take so long to get back to you. I don’t know if it is just me, but this isn’t an easy one to answer so I wanted to have time to write you a book.

When you listed your house, it should have had a beginning and an ending time for the listing period. After the contract expires, either of you are free to move on. If that time hasn’t come yet, the agent may let you out of the contract.

I do have a few questions. Is there a board of realtors in XXXXXXXXXX (meaning a local “chapter” for the MLS.) In Lexington, we have the Lexington-Bluegrass Association of Realtors. That is the site that all the local agents use. If there is one specifically for XXXXXXX, you definitely want an agent that is a member of it. If it isn’t on whatever association’s website that XXXXXXX agents use, you may as well have listed it with an agent from another planet. In your case, I would imagine that (major nearby city’s) association probably covers XXXXXXX too. Also, the odds of your agent actually being the one who finds a buyer are very slim. It happens, but odds are another agent is going to see it online and bring their client to your house. That is why online presentation is the most important thing right now.

Question 2. Is your current agent presenting it well online? Go to whatever site the agents use and take a looksie at it. If the pictures and marketing remarks wouldn’t make you want to see it, odds are everybody else feels the same way. While you are there, double check that everything is accurate.

Question 3. Is it priced realistically? Now this is where you will unfriend me, but if you have had XX showings in less than 6 months, it may be priced high. I don’t know the XXXXXXX market, but to have XX people look and not make an offer could mean that the price is too high or………Question #4!

Question 4) Is the feedback you are getting from the showings that there is some fatal negative that buyer’s just can’t look past? If you keep hearing the same thing over and over again, you might have a big negative. Most big negatives can only be conquered with a price reduction. I have a teeny-tiny backyard. I know when I go to sell, that is what buyer’s will be telling me. Most people wanting a decent sized 4 bedroom house in a great school district have kids and want a bigger yard. I’ll have to price it at the low end of the comps unless we have another crazy seller’s market.

So, if you do part ways with this agent, here is what I would look for next. Ideally, an agent that works with at least as many buyers as they do sellers. Most agents just want to list. Listing houses just means you see the one house. An agent that works with a lot of buyers has probably been in a lot of the house that you will be competing against. That agent will be better able to tell you what your house offers to buyers that are out there right NOW! I’d look for somebody that deals in your price range a lot. It always kills me when I see a cheaper house listed by one agent in Lex that deals almost exclusively in high end houses. What does this agent really know about a $100k house when 98% of their work is over $500k? And how much time are they going to put into that listing that will pay $3k verses the ones that will pay $15k. It takes a really etical person to work as hard for both sellers!

I’d also look for somebody that has a plan. Don’t go for the agent that spits out their average days on market unless they can specifically tell you what they did to acheive it. Lots of agents can get lucky. You want somebody that will do a market analysis and will show you how they came up with what they think your house is worth. Even if you don’t like the number. Some agents will list a house for whatever price it takes to get the listing. Then they start hitting you up for price reductions. I kind of think it is better to deal with reality now, since you’ll have to at some point down the road.

I hope this helps. Let me know if you have any other questions…..I may turn this into a blog post. (No names of people, places, things though.)”

The LEXpert tours Cumberland Hill

by John Rice

Did a video tour today.  This time it was in Cumberland Hill.  I don’t know if it is just me, but I’ve always called it Cumberland Hills……..Either way, you’ll call it special when you see the video.

It is in South Lexington off of Tates Creek Road.  It was built in the mid 1980’s, which was, in my opinion, the end of the era for decent sized lots and houses built to be lived in rather than just to be marketed.

The houses are in the 2000-2500 square feet range.  Some of them have basements.  Some of the smaller ranches are going for about $190,000 right now.  Most of the two story houses are getting $220-250,000.  The highest sale in the past year was for $285,000…..which is more of the exception than the rule!

One of the best features of Cumberland Hill is that it backs up to Veteran’s Park.  It also has a really cool section of Veteran’s Park called Ribbon Park.  It has wooded areas, open fields, a creek, walking paths, plus everything else that Veteran’s Park has.

The school district is really awesome…..as long as you only care about the elementary school.  It is Veteran’s Park Elementary, which is practically in the neighborhood.  The middle and high schools are both Tates Creek, which isn’t a popular choice.

The neighborhood has a pool and clubhouse too!

It’s a combo neighborhood…..meaning it offers more than just one strong feature.  The large lots, the location, the relaxed neighborly vibe, and the park make it a wise choice.

Hope you enjoy it!