Buying Advice

Should you buy that updated house?

by John Rice

It is soooo easy right now to sell a pretty house. Always has been but when there is so little for sale, it is especially easy.

You know the formula: White shaker cabinets, quartz tops, lots of trim, paint as much black as you can, etc.

I get it. Those houses are so pretty. The problem is that a house that’s only attraction is its pretty new finishes might not be a good enough reason to buy it.

I blogged a few weeks ago about a former Airbnb house I showed that sold for way over list price and got a crazy amount of offers. I pointed out to my buyer several things showing it wasn’t all that great of a house. The driveway was sort of steep and in bad shape. The old wood windows needed reglazed. It wasn’t really that great of a house, it was just pretty and most of what made it attractive was the furniture that didn’t stay with the house.

It is great if you get a pretty house but that isn’t enough of a reason to buy it.

At its core, whatever house you buy needs to have more than trendy finishes going for it. Why? Because one day those fancy finishes will either be out of style or worn out and you’ll be left with a house that doesn’t even have one great feature anymore.

Here is how to pick a house:

  1. Most important thing is a good location. I know that phrase that is thrown around a lot, but a good location can mean any reason that spot is desirable. It can be because it is close to something, far away from something, be in a desirable school district, be close to highway access, or just anything that makes it more desirable than somewhere else.
  2. If a house passes that test, then examine the lot. You want the lot to be equal to the others in the neighborhood or be better. Flatter is usually more desirable. Less slope on the driveway is usually better.
  3. Then think about the floor plan. It needs to be functional and fit in with the neighborhood. If you have a closed off floor plan in a neighborhood where most are open concept, then it might be harder to sell in a softer market. If something is odd about the floor plan to you, it will be odd to future buyers as well.

Where do those fancy finishes come into consideration? At the very end. It is always easier to put fancy finishes in any house than it is to change the location, lot or floor plan. If you have an outdated house in a good location with a good lot and a good floor plan, you still have a house that will always be desirable.

Should you buy that unique home you fell in love with?

by John Rice

So, you’ve found a house you’ve fallen in love with. It’s sort of out of the mainstream. Maybe it has something strange like an elevator in the bathroom or a kitchen addition shaped like an octagonal spaceship? Whatever it is, you love it and you’re wondering if you should buy it.

The answer is yes. Yes, you should buy it. A house is an investment so you want to make a good financial decision, but it is also an investment in your happiness.

However, there are some things to realize and take into consideration before you do.

The main thing you want to avoid is overpaying for it. Most houses like I am talking about tend to have limited appeal in the broader market. It can be difficult to determine the market value since it is nothing like the comparable sales in the area that a realtor or appraiser would use. It takes a bit more of a gut feeling than hard science to figure it out.

Realize that when it comes time for you to sell it, it might take longer. You’ll be waiting for somebody just like you who cherishes all its quirks and features. The good thing about this type of house is that once you find that person, they usually don’t have a back up plan. They aren’t interested in any other house on the market.

Many years ago, I had a very unique home listed. It was an old house that had been totally renovated inside. It looked old on the outside but new on the inside. It was in town but it had 3 acres and felt like a mini-farm. The primary bedroom was “Open concept.” There was no door going to the upstairs primary bedroom. You just walked up the stairs and just like that, you were IN the bedroom once you took that last step. Also totally open was the bathroom. Like, the shower and even the toilet were just sitting there visible from the top of the staircase and from any vantage point in the bedroom. It took forever to sell. The buyers said they had been looking for a long time and fell in love with this place. They had to have it. Literally probably 100 other buyers had given it a very hard pass. That is just how it goes with unique houses.

That’s all I got. Buy it right. Go in knowing it might not be easy to sell. Enjoy your stay in the house between those two points in time.

Airbnbust?

by John Rice

One of the most valuable lessons I learned from my dad is how cycles work.

I remember one of the first times I ever thought about such things was when we lived in a starter home neighborhood in Frankfort. I remember him telling me that the houses in our neighborhood would eventually get run down because everybody who buys such an entry level home only plans to stay there for a few years. You don’t do a room addition, kitchen renovation or anything when you’re thinking so short term. Forty years later, the neighborhood is pretty run down. Houses only got fixed up when the values got so low that an investor could buy them cheap enough to make a profit.

Another thing I learned about cycles is to expect them. There will be good times. There will be bad times. Most people view the good times as the norm and are shocked when bad times come.

We are there now with the short term rental market.

Over the past few years, I’ve had several clients ask me about getting into the STR (Short term rental) market. I have always been cautiously optimistic. I tell them sure, you can make some money, but have a backup plan because one day, the market will be saturated and/or demand will not be as strong. We had several things line up perfectly all at once to create the buzz for short term rentals. We had many people wanting to travel after the pandemic, we had a robust economy, and we had people eager to try using an Airbnb. I knew that would not last forever, especially with so many so eager to buy a house and use it for short term rentals.

The downside of the cycle is happening now. I am on a facebook group for real estate investors. Just about everybody is saying their bookings are waaaaaaay down compared to last year. We have several things that have lined up but none of them are good: Everybody travelled a lot after the pandemic and demand is down, we have a not-so-robust economy, and people are a little more cautious of short term rentals (Excessive fees, terrible hosts, pretty houses in scary areas, etc.)

In time, demand will pick up. Those who were merely Airbnb hobbyists will get out of the market leaving only those who view it as a serious business. This is part of a cycle too.

So what’s my advice to anybody wanting to buy real estate for STRs? Have a backup plan. Make sure the numbers also work as a long term rentals. Be ready to pivot when needed. Buy a property that is a good investment. Don’t buy a terrible house in a slummy neighborhood where the only desirable feature would be your trendy decor. Have an exit plan because one day you will be as excited to sell your property as you were the day you bought it.

What to do when you’ve gotta sell your old house first

by John Rice

I feel for people in this situation. I mean, the market is so tough right now. Even buyers who do NOT have to sell their old house before buying their next one are struggling to be competitive in multiple offers.

The odds of you finding a seller who will work with you when they have other offers without a similar contingency are equal to winning the lottery. Hoping for the best isn’t realistic. Here are some not so fun options that will ultimately end up with you getting your next home.

  1. List your house. Sell it. Pack up. Move out. Rent or stay somewhere short term until the house you want hits the market. Then buy it. This gets you where you wanted to be, the only negative is that you will end up moving twice.
  2. List your house. Sell it. Only take offers from buyers who will let you rent back after the closing. Then begin your search and only move once. Most buyers will give you maaaaybe 30-60 days after closing before they will want to be able to move into their new home. This allows you to buy something but you’re under pressure to find and close one within that time period. If you can’t, you’ll have to move out and stay somewhere short term.
  3. Only look at houses that have been on the market for more than about a week. Often these are the less desirable homes since the rush of buyers who saw it when it was a hot new listing decided they didn’t want it. The beauty of this plan is that you only move once and likely are not competing at all with other buyers. This is a good thing. A seller who only has one offer is much more likely to accept a contingency offer than one who has better choices.

So there you go. None of these are exciting. All are a lot of work. But they are real solutions to today’s real estate issues.

Why say NO to a perfect house?

by John Rice

I showed a house to a family yesterday. It was a perfect house. It was in move in ready condition. Had character. Even a salt water pool. It was on 5 glorious acres in a great location in Woodford County. It was even priced really good.

The buyer didn’t like it.

And that was okay. It wasn’t as good of a fit for he and his family as he had hoped.

He realized that having a primary bedroom on the main level was very important to him. He also realized he didn’t want to maintain that many acres.

It was a good day because we learned something. We narrowed down what he wants in a house. The simple fact is that the more houses you see, the more you learn about what you want/don’t want in your next house.

Often Buyers will apologize to me for wasting my time to show them a house they aren’t interested in buying. I always tell them that finding the right one is a process. It’s really not even about the houses. It’s about self discovery…..learning what’s most important. This Buyer now wants a big yard, but not acreage and a house with a primary bedroom on the main level. Had we not see this fabulous house yesterday, neither of us would have known this.

We are one step closer to finding HIS perfect home.