properties

Mold and $5000: Why I feel like Superman

by John Rice

“Do something a person can’t do for themselves or something they don’t want to do and you will always have a job.”

I think my dad said this when I was about 11 years old or so.  It is one of the many things he said to me that has always stuck with me.

I had a lawn care business when I was younger and stronger.  That was clearly something anybody could do for themselves, so what I was doing was something my customers didn’t want to do.

Now I’m a realtor.  To some people, it can look like I am doing something anybody can do.  Sure, people do sell their own houses, buyers do buy without the assistance of a realtor.  The funny thing about it is that those people never really know how well they did…..what did they have to compare it to?  Often, a bad buying decision isn’t discovered until you go to sell.

That is where experience comes in.  I kind of feel like all my life has been preparing me to be a realtor.  I was into architecture as a kid, always drew floor plans, went to open houses and model homes as my hobby.  Took drafting and construction classes in high school and college, worked around building materials at Lowe’s, was an estimator for a construction company.  It’s all helped me to offer something beyond opening doors and filling in the blanks on a contract for my clients.

I recently had 2 experiences that I am pretty proud of:

  1.  I have a client who is building a new home.  We just did what is called a pre-drywall walk-thru.  The builder’s goal is to make sure they have the buyer sign off on where all the outlets and such go before the drywall gets hung.  My goal is to check out the house.  I like to just walk around and look, and look and look.  Besides a few little things, I noticed what looked like mold on the roof trusses.  I sold a newer house to some friends a few years ago.  The home inspector found mold on their trusses.  The trusses are delivered to the site in bundles and sit outside until the workers begin the roof.  If it is really wet, those trusses get mold growing on them and are installed before they dry out.  Ever since then, I am always looking at roof trusses when I have a client building a new house.  It was a real pain for the seller of the house my friends bought, and I don’t want my clients to go through that.  We got lucky this time.  The builder at first tried to say it was dirt, but then agreed to spray something on them that would kill any mold.  That’s a win for my client on several layers, the most important one is their health.  (By the way, the truss in the picture  is cracked, which is also being addressed!)img_1756
  2. One of the most common things I get asked from a seller is what needs done to get their house ready to list?  I had a client whose house had a 27 year old roof.  That is pretty old.  I rarely see a roof that old.  And it wasn’t really in that good of shape either.  He was ready to spend $5000 to replace it before we listed it.  I came out and looked at it.  I told him we should put the house on the market as it is.  If we get lucky, nobody will ask for it to be replaced.  There weren’t a lot of listings available at that time and buyer’s could not be that picky.   We got the home inspection repair list.  Nothing at all about the roof.

So, a little experience got one client a mold free house and saved $5000 for another.  It feels really good to be able to do for my clients what they can’t do for themselves….often simply because they don’t have the experience to know what to do.

 

6% appreciation in 2 years….REALLY?

by John Rice

 

Here’s another property that shows the market is improving.  This house was on the market in 2009 for quite some time.  It sold for $350k.  It was a relocation house, which means the seller was transferred and a relocation company was involved.  Those houses always seem to sell for less than market value since most are vacant and many agents hate dealing with relocation companies because they have 27 times the paperwork.

I showed this house to 3 buyers when it was on the market as a relocation house, so I was quite familiar with this property.  It is in Beaumont, which is one of Lexington’s most preferred neighborhoods.  It sold again less than a year later for $357k.  That extra $7k really just shows how most buyers and their agents prefer a non-relocation sale and the difference an occupied house makes compared to one that is vacant.

Now, this is where it gets interesting.  I saw this house came back on the market, so I saved it in my cart.  Just about every house I have every been in, I save so I can see how accurate I was on what I thought it was worth.  When this one went pending in 7 days, I couldn’t wait to see its final sale price.  Ready?  It sold for $379k.  Yeah, that’s 6% appreciation and the house is identical to when I was in it.  I don’t even think it has been painted!

That is just where we are with Lexington real estate right now.  It is starting with the most preferred neighborhoods and will trickle down to the rest of the market.  After several years of telling people their house was worth much less than they hoped, it is refreshing to write posts that are good news!!

 

Did that house REALLY appreciate in Value?

by John Rice

 Wondering what the real estate market in Lexington Ky is like right now?  This house here is a prime example.  This place came on the market on 11/9/09 for $217,500.  It sat there, was reduced to $212,900, then $209,900, and finally sold on 8/20/10 for $209,500.  On top of that, the seller paid $3911 in the buyer’s closing costs, so the “Net” sale price was $205,589…….It just sold in 13 days for $219,000.  That is a gain of almost 7% in less than 2 years!

I was in this house before it sold in 2010 and have studied the pictures to see if the seller put any money in improvements.  I also looked at the disclosure to see if the roof or HVAC had been replaced since the sale.  Nada.  Same flooring, same cabinets, same counter tops.  About the only thing the seller did was landscaping.  The house was vacant when it sold last and was fully furnished for this sale.  I might say 1-2% of the appreciation could be due to those reasons.  But one thing we do know, taking almost a year before selling in 2010, the buyer didn’t get a bargain.  Houses that were bargains even back in the worst of the past several years still sold quickly.

Now that the market is improving, here is where we are:  The most sought after neighborhoods have already gone up in value.  The rest of the market is still pretty flat.  It is like a train starting…..first the locomotive moves and pulls the first car, then the locomotive AND the first call pull the second car, then the locomotive, first and second car pull the third, and so on until the whole thing is moving.

You are late to the party if you were wanting a deal in one of the most desirable neighborhoods in Lexington.  There is still time at the moment to grab a deal in other neighborhoods though.  I usually recommend the best neighborhoods for resale potential, but if you can get a good enough bargain, I think there is room to come out ahead as the market continues marching back to the future.

When 2 negatives together seem like 3

by John Rice

Sometimes a bunch of negatives are overwhelming when you have to see them all together.  This is something I learned when I bought a fixer upper house that was worn out, out-dated, and in disrepair.  I was broke back then, so I had to live with it for a couple of years.  Man, that was rough.  I remember thinking that the carpet wouldn’t look so bad if the walls weren’t so bad, and how together they really make the light fixture unbearable.  I guess that is when it first hit me how 2 or more negatives seem to compound their effects when viewed in the same room.

This is something that has really helped me out in real estate.  Let’s face it, very few houses are totally updated showplaces.  Just about any house has something old and/or worn out.  My current house, even though we have done a lot to it, still needs new carpet upstairs and our green laminate counter top needs to join the rest of 1998 in the landfill.  When we bought the place, it was all original, which meant not only that once trendy green counter top, but also a green vinyl floor.  I can’t believe I am telling you all this, but what the heck, the kitchen also had wall paper with fruit on it that one of my friends said looked like something Willy Wonka would make.

While the counter top is still around, the wall paper has been replaced with fresh paint and the green vinyl is now  Brazilian Cherry.  It looks so much different that you hardly notice the counter top is still green, when you use to feel like you were in Emerald City from the Wizard of Oz.  It is still a negative, but less of one now when viewed without the others negatives.

I’ve got a listing in my pipeline that I have been working on for a little bit.  In general, it just feels like a rental grade property.  It has a nice floor plan and all, but just doesn’t feel like something that a buyer will fall in love with.  Like I have always said, a seller has more power in the deal if the house comes across as something special.  The market is currently flooded with “Average” houses.  This house already has some pluses that could easily be over looked.  It has a couple of nice ceiling fans and brushed nickel fixtures……Things that I bet most buyers wouldn’t even remember after leaving the house if we didn’t do anything to it.  So, what is the plan?  We have just had the place painted.  Now the whole house is a nice warm beige.  That will unify the space to a buyer.  Buyers like to see all the rooms the same color.  You have to remember that buyers are going from room to room in a 20 minute window.  They like it all to be consistent.  The next step is going to be to replace the vinyl flooring in the baths and kitchen.  Then we’ll clean the existing carpet and stage it.

Now, when a buyer comes in this place, they will see fresh paint on all the walls and ceiling, clean floors, and new vinyl in the kitchen and baths.  They will also probably now notice the ceiling fans and nickel fixtures.  See, the goal is to make it the best house any buyer can get in that price range.  After all, as long as there is one buyer out there, you know they’ll pick the best one.

Negotiating With Realtors: If They Bluff, You Know They’ll Come Back

by John Rice

Realtors are so predictable.  It’s almost like watching a rerun of a show and you know just what is about to happen.  Sometimes I wonder if there was a class I missed on cliché bluffing phrases to use during negotiations.

I got an offer yesterday on one of my listings.  The original offer was pretty low, but these days everybody always has to try I guess.  One of the things that struck me as odd was that the buyer wanted to close in 25 days…..right between Christmas and New Years.  Nobody wants to move that week unless…..you have to.  Then I did my usual deal where I google the buyer’s name and look them up on Facebook.  Seems this buyer has a couple of small kids.  School starts on January 3rd.  I really think they picked this date to be in the house before school starts.   Naturally, I am wondering what are the chances of this buyer finding not only another house they like as much, but one with a seller willing to be out during that week?

The other agent and I trade a bunch of texts, and came $2ooo apart.  Then the agent gives the old “I strongly suggest your seller reconsider this offer given the market.”  I really don’t know how to respond to this politely, so I usually suggest the agent look at the comps and determine if our number is in line with them.  That is what I did this time.  I even asked the agent if he thought the house was worth the number we were currently stuck on.  His non-response answered the question perfectly.

Now for this one, we are only $2k apart, but I have had agents tell me this with an offer that is so low that anybody in their right mind knows it is a ridiculous offer.  I usually check out the agent’s production from the past year to see how much they really know about “The Market.”  My recent fave was an agent who made a verbal low-ball offer on another one of my listings.  He kept talking about how his guy had cash and how foolish my seller was to not sell his house for less that it was worth “In this market.”  Well, turns out that agent had sold all of two houses in the past year…..hardly an expert on “The Market.”

Sorry I drifted there…back to the offer.  Just as predictable, the agent told me that his people were going to look at their second choice house the following day.  He did the old “If anything changes, let me know” drill.  I thanked him for all his hard work and effort.  Why did I do that after being treated like a second class citizen for representing a seller in a buyer’s market?  Because I wanted to make it easy for him to come back to me.  See, many people don’t mind losing the war if you give them a chance to win the last battle.  Good thing because while I was writing all this, he left me a voicemail that said to call him back because he now things we can work something out…….His people are now ready to meet our price, and we should have all the paper work done today.