Why rising rates won’t stop the market

Rates just hit 5%.  They haven’t been that high in many years.

It sounds like the sky is falling but it is not.

Many first time buyers are freaked out over this since they got used to lower rates.

When I bought my first house, I bragged to my friends that I was getting a 6.5% rate.  I locked as soon as they fell from 6.625%.  Most of my friends who had owned their houses for a few years had rates over 7%.

Several years later, I refinanced my third house when rates dropped to 5%.  I could not believe at that time how low that rate seemed.  I currently have a 3.375% rate on that house.

I’ve watched rates go up and down.  The market change from a seller’s market to a buyer’s market to a seller’s market.  If there is one thing I have learned is that the market keeps going.  There are always first time buyers.  There are always people getting transferred, married, divorced, retiring, and running out of space.  Those things will always happen.  The market is really about life and all the stages and events of it.

Something else I have noticed is that the market tends to pause when there is a big change, whether that change is interest rates, rising prices, dropping prices, etc.  It’s like we say “Now isn’t a good time to do this because it is different that it was.”  Then life happens, we get used to the “New” normal and we buy and/or sell.

We are in one of those times now.  Mortgage applications are down slightly, sales are down slightly.  We are entering what is believed to become a balanced market, meaning the number of buyers will be about the same as the number of sellers.  This won’t last too long because like I said, people will get used to 5%.  It will become the new normal.  The market will go on just as life goes on.

What people google and find me

Every once in a while, especially when I am bored, I like to see what terms or phrases people google and end up on this blog.

Here are a few:

  1.  Chinoe Road Lexington Ky pronciation-It is “Shin-o-way”.  Now lets work on spelling pronunciation.
  2. What was Andover Hills Lexington Ky before it was a neighborhood-A farm.
  3. How many houses are in Masterson Station-2235 according to the Fayette Co PVA.  That probably does include a lot of vacant lots though.
  4. What you need to know to build a house in Oklahoma-Step 1 is ask somebody in Oklahoma.
  5. John Rice Realtor Lexington Ky-You found me.  I hope you aren’t a serial killer.

My top blog post was 25 things to know when building a new house.  Since I haven’t had too many buyers contact me that want to build a new house, maybe I should have listed 24 things to know and made number 25 something you had to call me to find out?

Any way, if you are reading this, I want to thank you for following me.  I often run into friends who mention a recent blog post……it always makes me feel like I am being helpful to those that are important to me.

The first rule in real estate

The first rule in real estate today is that there are no rules.

In the past, there was a general thought that certain times of the year were better to sell, you had to do a lot of prep work before listing your house, and other things that HGTV still perpetuates.

Back when the market was terrible, I would give people huge lists of things they needed to do to sell their house.  Now sellers are amazed when I tell them to do as little as possible.  I’ve had clients who were planning on putting on new roofs, replacing front doors, replacing old carpet.  I tell them not to worry about it.  As long as these items are in at least average shape, buyer’s don’t mind.  An average house is appealing when there are only like 12 other houses for sale in your price range all over town and you’ve lost out in multiple offers on the last 3 you wanted.

We are so starved for listings that even if a few people don’t like your house, there will be several more that do.  About the only time I see a house not sell is when it is grossly overpriced.  It’s a Seller’s Market for sure, but you still can’t sell your house for more than it is worth…..although if you wait long enough, it will have appreciated into your asking price.

When the market was bad, the value in having a realtor was in knowing what all you had to do to sell and presenting the listing so that it stood out among the multitude of other listings.  Now, having a good realtor is about knowing the least you have to do and the most you can get for your house.  I’ve often paid for myself by saving the seller from spending money that they did not need to spend.  Back then, working with a buyer was showing them 40 houses and helping them pick the best one and getting it for as cheap as possible.  Today, working with buyers is about getting them in a house ASAP and coming up with a winning bidding strategy.

So, as long as it is a Seller’s Market, put your house up for sale any time of the year.  Fix anything that is broken and give it a good clean, but there is no need to sweat the details like you had to when it was a Buyer’s Market.  Today’s buyers can’t afford to be too picky.

Who do I have to thank? YOU!

11.

After the last one this Friday, that is how many closings I will have had in July.  That’s the most I’ve ever done in one month.

Funny thing is that all this came from 8 clients.

Clients #1 & #2 were people that used me several years ago to buy their house.  They wanted to move, we found the right ones, then we sold their old houses.  (Client #2 has used me a total of 4 times now.)

Clients #3 built a new house and used me to sell their old one too.  They were sent to me by a past client I have become friends with that has used me twice.

Clients #4 bought Client #3’s house.  This client was sent to me from a friend who has used me twice before.

Client #5 is a past client who I have become friends with.

Client #6 was referred to me from a good friend who has used me twice.

Clients #7 & #8 are old friends.

I love thinking about how all this happens.  I feel like my career is a big tree that just keeps growing new branches.  It keeps me humble too because I realize that so many great people have taken the time to recommend me to their friends and family.  There is no way I could do what I love without them.

THE most perfect deal ever

Sometimes things just work out perfectly.

I had a client/friend send me a family that ended up buying a new house that was not finished yet.  They had a house to sell in Cumberland Hills.  The new house was at the foundation stage when they bought it and we had nooooo idea when it would be ready.

I had another client/friend send me their sister and brother in law.  They wanted to be close to their family in Cumberland Hills.  The only obstacle they had was that they were locked into a lease for several months.

Back when I was a kid, there was a commercial for Reese Cups where somebody was aimlessly walking down the street eating a chocolate bar.  Around the corner, another person was walking down the street eating peanut butter.  They run into each other at the corner.  One says “Hey, you got your chocolate in my peanut butter!”  The other says “Hey, you got your peanut butter in my chocolate!”  They each take a bite and realize what a wonderful thing just happened.

The buyers and I looked at a few houses.  The houses were nice, but nothing great.  The market in this price range moves so fast that some sold before they could decide if they wanted to make an offer or not.

I arranged a time for the buyers to see the sellers house.  They liked it.  We negotiated the terms.  Sold.

My seller probably sold it for a little less than they could have, but they had a buyer who was in a position to wait until their new house was complete before closing.  That kept my seller from having to potentially move twice and gave them the peace of mind that their old house was sold.  The buyer was using a lender I know, so that made it feel even more secure.

My buyers got the house for a little less than it’s full market potential and did not have to compete with other buyers, which is a real luxury in this market.  They also were able, of course, to buy a house on the same street as some family members.

It was very satisfying to be a part of making this work so well for both of my clients.  Everybody got what they needed out of the deal.

I think I’ll go eat a Reese Cup now.