Random Real Estate Thoughts

How my 4 houses helps me understand move-up buyers

by John Rice

My first house.

7 Ky Street

 

I loved everything about it.  It looked cute.  The mortgage was cheap.  It had two original fireplace mantles.  It didn’t bother me that it didn’t even have a driveway, or that there were some houses nearby that had been converted into cheap apartments.  It was my first home.  The threshold was low and I was happy.

 

My next house.

New outside

 

It was really a dump when we bought it, but I was so happy to have a garage, a master bathroom and to be the trashiest house on a nice street verses the best house on a trashy street.  I quickly grew to hate the trek from upstairs to the garage when I would take my kids to school, and the awkwardness of the split foyer design when people would come over.  The threshold for happiness was still low since having more space, that garage and my own bathroom were enough to get me excited.  It was better than the first house and that was enough.

 

My next house.

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This is the one where we started getting more picky.  Doing things like wanting to know if any houses around it were rentals, checking out the pantry and school districts.  The first house was better than renting a house.  The second house was better than the first.  That type of thinking wasn’t going to cut it on this move.  I loved living here, although there was no storage or anything.  Also, I was told that my lot was the gravel pit for the neighborhood, which is why the grass never looked good in the front yard.

 

The current house.

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We weren’t going to settle as much this time.  We looked and looked and looked at many houses.  The yard had to be flat.  There had to be more storage space.  The kitchen had to have a better pantry and more counter space.  The previous houses were more about finding a house we liked.  This one had to be in a certain part of town.  We didn’t have to move.  We wanted to move……which gets me to the point of this post.

And that point is that buyers who have owned several house and are now looking for their pinnacle house, the one they will live in before they start downsizing, are pretty picky.  And that is okay.

These buyers have lived in enough places to know what they want and more importantly, what they don’t want.  They know what they can compromise on and what they can’t.  The gray area that was okay for previous houses is gone.  There is no “Well, maybe that won’t bother me as much as I think it will.”

 

My next house??

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Maybe something like this.  I love windows.  I love looking out and seeing leaves blowing in the wind, and clouds, and birds in the air.  I want to feel like I am outside even when I am inside.  I want it bright.  I want a view.  Of something.  Trees, water, anything other than the back of my neighbor’s house.  I want to feel inspired by the architecture of my next house.

And the next house will probably be at the center of many posts about downsizing and empty nest buyers.

 

Will technology make Realtors obsolete?

by John Rice

Many people seem to think realtors are going to be replaced with a bunch of apps on a phone.  I don’t see it happening, but changes are bound to come.

I can see a day when, instead of touring several houses in person, buyers use virtual reality to narrow down the ones they want to see.  I am sure any buyer will still want to see whichever one they pick in person before signing a contract.

I can see sellers and technology doing more on the listing side of a sale.  I can see more for sale by owner listings and various businesses popping up to help sellers navigate the process alone, but I don’t see the same for buyers.  Buyers will always want help from a pro.  The seller is dealing with one house, their own.  The buyer is dealing with making a wise decision.  Artificial intelligence won’t ever replace the voice of a pro.

I can see a day when there are far fewer realtors than we have now.  The lame ones who don’t do more than open doors, fill in blanks and who just tag along to get their check will go first.  All that will be left are the really good ones.  We’ll make less per transaction, but each transaction will take less time.

I can see a day when a realtor hardly has to see their client in person, or actually go in many houses.

What I can’t see is there ever being a day when people don’t want a realtor.  People will always want a real live person to help them navigate through something they don’t understand, or when they have a problem they can’t solve.  Don’t believe me?  Then why does Apple have live people to help their customers when all the self guided trouble shooting tips don’t help?  Also, short of new construction, no two houses are alike.   People are always going to want to see a house before they buy it.  It is something most people do only a few times in their lives.  They are concerned about resale potential.  This isn’t like ordering a pair of shoes online where you will wear them and then dispose of them when they are worn or out of style.

I am sure there will be things I welcome as real estate evolves.  There will also be things I miss.  Until then, I will just keep doing my best for my clients and laughing every time I read an article that predicts I will be replaced with an app.

My Miata teaches sellers a lesson about color

by John Rice

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Ok, what is the first thing you notice about my Miata?  It’s the red top on a blue car, right?

I thought this picture may help on future discussions I have with sellers regarding their paint colors.

FYI, the top won’t always be red.  Plan is to paint it a metallic silver.  These original hardtops are hard to get, so you buy the first one you find.  This one happened to have come off of a red car.

So, this is my car.  I’ve gotten use to the red.  So much so that I don’t even really notice it, which is why I haven’t painted it in the 8 months I’ve had it.  Same happens with sellers with bold colors…..it is their normal and they don’t really see their house in the same eyes as a buyer.

But buyers notice bold colors just as the first thing you noticed about my car were the colors.

Do you care that the car only has 67k miles since 1990?  That all the suspension is new?  That it is all original?  No, you’re just giggling about the Wonder Woman/Superman/Papa Smurf color scheme.

Let’s say I wanted to sell it.  I might say that I don’t know what color the buyer would want it to be, so it is best to let them decide.  That is what a lot of sellers say when you tell them they need to paint.  The problem with leaving a boldly painted house alone is that you either need a buyer who can see past it or has your exact same taste, both are maybe 5% of the whole pool of buyers.  The most popular car colors are white, black and 50 shades of silver.  For houses, gray, beige or greige are the crowd pleasers.

I guess if I were selling it, I could offer an allowance for painting it.  Maybe $2000.  Then I still need a buyer who wants to paint a car as their first act as the new owners.  My experience is that people never know what painting will cost.  They are usually way high on what they think it will be.  So if you offered a $2000 allowance on your house for painting, most buyers will want twice that.

What happens if I were to do nothing about the paint and try to sell it like it is?  If selling a car with a bold color scheme is like selling a house with a bold color scheme, what will happen is that it would sit on the market for a long time and then finally get a low offer because the buyer wants a bargain price if he is going to have to do the work.

It’s a good thing I have no intentions of ever selling my Miata.  I’ve owned it twice.  I sold it to a friend and bought it back.  Unless you feel the same way about your house, you are wise to get rid of the bold colors.

 

I thought this was a seller’s market?

by John Rice

It is, but that doesn’t mean all price ranges are super hot right now.

I was doing a market update for a listing I have.  I try to keep my sellers up to date with what has been listed, pending sales, price reductions and closed sales that will become comps for an appraiser.

 

Check out these stats for single family homes in all of Lexington:

$100-150k has 34 listings.

$150-200k has 52 listings.

$200k-250k has 67 listings.
$250k-300k has 64 listings.
$300-350k has 106 listings.
$350k-400k has 68 listings.
$400k-450k has 38 listings.
$400k-500k has 40 listings.
If you’re a buyer in the $100-150k range you better do whatever it takes to get a house, your market is sizzling.
If you’re a seller in the $300-350k range, I would suggest a price reduction because you are not really in a seller’s market at the moment.
Why is this?  Nobody can say conclusively, but my experience is that most sellers in the $100-200k range move up to the $200-300k range.  Most sellers in the $200-300k range move up to the $400k and up range, so that leaves a vacuum in the $300-350k range.

How I grew up to become The LEXpert

by John Rice

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A little tubular box just like this one is what got me into real estate.  I remember all the times I sat in my grandparent’s family room and the thrill of pulling that plastic top off the cardboard container.  My grandfather would be sitting in his green plaid Lazy-Boy recliner watching golf or some sport on the 19 inch TV with a rabbit ear antenna.  The room was paneled.  Had a giant brick fireplace that took up most of the wall.  I would sit and built houses with these 50-60 pieces.  I played with these so much that the cardboard tube was badly frayed where the lid goes from taking it off and putting it on so many time.

 

Then I stepped up to this:

105 pieces of pure real estate pleasure.  It totally amazes me now to think how far Legos have come.  Most today are about building something and following a plan.  Back then, it was about being creative and making something that only existed in your mind.

I mainly did modern, flat roof houses because with only 105 pieces, you didn’t want to use half of them to make a sloped roof.

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Then I started to draw floor plans.  It was the 80s.  The dawn of the open floor plan for the masses.  There was still enough 70s left over that things like Conversation Pits, like I have in this house, were as cool as firepits and reclaimed wood are today.  My grandfather got me the drafting kit for something like my 10th or 11th birthday.  I still have the note inside that he wrote me.  I wish it had a date on it, but neither of us realized I might need it nearly 40 years later for something called a blog.

Then I got into neighborhoods.  Thinking about how one street compared to another and such.  Asking myself which house was better, which lot was better, what I liked or disliked about each.  We lived in Frankfort at the time.  I remember thinking our cul de sac was one of the better ones in the neighborhood, but I didn’t like that it sat at the bottom of the hill, and that the house behind us sat slightly higher than ours……but it was still far better than the houses closer to the East-West Connector Road with all the traffic noise.

I’d go to Florida in the summers to see my grandparents.  My entertainment was having them drive me around cool neighborhoods and going to model homes to see new houses.

People often ask me how long I have been in real estate.  I tell them I’ve had my license since 2005, but I’ve been in real estate all my life.