Random Real Estate Thoughts

3 buyers. $250k. Different Houses. Why?

by John Rice

Three buyers.  All spending $250k.  One buys a 1300 square foot house close to downtown in an up and coming area that is a little shady in spots.  Another buys a much bigger, plainer house further out.   The last one gets nice finishes, but is in an area that is seldom anybody’s first choice.   All of them feel like they got the best house for the same money.  None of them would have even looked at each other’s houses.

What gives?

Something that always amazes me, even after 8 years of being a Realtor, is all the different reasons people make the choices they do.  What one person considers a fantastic location, another thinks is a terrible location.  What one person thinks is appealing, another doesn’t.

Whether you are the buyer’s agent or the listing agent, I think there are things to be learned here…..let’s take a look at the 3 buyers I have mentioned.

The one that buys the 1300 square foot house close to town in a sketchy area cares about location and emotion.  They want to be close in, but also needed to fall in love with it since they were shopping for a feeling too. A good location to them is defined by proximity to downtown rather than the usual mix of good schools and a safe neighborhood.   When they go to sell, they need an agent that realizes this and will effectively market it to a similar buyer pool.  What needs to happen here is to describe the location and the feeling you get while in this neighborhood and inside the house.  The people attracted to this house aren’t going to care if a bedroom is on the small side as long as it looks and feels right.

The buyer who went further out  to get a bigger house is much more practical in their search.  They either wanted or needed  the space.  When that house sells, the location isn’t going to be as important as the raw facts about the house……and the emotional response to the house is not relevant at all.  When this one goes on the market,  a spread sheet of all the practical features will attract the next buyer.

The one that bought in an area that is second tier to get a pimped out house is also an emotional buyer.  They were most concerned about how the house feels inside and were willing to sacrifice location to get it.  This buyer type usually goes for new construction to get all the current trends in finishes or a freshly flipped house.   Assuming the finishes are still in style when this person sells the house, the listing agent needs to focus on bang for the buck.

Now, not every person or house fits perfectly in these 3 scenarios.  But the thing to keep in mind is that there is always a mix of the practical, emotional, and a broad definition of what makes a location appealing.  Each buyer is different and each house is different.  I typically see agents market all their listings the same way, which may work in some situations, but not others.  When you are listing a house, you really have to get a feel for not only the house and neighborhood, but also how to make the listing pop with the target buyer’s personality.  Same thing but in reverse when working with buyers….you really have to put your head in their world and think like them in order to show them the houses and neighborhoods that they will like.

Some Real Estate Memories of 2012

by John Rice

This is the time of year that I like to grab a cup of coffee and remember all the places I’ve been and people I’ve met through the year.  I’ve been all over LEXington and the surrounding area……here are some of my memories:

1)  After living in LEXington since 1985, I finally ate at Burger & Shake on the north side of New Circle Road.  When I moved here, you could get either a burger or a shake for 29 cents.  They are now 99 cents.  I was out with Rob looking at houses for his family on that end of town.  It was lunch time, and Rob like unique places, so we tried it.  Sat out front on a picnic table and had a good lunch together.

2)  Normally you don’t want to meet the seller if you are the buyer’s agent, and you normally want to keep the same distance for your buyer.  Krystal was soooooo pregnant that I was worried she would have the baby during the home inspection……which didn’t go so well.  As we left, the seller, an older gentleman, came to the house and talked to us.  I sent the listing agent a very lengthy repair list.  They did EVERY repair.  Don’t know if that would have happened if they had not have seen her pregnant.

3)  I sold two houses on the same street.  That is a first for me.  Both to great families who just recently met at a mutual neighbor’s Christmas party.

4)  Keith and his large family needed a very specific type of house and needed it quickly since they were relocating here.  Nothing was really working out.  Right when I was starting to get nervous about finding them something in time, I got wind of a house that had not even hit the market yet.  It was just about as perfect as possible-the right floor plan, high end finishes, their first choice in neighborhood.  I am thankful my agent friend Donna and I talked or else we might have had to settle for something less due to their time constraints.

5)  I use to live in Kenwick before it became such a trendy place……my parents have always known what was cool before everybody else “discovered” it.  I sold my first house in the neighborhood to Elizabeth and Jason this year.  It was new construction on a lot where a small, worn out house had been.  The builder was probably the best builder I have ever seen.  Their house is awesome.

I guess one of the things I am most proud of as I look back at all the people I have helped this year is that all of them have reached out to me.  I haven’t done anything to solicit any of the work I have done.  Most people were return clients or referred to me by past clients, or people who have been following me.  That is a good feeling 🙂

Sooooooo, I’d like to thank the 30+ people/families who have let me come into their lives and solve their real estate problems for them.  Here they are:

Chris & Sara

Rob & Danielle

Jim O

Pam

Krystal & Josh

Sam

Duane & Dacian

Elizabeth & Jason

Tom

Gabe & Whitney

Justin

Becky

Ted & Michiyo

Matt & Kaz

Wendy

Scott & Stephanie

Zac & Tomika

Ken & Michele

Greg & Lisa

Dave

Ron & Sheila

Elizabeth & Jason

James & Elvira

Sue & Joe

Ronnie & Phyllis

Brett & Farishta

Steve & Shelly

My wonderful wife Rhonda since we bought a house this year too!

Xiang

Donna & Keith

Kris

Don & Nina

 

Lexington Home Prices: Is it 2005 again??

by John Rice

For almost a year now, I have been saying the worst of the market is behind us.  I based that mainly on the fact that it was about that time when buyer’s seemed to lose the fear to buy a house.  Now that all the news reports are in agreement with me, thought I’d talk about what is next.

Rewind for a minute here.  The past several years have been pretty easy for realtors to understand the market.  Prices were pretty flat except for a big decline in 2007 and after the tax credit for first time buyers expired.  If a house sold for $XXX,000 six months to a year prior, it was probably worth that still, but you went in lower just to test the seller.  Those days are gone, especially for the most desirable locations/neighborhoods.

Take for example, Andover Hills.  I own a house I use to live in over there, so I watch that neighborhood closely.  Houses that were selling for $220ish are now going for in the low to mid $240’s.  The first one that went for this kind of money, I thought was a fluke.  Then it happened again, again, and again.  Back a few years ago, you needed one that was totally updated to pull that kind of money out of a 4 bed/2.5 bath 2300-2500 square foot home without a basement.  Today, the ones that are all original (meaning 15 year old HVAC, original windows, old cabinets and counter tops) are getting that same money.  Why?  School district.  If you want a good elementary school in that part of town it is about your only choice.  This same thing is happening in other neighborhoods that have something special about them.  Ashland Park and Chevy Chase are other neighborhoods where prices have gone up.  I had a client wanting to buy in the $300-600k range and just about every house sold as soon as it hit the market.  Two years ago, houses were sitting on the market forever in those areas, even the nice ones.  My people felt lucky to get the one they bought!

So, what is around the corner?  I am shocked that it hasn’t happened yet, but surely all those people who tried to sell as the market was circling the drain will eventually put their houses back on the market.  They might just get what they wanted for their houses now.  I think as long as interest rates stay pretty low, we’ll see a good market and increasing prices.  At the moment, people are so thrilled with how much house they can afford, they aren’t all that concerned about getting it at a rock bottom price….They just want to get a signed contract on it before somebody else does.  Also, the price increases in the top tier neighborhoods will pull up the 2nd tier and so on.  There has to be enough of a difference in price to make a buyer go for their 2nd choice location though.  Don’t think we are quite there yet.

It is a whole new exciting ball game right now.  I like trying to keep up with it and see where it is going.

Random Realtor Thoughts From This Week

by John Rice

Thought I’d write a bit about the week I have had:

Guess I’ll start with right now.  I am moving today.  The movers are here right now.  I’ll know by the end of day if the moving company I picked is as good as they claim to be.  Everything is packed up.  I may be sitting on the floor finishing this post if they come for this table next.

It is exciting for my family.  It is nice to be on this end of something I deal with professionally.  I’m always the one whose work is done when the moving truck is backing in or out of the driveway.  We’ve had a great time at our old house.  It is hard to leave since we liked the neighborhood and neighbors so much.  I hope to be just as blessed at the new place!

Yesterday, at a home inspection for some friends/past clients, I was standing in the backyard with the husband.  They are buying a nice house on a basement that has a huge lot.  He says to me “I never thought I would own a house like THIS!”  It was a moment I will always remember….especially since I found/suggested the house.  These low interest rates are getting a lot of people into houses that were out of their reach not too long ago……like the one I am moving into today!  It was kind of an emotional moment for me since I am friends with this family and it is the 3rd time they have used me.  I know it is a house their family can grow into, which is why I picked it.  This is probably the last house I will sell them for a looooooong time, and I am happy for that.  It was my goal to get them in a long term house since rates and prices are unlikely to stay this way forever.

Then, I had a conversation with the best home inspector IMHO.  I’ve become friends with him since I see him so often.  He was telling me about a seller whose house he inspected.  The seller told him how mad he was at him for telling the buyers all that was wrong with the house.  Then, the seller said he realized that all the inspector was doing was telling the truth, and he hired him to inspect the house he was buying!   I bet being a good inspector is tough since all you are doing is bringing bad news to people.  It’s like going to the doctor and they tell you that you need to lose weight, watch your cholesterol, or  that you’re old enough to need those very personal type exams annually.  But like a doctor, it is all for your own good.

That’s it for now since I think this table is next!!

Why buying close to apartments is a no-no

by John Rice

Just read in the paper about a dude that was found shot to death in his apartment near Henry Clay High School.  That got me thinking about the other apartment complexes in that area.

For those that don’t know the area, it has what are now some lower end apartments  near Richmond Road and some of the most desirable homes in the most desirable zip code, 40502.

When I was a kid, the apartments near Richmond Road were okay places to live.  At that time, the now razed apartments off Lakeshore on Laketower were really nice…..although by the late 1980’s the ones called “Two Lakes” were turning into the place for well off college kids to drink beer on the floating dock.

Now, you would think the old “Location, Location, Location” mantra would apply to apartments too.  Not the case.  I’m going to use the old apartments on Laketower as an example.  Here you had two apartment complexes surrounded by super high-end houses, some of the units even backing to a lake.  What happened?  Well, the same thing that happens to just about all apartments in time.  Investors cash flow them to death, sell them for cheap to somebody who cash flows them to death, and this cycle continues until they become cheap enough for an investor to fix up or they get condemned…….or in the case of the Laketower ones, they get torn down!  Is any of this the fault of renters?  Heck no.  It is all in the hands of investors.  I never blame the tenants for this cycle.  Shoot, when my wife and I were first married we lived on Redding Road.  It was a decent, affordable place back then and now it is a dilapidated building that is for sale, probably because the landlord knows it is about to need a lot of money spent on it!

So, stuff like this is why I will always recommend my clients not buy a house that backs to apartments, or one that has car/pedestrian traffic from apartments.  Even the nicest apartment complexes will eventually become a run down eyesore.  If it can happen to a complex that is on a lake, in a great school district, and within a neighborhood full of $400,000+ houses, it can happen anywhere given enough time.