Random Real Estate Thoughts

If real estate were gym class, would your house be picked last?

by John Rice

I was that kid in middle school that was always picked last in gym class.  You know the drill.  Two team Captains (Buyers) pick their team (Houses) until there is only one left and that person gets picked by default.  Don’t feel bad for me though…….I’m sure the past 30 years has been better for me than for most of those picked before me 😉

The real estate market is very similar to what we’ve all experienced in gym class.  Buyers organize the houses in order of preference.  Naturally, they are most interested in move-in ready houses that are priced right.  Then they move down the list to those that are less desirable.  Sellers want to be picked sooner rather than later……think “Days on Market.”

Once the Captains are chosen, that is like the beginning of the house hunting season.  The Captains pick those they think will be the best.  Once those kids are on a team, they are “Sold” and not available anymore.  All a Captain can do is pick the most desirable kid from what is left.  Once the best one has been picked, the second best one becomes the new best choice.  That is until it was just me standing there and the Captain says my name…….with the enthusiasm as if he had just heard the cafeteria was serving goulash for lunch.

Right now, we are in the time of year where not many new listings are hitting the market.  It’s kind of like when there are only about 6 kids left from the whole class.  These are the ones that maybe nobody really wants, but the next kid that gets picked is going to be the best of those that are left.  There are many sellers right now with average to below average houses that will get contracts simply because there are no better choices for a buyer right now.  I always say that fall is the best time to get rid of  house that nobody has wanted all spring and summer…….which I guess is my whole point.

  On a side note, the only time I ever got picked any higher than dead last was when it was for volleyball.  See, I am left-handed.  When I serve, the ball always goes on the opposite side of the court from where it lands when most people serve.  Everybody on the other team was always caught off gaurd……and nobody ever noticed the pattern of where the ball would go when I served.  Come to think of it, that is one of the first times I ever realized the benefit of zigging when most people zag and zagging when most people zig.

When the market comes back

by John Rice

When the market comes back……….People will finally be able to sell their house, we’ll see surgeons leaving their practices because real estate is more lucrative, sellers will no longer be under water on their mortgages.  Yep, it’s gonna be great again……when the market comes back.

Only problem is that the market we are currently in (at least locally) matches up to what historically has been considered normal.  About the only time in local real estate history that doesn’t match up to today is the heyday of 1998 to 2006, especially 2003 t0 2006.

Check this out.  Here are the January 1st through September 7th (today’s date) sales numbers for residential real estate deals in Lexington:

1997-2236 sales

1998-2911 sales

1999-2898 sales

2000-2811 sales

2001-2989 sales

2002-3133 sales

2003-3568 sales

2004-3746 sales

2005-3723 sales

2006-3469 sales

2007-3106 sales

2008-2538 sales

2009-2290 sales

2010-2395 sales

2011-2117 sales

Wish I could easily get the numbers prior to 1997, but they aren’t available online.  I was here prior to that though…I remember when it started to heat up back in 1998.  There was an article in the paper about a local realtor who needed foot surgery but was putting it off since the market was soooooooo hot.  1997 to 1998 was the largest jump in sales for two consecutive years.  Prior to that, the market was…..well, just normal.

And that’s why I really think that the market IS back, just back to normal.

Changing Realtors? Do it for the RIGHT reason!

by John Rice

I was flipping through listings the other day and I noticed a house I have seen before is now listed with a different agent.  Having seen the house, I knew exactly why it didn’t sell with the first agent:  Price.  It was a nice house, but it didn’t have anything that would put it at the top of any buyers list.  The deck was smaller than you typically see in that neighborhood,  the driveway was sloped, and it had an unfinished basement when most you see in that neighborhood are finished.  Another house around the corner just sold for a mere $15k more than the asking price on this one.  It had a finished basement, an extra bath, and granite counter tops.  Which would you pick?

Since the house didn’t have anything to WOW buyers, about the only thing a realtor has left in the arsenal is price…..and it was clear the sellers weren’t budging since the new agent had it at the same price that didn’t attract buyers with the previous agent.  To me, it was sad since the original listing agent was actually quite good at marketing houses.

I see this all the time.  Sellers think switching realtors is somehow magically going to convince a buyer to make an offer on a house they don’t want.  I mean, if your agent is actually doing a decent job and you are getting showings, the problem is either with the house or the price……..both of which are something only the seller can fix.  If you get no showings, buyers/agents knoooooooow your house is over-priced.  You get showings, but no offers?  That means that buyers/agents think your house could be worth the asking price, but change their mind when they see it……meaning your house has some fatal flaw or doesn’t show well.  All a seller can do is improve the house or reduce the price.  No amount of marketing can convince a buyer to want your house as long as there are better houses out there for them.

Want to know some reasons when it is a good idea to switch agents?

*When you look online and notice your realtor has not only your neighborhood WRONG, but the zip code too!

*When you look online and the house number is WRONG!

*When you look online and your realtor hasn’t posted pictures after MORE than a week!

*When your realtor NEVER calls back an agent who wants to show your house!

*When the showing instructions for other realtors says to give notice so the seller can remove a dog and the house has been vacant for months (and your agent still doesn’t change it even after another agent brings that to their attention.)

Can you believe I ran into all of these situations just in the past couple of weeks?  Just yesterday I was at a house with a cash buyer.  The house number was wrong, but I found it.  The showing instructions were to “Leave Message & Show”, which I did.  When I got to the lockbox, there was a special code I needed to enter after my PIN number, which wasn’t mentioned.  Of course, when I called the office, I gave them the actual address for the house rather than the one the agent had online, so the office couldn’t find it.  Meanwhile, my clients are just wondering around the outside of the place, hoping we can get inside.  What did we do?  We left.  We went back later when the agent called me back.  That seller almost missed a showing all because their agent made a lot of careless mistakes.

Which Neigborhoods Does THIS Realtor Like?

by John Rice

You know, I work with people in all price ranges from well under $100k to over $500k.  I go in a lot of houses all over town.  I’m always telling my folks where I would live in their price range.  Thought it might make a good post.  Since buyers seem to want either an older or a newer house, I’ll give my picks on both.

Under $100k for newer homes:  This one is easy…….there aren’t any!

Under $100k for older homes:  I really like the Buckhorn Road area.  There are tons of different neighborhood names along Buckhorn, but it is easier to just lump them together and call it “Buckhorn.”  Why Do I like this area?  Good schools and convenient location.  Also, most are simple homes built in the late 1970’s and 1980’s, so they are pretty easy to maintain on a budget.  Another neighborhood I am a fan of is Gardenside.  Great cape cods and ranches from the 50’s and 60’s  just south of downtown ought to put this on anybody’s short list.

$100-200k for newer homes:  I really like Chilesburg cause it is pretty close to Hamburg and it has a lot of greenspace.  Also, the middle school is right in the area.  Masterson gets a bad rap from most old-time Lexingtonians, but you really can’t beat the value since you get more house for less money.  It isn’t a convenient location for getting around Lexington, but I would still live there.

$100-200k for older homes:  Meadowthorpe has a lot of the 1940’s charm and has the elementary school within the neighborhood.  Squire Oak and Hunting Hills are probably my favorite spots if you want a medium-sized house in SE Lexington from the 1980’s.  SE Lex is pretty handy since you can get to the two main shopping/dining/entertainment areas, Hamburg and Fayette Mall, pretty easily.  These neighborhoods are right beside each other.  The school district is good, and the elementary is right there in the middle of the area. 

$200-300k for newer houses:  In the NE side of town, Andover Hills is my pick.  This is mainly a late 1990’s area.  The school district keeps this neighborhood high on the list of those wanting this part of LEX.  Chilesburg is also nice for the previously stated reasons. 

$200-300k for older houses:  Kenwick is cool since it is so close to downtown and has a lot of early 1900’s charm.  An area few even know exists is Deepwood.  It is on the north end of town.  It is a small area of houses from the 1930’s to the 1950’s.  It is surrounded by neighborhoods that aren’t as nice, but I’d still live there just for the coolness factor.  Lansdowne-Merrick, AKA Lans-Merrick is a convenient spot close to everything and is surrounded by much more expensive neighborhoods.  To me, it is a bargain and I look for this area to become more popular once we start seeing more houses that have shed their 1970’s finishes.

$300-400k for newer houses:  Stuart Hall is right next to Chilesburg, so it has all the same perks.  Prices have fallen, so it is high on my value radar.  The lots seem to be larger than I typically see for newer areas.  That area is pretty flat, so you don’t have to worry about a crazy sloped lot!

$300-400k for older houses:  I LOVE Hartland.  This area was built in the 1980’s.  Still a lot of outdated houses left, but there is no other neighborhood in town from my POV that has such a good vibe.  I think it is going to be as loved by Lexingtonians as Chevy Chase and Ashland Park.  Why?  All the mature landscaping and fantastic layout.  All the cul-de-sacs are landscaped in the center as well as the median that runs through the whole main street.  In fact, the layout of the road and lots reminds me a lot of Ashland Park.  It is just as picturesque.  ALso, you can get a decent place in  Chevy Chase and Ashland Park within this price range.

$400-500k for newer houses:  Still Meadows gets my vote for character and a good school district in NE LEX.  Beaumont is a great pick…..most desirable schools in town, convenient southside location, walking trails, etc.

$400-500k for older houses:  You can also get a great house in Andover Forest for this kind of dough.  It’s close to Hamburg and the interstate, plus it has many golf course lots.  Hartland gets even better at this price point.  Chevy Chase and Ashland Park are great.  Greenbriar is a classic 1970’s interpretation of the executive, country club neighborhood full of custom builds on large lots situated out in the country…..only now, it is just a few minutes outside of town.

Over $500k?  I’d be in a really nice home in Hartland, Warrenton Woods, the Lakewood area, the Estate section of Andover Hills, or find a lot and build my dream home.

What are your favorite neighborhoods?  Leave me a comment 🙂

Sure, a tomato is a fruit, buuuuuuut……..

by John Rice

“Knowledge is knowing a tomato is a fruit.  Wisdom is not putting it in Fruit Salad.”

A friend of mine posted that this morning on Facebook.  I got a kick out of it.  It also reminded me of a trend with many of today’s buyers.

Now, I am not trying to defend my industry or bash these buyers, but more and more I am seeing buyers who don’t want a realtor and who don’t know how to use all the info they find online when it comes to real estate.  They go on sites like Zillow, Trulia, the PVA and get the same info that only realtors use to have access too.  I don’t have any issues with that at all, unlike many of the old school agents out there who long for the by-gone days when we controlled that stuff.  My issue is that most people end up making bad decisions with good info and don’t even know it.  (Putting the tomato in the fruit salad.)

Examples?

A buyer told me he saw the zestimate value for a house on Zillow and thought it would be a good one to flip since it was priced so much lower than the rest of the neighborhood.  I looked at the place.  It was on the most miserable, busy corner of the whole neighborhood and was out of character with the rest of the neighborhood.  It SHOULD be priced a whole lot lower than the neighborhood to even make it a fair price.  It was not a bargain.

Another buyer told me he didn’t see the need for having his own Buyer’s Agent.  He was going to rely on these sites and the PVA.  I told him that was fine and well for figuring out averages like price per square foot, but that isn’t going to help him know what the house he buys is really worth.  How so?  How will he know whether a house he knows sold so many months ago for so much money had a new roof? An old furnace?  How the inside compared?  What value the market bears for a covered patio verses an uncovered deck?  What is considered typical for the neighborhood?  If the house has some fatal flaw that will turn off most buyers when he goes to sell?  If the seller paid any of the buyer’s closing costs?  Those things aren’t on those sites.  And while I am here, many sellers pay part of the buyer’s closing costs these days.  Let’s say the PVA or zillow say a house just sold for $155k and this buyer is using THAT number to base an offer on.  If the seller paid $5k of the buyers closing costs, then the house really sold for $150k…..OUCH!  He just over-paid by $5k and won’t even know it……until it is his turn to sell the house!

I’ve got a little different business model.  I don’t mind buyers that like to also do their own research.  Many of my buyers actually know much more info than many of the realtors here in town.  I don’t mind letting them do that if they wish and then helping them put the pieces together.  I find that it actually helps build trust because they can verify everything you say.  Tell them the truth and work for their benefit and they love it.  So, whether a buyer wants to help out or let me do all the work, I am cool with it, and we’ll find a good use for that tomato.