Random Real Estate Thoughts

If You Don’t Remember Me, I Don’t Deserve Your Repeat Business

by John Rice

For as long as I’ve been a realtor, I’ve always liked to look at the listing history for houses on LBAR.   What amazes me is that most people don’t use the same realtor to sell their house that they used when they bought it.

I guess my fascination with this all goes back to my very first listing.  I met a seller at his work while he helped me load paint in my car.  He told me he was selling his house himself and wasn’t having much luck.  We kept talking, then he later  interviewed me and several other agents.  I remember going to their house and seeing several calendars on the fridge from other realtors.  I wondered why they didn’t use one of them?

I haven’t had this problem in the 6 years I’ve been a realtor.   Want to hear some of the stories?

I met a dating couple back in late 2005 at an open house.  We looked at houses one time and the soon-to-be-engaged-lady bought one that we saw that day.  I remember thinking that there was no way they would ever remember me since it all happened so fast.  The house had a dilapidated door to what was like an outside closet.  I tried to get the seller to fix it.  They wouldn’t (Keep in mind it was a seller’s market then and there had been multiple offers!)  Then I tried to get the FHA appraiser to make it an issue.  No luck there either.  In the end I bought a door and put it on myself.  I just wanted her to have a good door.

A few years later I am at an open house and my phone rings.  It is an agent who says some clients of mine came to his open house.  Turns out it was these people.  Guess they remembered my name after all?  They were now engaged and needed to combine households.  We sold the soon-to-be-husband’s house, then they bought a new one, then we sold the one I put the door on.  A couple years later, they decided they wanted a ranch on a big lot, so we got one and sold the first house they bought together.  That is 6 deals with the same people.

I have another client that I met while showing a listing of mine.   He was looking for a bargain.  This was about the time that all the foreclosures started hitting the market.  We looked at a bunch of houses.  Then one day a really good one came up that was in really good shape and in a great location.  I told him it wouldn’t get any better than that one.  There were multiple offers, but I got it for him.  I thought he and his family would stay forever, but they wanted to do it again just over a year later.  Good thing I picked such a good house because it sold pretty fast during the period after the tax credits expired.  I am now working my but off on one of the most difficult deals I have ever been in for this family.  We should close it next week.

I’ve also had a few other clients who have gotten transferred and called me out of the blue to sell their house for them.

All this is one reason why I don’t send post cards announcing day light savings, or basketball schedules.  I guess my attitude is that if my name doesn’t  come to mind when my past clients need a realtor, then I don’t deserve their business again.

Location, Location, Location is so Yesterday

by John Rice

I’ve got about an hour before I need to go show a listing of mine and then get with a client to go see a couple of houses, but I wanted to let you know what is going on with real estate in Lexington ky!

I’ve closed 3 deals, have 5 pending, have several buyers looking, and have a bunch of active listings.  I think I’ve got a pretty good idea about where things are at the moment,  having worked with both buyers and sellers a lot.   Glad I love my car since I’ve put over 5000 miles on it in the past 3 months…all local too!

Soooo, what is going on?  Well, I think we are at the tail end of denial and about to start accepting that the market has changed a lot in the past 8 months since the tax credits expired.  I don’t just mean fewer sales.  We all know that has happened.  What I mean is that there has been a major shift in buyer mentality.  If you’ve read my past blogs from this winter, you remember me saying (okay….complaining!) about the crazy buyers out there making ridiculous offers on houses who never actually bought anything.  Now that the weather has warmed up a little, the “Real” buyers are coming out.

These buyers are much more conservative and cautious than they were last year at this time.  We all know that buyers are expecting more and more.  They have come to expect staging and a good presentation.   Now they expect that AND a low price.  I guess that is the big change that we all need to adapt to.  You can no longer make a house look good and expect it to sell mid-range in the comparable sales.  Now, pretty much every buyer expects the bottom of that range as the max they will go.  I mean, I can’t blame them.  I would do the same thing right now if I were buying and you would too.  I think a lot of that is just because they want to have a little margin if prices drop any more than they have.  “Location, Location, Location” use to be the big thing in a buyer’s mind, but yep, it is now second chair to price.

All this leads me to something else that has been on my mind, which is how we as agents need to keep responding to what and how the market wants their real estate done.  It is hard to believe that a long time ago having more than one picture of the outside of the house was cutting edge.  Then agents thought that getting you to see yourself in the house was what it took.  Maybe it did back then, but when I see an agent write something like “Enjoy playing board games or reading the morning paper with your family around the table in this great eat in kitchen,” I know that the agent hasn’t grown past 1995.    I think it is time to start talking about money in the marketing remarks.  It is what is on everybody’s mind right now.  If the house is a good deal for the size, location, or condition, we need to tell that to the buyers……in fact, I am going to go make those changes right now on my listings….see ya later!

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.

Resale Value…North LEXington…What?

by John Rice

When you think of resale value/potential, you are probably thinking about things like a preferred school district, the most desirable part of town, etc.  All of those are good things, but what if you don’t have any of that?  You know…..there is a lot of Lexington that doesn’t have a desirable school district, and heck, most people strongly favor the south end of town.  What about those houses on the north end of town?  What is their resale value like?

Well, it is as good as it is on the south end of Lex.  Yep.  Sure is.  The difference is that the prices have always been lower for that part of town, but hey, they seem to be holding their value as well as any other place in town.  In fact, since our market has been hit the hardest over $500k, you could argue that the buyer who spent $100k on a house in 2005 on the north end of town with a less desirable school district has actually come out better than the guy that dropped $1,000,000 on an awesome house in the most expensive zip code, 40502!

Just for fun, I ran some numbers for Area 1 and Area 4 in Lexington.  Area 1 is the NW part of town between Leestown Road and North Broadway.  Area 4 is SW Lexington from Nicholasville Road to Leestown Road.  Area 1’s hook is value.  Area 4 is probably the most desirable part of town for all the things most buyers want.  To be fair, I only looked at houses from $100k-$250k.  Area 4 has a lot of expensive neighborhoods, and I wanted to make the figures apples to apples.  I picked that price range because it represents most of the Lexington market.

So, from Thanksgiving 2008 to Thanksgiving 2009, Area 1 had 431 sales with an average price of $151,110 which got you a 1755 square foot house that took an average of 66 days to sell.  Area 4 had 739 sales averaging $156,643 for a 1745 square foot house that took 62 days to sell.

Here are the numbers for Thanksgiving 2009 to today:  Area 1 had 320 sales averaging $147,559…..1759 square feet….59 Dom.  Area 4 had 617 sales….$159,458….1760 square feet…..57 DOM.  (Okay…..sure you realized that the average price for Area 1 declined while it went up a little for Area 4.  I really haven’t seen this in individual houses….I really think it is because savvy builders built more houses in the $125-140k range for first time buyers looking to take advantage of the tax credit and brought the average down.  Area 4 doesn’t have much new construction….esecially in that price range.)

So….how does the north end of town stay that strong?  I really think it all has to do with value.  I have sold a ton of houses in and around Masterson Station.  All of my buyers saw that they could get a little more house for their money.  They have all been willing to drive to other parts of town for shopping/dining to get a bigger and better house.  This part of town also works well for folks working in Frankfort, those needing to be close to the interstate, and those who work at places like UPS and other businesses that are close by.  Because of the value hook, I think the north end will always need to stay a little less expensive than the south end of town, but there will aways be people who appreciate that value and will buy out there.