Why that house DIDN’T sell for what it should have?

by John Rice

I frequently boast on Facebook when a buyer of mine gets a house for way under the appraised value……Although I really think it has more to do with a listing agent who didn’t know what the house was really worth than my ability to get a good deal for my peeps.  An appraisal is like the CMA that agents should do when they list a house.  Both are really more focused on the comparable houses, rather than the house being marketed.

And I guess that is what this is all about today:  Listing agents that don’t know what their listing will really sell for.

When I was a new agent, they trained us to do a CMA, or Comparative Market Analysis.  They give you a sheet of paper that has values for things like a half  bath verses a full.  What a square foot of space should be worth in each price range.  What a basement is worth.  Etc, etc, etc.  I remember all the new agents sitting there like the first day of algebra class, trying to work through the formula with no idea what any of it really meant, or having a clue as to the concept behind it all.  We were just following a formula, and in the end, we all had our value for the house and were really proud of ourselves.

I don’t think many agents have really gotten past doing it this way.  I say that because on several occasions, I have talked to agents who have told me how they did a CMA when they listed a house and are shocked that it didn’t or hasn’t sold for more.  According to the comps, the house is a bargain they alway say.

Well, that must not be true, because if it were a bargain, it would have sold.  I think that most agents don’t take a close look at the house and add/subtract value for things that aren’t on the CMA list we all use.  These things are features like a big house with a tiny backyard whose probable buyer is a family, the house that backs to an apartment building, the house with purple carpet, the house with an awkward floor plan, or just about any feature that knocks it out of being somebody’s first choice.

I recently sold a house in Beaumont Reserve that the listing agent told me how shocked she was that it didn’t sell for about $50k more than it did.  It was the same floor plan as others that sold for more.  The lot was typical.  The finishes were typical.  On the CMA sheet and appraisal, it was worth more.  Here is the deal, the house was painted off white, with off white carpet, and the seller’s furniture didn’t help any either!  See, to a buyer, the house seemed just too plain to sell for what other similar ones did.  My buyer painted it and spend some money on updating it.  It is now in line with what the other ones are selling for in that area.  That house was worth less in the “Real” market than what any apprisal or CMA showed because neither has a value for how a buyer feels about a property.

The “Real” Market is where the rubber meets the road.  An agent should be able to look at the comps, do the science part of the CMA, and then also be able to make adjustments for things that buyers will respond positively and negatively to.  Why?  Because they are things that matter to a buyer, and a house is only worth what a buyer will pay for it.

Old House VS New….Lots of Misperceptions

by John Rice

I often get asked by buyers if they should buy an old house or a new house.  My usual response is to say that it depends on what kind of problems they want to have.  I get crazy looks when I say that, but it is just my way of telling people that all houses will have problems.  Basically, it is your house verses Mother Nature and Father Time……and they usually win.

I have lived in both old and new/newer houses all my life.  When I was a kid, I went from a 1910ish four square to a 3-year-old ranch.  Next, my parents bought a house in Kenwick  from the 1930’s.  My first house was built around 1915.  My second was 1973.  My current house is 13 years old.  All of them had things to deal with.  The only way to escape house issues is to refuse to deal with them, and I see a lot of that on the market!

There seems to be this misperception that old houses were built better.  True, MOST were built with more care than today’s homes are.  I say most because my first house, the one built around 1915, was nowhere near as well-built as my parents Kenwick house from the 1930’s.  I thought it would be, but once I moved in, I started to realize it wasn’t.

Old House misperception #2 has to do with today.  Many people think that any old house is better than any new/newer house is today.  After living in a lot of old houses and showing a bunch to my clients, I can tell you that what it comes down to is maintenance.  Even the best built house from yesterday will be nothing but trouble today if somebody didn’t keep it up.  Remember, an older house has been in the ring with Father Time for more rounds than a newer house will have.

The new house misperception is that they won’t last as long as an old house.  I use to think that…..until my parents bought a 100+ year old farm-house in Clark County.  See, their house started out as a 2 room timber structure.  Then a porch was added on the back….which was later converted to be a kitchen.  Then a new porch was added to the side of the kitchen…..which later became the new kitchen and the old kitchen became a dining room.  Then somebody added a second story over the original structure, then came a second story over the original porch/current dining room.   So, my attitude now is that if my parents house can defy all building codes and even gravity a little, any new house should last just as long. 

Here are some of the common old house issues:  Inadequate electrical, plumbing, insulation, lack of maintenance,  and poorly done improvements to any of those prior items.

New/Newer house issues:   Rushed construction by unskilled/uncaring workers sums it all up the best.  I have a friend whose house was practically rebuilt after a fire.  It had no insulation on one side of the house.  On my own current house, poor mortar joints on a brick window sill allowed water to run down the inside of the brick veneer and rot some of the sill plate….I only found it out when I did the demo for the new slate floor.  If today’s workers would apply to their trade the same care they use to draw naked women in the potapotties, we would have the best built houses of all time!

Occasionally I do see both a really well-built newer home and a fantastic older home.  I represented a builder who did a great job of making decisions that the buyer wouldn’t even begin to appreciate for years to come.  He did a lot of little things way above minimum code.   I also just sold an older house that had been well maintained and had recently been overhauled by a good contractor.  That combination made it a pretty unique older home and a good pick…..I guess that buyer got the best of both worlds and none of the negatives!

Which do you like better:  Older houses or newer construction and how come??

Lexington Ky Real Estate: Sim City helped make me a better Realtor

by John Rice

Ever play Sim City?  I must admit, I haven’t done it in like 15 years, but I always loved to watch what happened when you built a neighborhood by an industrial zone, or watch a neighborhood grow when you added a commercial district beside it.

Sim City is a lot like real life in the way something outside a neighborhood can have an impact on what happens within a neighborhood. 

One day several years ago, I was talking to a neighbor who bought her house brand new back in the early 70’s.  We were talking about all the traffic on Pimlico Parkway.  She told me that before they opened Man-O War, the only traffic on Pimlico Parkway was just people from the neighborhood.  It was just the main drag through the neighborhood, like any other entrance and exit  in your neighborhood…..until something changed.

And I guess that is what is on my mind.  How things are always the same, until something changes.

Another example of a road like this is Autumn Ridge Blvd.  I remember when it was a new neighborhood.  You took Autumn Ridge all the way back, turned on Pleasant Ridge just like you do today, only back then it ended before you got to Andover Forest…..and oh, there was also no Hamburg back then either.

Next thing you know, Hamburg is built and you can get to it straight through Autumn Ridge.  It really worked out great for everybody….except those folks that lived on the cut through streets.  They saw a lot of traffic and watched as their houses became less valuable than the same house on a different street in the neighborhood.

So, here is my advice:  Don’t buy a house on a road that ends at an undeveloped area.  SOMETHING will eventually be there….just like on Sim City, and odds are it will change the vibe of your neighborhood.  Sometimes it changes it in a good way, but most of the time it means increased traffic, which usually means increased crime…..just like Sim City.

Here is some more advice:  When you are considering a neighborhood that has roads like that, take a look at a satellite view of the neighborhood.  You want to see what is on the other side of the vacant land to see what may eventually be connected to your neighborhood.  Also, don’t rely on zoning.  I hear people say things like, “Oh, that is zoned for single family, so we’ll be okay.”  Well, lets say that it stays zoned as such.  That doesn’t mean that it will be a single family neighborhood similar to your neighborhood?  But even more of a big deal is that there are zoning changes all the time.

And you know what usually happens when there is a big change in the neighborhood don’t you?  All your neighbors decide to move at the same time.   Never a good thing for resale value……and Game Over for you!

Lexington Ky Real Estate: The LEXpert tours Lans-Merik

by John Rice

 

Did another video tour today.  This time I hit one of my favorite areas…..Lans-Merik.  The neighborhood is located inside New Circle Road between Tates Creek and Alumni Drive.

What do I think is so cool about this area?  Well, the main thing is that you get a fantastic location.  Lans-Merik is in the 40502 zip code, so it is surrounded by some of the most desirable neighborhoods in town.  The lots are big, there is a park and elementary school right in the neighborhood, and you have great shopping very close.

 Most of the neighborhood is split levels, split foyers, ranches and two-story houses, ranging from traditional to modern to even a few Spanish looking ones…..No need to tell you that this area was built in the 70’s, right!

Right now, houses from the 1970’s  and 1980’s don’t get much respect.  They aren’t old enough to have the charm of homes built before the 1940’s, and don’t have that mid-century modern vibe like ones from the 50’s and 60’s.  Anything from the 90’s up is considered pretty much current.  But I think in time they will come into their own…atleast in Lexington since this era was pretty much the end of nice big lots and closer in locations.  It may take the mid-century homes to become too expensive for the average buyer to consider them, but no doubt it will happen, and when it does we will all be wishing we had bought in Lans-Merik while prices were good!

The prices seem to mostly be in the $200-250k range.  Granted, many of the houses are pretty outdated, but I think they are a bargain considering the fact that you can go half a mile in almost all directions from this area and the houses are much much more expensive.  That is also a great thing because you know that you have room to spend money updating.  I really think that in the next 10 years people will be putting more money into these houses and we will see the average prices take a big jump.    Why not?  People will always want a terrific location and nice lots!

The schools are Julius Marks Elementary, Morton Middle, and Henry Clay High School.  All are pretty desirable!

Check out the video to see more.  Oh….I did make a mistake in the video.  I meant to say Tates Creek Road, but said Todds Road….Ooooops!

Enjoy 🙂

Lexington Ky Neighborhood Tour by The LEXpert: Ashland Park & Chevy Chase

by John Rice

I did a tour of Ashland Park and Chevy Chase today……and it was a great day to be out in the convertible.  I picked these two neighborhoods because I have had 3 buyers recently that have been looking in these neighborhoods, as well as the general 40502 area.

So, if you’re not from Lexington and want to know what is so great about Ashland Park and Chevy Chase, here we go!

Both neighborhoods are in the heart of Lexington.  If you look on a map, they are between Richmond Road and Tates Creek Road out to around Cooper Drive.  When new, Ashland Park had bigger houses, while Chevy Chase had smaller houses…..but a lot of that has changed.  There have been a lot of houses with huge additions.  Some are on the back, and some ranches and 1 1/2 story homes have been transformed into 2 story houses. 

Besides the cool older architecture and mature trees, it is one of the few places in Lexington that is truly walkable.  There is a commercial district along Tates Creek Road/East High Street as well as on Euclid Avenue.  On the opposite side of Chevy Chase is a road called Romany with a few businesses too.  We’re talking barber shops, grocery stores, a french bakery, a hardware store, florist, restaurants, a post office…..and to sound like a Time-Life infomercial, plus many more!  Both spots are fun to be in.

There has been some debate among Hoodies like me as to what makes Chevy Chase and Ashland Park so popular.  (BTW, I’m starting a new term for people who are into neighborhoods.  It’s like how the people who are all into The Food Network are called Foodies…..Like it?)  Both neighborhoods  have a good stock of old houses.  Yes they have a great location.  But, I think one of the prime things is the way it was laid out.  There are lots of medians and many of the roads just kind of meander through.

I think another aspect that is over looked is that the neighborhood has never really had a period of decline like almost every other neighborhood goes through.  What I mean is this:  These neighborhoods had a lot of the original owners stick around through the 1960’s and 1970’s when older houses close in town were not the thing……although these were still very desirable.  Many neighborhoods this old had a rough time during those decades.  Having so many old ladies stick around for so long kept these spots from suffering.  Since they both have location/charm/character/good schools, it attracted the type of buyers that actually turned these areas into upscale neighborhoods.  I remember reading in the 80’s that several long term owners were having a hard time paying the ever-increasing property taxes for their house.  In other words, these neighborhoods actually improved as the original owners left, when most neighborhoods decline a little after the original peeps leave!

Okay.  The schools are Cassidy Elementary, Morton Middle, and Henry Clay High.  All are popular schools.  These have been the schools for these neighborhoods for as long as I can remember.

Prices?  Well, I have seen a few smaller ones that need TLC go for around $250,000.  Most of the ones I have seen lately seem to be in the $350-500k range.  I think for $350-400k you can get an updated smaller house.  To get an updated bigger one, you will be looking more along the lines of $400-550k.  There are some that are going for much much more, but that seems to be what I would consider typical.  Figure about $170-200 per square foot.

Hope you enjoy the video.  I did have a few bloopers.  I said the circular part of South Hanover was like a turn-a-bout rather than a round-a-bout.  I also think I might have turned on Ridgeway and called it Dudley.  If you look close, the blue Audi wagon that pulled out in front of me on East High Street was the SAME GUY that pulled right in front of me on Romany Road….watch out for that dude!