Tricks Sellers Play

by John Rice

I was out with a client this week looking at old houses in Chevy Chase, Fairway, Lakewood, Lansdowne,basically 40502.  One house in particular stuck out to me because it was a FRAUD!!!

What do I mean by that?  Simply that the seller had done everything possible to make the house attractive……….except making it a good house.  They had all the lights on, a fire going in the fireplace, they were simmering an orange in some type of cinnamon gue on the stove.  It was decorated with small scale furniture to make the small rooms look bigger. I can over look that stuff, but what got me miffed was that the whole house was nothing more than a beautiful faux finish. 

The ceiling in the bathroom looked like tin……but it was just wall paper.  The counter top had a neat design on it…………but it was painted plywood.  The flooring in the kitchen was left over parquet flooring from an 80’s remodel, but they had painted a light green and white diamond pattern over it.  All the vanities in the bathrooms were ancient, but were painted a trendy flat black.  There was panelling in the basement and a little in the kitchen that had just been painted.

None of this would bother me in a $100,000 house………….heck, not even in a $150,000 house.   In fact, I would probably give them credit for all their effort.  But this was a $350,000 house.  I just felt like somebody was trying to fool me!

My advice for this seller is to put in some granite and do some updates that aren’t in liquid form and can’t be poured out of a can.  Make your house honestly good!  Location is only one third of the known real estate principles.  Condition and price are part of it too!

My advice for buyers is to watch out for this kind of trickery.  Until you started to look closely at what this house really was, it looked stunningly beautiful.   But, none of that comes with the house.  The decor will be gone.  The new owner will then realize that the house was really just cheap updates inspired by those HGTV shows where they make over an entire room for $1000.

But it won’t be my clients that fall for this!!

LEXpert Neighborhood Tour: Brookhaven

by John Rice

Here is a tour I did for a great neighborhood called Brookhaven.  Shot it on a dreary day in February, so the area doesn’t look as good as it does when all the mature trees have their leaves and the big lots have grass that is green

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Moving downtown trend doesn’t apply to Lexington

by John Rice

Since I get all kinds of newsletters and magazines about real estate, I’ve read a lot of predictions about buyers leaving the burbs and buying downtown.  Sorry, not in Lexington.  I guess the people that  build the condos in downtown Lex a few years ago must have been reading the same articles.  I predicted in 2006 that there wasn’t enough of a market to support all the new condos.  Back then, everybody was buying them to flip.  That wasn’t a real market.   Just goes to show that what may be happening in many other places doesn’t mean it applies here.

Why?  For starters, Lexington just isn’t big enough.  The people that are returning to downtown are in big cities and want to escape a long commute.  When you spend 3 hours a day just getting to and from work, it becomes a quality of life issue.  You can get from one end of Lex to the other in 35-40 minutes even in bad traffic.  A lot of  Lexingtonians have moved here from  rural areas in Kentucky or transferred here from a larger area.   They always tell me they are used to driving much more than we do here, so it is a non-issue to them. 

The next reason is Lexington doesn’t even have suburbs for people to leave!  We have suburban type neighborhoods, but it is all still Lexington.  The furthest developed point in Fayette County is still only 20-25 minutes from the core of downtown.   We just don’t have the sprawling suburbs that are miiiiiiles away from anything like a true city does.

The last reason is a pretty big one too.  There isn’t enough area downtown for all those people even if they did want to move there.  There just isn’t enough good existing housing downtown.  You pretty much have very small houses in areas people don’t want or very nice houses that are out of reach for the average buyer.  We do have some nice areas just outside downtown, but in reality, they were just as much a suburban type neighborhood when new  as what we have on the edge of town.  Plus, they aren’t the kind of  areas that the articles are about.  Places like Gardenside, Southland and Meadowthorpe are close to downtown and still affordable.  Spending more gets you into Ashland Park, Chevy Chase, Fairway and Kenwick.

I also don’t see the condo market getting off the ground anytime soon, even if we returned to a good economy and real estate market.  The thought is that the retiring baby boomers will want to be there and walk to everything and enjoy the low maintenance lifestyle.  My parents are boomers.  They and all their friends like the idea of it all.  Why just the idea?  Like other articles we have all read, this is the most active and affluent group of senior citizens ever?  Where do you keep your canoe, boat, bikes, motorcycles, extra cars when you have one parking space and 800 square feet?  At best, I can see really wealthy boomers having a downtown condo as a second home.

So, in a nutshell, this trend will only apply to cities with a big enough downtown and sprawling suburbs.  That just isn’t Lexington…..right now.  What do I predict?  For the short-term, more of the same.  Lexington has 3  types of buyers:  Those who want something closer in town and an older house, those who go for something further out to get a newer house with the features they want, and those that look at everything in their price range.  In the long-range, Lexington will eventually use all of its available land.  When that happens I think we’ll start to see a huge price difference between Lexington and the surrounding towns.  When the land becomes that valuable, we’ll see a lot of what are now cheap areas redeveloped.

Negotiating Repairs after an inspection

by John Rice

You know, you can find out a lot of people’s motivation if you just listen to their realtor.  Most are big talkers.  Most of them view the deal as practically done once you settle on a price.  They seem to forget that there is usually one more thing to negotiate:  The repairs after the inspection.

Here are some examples of what agents sometimes say right after a contract has been accepted: 

1)  “The sellers have a contingency contract on another house that they were about to lose.”

2)  “The buyer needed to close on a house in time for him to get his family moved down here before he started his new job .”

3)  “The seller is making 2 mortgage payments.”

4)  “The buyer’s lease is up at the end of next month.”

Now, repairs are always the trickiest part of a deal.  The seller is thinking that they have lived happily in the house for so many years and that they let it go too cheap.  The buyer is always thinking that they didn’t get the house as cheap as they wanted and they don’t want to buy the seller’s problems.  That’s just human nature.   It gets rough sometimes.  Usually there is a little compromising, meaning neither party is truly happy.

But when the agent pretty much discloses that their client can’t afford to lose your client, it makes negotiating a little easier.  I’m nice about it and all, but the reality is that the only person whose interest I need to promote is that of my client’s.  If my client gives me a list of things they want repaired, I’ve got to try to get as much of it done as possible.

So, negotiating repairs is really about knowing what is happening with the other party while keeping tight lips about what is up with your client.  It is a lot easier to draw a line in the sand if the other party doesn’t know enough about you to predict what you’ll do next.

How to ask the seller for repairs

by John Rice

I’m in the middle of a deal and we just had the inspection done.  The place has some medium sized issues.  Nothing that is too too bad, but stuff that still needs to be addressed………..and addressed soon! 

As I was explaining to my client how I write a repair list, I thought that might be something good to blog about.  Most realtors just list all the deficiencies and ask them to be repaired.  That sounds easy enough.  Just give them a list of tasks to do and move on.  Buuuuuuuuut, there is a potential problem in doing it that way.  Granted, it rarely comes up, but when a problem does happen, it really sucks!

The problem is that if you ask for a task to be done, you can have a situation where an action was performed, but the problems wasn’t solved.  Don’t get it?  Think of it like this.  You get a home inspection, find out the faucet leaks because it needs a new washer.  You write on the repair list that the seller has to install a new washer.  Seller agrees.  Seller goes to Lowe’s, buys a washer.  Seller installs new washer.  The faucet still leaks.  You tell the listing agent that he didn’t fix the faucet because it still leaks and the agent tells you that all you asked him to do was replace a washer.  See it now?  I don’t see this kind of bickering as much now that we are in a buyer’s market, but it still happens some.  If it is for something minor like my example, the seller and their agent know that you aren’t going to walk away from the deal over something so small.  Even if they agree to go back and fix the faucet, it still causes a lot of stress for the buyer.

The simple solution came from my Dad.  He is the smarted man I know.  He is also a lawyer, so he is pretty good about getting things worded correctly.  I remember asking him to help me word one of my first repair lists.  I started to do it just like everybody else.  Then he said to me that I should word it where a result is to be achieved rather than just a task performed.  It was like a revelation or something.  As soon as he said that, I totally got it.  Since then, I always state the problem that needs fixed and usually add something like “so that it functions properly” at the end.  That way if there is some issue with the work that was done, I can always claim that it isn’t functioning properly.  Also, for plumbing, electrical, and HVAC work, I always state that the work has do be done by licensed, qualified contractors.  That keeps the roofer from working on your furnace and a handyman from getting inside your electrical panel.

Thanks Dad!!