Looking at the big picture

by John Rice

Just for fun, I thought I would go through my old blog drafts that I never published for some reason.  I found this one below.  I got a good laugh out of this because I never bought an SUV and I wrote it so long ago that my kids both have their own cars now…..and my dad is retired!

It still makes a good point that is true today:  You’ve got to look at the whole picture when buying a house and any house, unless brand new, will need some of your hard earned money spent on it.

“So, I am thinking about getting a bigger vehicle, maybe an SUV to haul kids to school.  Not too excited about it, so I have a lot of reservations, and find myself trying to make comparisons based more on my perceptions rather than reality.  Then it dawns on me that I am going through the exact same thing that home buyers deal with after they get a home inspection.

See, I am sitting around thinking things like how the tires on my current car have only about 25,000 miles on them, that my brakes are pretty new, and that I just did a major service.  I feel like I am throwing that money away if I were to trade.  Then I realize that I am only looking at half of the whole picture.  If I buy an SUV that still has plenty of life left on the tires and brakes, then I am coming out the same.  Also, since the ones I am looking at all seem to have just over 30,000 miles, they would have just had a major service too.

I think that most buyers deal with something like this after they get their home inspection done.  They start adding the costs of all the problems.  That is natural.  They also usually start to compare the house to other ones they have looked at.  So, at this point I like to try to get them to look at the whole picture like I am trying to do with my car situation.  Lets say House A needs $2000 worth of work on stuff like the roof or plumbing.  House B needs none of those things fixed, so House B must be the better one to go with, right?  Well, House B needs fresh paint, and it will also cost $2000.   When I put it this way, I am sure you see that $2000 is still $2000 no matter how you spend it. (Now I know I have over simplified here, and that most buyers have a chance to ask the seller to make repairs, but this was just the easiest way to make a point.)

My dad is the master of looking at the whole picture.  Seems like most of his friends and family always come to him seeking advice.  The funny thing is that I don’t think he ever really gives advice.  He seems to lead you to the obvious conclusion by asking a series of questions.  He’s like the compassion of Mother Teresa and the wisdom of Yoda wrapped up in a motorcycling, pet loving lawyer.

So, by looking at the whole picture about my car situation, I can now go forward to the next step, which is to decide if it is really something I want to do.  When you get to this point of the home buying process, keep in mind that just about any house is going to need money spent on it somewhere, then decide what you can live with and what you can’t.

What makes a good location?

by John Rice

This week, I’ve been listening to several different buyers tell me what part of town they want to be in.  It has had me thinking about the whole “Location Location Location” thing.  I think most of the time, we as people like to reduce things down to a yes/no, for/against, good/bad scenario……Like this is a good location and this is a bad one.  I just don’t think it is that simple and here is why.

Just this week I’ve had two people tell me they really want to be in a location that many people avoid.  This is a high density area, so the buyers are looking for townhouses and condos.  See, the people that think this is an area to be avoided don’t want to be in that kind of density and are single family home types.  Both buyers mentioned that they had lived in that area before and liked how easy it was to get any where in town and that they enjoyed the 30+ acre park in the middle of the area.  When my wife and I were newlyweds, we lived in this area too…..we thought the same thing back then.

I guess my point in all this is that what makes a good location is really a subjective thing that varies greatly.  Age, income, property type, etc, all greatly have an impact on what makes a location appealing.  There is one common thing that all people tell me they want in a location:  Proximity to work, businesses they shop at, restaurants they eat at, and things like parks/sports/ or places they frequently go.  People with kids like to be in a good performing school district too.

Lexington is big enough to support all these different opinions about what makes a location good.  It is all in the eye of the buyer, and if enough of them think it is a good location, then it must be.

When do you know you’ve found the right house?

by John Rice

“We pretty much know as soon as we walk in.”

I was covering for an agent that was on vacation this week.  This is what one of her buyers said to me when I commented that they didn’t spend much time in the first house I showed them.  I often hear this from my own buyers.

You know what this means?

A lot of people base their decision on how they feel.

I’ve always said you could find a house with all of the items on a buyer’s must have list, but they still might not buy it.

This is why that first impression when a buyer walks through the door is so important.  If your house isn’t perfect, you are better to have the the rooms a buyer sees in the first few minutes looking better than the last few rooms they see. If a buyer likes what they see at the beginning, they are more forgiving of little things they don’t like later.  It doesn’t work in reverse.

I recently sold a house in one of my favorite neighborhoods.  It sold for about $3-4k more than it should have.  Sure, the market is hot, and we did get multiple offers…..but I think we got TOP TOP dollar for it because the seller’s decor was so attractive.   They had the right colors, the right furniture and everything else just right.  The house felt good.

And I bet the two buyers who made offers the first day on the market both  knew they wanted it as soon as they walked in.

 

Where is the market RIGHT NOW

by John Rice

Ok.  It has happened.  I think we have hit a ceiling with real estate prices in and around Lexington.

The market has slowed down a bit in the past few weeks.  You can get a photographer or home inspector quicker than you can a neurosurgeon lately.  Could be because 15% of the whole town is on vacation on any given week this summer.  Could be more than a normal seasonal slowdown?

Slowing down isn’t a bad thing, so don’t freak out.  This is kind of like when you are doing 100 MPH and slow down to 80.

I am starting to see more price reductions than I have in the past 6-8 months too.  I don’t think that values for those houses have declined.  I think that sellers were pushing prices higher and higher and buyers are pushing back a little now.  Mr. Overly-Optimistic Seller, you won’t be getting above market value for your house.

It all reminds me of early 2013.  That is when the market made a sudden shift from bad to good.  For about 6 months there it seemed like houses were selling as soon as they hit the market and prices were going up for the first time in years.  The market changed so fast it reminded me of being a kid on a swing and somebody giving you a swift push that causes you to hold on tight as your neck snaps backwards.

The rest of 2013, all of 2014 and 2015 were good markets, but less frenzied.  Then early 2016 gets crazy again.  It was the first time in my career of over 11 years that I waited in line to show houses.  If the frenzy is over, that is one thing I won’t miss!

Bully sellers and what happens to them

by John Rice

I just got a call from an agent who I almost sold a house with several months ago.  This agent wanted to see if my client had bought anything yet.

My client had a contract to buy this agent’s listing.  My client had it inspected.  There were two pretty big things wrong that needed some attention.  We were told by this agent that my clients needed to take it like it is or walk away, because we were being crazy…..AND that we had to decide by 7:PM that night or the seller was walking away from us!

We walked away since the only other option was unacceptable.

The listing came back on the market.

Sold again.

Back on the market again.

Reduced.

Still hasn’t sold.

The funny thing is that I saw all this coming.  I knew that any buyer would have the same concerns that we did.  We used a good inspector.  My clients were reasonable.  I was being reasonable.  It should have worked out.  Problems with the seller’s house don’t disappear if the buyer moves on.  They just sit there until the next inspection.

The best thing this agent and the seller could have done is thrown us a bone-meaning offer us something to have stuck in the deal.  Negotiate.  Make a good faith effort.

Didn’t happen.

Must not have happened with the second buyer either.

Meanwhile, my clients are enjoying their new home that we closed last Friday and this agent and her seller are waiting for a third buyer.  It is a nice house with two solvable problems.  It just needs an agent and a seller who would rather solve problems than give ultimatums.