Best time to buy

Why buying now always beats waiting

by John Rice

I reckon this is sort of like a market update type of post.

I showed a very affordable house in Berea last weekend. It was very nice. Good sized. More than one bathroom. In good condition with a couple of nice features. The list price was $229k.

The house sold 15 months ago for $205k. From the pictures of when it sold back then, about all that is different is that it was vacant.

15 months ago was a little different of a market. We had just seen rates rapidly rise to about where they are today. Buyers were still in a little bit of shock. Back then I predicted that the market would pick back up as people acclimated to current rates and the period of super low rates disappeared in the rearview mirror. Guess I was correct although that was a pretty safe prediction to have made.

The house sat on the market for a few months back then. It being vacant didn’t help. If at all possible, you always want to sell your house with some furniture in it to warm it up a bit. Most buyers have a hard time envisioning what a house would be like when it is empty.

Back to today. We were one of four offers. We went $5k over the list price and waived the home inspection. Know what? We still didn’t get it.

That means this house sold for at least 14% more in those 15 months. That’s a really good return for not having done any updates and in a small town that isn’t really considered a hotbed for growth.

I am totally sure that the seller of this house was anxious about their purchase 15 months ago. They probably felt like they paid top dollar for it and were anxious about their interest rate. Want to be this person? All you have to do is think about where you’ll be a year, five years, ten years down the road and not focus on today’s fear. Other than the Great Recession, it’s hard to go wrong with homeownership.

When is the best time to sell your house?

by John Rice

I’m seeing a lot of buzz lately saying right around now is the best time of year to sell your house. Many realtors post these articles. I can’t blame them. We are always saying “Now” is a good time to do anything, lol.

I am in now way doubting the statistics. Numbers don’t like. The problem though is knowing what they mean.

Fact: There are more buyers out in the market in the spring. It’s always been this way so I don’t see the newsworthiness of it.

Fact: The likelihood of your house selling for top dollar is less dependent on when you list than it is on the condition of your house and how it fits in the market…..meaning, how do buyers rank your house compared to what is currently available to them in terms of condition, price, floor plan, lot and location.

I have sold plenty of houses in multiple offers the very first day on the market back in 2008-2010. That was when it was an extreme Buyer’s Market.

It is a simple formula really.

You do some prep work. Fix anything that is going to keep a buyer from saying yes to your house. You want them to leave their showing with a positive emotional response. If there is work to be done on your house, they leave with a logical response. They are thinking about what they need to do to your house and how much it is going to cost. If they even make an offer, it will be less since they are deducting the cost of those repairs. So, leave them with nothing to do but fall in love.

Price it right. I don’t mean use what zillow, a recent appraisal or an AVM says the house is worth. Do some real research. See what has recently sold in your neighborhood. See what is pending in your neighborhood. Pending sales, while you don’t know the actually sale price until it closes, can tell you what buyers are doing in real time.

The last step is the most important one. You see what other choices a buyer has maybe 15% below and 15% higher than the value of your house. Then you price your house so it is clearly one of their top choices. Why? Because after 19 years in this business, the one biggest thing I have learned is that every buyer wants the best house they can get for their budget. As long as you have one of those houses, it will sell quickly for top dollar in any market and in any time of the year.

How to get $65k for a down payment

by John Rice

The starter home.

It was that first home that you really were not all that exciting about living in. Yeah, you were coming out of an apartment so it seemed liked a luxury to park in your own driveway or maybe have your own washer and dryer. But it was a place you knew you wouldn’t stay in forever. The goal was to get on what we used to call “The Property Ladder” just to start building equity. Then you’d take that equity with you to your next home, which was nicer and had more of what you really wanted.

The trend I’ve noticed lately is most first time buyers want to start off with their second home. They can’t afford it now, which is the problem. Most would rather complain about how past generations had it better than to buy a house they don’t really love, so they keep renting……as if we somehow loved living in a 1000 square foot home with only one bathroom. We didn’t, trust me!

I don’t think many of them see that the way to get to the house they really want is to start with what you can afford and build the equity. Equity is a pleasant sounding word that means your home increases in value while you sleep and part of your payment goes towards reducing the balance on the loan. Building equity is what my dad used to call “Leveraging time.” If you are young, leverage the time of your youth by building equity.

If you were to buy a boring $250k house and commit to staying there for 5 years, you would have paid down about $15k of the loan. Nice, but there is more. Let’s say your $250k house appreciates at 5% per year for each of those 5 years you are staying. Your house should be worth about $320k. At the end of those 5 years, you only owe about $235k. When you go to buy that next house, the one you really are excited to own, you’ll have about $65k to put down on it after things like some maintenance and real estate commissions.

What I love about this is that you are double dipping in the world of money. Your loan balance goes down and the value of your home goes up every month. Win-Win.

Getting a starter home is how you get to the house you really want within 5 years. Renting won’t get you there. Saving money for a larger down payment won’t get you there. Go buy a house you can afford today. Find the best one there is. Live there for 5 years. It’s what every generation did that now seems to have such nice homes.

Don’t be afraid. Just do it.

by John Rice

There is a lot of fear involved in real estate.

Fear of missing out. Fear of making the wrong decision. Fear of financial ruin. Fear of even making such a huge decision.

I see it every day.

One of the most common questions I get asked by those who are afraid of missing out or making the wrong decision is if it is a good time to buy.

I usually tell people that it is always a good time to buy if you are ready. The prices and interest rates of the past are gone. Nostalgia. The present is all you have to work with. Yesterday will always have been the best time to buy a house. Today is the second best. If you are not going to stretch yourself too far financially and you are 99% sure you will be in the house for 5 or more years, then today is when you need to buy a house. The sooner you get one, the sooner you can start building equity. The sooner it will be paid off too. The market can’t be timed. Other than the great recession, prices have historically always gone up. Trust me, one day in the distant future you will be telling young people how it was a struggle to make the $3500 payment on that $500k house you bought. They will be like “Wow, that’s what my cell phone bill is!”

Another thing I see all the time is fear of picking the wrong house. Often first time buyers or those who struggle with making a decision will want to keep looking at houses, almost as a way of not having to make a decision.

Here are some signs you might have found the perfect home for you:

  1. Your showing lasts longer than any other house you have seen. A house you are in and out of in 5 minutes is not the one. The house where the realtor is standing beside the front door after turning off all the lights and you still don’t want to leave…..well, that might be the one.
  2. You are comparing every other house you see to one, which is usually the house you didn’t want to leave in item #1.
  3. You are afraid of somebody else buying it out from under you.

When any/all of the above items happen, you’ve found your house.

I hope this helps somebody out there. I know fear is a hard thing to get past, but it is so worth it. I try to keep things simple. Really it’s all about finding a house you like, that will be a good investment and that you can afford. That’s it!

What’s 2024 Going to be Like?

by John Rice

I do these type of posts every year. Not to brag, but I am usually spot on. Why is that? I think it is because I don’t concern myself with short term knee jerk reactions to market fluxuation like the media does. I don’t view “Demand” like most people. I think there is always demand because everybody loves real estate and everybody ultimately wants to own their home. How many people are out there buying at this exact moment can vary, but there is always demand.

I think 2024 will be a better year for buyers and a still great year for sellers. We have all been on a roller coaster the past few years:

2020-We thought we were all going to catch COVID and die, or didn’t think it existed at all. We were too busy fighting over everything early on to bother with buying or selling houses….until later in the year when rates got so low.

2021-We partied like it was 1999. We chatted daily about how much our crypto went up. We got a better house, an airbnb or refinanced what we already had like crazy.

2022-We continued to party like it was 1999 but we knew the ball was about to drop. Just like inflation was eroding our purchasing power, we could no longer afford the cost to maintain our enthusiasm.

2023-Was like “Will there be a recession?”, “Are we IN a recession?” and “These rates are crazy high right now!” It felt like when somebody thinks they saw a shark and everybody jumps out of the water. Was there a shark? Who knows, but nobody wants to be the first one to get back in the water.

2024 is looking like the economy has stabilized, rates are going to drop to a level that is historically average, and all those people who are on the fence will come out….just like the opening scene of Bambi. Affordability will remain an issue. Prices will at least stay stable. We will read later in the year that rent prices are dropping but that data is skewed. All the new giant apartment complexes will be competing for the same tenants. Prices for apartments will go down for sure. The single family rental market will remain strong since there are not enough single family houses for anybody in any market.

Ultimately, I think this will be the most normal market we have seen since Covid.

And I welcome it. Bring on 2024!