cash buyer

Things you hear when I am your realtor

by John Rice

1)  “Don’t buy a 2 bedroom house.” They are harder to sell when most every buyer and their realtor enters “3” for the minimum bedroom count on searches. A two bedroom listings is like playing Marco Polo alone. You’re shouting Marco, but there is nobody listening to reply with Polo.

2)  “If you buy a house that had been on the market for a long time and was realistically priced, you will have the same thing happen to you when you go to sell.” I find usually that means there is something odd about the house that most buyers don’t want, or else it would have sold sooner.

3)  “It is good to be in multiple offers when in a slow to balanced market.”  My experience tells me that when this happens in a slow to balanced market, you either have a fantastic house or one that is priced below market. When you go to sell you will either have a house that everybody wants or are buying it right, or maybe both!

4)  “If you have to use the word ‘Except’ when you describe your purchase, it was a bad one.”  “Except” means there is some major negative that will bite you on the bum if you need to sell in a slow market. “We got a great house…..EXCEPT for the tiny yard…..EXCEPT for backing to the loading docks of a grocery store…..EXCEPT for being on a busy road.”

5)  “Avoid a bad school district.” There are exceptions here, such as a condo complex that appeals mainly to empty nesters. However, if you have a house where the target buyer will likely have kids, it will be important to them even if it wasn’t to you. And notice what I did not say. I did not say to buy only in the best district. Why? Because most buyers with kids are okay with an average or better performing school, they just don’t want a poorly performing one.

6)  “A fixer upper isn’t always a bargain.”  I learned this one the hard way long before I got into real estate. If you buy a house for 80% of the potential market value, but must spend the 20% savings to make it just as good as any other house on the street, all you have gained is experience that will help you if you ever decide to become a realtor.

7)  “Buying the least house in the best neighborhood doesn’t always make sense.” This one runs contrary to what most people think. The reality is that the typical buyer for the nicer neighborhood is going to find your house plain or too small. I see it all the time where people will pick the better house in a lesser neighborhood over the lesser house in the better neighborhood for the same price.

So, follow these rules and you should be on a good start to not losing your shirt when you need to sell!

Who will buy your house when you are done with it?

by John Rice

You know, I think too often realtors and the public operate out of “one size fits all” generalities. Case in point is resale value. If asked which is better, a house with a first floor primary bedroom or one with all the bedrooms upstairs, most people and realtors would agree that the one with the first floor primary has broader appeal, and broader appeal is what resale value is all about. True…..but what if both houses are in a neighborhood that many people pick because of a good elementary school? That means that the target buyer has young kids. Very few parents I have shown houses to with young ones feel okay about sleeping on a different level from them. So, I think in this case, the one with all the bedrooms upstairs is a safer bet.

I used to live near a house that has 4 bedrooms and is about 2500 square feet. Being in a good school district, who do you think will be attracted to that house? Right, a family with kids. But, this place has zero back yard. The deck is about a foot from the property line. So now this poor house will always need to  find a family that doesn’t care about the yard or a couple/single person who wants a big house. A smaller house would have been better suited to that lot, and would probably have taken up less space too.

Many years ago I listed a 3rd floor condo in a complex that was mainly retirees. Did I mention there was no elevator? That was a hard sale. The typical resident didn’t want all the steps and it wasn’t the type of place to be on the radar of most people who weren’t retired.

I had a townhouse listed a long time ago whose target buyer would be a person downsizing.  The place sat right between a pharmacy and an elementary school on the same road. Which one did I emphasize in the marketing remarks? That it was close to a pharmacy.

So, when you’re buying a place, always think about the whole picture. Will the floor plan work for the most likely buyer? Is the yard too big or too small for the most likely buyer? Is that buyer going to even care about the school district? I always find when you start asking yourself a bunch of questions, you can always make a better decision.

What’s an old house worth?

by John Rice

I had to run the comparable sales data for a house in the area between Chevy Chase and UK. My buyer wanted to know what I thought a house I showed him was worth. Usually comps aren’t too hard. In a newer neighborhood, they can be really easy since sometimes you can even find three of the exact same floor plans to use.

Older houses are a little harder to comp. For example, the 3 best ones I had to pick from today were all in the same area, but were very different. A lot of realtors would have just divided the sale price by the square footage, maybe added/subtracted for differences such as the number of bathrooms or a garage. (Or even worse, just gone with what Zillow says is the value.) It is all a very logical process of averaging data to come up with an opinion of value. The only problem is that it doesn’t always work.

Back to my story….

The cheapest one was on the edge of the neighborhood near where the commercial section ends on South Ashland. That corner of the neighborhood has a very different vibe than the one I saw with my buyer.  The next one was right around the corner from the house I showed. You’d think that would have been a good one. But, it was much bigger, had been converted to student housing a long time ago, had a surplus of bedrooms, and was handicap accessible. That isn’t going to attract anybody from the same buyer pool as the one we saw. Sorry if this is starting to sound like the real estate version of “Goldilocks”, but the last one was just right.

The last place was similar in square footage, was more updated, had newer systems and would attract buyers from a much broader pool. It sold for less than the asking price of the one we saw.  I had to tell him that I thought the one we saw was over priced.

I also had to tell him that with old houses, you just never know. Somebody could see that place and totally fall in love with it, with the end result being they paid more than any other buyer would.

All this reminds me of 2 houses I had listed on Wabash a long time ago. Both of them were totally and tastefully updated. The first one I listed was everything anybody could want in an old house, with the exception of very rough and very steep steps that went to the converted attic space. It was really nice up there, but getting there was posing a problem. Time after time (not trying to sound like Cyndi Lauper here) the feedback would be that the house was very nice but those stairs were a deal breaker. We did sell it however.  I should add that we actually sold it for much higher than the neighbors and a realtor who lived a few blocks away ever though was possible. The comps didn’t really support the asking price. We kind of pushed the envelope and it worked. The buyer was transferring from California, had a tight time line and everything in Lexington looked like a bargain!

The next house I listed on that road was equally nice. They had remodeled the upstairs, bumped out the roofline of the back and added a killer master bathroom and a walk-in closet. Those are 2 things you don’t see often in an older house, especially for the price range we were in. That house posed a different problem for me. See, the downstairs rooms were sooooo small. If you just looked at the comps, you’d have thought the house was worth about $20,000 more than it was. We had to sell it a little under the comps to make up for the small rooms because this time, there was no California transferee to be found.

So, you really have to have a feel for how buyers will perceive the house as a whole to know where to add or subtract value. That is the art part of the deal. Even to the most unemotional buyer, they still have to like the house to buy it. On the comp sheets that all the realtors use, it has the scientific stuff  like values for square footage differences, bathroom count, a finished basement verses unfinished basement, the number of garage spaces, etc. The problem is that if we don’t throw a little art into the comps we’ll just get them wrong…………unless the house is one of those where 3 identical houses have recently sold!

Do you know where your property lines are?

by John Rice

Based on nearly 20 years of experience, I am going to guess you will say you do.

There are two questions on the Seller’s Disclosure about property lines that make me think this.

One questions asks if you know the property lines. I do not think I have ever had a seller answer no to that quesiton.

The next question asks if they are marked in any way. Many sellers answer no to that question.

I have always wondered how they know where the property lines are if the boundaries are not marked in any way?

The truth of real estate is that most of the time, we do not know where the property lines really are. The only way to be sure is to have a pin and stake survey done. Many people assume that was done when a fence was installed but that is not always the case.

When buying a house, few buyers purchasing a home in a neighborhood care to find out exactly where the boundaries are. Most assume it is the fence or if no fence exists, it is the mutually agreed upon line where the neighbors stop mowing their grass.

And for all intents and purposes , if everybody is happy, then that pretend line is just fine.

Buy if you are going to add a fence or some structure that may encroach on the set back lines of your property, the best thing you can do is get a survey done. Nobody likes to spend a few hundred bucks on something they think they don’t need, but if a neighbor doesn’t like where you put your fence, you better hope your fencing company guessed correctly where the property line actually is. It can get even more expensive if you do something like build a deck within the set back line, which is the minimum space required along the perimeter of your property. If the building inspector finds out, you will either need to remove it or apply for a variance. Neither are fun and will cost more than a survey.

Plus, getting a survey done allows you to answer affirmatively that you actually DO know where the boundaries are because they ARE actually marked.

This house stinks (Literally & Figuratively)

by John Rice

I showed a really loser house to some friends of mine today. It stank. Literally.

This place looked okay in the pictures. A little 2005ish but nice. It had a huge sunroom and was on an absolutely gorgeous 1.5 acre lot with a lovely view on 2 sides.

I got to this vacant house about 45 minutes before my people. I had plenty of time to work on getting my daily allotment of steps. As I was walking around the house for all that time, I concluded that the floor plan was especially terrible.

It had a nice kitchen and great room. The sunroom was really nice although it had a strong cat urine odor. There was a flex room with a closet with french doors right off the great room by the front door. It had two bedrooms and two baths downstairs. There was a staircase leading to a finished room over the garage. This room did not have a bathroom or a closet and had limited headroom.

SO BASICALLY THIS WAS A 2 BEDROOM HOUSE!

Sure, somebody could use that flex room on the front of the house as a bedroom since there was a closet, but who is going to do that? Sure you could use the room upstairs that didn’t have a closet or bathroom as a bedroom, but who wants to do that? The closest bathroom is downstairs on the opposite side of the house.

When my friends asked what I thought of the house, I told them it was a waste of a really nice lot. I told them that even if this floor plan could work for them, it isn’t going to work for 90% of the buyers when they would later attempt to sell it. They agreed it was a hard no for them. There really should have been either a true third bedroom downstairs or a closet and full bath upstairs.

While I am all about people finding a house they love, there is an investment side to buying a house. One day you will need to become the seller…….so start with a house that most people would want to buy.