downtown Lexington

Best buying advice ever

by John Rice

How would you like to pay top dollar for a house nobody else wanted that sat on the market for a very long time? Not really the type of thing you want to do? Well then, let me tell you how to prevent it.

A house in a neighborhood I am very familiar with had been sitting on the market for a very long time before eventually selling. I had a house around the corner from it listed during that period, only mine sold much sooner! I ended up showing my listing to a few buyers who had called the listing agent to see that house. I would ask them how mine compared. They all told me that the other house had a funky floor plan they didn’t like. Let’s fast forward to when the buyer of that house goes to sell. Think buyers will have the same opinion?

I noticed the other day that it finally closed. I looked to see who represented the buyer. Guess who? The listing agent was also the buyer’s agent. That tells a whole lot. That lets you know that the buyer was some unrepresented sucker who was just calling listing agents to see properties. They didn’t have somebody working for them to say “WAIT! This house has a funky floor plan and you are going to have a hard time selling it down the road and sure, it seems like a good price compared to similar sized houses, but that doesn’t make it a good value nor a wise decision!!”

Now, I am for sure not making a judgement about this agent. I don’t know what all happened. All I know is that when I see a house sell that has been on the market forever, most of the time the listing agent ends up representing the buyer too. An agent has to walk a fine line when all the sudden there is a buyer for a house they thought they’d never sell…..and getting commission as both the listing agent and buyer’s agent makes it even harder. I think most of the time the agent and the seller come out better than the buyer in these situations.

Basically folks, my message is if you are buying, don’t go at it alone. Don’t trust the listing agent for advice. Don’t rely on zillow. Get yourself your very own realtor who will only represent you. One who has been in enough houses, is familiar enough with the market and can recognize the things that will bite you in the rear down the road.  The buyers of this house made a bad decision, and the sad thing is that they won’t know that until they need to move again.

What will 2026 be like?

by John Rice

I think it will be like 2008. Don’t panic though. Next year shouldn’t be like the 2009 market.

In 2008, we were starting to feel the market slow down. It peaked in 2005 just as it did a couple years ago. We were all in denial back then, hoping what we were seeing in California and Arizona would not come here. It did, but not as severe. The Lexington/Bluegrass market has always been pretty stable and resiliant.

So, by 2008 we were seeing a lot of price reductions. A lot of rising inventory. Only the best houses were selling fast. A seller had to do some prep work to make their house stand out. Many sellers were in denial because they had bought in a frenzy. They were shocked not to have a line of buyers wanting their house the first day on the market. Being a realtor began to be a real job that required skills where you really need to know the market, know how to negotiate, and know how to present a house so it stands out among all the competing listings.

I would normally use this paragraph to contrast 2008 to the current market. Since it is identical, just go back up there and substitute 2026 where I wrote 2008.

Don’t worry though. There are no signs of a coming crash. This slow down is driven by lack of demand due to affordability. Back then, the market crashed due to bad mortgages causing forclosures.

I think the rest of this year will see little appreciation, frustrated sellers, cautious buyers and a lot of realtors getting out of the business.

Does spending more get you more?

by John Rice

I’ve always been into two things: Houses and cars.

There are a lot of luxury cars out there that are really just blinged out versions of cheaper cars. Cadillac Escalade? At its core, it is a Chevy Pickup truck…….sorry if you have one and I have insulted you. Lexus TX? It is a better looking Toyota Highlander. Nothing wrong with these companies doing this. It is an economy of scale to be able to sell essentially the same thing to buyers in different socioeconomic classes. They add a few features and make it look better for a lot more money, but all the important stuff is shared with their cheaper platform mates.

Now that you’ve got the concept of today’s blog post, let’s see how it relates to houses.

I showed a house to a client today. It was in a very Toyota Highlander neighborhood. It was close to 3500 square feet with a basement. Great location. Great school district.

I told my client I thought this $484k house was a great value. Why? Because if you spend $100k more, you wouldn’t really get a bigger or better house, you might just get brick on all four sides and be in a more Lexus TX neighborhood.

Sometimes spending more doesn’t really get you much more.

Selling a house is like middle school gym class

by John Rice

I was that kid in middle school that was always picked last in gym class. You know the drill. Two team Captains (Buyers) pick their team (Houses) until there is only one left and that person gets picked by default. Don’t feel bad for me though…….I’m sure the past 40 years has been better for me than for most of those picked before me.

The real estate market is very similar to what we’ve all experienced in gym class. Buyers organize the houses in order of preference. Naturally, they are most interested in move-in ready houses that are priced right. Then they move down the list to those that are less desirable.  Sellers want to be picked sooner rather than later. Think “Days on Market.”

Once the Captains are chosen, that is like the beginning of the house hunting season. The Captains pick those they think will be the best. Once those kids are on a team, they are “Sold” and not available anymore. All a Captain can do is pick the most desirable kid from what is left. Once the best one has been picked, the second best one becomes the new best choice. That is until it was just me standing there and the Captain says my name with the enthusiasm as if he had just heard the cafeteria was serving goulash for lunch.

Right now, we are in the time of year where not many new listings are hitting the market. It’s kind of like when there are only about 6 kids left from the whole class. These are the ones that maybe nobody really wants, but the next kid that gets picked is going to be the best of those that are left. There are many sellers right now with average to below average houses that will get contracts simply because there are no better choices for a buyer right now. I always say that fall is the best time to get rid of  house that nobody has wanted all spring and summer, which I guess is my whole point.

 On a side note, the only time I ever got picked any higher than dead last was when it was for volleyball. See, I am left-handed. When I serve, the ball always goes on the opposite side of the court from where it lands when most people serve. Everybody on the other team was always caught off guard. Nobody ever noticed the pattern of where the ball would go when I served. Come to think of it, that is one of the first times I ever realized the benefit of zigging when most people zag and zagging when most people zig.

Selling? What you like doesn’t matter

by John Rice

A long time ago, my wife decided she wanted a Subaru Outback. We looked at a few on used car lots. I did a lot of research to find out what trim level we had to get for her to have the sunroof and heated leather seats that she wanted. There really weren’t a lot of used Outbacks in or around Lexington at that time. This was so long ago that I found a classified ad in a newspaper that said “2008 Subaru Outback, SI Drive” with the price and the seller’s phone number. That was it. Not a lot of info to work with. Definitely nothing to make the guy’s phone start ringing. But to me, this car having SI Drive told me a whole lot more about it. Having done the research, I knew that was only offered on the top trim level. It had the giant sunroof, heated leather seats, and the bigger engine. When we went to see the car, the seller kept talking about the SI Drive. I could tell it was very important to him.

A lot of home sellers are like that too. They want to focus on what is important to them when selling their house, rather than focusing on things that are important to the buyer. I see it a lot in the marketing material of For Sale by Owner listings. I once read a flyer where the seller spent a lot of space talking about how level the sidewalks are.

About this same time, I sold a house to a family that I have since become friends with. They found the house by driving around the neighborhood. They would have never come to see it if they had only seen it online. Why? Because of the marketing remarks. Instead of mentioning the hardwood floors, instead of mentioning that one of the upstairs bedrooms was huge, or that there were bedrooms on both levels of the house, or that the backyard was an awesome park-like oasis, the realtor used that space to tell you that the exterior was maintenance free, that the curtains stayed with the house, and that there was an allowance for water-proofing the basement as well as mitigating radon. The marketing remarks could only have been better if they said  “Must see! You get to keep the seller’s curtains AND fix some major problems with this house, but at least you’ll never have to paint the outside!! NOT a drive by!”

The hardest thing about real estate is getting sellers to think like a buyer and a buyer to think like a seller. I think if that ever were to happen, I’d probably be out of a job! Being a realtor these days is as much about mediation, negotiation and understanding differing perspectives as it is about houses.

BTW, “SI Drive” is a feature that has 3 settings for throttle response and transmission shift points.