home improvement

A fun way to lose $100k

by John Rice

I had a client ask me about a gorgeously renovated house in South Lexington the other day.  It looked like something right out of HGTV.

What was the problem?

It was easily $100k more than anything in that neighborhood.  It was around $350k in a neighborhood of $180-225k houses.

It was too risky.

Now, it could be this was the first house to be totally renovated and many more will follow in this neighborhood.  Or it could forever remain the one house that doesn’t really fit in.  Only somebody with a crystal ball could tell.  For now, I think it is too risky to be that first person to pay waaaaay more than what any house in the neighborhood is worth.  If this isn’t the next “Up and coming” neighborhood, then the buyer for this house will find that in 10 years, nobody wants the 2017 trendy finishes they paid an extra $100k to have.  It will just be another outdated home in the neighborhood and no longer the best one……and will be worth about $180-225k adjusted to inflation.

The 3rd real estate word I created

by John Rice

One of the toughest things about being a realtor is when you make friends with somebody who buys a house from you, then they move out of town.

Phil and his wife were referred to me from their agent when they moved to Lexington.  He had taken a job here and commuting from out of state was not an option.

I had a really good time looking at houses with them.  They were a lot of fun.  We laughed.  It didn’t even feel like work to me.  It was like hanging out with old friends.

Several times a year, Phil and I try to find the best Chinese buffet in town.  We haven’t really found an amazing buffet, but we sure can tell you where not to go for lunch.

Well, Phil is just too good at what he does and now it is time to move on to bigger and better things that are not in Lexington.  Time to sell their house.

I went over to check it out earlier this week.  It was good to see what all they have done to the place.  I had forgotten a lot of details about the house, but I quickly saw why they picked it.  Back then, he had a choice of many houses in that price range.  Today, there might be 20 houses on that side of town in this price range.  I always like to make sure my people get a house that will be a buyer’s top choice even in a bad market.  We won’t have any trouble selling it.

Anyway, as I was looking at their hall bathroom, I said that the tile floor was “Decade Neutral.”  He got a good laugh, said that would make a good blog post, and here we are.

Decade Neutral I guess is my new term for those finishes that are hard to tell when they were done.  His house had 12 by 12 beige tile with a light but not white grout.  Who knows when it was installed.  It could have been the 70s.  Could have been the 80s.  Could have been last week?  It is decade……neutral!

When people ask me about updating their house, I usually suggest things like this.  It is no fun to rip out trendy tile once there is a new trend.  His tile is like a pair of jeans or khaki pants.  It goes with everything and is timeless.

Some other things that are Decade Neutral are:

  1. Hardwood floors.  Not the prefinished kind.  The kind that gets stained and polyed on site.  The Goldilocks kind because it is not too wide and not too narrow. It is just right.  The kind you see in houses from every decade since houses have been built.
  2.  Crown molding.  I’ve never had anybody tell me that they would have to update crown molding.
  3. Recessed lighting.  The beauty of recessed lighting is, well, that you DON’T SEE IT.  (Ok, I guess they did make some a long time ago that had a mirrored gold ring around it…but you can buy covers for THAT kind now.)
  4. Chrome faucets.  While they are more minivan than “Sexy Black Dress”, they get the job done and nobody is appalled to see them in a house.
  5.  Tall ceilings.  Sure, the 2 story foyer isn’t as popular any more, but nobody has ever said they wished the ceiling in the family room was shorter.

That is all I have for now.  I’m gonna miss Phil, but I sure wish him all the success he in due in his new job.  He’ll do great!

Oh, and the other real estate terms I created are “Move out ready” and “Reach-in closet.”  Move out ready is when a vacant house looks like the seller left in a hurry.  It has crumbs in the fridge, you can see the impression on the carpet where the couch was, and there are nail holes in every wall.  A “Reach-in closet” is any closet that isn’t a walk-in.

Common mistakes sellers make

by John Rice

Besides thinking the people on HGTV really know a lot about real estate, below are the most common ways sellers shoot themselves in the foot.  Granted, we are in a hot market and buyers are easier to please these days, but there are 228 houses in Lexington in the $100-500k range that have been on the market for more than 60 days…..not EVERY house in town is selling in multiple offers the first day on the market.

Here goes:

1. When sellers don’t finish moving out. If you are no longer living in the house, get ALL of your stuff out. You know you are going to have to do it anyway, right? It will make your house look better. Better looking houses sell quicker. Time is money.

2. When you don’t paint because you think you are somehow doing the buyer a favor by leaving it up to them to paint. I hear this a lot: “I don’t know what color the buyer will like and most buyers always paint after they move in anyway.” I can tell you that bad paint keeps a buyer from making an offer. If it doesn’t look good, they don’t want it. Fresh neutral paint is the cheapest thing you can do you make your house easy for a buyer to say YES to.

3. Leaving a lot of room for negotiating. An over inflated price usually drives buyers away. I see all the time where a seller will list for far more than the house is worth and eventually sell it for a little less than it is worth. The best model is to price it right from the start. If a house has been on the market for a long time, buyers assume there is no risk of losing it so they make a low offer just to see what you will take.

4.  Not doing any obvious repairs.  As a seller, your goal is to make it easy for a buyer to say yes to your house.  You want them to be excited and fall in love.  If a buyer walks in and immediately sees work that needs done, they begin to subtract whatever they think it would cost to change it, and they usually overestimate the cost.  You want your buyer to be walking around your house falling in love with it rather than subtracting repair costs off your list price.

I hope this helps you when it is time to sell.  The worst thing that could happen if you did all of this is that you sell your house for top dollar in multiple offers the first day on the market.

New roof add value to your house?

by John Rice

I just don’t buy it.
I read an article put out by the National Association of Realtors and the National Association of the Remodeling Industry.  It said putting on a new roof is the biggest single item a seller can do to get the highest return. They said it increased the value of a house by 105%. Get this, remodeling or updating your kitchen only brings back about 67% in added value.
I laughed so hard I snorted a little.
About 50% of my work is with buyers. I sell a lot of houses. I have been doing for over 10 years. My experience in and around Lexington Ky is that very few buyers even notice the age or condition of the roof. The HVAC too for that matter. Most buyers care more about the appearance of the house than anything…..assuming they were okay with the location to have even considered viewing the house.  Most don’t think about the roof (or windows or HVAC or water heater) until the home inspection. That is why I always try to think about these things for them. I am always telling people the age and condition of the roof and the rest of the house. In fact, I’m working with a buyer right now who fired their old realtor because they kept making offers on houses that were in terrible shape and the deals fell apart after the home inspection. The last thing I want is a client of mine to emotionally move in, tell their friends and family all about the house, and then it fall apart after the home inspection.
Several years ago I listed a house for some clients/friends have used me several times. Their house had new windows and literally a brand new roof. The house was a bit outdated. They found their dream home before doing much inside to this one. The seller knew a lot about houses and wanted to take care of those big items first. LOL, I guess I am the same way because I am sitting in my own home, that has a new water heater, sump pumps and I am about to put in new windows…..yet I have a master bathroom that dates back to when Dallas and Knots Landing were new shows.
I put their house on the market. I showed it several times. It took a while to sell because it was outdated. I would remind buyers that there was $15-20k in windows and the roof that they would not have to spend. I would tell them it is more fun to spend that much on flooring and granite than to buy another house that was updated inside but would need new windows and a roof. It finally sold, but my point is that most buyers make decisions on how updated a house LOOKS. That is just how it works. 99% of the time, I would rather have my sellers drop money on updates that can be seen verses maintenance items than cannot. Unless a roof is just ancient or really ugly, most buyers don’t care as long as it doesn’t leak.
So, I totally disagree with this report. It just isn’t happening in my area.
And ALWAYS consult with a knowledgeable real estate agent in your area before making big decisions. I spend a lot of time advising friends and clients about how to spend money on their houses. You need somebody who knows the market and even your neighborhood to help make decisions.
There are a lot of variables depending on your neighborhood and price range.
We had a hail storm several years ago in South Lexington. Almost everybody got a new roof. The norm in those neighborhoods was to have a new roof. Buyers expected a new roof. It was a negative in that situation to not have a new roof.
There are several neighborhoods that are about 15 years old right now. The norm is to have original HVAC and roof. Since buyers will be viewing houses that all have an older roof or HVAC, a seller would do better to spend money updating the interior if they are considering selling any time soon. If they plan to stay forever, it is okay to spend their money any way they want.