John Rice

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.

 

 

What bugs The LEXpert

by John Rice

Know what The LEXpert is thinking about today?  Termite inspections….well, there is more than just termites.  You’ve got Carpenter Ants, Carpenter Bees, Termites, Powder Post Beetles and maybe even more.  Those are just the ones I’ve encountered over the past  11 years.

Most people only get inspections when they buy a house.  That means that when you see on the PVA or a Seller Disclosure that the seller has owned the house for a long time, odds are that there miiiiight not have been a termite inspection since then.  It isn’t rare for a house to need a termite treatment in our area.  Seeing a lot of damage is rare though.  And the times I have seen the most damage have been when a seller has been there for a mighty long time.  A termites first bite might have been the night the seller watched the last episode of Cheers.  Now they just watched the season finale of N.C.I.S and the original termite’s great-great-great-great-great-great grandkids are half way up the first floor.

Now that I have scared you into having YOUR house inspected, there are a few things I want to share about how we Realtors handle wood destroying organisms in the Bluegrass area.

The contracts we use say that the buyer may get a termite inspection at their own expense (except for VA loans where the seller has to pay for it for some reason), and IF there is evidence of live or dead insects, or any damage from them, the seller has to pay for a treatment.

Our contracts also say that if there is any damage, the seller is automatically on the hook to pay up to 1% of the contract amount for repairs.  Anything above that amount is to be negotiated.  The attorney who wrote our contracts but have been about to be a buyer, since it sure favors the buyer.

So, if you are a buyer, you definitely want to do a termite inspection.  If you are a seller, you really hope nothing is found.  Speaking of that, there is a place on the standard Wood Destroying Insect Report (WDIR) where inspectors write a bunch of numbers.  If you look down at the key, those numbers are all the places the inspector can’t get to, such as behind drywall, under carpet, behind insulation, etc.  I like to point that out to my people because a clean report really just means no insects were FOUND.

The best time to do a termite inspection is after you have negotiated the normal home inspection repair items.  That way you don’t end up spending the money on the termite inspection until after you have any home inspection repairs resolved.  Our contract just says that it has to be done before the closing if one is going to be done.  The termite inspection does not fall under the same paragraph/time line for the normal home inspection.  Another reason to wait is this:  Since the seller has already agreed to a treatment and repairing damage up to 1% of the contract price if needed, you want to drop that news after you have worked out your normal home inspection repair list.  The seller is only going to spend so much money on repairs.  You want all of the budget for the home inspection repairs.  Let the seller know there are termites at the same time you present the repair list and you get fewer inspection repairs because he is now subtracting the termite treatment/repairs from his budget.

Good deals in a seller’s market? (Depends on the seller)

by John Rice

The market isn’t hot enough for buyers to accept two things:

  1.  A nasty house.
  2. An over ambitious asking price.

If your house is nasty, no buyer is going to be able to imagine themselves in it.  I’m talking if it is dirty, messy, desperately needs paint or stinks.   Trust me, buyers just want to exit a house like this.  Even if you slashed the price in half, I bet most of the buyers would still say no.

I recently sold a nasty house.  It had been on the market for quite some time.  It was in a desirable neighborhood and actually priced right.  It has more updates than most in this nice neighborhood.  Problem?  It smells like dogs and has one of the nastiest bathrooms I have ever seen in a house for sale.  It was hard to get excited about the expensive tile in the remodeled bathroom when there was urine and hair all over the toilet.  Sorry to be so graphic…..I have a picture but decided not to include it, so I am holding back a little for those with weak stomachs.

My buyer is one of the rare people who can see past that and is getting a super nice house for a really fair price.  Added bonus:  It was one of the few times recently that I haven’t been in multiple offers with a buyer.  The house was so nasty that my client called me after the home inspection asking if I thought the seller was going to clean it when they moved out.  He just met with a home inspector and heard everything wrong with the house and the thing that was on his mind the most was how dirty it was.

Moving on, the next item is the overly ambitious list price.  A client bought a house for $400k that had been listed originally at $445k.  Nice house, just not a $445k house.  Maybe $410-415k based on the comps.  LOL, the way the market is going, it might be worth that now!  Anyway, it was reduced, reduced and reduced again.  By the time 170+ days had passed, it wasn’t on anybody’s radar.  Nobody cared?  Buyers today are focused on new listings.  If a house doesn’t catch their attention on Day 1, few will go back and reconsider a house.  They’d rather wait for tomorrow’s new listings.

My client actually passed on this house two times, then came back to it.  They were worried because it had not sold.  In today’s market, 6 months is an eternity of buyer’s saying “No” to a house.  Ironically, a house two doors down just sold for $405k the first day on the market.  It was 1200 square feet smaller and had a marginally more updated master bathroom.

While it is one of the hottest seller’s market ever, not all houses are selling immediately in multiple offers.  I always encourage buyers to seek out these good houses that are being held back by the sellers.  You can avoid multiple offers and get a good deal, even in a seller’s market.  My buyer with the nasty house might pay $400 to have it professionally cleaned but saved much more than that.  My buyer who made a reasonable offer on an overpriced listing didn’t have to immediately make a decision to buy it since there were no other buyer’s around.  It felt like a buyer’s market to them.

Neighborhoods that benefited the most from school district changes

by John Rice

I get a lot of questions about school districts and property values.  Most of the time there is nothing to worry about unless your neighborhood goes from having average/above average schools to getting ones that are worse.    A lateral move doesn’t really matter.  The best situation is when you have poorer performing schools and get better ones….which is the topic of today’s blog post.

Here are the top 3 winners in my opinion.  The biggest changes in the district boundaries were in the Hamburg/40509 area, so these are all out that way:

3.  The Home Place/Gleneagles.  The cat got out of the bag early on this one.  The school district bought land in this area and everybody knew that these 2 neighborhoods would go to the new school.  Suddenly it became a more desirable place to buy and prices went up.

2.  Greenbrier.  Several years ago I would get the same feedback from my buyers after showing houses in this neighborhood.  They would say “I love the neighborhood and all the space out here, but I don’t have $100k to renovate this house AND pay for private school.”  So, they wouldn’t buy it.  Now that “The Brier” is getting the new elementary and new high school, houses are selling and being renovated.

1.  Chilesburg.  Use to be only the first phase of that neighborhood went to Athens-Chilesburg Elementary (A.C.E.).  It never really made any sense since the school was right in the middle of the neighborhood.  The neighborhood got the school and prices have really gone up.  Use to be if you were in the mid $200k range and wanted that school, Andover Hills was your only option.  There use to be a big gap between similar sized houses in these two neighborhoods.  Not any more.  Chilesburg can pull the same money per sqaure foot as Andover Hills can now.  A 2500 square foot 4 bedroom house in Chilesburg use to be about $190-225k several years ago.  Practically the same floor plan in Andover Hills was getting $225-245k.  Now both are in the $245-255k range.