John Rice

LEXington market trends

by John Rice

Ok, we all know there is a shortage of inventory and houses are selling fast….but there is more going on in this town than just that.

Here is what I am seeing in 2016:

  •  Waiting.  Lots of waiting in line to see a new listing it’s first day on the market.  Everybody is so focused on new listings.  Granted, you do want to see them before they sell, but I think there has been more of a shift in how the public gets listings.  Everybody has saved searches and gets alerts when there is a new listing.  If it doesn’t interest them at that very moment, they rarely will consider seeing it later.  They just wait for the next new listing.  That is bad news for sellers who don’t sell their houses immediately, and proof that starting out with the best presentation and the right list price is critical.
  • Not ALL houses are selling as fast as you would think.  Only the good ones are selling immediately.  In Fayette County, there are 555 houses for sale priced between $100k and $500k.  Of those, 152 have been on the market for more than 90 days.  That is almost 1/3 of the available houses.  Savvy buyers go back and look at those 152 to see if they can get it for cheaper and avoid the multiple offer frenzy.
  • New construction on the edge of town isn’t doing so well.  I think Lexington is finally big enough that people see a big difference between being closer in town and on the edge of town.  I am seeing more and more people wanting to be closer in to town….heck, I feel that urge too since I live just past Hamburg and am always stuck in traffic.  One of the most successful new construction neighborhoods has been Summerfield.  I think it is about location more than anything.  You are 10 minutes from downtown and 5 minutes to Hamburg.  The best of both worlds really.
  • Smaller ranch houses in nice neighborhoods are getting amazing money.  I’m seeing 1200-1400 square foot houses getting close to $170k in neighborhoods like Cooper Trace, Ashbrooke, Wyndham Hills, Wyndham Downs and Harrods Point.
  •   Lots of people retiring in Lexington…..even Clint Eastwood is moving here, if you believe everything you see on Facebook 😉  An area super popular with retirees is Brookhaven and Lansdowne.  There are lots of nice ranches on good lots in this area.  You are close to downtown, can hop on New Circle at Tates Creek and go anywhere, cut across roads like Regency, Larkin, Zandale or Reynolds to get to anything on Nicholasville Road.  Plus you have cool places like The Lansdowne Club, Lansdowne Shoppes and are 1o minutes to Chevy Chase.

It sure will be interesting to see what comes for the rest of this year.  I am hearing from other realtors that they are having a hard time getting on a photographer’s schedule.  That either means we have a lot of new listings about to hit the market or realtors are just really impatient to get a house on the market!

 

Home inspection memories

by John Rice

Ahhhhhhh the home inspection.  Probably everybody’s least favorite part of buying/selling a house.  After 11 years, below is my favorite home inspection story.  It happened when I was a new agent.  I think the listing agent thought she could push me around since I was a newbie.

My clients and I  got past the offer and had the house inspected.  Seems the upstairs furnace didn’t work.  It made a squeaky noise and started smoking when the inspector looked at it.  I wrote the repair list and sent it to the agent.

She called me about an hour later and said that I really couldn’t ask for the furnace to be repaired since she put on the listing detail that it had baseboard heat upstairs.  I fired up the computer.  Sure enough, for heat source it said “Heat pump, baseboard (upstairs)”  I told her at best, that was a little ambiguous since it could also be interpreted that there are 2 heat sources upstairs.  She started to argue with me, then I said let’s look at the seller’s disclosure (which, btw, is incorporated into the contract.)  The seller’s disclosure just listed the age of the upstairs heat pump, making no mention of it not working-the seller is to answer yes or no if there has ever been a problem with the HVAC……not working IS a problem.  Knowing she wasn’t going to scare me into doing what she wanted, she then started to argue that the inspector we used has always had HVAC issues on all of her listings.  I told her I don’t know why she is now claiming that this is somehow the inspector’s fault since everybody agrees that the furnace doesn’t work!!

We finally got past that.  We had a lot of repairs on this house.  I suggested we bring back the inspector to make sure they were all done correctly.  As you already know, most weren’t done right.  The agents then tried to tell me that I was outside of  the 10 days I had to do inspections and couldn’t bring back the inspector.  Again, I whip out the contract and quote them the part about us being able to check on the repairs we asked the seller to do.  Finally, all but one item was correct.  My buyer was so tired of dealing with it all that he just accepted the house without that one repair done.

Here are some funny memories of dealing with inspections/repairs:

1)  The seller’s agent told me that the dishwasher was installed and the painting was done (part of the contract).  I go to the house and the paint is about half done and the dishwasher is sitting in the middle of the kitchen floor.

2) My buyer and I show up for the walk-thru and the basement is flooded…………..and it was my listing!!

3)  A house I almost bought had 2 little rooms with window air conditioners in the attic.  The kiddie pools full of dirt only added to the mystery.

4)  A football stuffed in some ductwork in one of my listings.

5)  The inspector turned on the water for a foreclosed house and I got a shower.  Water started coming out of the ceiling and spewing from the drain on the hot water heater.  Got that cleaned up and found water all over the kitchen floor too.

How hot is the market?

by John Rice

16 showings and 5 offers the first day on the market.  Granted, it was in a very popular neighborhood, but still….that’s hot!

I had a lot of fun that day.  It was stressful as heck.  Trying to keep up with all the showings.  Then the offers started rolling in.

I try to put my new listings on first thing in the morning or in the evening.  I want every buyer in the market to see the house on it’s first day.  If you put in on midday, you get some showings that day and then some more the next.  I love it when I know buyers are seeing others buyers coming and going all day.

The first offer was full price and contingent on selling a property.  That one was out pretty much from the beginning unless we didn’t get other offers.  Then an offer for nearly full price but contingent on closing a house.  That is better.  Then an offer close to full price but contingent on nothing to sell or close.  That was a good one.  Then a full price offer contingent on closing a house.  Then a lower offer that gave the sellers and I a good laugh.

Once I told all the agents about the other offers we had in hand, one of them raised their offer to just over the asking price.

What you do in these situations is pick the one you think is most likely to work out and try to get them to meet the better terms of the other offers.  So, we countered the offer with no contingencies for the highest price offer we had.  Those people came up to the full asking price, but wouldn’t go higher.  NEXT!  We then countered one of the offers that had a contingency to close.  We picked this one to work next because the buyer had better financing terms and a house that would be easier to sell should that buyer’s sale fall apart.  That buyer got the house.

While it was fun and I did get my seller the absolute best deal possible, it was a little tough for me.  I knew 3 of the 5 agents.  It was hard to tell them that their buyers did not get the house.  I thanked them all and explained why we went with the offer we did.  They all did a great job playing the cards their clients dealt them…..I only wish I had 4 other listings just like this one to sell them.

NEVER do this when buying a house

by John Rice

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I got an offer on a new listing this week.  We negotiated it to the exact number I told the seller to expect.  There was one thing that made me nervous about it though.  The buyer wrote on the contract that they wanted the master bathroom shower door replaced.  It worked and was not ugly.  You just had to lift up a little on the handle to open it.

Before I get to why that freaked me out a little, let me tell all the buyer’s out there that doing something like this is NEVER a good idea.  Sure, this buyer wanted a new shower door and for some reason didn’t like the existing one.  If the seller would have considered doing this, we would have just added the cost to the counter offer, effectively making the buyer pay for it anyway.  Then there is the issue of what the buyer is expecting it to look like.  The seller having to find out how much it would cost to install.  Those things take time and slow down negotiations.  In a fast moving, hot market like we have right now, the last thing a buyer should do is cause a delay in the seller responding to their offer.  It just gives too much time for another offer to come in.  So, this is never a good idea.  The buyer never benefits from it.  Don’t do this.  Period.

What writing this in the offer showed me was that these buyers expected way too much and would absolutely kill us on the home inspection.  Any time I have had a buyer for one of my listings write repairs or things like replacing flooring, repainting a specific room or anything like that, the buyers have been a nightmare to work with.  Most of the time the deal falls apart because they expect the seller to repair everything on the repair list.  If the roof or HVAC are older but functioning fine, they are the buyers that ask for brand new ones despite signing the seller disclosure that told them the ages.

In the end, this buyer sent us a clue about how they would be to work with…..and we said no thanks.

Do you need a realtor to sell in a hot market?

by John Rice

A seller-client of mine posted on Facebook that she was about to list her house.  We had two showings before it officially hit the market and sold it.

If you think all a realtor does is find a buyer, then I would be considered totally useless in this deal.  Getting paid for nothing.  Unfortunately, the public seems to think that the realtor’s work is done once we get to this point……heck, some realtors think their work is done at this point too!

All that was left to do on this deal is negotiate the offer, then negotiate the inspection repair list.  Coordinate the closing and be done with it.

But it didn’t go that smooth.  The appraisal came in very low.  In fact, it came in LESS than my people paid for it almost 3 years ago.

The deal was about to fall apart.

I tried to get the appraiser to up his value since one of the comparable sales he used was 11 months old and there was a non-listed sale that was only two weeks old.  He refused to budge or consider using the newer sale.

The buyer’s agent and I discussed alternatives.  I knew getting a new appraisal with the buyer’s same lender would not work.  Assuming the new appraisal would have come in higher, the underwriter for the loan would be forced to pick between a lower and higher appraisal.  Underwriting is all about minimizing risk and covering your own rear end.

The buyer had a big down payment.  I thought maybe she would be willing to pay the difference in cash.  Nope.

So, here I am in a hot market with a lousy appraisal.  I don’t want to lose this buyer, but the only chance we had of getting a higher appraised value would be to have a new lender.  Any other option was too risky.

I sent the release to void the contract.  The buyer decided to change lenders.  Bingo!  That was what we needed because the underwriter for the new loan would never know about the low appraisal.  (And I was sort of hoping sending the release might make the buyer realize that she was about to lose the house she wanted.  The release shows the other party that you have really done all you can do.)

My client was concerned about the appraisal.  She wondered if we should lower the price to make it more likely to appraise.  I said no, that I would rather have the appraiser shoot for the contract price.  If he could justify that value, then all would be well.  If it came in lower than the contract amount, we could renegotiate with the buyer at that time.

There was another listing up the street that was 100 square feet bigger.  I called that listing agent to see how it was going.  She told me that her seller had turned down two offers close to the list price (which was similar to my listing) because the seller wanted to move out after the end of the school year.

Armed with that information, I told the new appraiser about the other listing getting offers well above the first appraisal we had.  I told him that the market value of the neighborhood has outpaced the recent sales.  Keep in mind, that market value is right NOW.  Recent sales just tell you what the market was doing in the recent past.  That helped him out, and also told him nicely that I wasn’t going to be easy to deal with if the value came in light.

The value came in just fine.  Crisis diverted.

Not every deal has a big problem like this to navigate.   This deal would have fallen apart if it wasn’t for the right combination of experience, wisdom and luck.

So yeah, even in a hot market, it is good to have a realtor.