lexington kentucky blog

Why buying now always beats waiting

by John Rice

I reckon this is sort of like a market update type of post.

I showed a very affordable house in Berea last weekend. It was very nice. Good sized. More than one bathroom. In good condition with a couple of nice features. The list price was $229k.

The house sold 15 months ago for $205k. From the pictures of when it sold back then, about all that is different is that it was vacant.

15 months ago was a little different of a market. We had just seen rates rapidly rise to about where they are today. Buyers were still in a little bit of shock. Back then I predicted that the market would pick back up as people acclimated to current rates and the period of super low rates disappeared in the rearview mirror. Guess I was correct although that was a pretty safe prediction to have made.

The house sat on the market for a few months back then. It being vacant didn’t help. If at all possible, you always want to sell your house with some furniture in it to warm it up a bit. Most buyers have a hard time envisioning what a house would be like when it is empty.

Back to today. We were one of four offers. We went $5k over the list price and waived the home inspection. Know what? We still didn’t get it.

That means this house sold for at least 14% more in those 15 months. That’s a really good return for not having done any updates and in a small town that isn’t really considered a hotbed for growth.

I am totally sure that the seller of this house was anxious about their purchase 15 months ago. They probably felt like they paid top dollar for it and were anxious about their interest rate. Want to be this person? All you have to do is think about where you’ll be a year, five years, ten years down the road and not focus on today’s fear. Other than the Great Recession, it’s hard to go wrong with homeownership.

When is the best time to sell your house?

by John Rice

I’m seeing a lot of buzz lately saying right around now is the best time of year to sell your house. Many realtors post these articles. I can’t blame them. We are always saying “Now” is a good time to do anything, lol.

I am in now way doubting the statistics. Numbers don’t like. The problem though is knowing what they mean.

Fact: There are more buyers out in the market in the spring. It’s always been this way so I don’t see the newsworthiness of it.

Fact: The likelihood of your house selling for top dollar is less dependent on when you list than it is on the condition of your house and how it fits in the market…..meaning, how do buyers rank your house compared to what is currently available to them in terms of condition, price, floor plan, lot and location.

I have sold plenty of houses in multiple offers the very first day on the market back in 2008-2010. That was when it was an extreme Buyer’s Market.

It is a simple formula really.

You do some prep work. Fix anything that is going to keep a buyer from saying yes to your house. You want them to leave their showing with a positive emotional response. If there is work to be done on your house, they leave with a logical response. They are thinking about what they need to do to your house and how much it is going to cost. If they even make an offer, it will be less since they are deducting the cost of those repairs. So, leave them with nothing to do but fall in love.

Price it right. I don’t mean use what zillow, a recent appraisal or an AVM says the house is worth. Do some real research. See what has recently sold in your neighborhood. See what is pending in your neighborhood. Pending sales, while you don’t know the actually sale price until it closes, can tell you what buyers are doing in real time.

The last step is the most important one. You see what other choices a buyer has maybe 15% below and 15% higher than the value of your house. Then you price your house so it is clearly one of their top choices. Why? Because after 19 years in this business, the one biggest thing I have learned is that every buyer wants the best house they can get for their budget. As long as you have one of those houses, it will sell quickly for top dollar in any market and in any time of the year.

How to get $65k for a down payment

by John Rice

The starter home.

It was that first home that you really were not all that exciting about living in. Yeah, you were coming out of an apartment so it seemed liked a luxury to park in your own driveway or maybe have your own washer and dryer. But it was a place you knew you wouldn’t stay in forever. The goal was to get on what we used to call “The Property Ladder” just to start building equity. Then you’d take that equity with you to your next home, which was nicer and had more of what you really wanted.

The trend I’ve noticed lately is most first time buyers want to start off with their second home. They can’t afford it now, which is the problem. Most would rather complain about how past generations had it better than to buy a house they don’t really love, so they keep renting……as if we somehow loved living in a 1000 square foot home with only one bathroom. We didn’t, trust me!

I don’t think many of them see that the way to get to the house they really want is to start with what you can afford and build the equity. Equity is a pleasant sounding word that means your home increases in value while you sleep and part of your payment goes towards reducing the balance on the loan. Building equity is what my dad used to call “Leveraging time.” If you are young, leverage the time of your youth by building equity.

If you were to buy a boring $250k house and commit to staying there for 5 years, you would have paid down about $15k of the loan. Nice, but there is more. Let’s say your $250k house appreciates at 5% per year for each of those 5 years you are staying. Your house should be worth about $320k. At the end of those 5 years, you only owe about $235k. When you go to buy that next house, the one you really are excited to own, you’ll have about $65k to put down on it after things like some maintenance and real estate commissions.

What I love about this is that you are double dipping in the world of money. Your loan balance goes down and the value of your home goes up every month. Win-Win.

Getting a starter home is how you get to the house you really want within 5 years. Renting won’t get you there. Saving money for a larger down payment won’t get you there. Go buy a house you can afford today. Find the best one there is. Live there for 5 years. It’s what every generation did that now seems to have such nice homes.

Don’t be afraid. Just do it.

by John Rice

There is a lot of fear involved in real estate.

Fear of missing out. Fear of making the wrong decision. Fear of financial ruin. Fear of even making such a huge decision.

I see it every day.

One of the most common questions I get asked by those who are afraid of missing out or making the wrong decision is if it is a good time to buy.

I usually tell people that it is always a good time to buy if you are ready. The prices and interest rates of the past are gone. Nostalgia. The present is all you have to work with. Yesterday will always have been the best time to buy a house. Today is the second best. If you are not going to stretch yourself too far financially and you are 99% sure you will be in the house for 5 or more years, then today is when you need to buy a house. The sooner you get one, the sooner you can start building equity. The sooner it will be paid off too. The market can’t be timed. Other than the great recession, prices have historically always gone up. Trust me, one day in the distant future you will be telling young people how it was a struggle to make the $3500 payment on that $500k house you bought. They will be like “Wow, that’s what my cell phone bill is!”

Another thing I see all the time is fear of picking the wrong house. Often first time buyers or those who struggle with making a decision will want to keep looking at houses, almost as a way of not having to make a decision.

Here are some signs you might have found the perfect home for you:

  1. Your showing lasts longer than any other house you have seen. A house you are in and out of in 5 minutes is not the one. The house where the realtor is standing beside the front door after turning off all the lights and you still don’t want to leave…..well, that might be the one.
  2. You are comparing every other house you see to one, which is usually the house you didn’t want to leave in item #1.
  3. You are afraid of somebody else buying it out from under you.

When any/all of the above items happen, you’ve found your house.

I hope this helps somebody out there. I know fear is a hard thing to get past, but it is so worth it. I try to keep things simple. Really it’s all about finding a house you like, that will be a good investment and that you can afford. That’s it!

Guess how long I’ve been a Realtor

by John Rice

N I N E T E E N

Y E A R S

That’s how long I’ve been a realtor. March 2005. It’s kind of hard for me to believe. One day I’m the new kid in town fresh with enthusiasm. Then all the sudden all this time passes. Now I’m the old dude with all the wisdom and experience that one only gains with time.

I was going to write about all the changes in real estate over the course of my career. I was going to say that while there have been changes in execution, pretty much everything is still the same. I even had some analogy about how whether you had a YETI or a Stanley Cup, what you put inside is the same and they both serve the same purpose.

But I will skip all that. Maybe next year.

So what am I going to say in this post? I am going to talk about how it feels having been a realtor for this long.

It’s been a great ride overall. Remember, I was the kid who was reading the real estate section of the Sunday newspaper. I would skip school once I got my driver’s license and cruise around neighborhoods looking at houses. I had no idea that one day I would be able to check out the inside of some of the houses that caught my eye.

I also had no idea the success this would bring. Pretty much everybody I told I was going into real estate said “Oh, you’ll do great at that!” I had no idea what they meant but I appreciated the encouragement. I had no idea that I would become one of the top producing realtors when at my peak. It was a lot of fun to reach that level. LOL, I don’t know if I want to do that again though. It was so much stress. I am much happier now and think I am a better realtor only being up to my shoulders with work instead of drowning in it.

Another feeling I have is gratitude. I am smart enough to realize none of this would have happened without my family, friends and clients.

My wife would keep dinner warm on the stove all those nights I had to work. Often I would have paperwork to do and she would bring a plate up to my office. I would not have been able to have gotten into real estate if she didn’t have a good job that covered all our expenses those early years.

My parents always encouraged me to do whatever I wanted to do. They also would watch my two sons when I had to rush out to show a house…..although, haha, they benefited as much from that as I did. My dad used to be an attorney. He’s probably given me a million dollars of legal advice for free.

Then there are my friends. Many of them would watch my sons too when I had to work. Many of them trusted me for their real estate needs when I was a newbie. A lot of them sent their friends, co-workers or family to me.

And my clients. Many of you have become friends. Ultimately I have you to thank because without you, none of this would have come to fruition.

I don’t think I have done anything to deserve all the wonderful things that have happened to me over my career. That’s probably what is the most humbling part of it all……that I am blessed by the goodness of others and not as a result of anything I have done.

And I am not done yet. Here’s to another 19 years!