lexington ky

How my 4 houses helps me understand move-up buyers

by John Rice

My first house.

7 Ky Street

 

I loved everything about it.  It looked cute.  The mortgage was cheap.  It had two original fireplace mantles.  It didn’t bother me that it didn’t even have a driveway, or that there were some houses nearby that had been converted into cheap apartments.  It was my first home.  The threshold was low and I was happy.

 

My next house.

New outside

 

It was really a dump when we bought it, but I was so happy to have a garage, a master bathroom and to be the trashiest house on a nice street verses the best house on a trashy street.  I quickly grew to hate the trek from upstairs to the garage when I would take my kids to school, and the awkwardness of the split foyer design when people would come over.  The threshold for happiness was still low since having more space, that garage and my own bathroom were enough to get me excited.  It was better than the first house and that was enough.

 

My next house.

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This is the one where we started getting more picky.  Doing things like wanting to know if any houses around it were rentals, checking out the pantry and school districts.  The first house was better than renting a house.  The second house was better than the first.  That type of thinking wasn’t going to cut it on this move.  I loved living here, although there was no storage or anything.  Also, I was told that my lot was the gravel pit for the neighborhood, which is why the grass never looked good in the front yard.

 

The current house.

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We weren’t going to settle as much this time.  We looked and looked and looked at many houses.  The yard had to be flat.  There had to be more storage space.  The kitchen had to have a better pantry and more counter space.  The previous houses were more about finding a house we liked.  This one had to be in a certain part of town.  We didn’t have to move.  We wanted to move……which gets me to the point of this post.

And that point is that buyers who have owned several house and are now looking for their pinnacle house, the one they will live in before they start downsizing, are pretty picky.  And that is okay.

These buyers have lived in enough places to know what they want and more importantly, what they don’t want.  They know what they can compromise on and what they can’t.  The gray area that was okay for previous houses is gone.  There is no “Well, maybe that won’t bother me as much as I think it will.”

 

My next house??

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Maybe something like this.  I love windows.  I love looking out and seeing leaves blowing in the wind, and clouds, and birds in the air.  I want to feel like I am outside even when I am inside.  I want it bright.  I want a view.  Of something.  Trees, water, anything other than the back of my neighbor’s house.  I want to feel inspired by the architecture of my next house.

And the next house will probably be at the center of many posts about downsizing and empty nest buyers.

 

Will technology make Realtors obsolete?

by John Rice

Many people seem to think realtors are going to be replaced with a bunch of apps on a phone.  I don’t see it happening, but changes are bound to come.

I can see a day when, instead of touring several houses in person, buyers use virtual reality to narrow down the ones they want to see.  I am sure any buyer will still want to see whichever one they pick in person before signing a contract.

I can see sellers and technology doing more on the listing side of a sale.  I can see more for sale by owner listings and various businesses popping up to help sellers navigate the process alone, but I don’t see the same for buyers.  Buyers will always want help from a pro.  The seller is dealing with one house, their own.  The buyer is dealing with making a wise decision.  Artificial intelligence won’t ever replace the voice of a pro.

I can see a day when there are far fewer realtors than we have now.  The lame ones who don’t do more than open doors, fill in blanks and who just tag along to get their check will go first.  All that will be left are the really good ones.  We’ll make less per transaction, but each transaction will take less time.

I can see a day when a realtor hardly has to see their client in person, or actually go in many houses.

What I can’t see is there ever being a day when people don’t want a realtor.  People will always want a real live person to help them navigate through something they don’t understand, or when they have a problem they can’t solve.  Don’t believe me?  Then why does Apple have live people to help their customers when all the self guided trouble shooting tips don’t help?  Also, short of new construction, no two houses are alike.   People are always going to want to see a house before they buy it.  It is something most people do only a few times in their lives.  They are concerned about resale potential.  This isn’t like ordering a pair of shoes online where you will wear them and then dispose of them when they are worn or out of style.

I am sure there will be things I welcome as real estate evolves.  There will also be things I miss.  Until then, I will just keep doing my best for my clients and laughing every time I read an article that predicts I will be replaced with an app.

Why NOW is the scariest market ever

by John Rice

I think right now is the scariest real estate market we have seen in a long time, for buyer’s at least.

I know, it seems crazy when prices are going up and there is a frenzy to buy any house as soon as it comes on the market……but that is what makes it scary.

When the market was so bad years ago, a buyer had their pick of dozens of houses.  They were able to make a good choice.  If the market dropped even further, you knew it would eventually come up.  You don’t have that luxury when you are at the top of the market.  You just hope it continues to go up more and more and more.  You never know where the peak is until it starts going down the other side of the hill.

I cut my teeth in real estate in the bad market.  Many people who did not use me as their buyer’s agent contacted me to sell their homes when times were tough.  Many of them had bought in the early 2000s when the market was hot.  They would tell me how they had lost several houses and they didn’t want to lose again so they bought the house they now wanted me to sell.  They’d say the market was booming so they didn’t think they could go wrong with a full price offer because that was the only way to get a house.  They were thankful to have even gotten their house.  The very house that at the time they were saying all this, had become a noose around their neck, preventing them from relocating for a better job, dividing families because one spouse had to start a new job while the other stayed behind praying the house would eventually sell.

The market they bought in was just like it is today.

While I don’t think we will ever see the market crash again any time soon, you know the market will go back and forth from being a seller’s market to a buyer’s market.

That is why I think being a buyer in today’s market must really make a wise decision.

Many buyers today, again, feel lucky to have gotten their house that backs to a business, is on a busy road, has a terrible lot.  They just feel lucky to have even gotten a house.  Period.  Many of them will call me when it isn’t as easy to sell because the agent that sold them the house is no longer in real estate.

I wish they’d call me now instead of using their uncle’s neighbor’s cousin’s babysitter who just got into real estate last month.

Here is what I would tell them:

“This market is tough.  There is no easy way to get a good house.  Yes, you will pay top dollar.  Yes, you may lose some houses.  Yes, you may even have to find temporary housing while we wait for a house that will be a good investment.  This market will cost you something-you can be burdened now and end up with a great house, or you can be burdened when you go to sell.  Whatever house you buy should set you up for your next bigger and better house.  You want to build equity to use as your next down payment.  You don’t want to have this house ruin your life should you have to sell in a buyer’s market.  So, let’s pick a winner that you will enjoy and that will be a solid investment for your future.  It isn’t going to be easy, but I am committed to making this happen for you.”

My Miata teaches sellers a lesson about color

by John Rice

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Ok, what is the first thing you notice about my Miata?  It’s the red top on a blue car, right?

I thought this picture may help on future discussions I have with sellers regarding their paint colors.

FYI, the top won’t always be red.  Plan is to paint it a metallic silver.  These original hardtops are hard to get, so you buy the first one you find.  This one happened to have come off of a red car.

So, this is my car.  I’ve gotten use to the red.  So much so that I don’t even really notice it, which is why I haven’t painted it in the 8 months I’ve had it.  Same happens with sellers with bold colors…..it is their normal and they don’t really see their house in the same eyes as a buyer.

But buyers notice bold colors just as the first thing you noticed about my car were the colors.

Do you care that the car only has 67k miles since 1990?  That all the suspension is new?  That it is all original?  No, you’re just giggling about the Wonder Woman/Superman/Papa Smurf color scheme.

Let’s say I wanted to sell it.  I might say that I don’t know what color the buyer would want it to be, so it is best to let them decide.  That is what a lot of sellers say when you tell them they need to paint.  The problem with leaving a boldly painted house alone is that you either need a buyer who can see past it or has your exact same taste, both are maybe 5% of the whole pool of buyers.  The most popular car colors are white, black and 50 shades of silver.  For houses, gray, beige or greige are the crowd pleasers.

I guess if I were selling it, I could offer an allowance for painting it.  Maybe $2000.  Then I still need a buyer who wants to paint a car as their first act as the new owners.  My experience is that people never know what painting will cost.  They are usually way high on what they think it will be.  So if you offered a $2000 allowance on your house for painting, most buyers will want twice that.

What happens if I were to do nothing about the paint and try to sell it like it is?  If selling a car with a bold color scheme is like selling a house with a bold color scheme, what will happen is that it would sit on the market for a long time and then finally get a low offer because the buyer wants a bargain price if he is going to have to do the work.

It’s a good thing I have no intentions of ever selling my Miata.  I’ve owned it twice.  I sold it to a friend and bought it back.  Unless you feel the same way about your house, you are wise to get rid of the bold colors.

 

Is building the answer?

by John Rice

A lot of people think that we need to build our way out of the shortage of houses for sale.

I don’t.

The only places left to build in Fayette County are on the edges of town at a time when there is more and more interest in living closer in.  No builder is going to use the little bit of land we have left for anything less than a $173,950 house, which is the base price of the cheapest model Ball Homes will build in Masterson Station.  A quick search on LBAR shows the cheapest actively listed new construction home is $202,900.

I think the problem is affordability for first time buyers.  I have always said that it is the first time buyer who greases the entire real estate market.  They are usually the only group that doesn’t need to sell a house in order to buy.  It is like the bases are loaded and the first time buyer is the one who hits the home run so everybody standing on all those bases gets to move.

A lot of first time buyers are and will continue to look outside of Fayette County.  They will look in Lexington neighborhoods they would not have considered 10 years ago to make their numbers work.   They might even consider a townhouse or condo.

Like my baseball example, the bases are loaded.  The first time buyer is waiting to hit their home run, only there are no balls being thrown.  If more affordable houses come on the market, it will make sellers in all price ranges less worried about finding their next house.  Sellers know they can sell quickly but are worried about finding a house.  Remove that fear and we’ll have more houses for sale.