What is the type of house that is the riskiest to buy?
(I’ll pause to give you a minute to think.)
I bet you didn’t come up with a brand new house as an answer, did you?
Now, new homes are built every day all around the country. Most of the time everything goes well. Probably like 98% of the time, but there are some risks involved that I always like to check out before a client decides to build a house. So, why is new construction risky?
- You don’t know what the neighborhood is going to look like until it is done. Ever drive down Wilson-Downing and see that one street with about 12 houses that are much bigger than the rest of Belleau Woods? Those were the first houses in what was going to be a neighborhood similar to Hartland. Until interest rates shot through the roof in the early 80s and the only thing that was selling were small homes. The people who bought their new houses on that street didn’t get what they expected.
- You don’t know what the value is going to be after you build. A brand new sale is a unique sale. It is never going to be brand new again. It will be a “Used” house for each subsequent sale. That is why when I have a client who builds, I like to look at the sales of other “Used” homes in the neighborhood so I can tell them what to expect.
- You don’t know what the builder is like. Building is like most industries where 99% of them are good honest hard working people. The rest are the ones that bring their whole industry down. Many many years ago, there was a custom builder who was flying first class to see every UK basketball game, using his customer’s money to live large instead of you know, building their house. He got arrested because he was telling banks that houses were nearly done so he could get more drawls from the construction loan. There were a few houses that were still vacant lots. This is why I like to check out my client’s builder to see if I think he is going to take their money and run. Usually a long track record of building homes and a good reputation goes a long way with me. I get nervous when the builder has only been around for a short time.
These are just a few things that pop in my mind when a client says they want to build. Like I said, most of the time you never have these issues, but I think it is always a good idea for you to have your own realtor involved.
I can’t count how many houses I have been in over the past 15 years. Old, new, affordable, expensive and just about every neighborhood in the Bluegrass. Seen it.
One of my favorite things to do is watch how buyers react to several things, one of the biggest is the floor plan.
I think we don’t discuss the floor plan of houses often enough. Sure, we think about whether it is open or traditional but there is more to it than that. We usually just focus on the square footage. For example, I will often have buyers get excited about a small house because it has a basement. They will be excited because it is 2400 square feet. Having shown several of these over the years, I like to remind buyers that yes, 2400 square feet is a lot of space, but that house is really a small starter home sitting on a finished basement. 1200 up and 1200 down. The upstairs will always live like a starter home. I tell them this because just about every buyer I’ve known has lost their enthusiasm once they see a house like this.
Floor plans can greatly affect the value in older neighborhoods like Chevy Chase or Kenwick. I have seen far too many houses that sold for far less than similar sized houses that were finished equally. When I go to list an older house, the first thing I do is assess the floor plan. If it has lots of tiny rooms and much of the square footage is wasted in hallways, then I know it will sell for the lower end of the range for the neighborhood. A lot of older houses must have been designed by builders or the first owner on a napkin. You sometimes see some pretty odd things. You also see some odd things done during remodels. My parents house in Kenwick was built as a one bathroom house like pretty much all houses in the 1930s. Somebody at some point thought adding a half bath in an upstairs hall closet was a good idea. Since I lived upstairs, I can say that it was a good idea but it was very tight and very odd. This was before you could go to IKEA and buy those super small sinks. I just remember sucking in my gut to get past the sink.
Even in newer houses there are a few things that buyers seem to not like. I’ve shown some newer small ranch houses that have the living space on the back of the house. You have to walk down a hall and literally find the living room, which doesn’t make a good first impression. I have never sold one of these because a buyer just can’t get past that first impression, similar to split foyer houses where you have to decide immediately whether you are going up or down. Buyers don’t like anxiety as soon as they open the door. Also, a lot of the diagonal walls and plant shelves of the 1990s haven’t aged well. They usually make a room feel small, furniture placement odd and make people feel like they are in an interactive M.C. Escher display.
Another big negative is with houses that have a finished basement. Most people want to use this space for kids to play or for large gatherings of people. Lots of small rooms is a big negative. A lot of times, these basements got finished to suit the needs of the owner, which may not be the same needs as the next potential owner. When I have a client who will be finishing a basement, I ALWAYS tell them to have one big open room and to not make a maze of walls. Just like those ranches with the hallway leading from the front of the house to the back, buyers want to walk down into the basement and see that big open room immediately. They don’t want to get to the bottom of the stairs, turn and walk down a hall that leads to another hall or a small room that you must go through before getting to the main room. It is best to mimic the upstairs floor plan, only make it more open. You can put a spare bedroom under the dining room and a bathroom under the kitchen usually. Be sure to leave a little space for storage too.
Yeah yeah yeah. We’ve all been told by real estate professionals for years that the single most important thing when picking a house is it’s location. I’m telling you right now that there is something even more critical than that.
Let me tell you a few things about location first. It’s subjective. People pick where they want to live for lots of reasons: Proximity to main roads, their job, schools, parks, low crime, etc. It’s always a compromise too. One buyer may be willing to be far from parks if their kid can be in a better rated school. Another buyer may be willing to put up with a higher crime rate if it is super close to their job…..so, one person’s great location may not be as great to other buyers. Also, locations are sort of price dependent. What is considered a good location for somebody with a $100k budget will definitely be a bad location for a $400k buyer.
What do ALL buyers have in common though when picking a house? They all want as good of a lot as they can get. In all 15 years of my career, I have never had somebody say they wanted a house that backed to a busy road, had a steep driveway, lacked privacy or had a backyard that was unusable due to a slope.
Why is the lot so important? For starters, it is often a buyers first impression. If a buyer tries to pull in the driveway and their car scrapes the pavement, bad sign. If they are out of breath before they get to the front door, bad sign. If they step out of their car and can hear New Circle Road or the Interstate that is behind the house, bad sign. Additionally, the lot affects just about anything you do with the property.
What should you look for in a lot?
- As flat as possible is the biggest thing around here. Lexington is pretty flat. The severely sloping lot is unusual here. Go to Richmond or parts of Scott County and it is more common. For what’s it is worth, nobody has ever told me they didn’t like a house I showed them because the lot was too flat.
- A nice view is always a plus. If you can’t get a good view, then no view at all is safe. We don’t have a lot of greenspace views and even fewer water views in Lexington. It is totally okay to just have a flat backyard that backs to other houses. I would avoid backing to anything than other houses, such as businesses, apartments or a road…..and ideally it backs to houses that are equal or higher in value than the one you’re viewing.
- Get a lot size and shape that is normal for the neighborhood. If you are looking at a house that has a tiny or oddly shaped lot unlike any other in the neighborhood, don’t buy it. The same doesn’t always apply for lots that are bigger. Most of the time the biggest lot in the neighborhood is the most desirable unless it is in a neighborhood where the most likely buyer will be a retiree or somebody downsizing to get away from a lot of maintenance.
- I would avoid a corner lot if possible. There are a few buyers who prefer a corner lot but most people view them as twice as much sidewalk to deal with. Plus, most neighborhoods only allow you to fence a corner lot from the rear edge of the house, meaning that you have much less space if you want to fence it in. (I’ve got a good friend who looooves his corner lot and will likely find out I said this…..sorry Peter!)
Want to know my absolute favorite thing about getting a good lot? It never needs updating and never goes out of style.
I know, I know…..realtors always say it is a good time to buy, or a good time to sell, but hear me out.
There are two things I have consistently seen over my 15 year career:
- All the buyers come out in mass in about March. They fight for the best houses on the market.
- When the market is good, prices always begin to creep up in the spring because that is sort of the opening season for the whole year.
If you are planning on buying under $200k this year, you will have a harder time finding a house later in the year when there will be multiple offers the first day on the market for the best ones. You will have to do things like be flexible on when the seller moves out and possibly do the inspection type where you don’t ask for repairs, you either take it or walk away after the inspection.
Or, you could start now and avoid all of that while getting Fall 2019 prices.
Right now really is a good time to buy.
I always joke that I am a bad combination of OCD and ADD. A lot goes through my mind, especially as I drive around Lexington.
Here are some things that have popped in my mind lately:
1. Masterson Station is no longer the “Affordable” side of town. I don’t know if you have noticed, but a lot of the new homes in Masterson and the various new neighborhoods that have their own name but in 15 years will be called Masterson are not cheap. I am seeing more and more houses for over $300k.
2. The giant dice looking metal things by Local’s are really cool. I enjoy seeing the murals, art and other well designed structures around town.
3. There are more and more small condo/townhouse projects all over town. I still think they are a little risky. Lexington has always been mostly a single family home type of town. Condos or townhouses were always a niche market with most of them being geared towards first time buyers or empty nesters. I’ll wait to see how well they sell in a soft market and if they appreciate before I give them a Thumb’s Up. I guess the issue is nobody plans on staying in one forever. You’re going to need the next generation to want to live in them too for there to be a future market. Also, way to many of the 10-15 year old condos downtown are rentals now.
4. I’m turning into a curmudgeon Gen Xer I guess because I miss the old days when you dropped some quarters in a meter to park downtown. Now you have to enter your license plate number, hit a bunch of buttons on a keypad and then drop in your quarters. What was wrong with the old way??