lexpert

Today is a big day for me

by John Rice

E I G H T E E N YEARS.

That’s how long I have been a Realtor as of today.

I’ve been a Realtor through the worst market in history, the best market in history and every market in between. Sometimes I miss those early days when everything was new and there was so much to learn….but most of the time I am thankful that those 18 years have provided me so much experience that I am rarely caught off guard by anything.

My most vivid memory after getting my license was joining the Lexington-Bluegrass Association of Realtors, AKA, LBAR. I went to their office on Regency Road, plunked down my membership dues, filled out some paperwork then I rushed back home as fast as I could to log into the “Realtor only” side of the MLS and see what that was all about. The office is still there. Only one person from my early days remains. LBAR is now just called Bluegrass Realtors.

I got my first listing while buying paint for the basement of my home that I was remodeling. The manager was mixing my paint and as people often do, he started talking about real estate. He said he and his family were building a new home and would be needing to sell their old home very soon. As I got in my SUV after loading the paint in the back, I thought “Wait!! I’m a realtor now!!!” So, I went back inside and talked to him. I got the listing. I remember being so amazed that somebody was going to pay me to do what I had been waiting so long to do. The Buyer’s realtor for that listing and I became best friends and still are.

My first Buyer’s Realtor experience was a townhouse that some friends bought as their first home. They knew it was my first sale ever. I will always be thankful to them for that. I remember being so anxious about the closing, as if somebody’s life depended on me getting everything perfect…..which didn’t happen. I had gotten their $500 for earnest money when they signed the contract and given it to the nice older lady at my office (who was probably the age I am now.) I guess I thought the check would just magically appear in my mailbox the day of the closing. Turns out I had needed to request it. Fortunately there was time to get the check at the main office and off I rushed to the closing. I was such a nervous wreck. The closing was at 5:PM on a Friday. Back then the market was pretty crazy and the lady doing the closing had probably done 20 others that day. I walked out of the closing about 5:45. I was so relieved. I had done it! I thanked the clients who would use me several other times in the future and started walking to my car. Wait!! Something was missing. It was MY check. In the closing attorney’s rush to end her day and in MY anxiousness over the closing, both of us had forgotten that I needed a check. I caught her as she was about to back out of her parking spot and got it. I used what was left to buy a leather couch after my broker and Uncle Sam took their share of that check. My oldest son still has that couch today.

On that day in 2005, all I had was a future. Everybody told me I would do great in real estate. I had hoped they would be right. Today I’ve got a past, present AND a future. Looking back, I can see sooooo many people who helped me along the way. These people said encouraging things, trusted me when I had little to no experience, watched my boys on short notice so I could rush out to show a client a house. My parents, The Ponders and The Boyds ALWAYS were happy to let me drop off my kids at their house and usually yelled “Go sell a house!” as I was backing out of their driveway. I’ve got a client who is about to use me for the 7th time. I’ve got many who have used me 3-6 times and regularly send me their friends. Last year was my best year ever…..and you know what? I’m not done yet.

Know what I like about this market?

by John Rice

If you just want the answer but don’t care to know why, it is because this market is LOGICAL.

If you want to know what I mean, here we go:

Other than the past few years, the real estate market has always been logical. The best houses sold for the most money and sold the quickest within their price range. The second choice houses sold for less than the more desirable houses. Location mattered. The lot the house was on mattered.

For a few years there, nothing mattered. Any house was selling for more than it should have and it didn’t matter if one house was in a second choice neighborhood or had a terrible lot. It was tough being a realtor back then. You could look at recently sold comparable homes and determine what a house should be worth, but it always sold for more, sometimes waaaaaay more than that. I would tell my sellers “Here is what your house is really worth but here is what it could sell for…..expect anything to happen!” I would tell my buyers “Here is what the house you are bidding on is worth, but here is how much of a convenience fee you may have to pay just to end your misery of losing in multiple offers.”

Today’s market is about logic again and I am glad. If two identical houses come on the market on the same street and on the same day and one of them backs to the interstate and the other doesn’t, the one with the better lot will sell for more. If a house is overpriced, it won’t sell at all.

Why is this? It is because today’s buyer has choices. Yesterday’s buyer had one shot at the only active listing in their price range. Having a little inventory makes a difference. It is still a good market. It is an even better market if you have one of the better houses in your price range. This has always been true. I remember back in 2009. The market sucked yet I was getting multiple offers the first day on the market for some of my listings. Buyers will always pick the very best house that is available and take a pass on those that aren’t. That’s just the way logic works.

My first open house in 13 years

by John Rice

I did my first open house since 2009 recently. None of the people who came to the open house bought it.

Why?

Because open houses do not help a seller get their house sold.

Who comes to an open house?

1) People who are so new in their search for a home that they are not ready to make a decision.

2) Neighbors.

3) People who just like houses and real estate.

Why do realtors seem to love doing them?

Because they get to meet all those people who are not going to buy the house they are standing in but may buy something later.

Why then did I do one?

For my seller. We put her house on the market right before Thanksgiving. That is statistically the absolute worst time to put a house on the market……and Thanksgiving 2022 was pretty much the worst market since 2011. Interest rates had just put all buyers in a state of shock and very few were out actively shopping.

My seller was one of the nicest clients I have ever had. She needed to get this house sold so she could get married, move and start a new life out of state. All that was in the way was selling this house. It was very discouraging to her that it didn’t sell fast. The market did a major shift so quickly last fall. FYI-It is much better now. Buyers are getting used to today’s rates and are not as shocked/mad/afraid to buy a house. Back then all the headlines were how terrible the market would get. Prices would fall. Zillow and Redfin went from predicting things like 14% annual gains to declines of 10% or more in value.

Long story short, she needed a little encouragement and the least I could do was give her part of one Sunday afternoon.

It had been so long since I had done an open house that I didn’t even have any signs. The first step was to buy the bigger open house sign to put in the yard and get it scheduled online. On my way to her house, I placed the brand new directional signs so people could find the place.

Where I hadn’t done one in so long, I had no idea what to expect. My plan was to get my 10,000 steps done for the day by pacing around her house. I had many pleasant surprises that day. The first of which was that the seller had candy in practically every room and had baked fresh cookies. I ate so many of them that I should have walked 1,000,000 steps that day. We had a huge number of people show up. So much so that I didn’t really have time to play solitaire and sudoku on my phone. I also ran into two people I knew that I hadn’t seen in forever. Overall, it was a successful open house in the sense that it gave my seller the encouragement she needed.

Selling a house is very stressful. Most of my job is giving practical advice and taking care of tasks. Sometimes it is about doing something that says “We’re in this together.”

The house sold a few weeks later to a young couple who feel in love with it. The seller was very happy they loved the house as much as she did.

Two deals: BuyerZilla & One of the best sellers ever

by John Rice

I have always said that during a real estate transaction, you either see people at their best or their worst.

It is a stressful thing to do. So many details. Such a big change in the lives of both the buyer and seller. It is something most people do 4-5 times in their life so it isn’t like this is anything anybody will ever get used to doing.

I’ve got two deals right now where I am seeing somebody at their best and at their worst.

I have a listing where the buyer is clearly at their worst. They are making things a little difficult for their own realtor, the seller and me as the listing realtor. The funny thing is that I don’t know why? Due to the slowdown in the market last fall, there were not enough comparable sales for this higher priced home in a small town outside of Lexington. The house appraised for $14k less than the contract price. My seller agreed to lower their price. Then the buyer hit us with a pretty big repair list. We agreed to all but one item which happened to be the easiest one on the whole list. They threw a fit. One of the items was to repair a roof leak around the chimney. This was perfectly acceptable to ask for and the seller committed to getting it done. My seller turned it into his insurance. While the insurance company rejected the claim, they did agree to replace the whole roof at a cost of over $24k. He has to pay out of pocket for the chimney repair however. We asked the buyer to chip in a little bit towards the new roof (which my seller had no obligation to do) and they threatened to walk away from the sale. While they were under no obligation to help, one would have thought that having gotten the house for $14k less than the price they offered AND getting a whole brand new roof worth $24k would have made any buyer feel like they had won the lottery. It appears this buyer somehow feels like it was all owed to them.

The other deal is a property some long time good friends are buying. We were set to close today after waiting for the seller to get a new hvac part installed. It got installed and we all thought things were good. The person who installed this part went back yesterday to check on it and turns out that the gas furnace is now producing too much carbon monoxide. When faced with the choice of not telling us and closing today as planned or disclosing this, they chose to let the us know. Their HVAC person’s solution was to install a new furnace. They seller offered to split the cost with the buyers, who immediately said yes because who wouldn’t want a brand new furnace for half price, right? We decided to postpone the closing until the new furnace is installed and the carbon monoxide level is checked again. Had this seller chose the option of not letting us know, it would have cost my buyers more money and could have cost them even more since they would be sleeping in a house with high carbon monoxide levels. This seller did the right thing. I told the seller’s realtor how much I appreciated their honesty and that I was definitely seeing the sellers at their very best.

I am always inspired when I see a buyer or seller at their best, I just wish it happened every time.

My advice to First Time Buyers

by John Rice

I was you once. I had no idea how any of this works. All I knew was that I was ready to buy a house and I had to borrow money to do it.

I had been saving a little. I was self employed running my lawn care business. I had a busy spring and had fallen behind on billing. I totaled up the invoices I had just sent out and to my surprise, I had suddenly had a 5% down payment for a very modest home.

I started working with the only realtor I knew at that time. I got preapproved with the bank that I had my checking account with. After seeing a lot of houses, we decided on one and bought it. There is of course more to that story, but this is really about what I learned as a first time buyer and now many years later a realtor that might help you.

I always think the first step is to find a realtor. A realtor can explain the whole process and prevent a lot of mistakes. When picking a realtor, you want somebody that sells enough houses in your price range to be able to tell you if a certain house is a good one to buy or not. Keep in mind that while it is great to love the house you buy, odds are you won’t be there forever. It is the first step on a path to getting in the house you ultimately want, can’t afford now and that you will be in long term. You want a house that will be easy to sell in any market. Always keep in mind that one day you will sell it because your needs have changed. You will love the next house that suits your needs better and this one can help you get it or ruin your chances. This means don’t use your neighbor’s babysitter who just quit her job at Subway and got her license. Don’t use your best friend who just got their license. Having some experience will benefit you more than you will ever understand. A lot of first time buyers assume they have to pay for their realtor and will try to go at it alone. The commission your realtor gets is offered from the Listing Realtor. The Listing Realtor has an agreement for the Seller to pay them a commission to sell their house. That Listing Agent has offered to split it with your realtor. That means having your own realtor is totally free to you. (Caveat-some realtors do charge what is called an ABC fee of $175-250. I do not do that since I think it is stupid and just a way of getting a little more money.)

The next step I would take if I were you is to find a good lender. A good lender is not necessarily the one with the rock bottom interest rate and closing cost. The best lender is one with a competitive rate that can smoothly and efficiently get you to the closing table with the least drama or delay. Pro Tip here…….this lender is typically NOT the bank with your car loan or your checking account. Your realtor probably knows a couple of good lenders.

Then I would start looking at houses. I’d look at a bunch of stuff in your price range all over town. This is a process. I can tell you that few buyers I have worked with ended up with exactly what they told me they wanted. I’ll have people say they want a specific neighborhood and fall in love with a house outside that neighborhood. I’ve had people tell me they wanted an old house end up buying a much newer one. They often apologize to me for the change of plans. I always tell them it is a process to get the right house. Changing plans just means you are more clearly discovering what you really want. The more houses you see, the more you know what you want. The worst thing about the crazy hot market of the last few years is that no buyer in any price range has had a chance to look at more than a handful of houses.

How do you know when you’ve found the right one? Most people leave a house they don’t like pretty fast…..NEXT! People that like a house stay at the house for a long time and keep walking around. Sometimes buyers stay for a while because they love certain features and not others. If you find yourself saying “If only this were different, it would be perfect,” then it probably isn’t the one. If you begin arranging your furniture in the house and are worried about losing the house as you leave it, then it is probably the one. When I say worry about losing it, I mean losing the house. The past few years the market has moved so fast that people have started worrying about losing the opportunity to make an offer. That is a fear of missing out. That has nothing to do with the house. That just means you like it enough to be anxious about losing it while you decide if you want it. If you are worried about losing the house and not just the opportunity, then you know. Also, you’ve been so focused on finding the right place that odds are you are sort of caught off guard when you do find the house. Don’t worry about that. It is common. Often a first time buyer needs to wrap their head around the fact that they are about to take the giant step they have been working towards. I try to give my first time buyers a little space. You need to get past the shock and be ready to sign the offer.

When you are ready to make an offer, please rely on your realtor for advice. I have seen so many buyers just tell their realtor what to put in the terms of the offer and then not get the house should there be multiple offers. In multiple offers, you really only get one change to win the house. Ask your realtor what they think you should do. If you can handle their advice, just do it. Your realtor has done this multiple times in the past month and this is your first time. It is their time to take care of you.

You’re feeling all good now. You’ve found the house. A contract has been signed. Your lender is asking you for a lot of documents. The next step is the home inspection. Not having been though a home inspection, you assume since the house looks good that it is good. As the home inspector you chose starts going over the inspection report, you begin to wonder if you have made the wrong choice. Most home inspection reports I have seen have 20-50 items that the inspector found. Most of these items will be things that are deferred maintenance or things that were not done in the textbook perfect way. This is where a realtor you trust can help you sort through what items are most likely going to be on any home inspection report and which items are specific to this house. I try to break down the items that are most immediate and those that will be the most expensive. Sometimes the house has one or more major items that are deal breakers. Sometimes the sum of all the immediate needs is too much. Most of the time though, 80% of whatever your inspector found at your house will be on the next home inspection report should you walk away from this house and buy another. Why? Because there is no perfect house.

Now we are getting close to the closing. Your realtor tells you that you have to do a “Final Walk Through” of the house right before the closing. All this means is you need to see the house prior to you owning it to make sure any home inspection repairs were done and that the house is in equal or better condition than it was the day you bought it. It can be a fun time too just to get inside the house.

The final step is the closing. Sometimes buyers get anxious about this. They just don’t know what to expect. A closing in my state usually takes about 30-45 minutes. Everybody sits at a table and signs a bunch of documents. You’ll have the most to sign since you’re getting a mortgage. It’s a fairly casual deal. Dress however you want since all anybody cares about is that you brought your Driver’s License and are able to sign your name. You are the star that day. Everybody at the table is there because YOU decided to buy a house.

Now the place is yours. Move in and enjoy building equity!