listing

Best buying advice ever

by John Rice

How would you like to pay top dollar for a house nobody else wanted that sat on the market for a very long time? Not really the type of thing you want to do? Well then, let me tell you how to prevent it.

A house in a neighborhood I am very familiar with had been sitting on the market for a very long time before eventually selling. I had a house around the corner from it listed during that period, only mine sold much sooner! I ended up showing my listing to a few buyers who had called the listing agent to see that house. I would ask them how mine compared. They all told me that the other house had a funky floor plan they didn’t like. Let’s fast forward to when the buyer of that house goes to sell. Think buyers will have the same opinion?

I noticed the other day that it finally closed. I looked to see who represented the buyer. Guess who? The listing agent was also the buyer’s agent. That tells a whole lot. That lets you know that the buyer was some unrepresented sucker who was just calling listing agents to see properties. They didn’t have somebody working for them to say “WAIT! This house has a funky floor plan and you are going to have a hard time selling it down the road and sure, it seems like a good price compared to similar sized houses, but that doesn’t make it a good value nor a wise decision!!”

Now, I am for sure not making a judgement about this agent. I don’t know what all happened. All I know is that when I see a house sell that has been on the market forever, most of the time the listing agent ends up representing the buyer too. An agent has to walk a fine line when all the sudden there is a buyer for a house they thought they’d never sell…..and getting commission as both the listing agent and buyer’s agent makes it even harder. I think most of the time the agent and the seller come out better than the buyer in these situations.

Basically folks, my message is if you are buying, don’t go at it alone. Don’t trust the listing agent for advice. Don’t rely on zillow. Get yourself your very own realtor who will only represent you. One who has been in enough houses, is familiar enough with the market and can recognize the things that will bite you in the rear down the road.  The buyers of this house made a bad decision, and the sad thing is that they won’t know that until they need to move again.

What will 2026 be like?

by John Rice

I think it will be like 2008. Don’t panic though. Next year shouldn’t be like the 2009 market.

In 2008, we were starting to feel the market slow down. It peaked in 2005 just as it did a couple years ago. We were all in denial back then, hoping what we were seeing in California and Arizona would not come here. It did, but not as severe. The Lexington/Bluegrass market has always been pretty stable and resiliant.

So, by 2008 we were seeing a lot of price reductions. A lot of rising inventory. Only the best houses were selling fast. A seller had to do some prep work to make their house stand out. Many sellers were in denial because they had bought in a frenzy. They were shocked not to have a line of buyers wanting their house the first day on the market. Being a realtor began to be a real job that required skills where you really need to know the market, know how to negotiate, and know how to present a house so it stands out among all the competing listings.

I would normally use this paragraph to contrast 2008 to the current market. Since it is identical, just go back up there and substitute 2026 where I wrote 2008.

Don’t worry though. There are no signs of a coming crash. This slow down is driven by lack of demand due to affordability. Back then, the market crashed due to bad mortgages causing forclosures.

I think the rest of this year will see little appreciation, frustrated sellers, cautious buyers and a lot of realtors getting out of the business.

A bridge not to burn

by John Rice

We are back in a market where buyers want to test sellers and see how far they will bend.

Used to be that the average List-to-Sale percentage was about 97%. That means that the house sold for 97% of the list price. As the market got hot right before COVID, it inched up. During and immediately after COVID, houses were selling for no less than full price, many going for 10% or more over the list price.

Those days are gone. I occasionally see a house that will go for slightly over the list price. That is only for super amazing houses that got multiple offers immediately. Short of that happening, full price is about the best a seller can expect and not a whole lot sell for that.

I have had many sellers this year get super discouraged when we finally got an offer. Most will tell me they don’t even want to reply to it. I tell them that it doesn’t matter what the initial offer is. What matters is how high the buyer will go. Most of the time the buyer will end up paying an amount that the seller is satisfied with.

If a buyer offers 92% of the list price, odds are they will go to 96%.

If a buyer asks for $5k in repairs after a home inspection, odds are they will settle for $2500.

It is crazy how predictable this is. So much so that when I get an offer or a repair list, I am usually correct on where it will end.

So, if you are a seller, be prepared for this. Don’t be offended. Don’t reject the offer or burn the bridge. Keep playing the game until it is over. Odds are you will be glad you did.

Does spending more get you more?

by John Rice

I’ve always been into two things: Houses and cars.

There are a lot of luxury cars out there that are really just blinged out versions of cheaper cars. Cadillac Escalade? At its core, it is a Chevy Pickup truck…….sorry if you have one and I have insulted you. Lexus TX? It is a better looking Toyota Highlander. Nothing wrong with these companies doing this. It is an economy of scale to be able to sell essentially the same thing to buyers in different socioeconomic classes. They add a few features and make it look better for a lot more money, but all the important stuff is shared with their cheaper platform mates.

Now that you’ve got the concept of today’s blog post, let’s see how it relates to houses.

I showed a house to a client today. It was in a very Toyota Highlander neighborhood. It was close to 3500 square feet with a basement. Great location. Great school district.

I told my client I thought this $484k house was a great value. Why? Because if you spend $100k more, you wouldn’t really get a bigger or better house, you might just get brick on all four sides and be in a more Lexus TX neighborhood.

Sometimes spending more doesn’t really get you much more.

Harsh reality of renting instead of buying

by John Rice

Sometimes when I tell first time buyers that they should buy a home as soon as they have a down payment and know they won’t be moving for several years, I wonder if they think I am just trying to get a sale.

Here is a harsh reality. Even if you are renting, you are paying somebody else’s mortgage.

In 2013, I bought a house to rent out. My mortgage was $543 a month including taxes and insurance. I rented it for $1100, which was a fair price at that time. Last year, I raised the rent to $1450. That is still under market value. When I raise rent, I try to keep it at about 85-90% of full market value since I am benefiting from the continued relationship. It is a win-win for everybody.

When I bought this place, I think I made the first 5-6 payments while I was renovating it. Do you know who has made the payments for the past 12 years? The same tenant. If that tenant could have bought the house in 2013, their mortgage would have been a little higher since I had to have a larger downpayment and I paid cash to do some work to the house. Their mortgage would have been more than mine, but still a little cheaper than the rent. Do you know what their monthly expense would have been today had they bought the house back then? THE SAME AMOUNT ALL THIS TIME. Ok, technically their taxes and insurance would have gone up a little, but what they pay for interest and principal would have been the same all this time. My point is that had they basically had a down payment and decent credit, they could have bought the house, had a fairly stable payment, been building equity for themselves instead of me, and would have the house more than half paid off by now.

This is why I encourage first time buyers to buy as soon as they can. I know it is tough right now with higher rates, prices, tariffs, inflation, etc. It is not impossible though regardless of how discouraging it may be. I think anybody is better off in the long term buying most any house they can afford verses renting.