neighbohoods

What’s an old house worth?

by John Rice

I had to run the comparable sales data for a house in the area between Chevy Chase and UK. My buyer wanted to know what I thought a house I showed him was worth. Usually comps aren’t too hard. In a newer neighborhood, they can be really easy since sometimes you can even find three of the exact same floor plans to use.

Older houses are a little harder to comp. For example, the 3 best ones I had to pick from today were all in the same area, but were very different. A lot of realtors would have just divided the sale price by the square footage, maybe added/subtracted for differences such as the number of bathrooms or a garage. (Or even worse, just gone with what Zillow says is the value.) It is all a very logical process of averaging data to come up with an opinion of value. The only problem is that it doesn’t always work.

Back to my story….

The cheapest one was on the edge of the neighborhood near where the commercial section ends on South Ashland. That corner of the neighborhood has a very different vibe than the one I saw with my buyer.  The next one was right around the corner from the house I showed. You’d think that would have been a good one. But, it was much bigger, had been converted to student housing a long time ago, had a surplus of bedrooms, and was handicap accessible. That isn’t going to attract anybody from the same buyer pool as the one we saw. Sorry if this is starting to sound like the real estate version of “Goldilocks”, but the last one was just right.

The last place was similar in square footage, was more updated, had newer systems and would attract buyers from a much broader pool. It sold for less than the asking price of the one we saw.  I had to tell him that I thought the one we saw was over priced.

I also had to tell him that with old houses, you just never know. Somebody could see that place and totally fall in love with it, with the end result being they paid more than any other buyer would.

All this reminds me of 2 houses I had listed on Wabash a long time ago. Both of them were totally and tastefully updated. The first one I listed was everything anybody could want in an old house, with the exception of very rough and very steep steps that went to the converted attic space. It was really nice up there, but getting there was posing a problem. Time after time (not trying to sound like Cyndi Lauper here) the feedback would be that the house was very nice but those stairs were a deal breaker. We did sell it however.  I should add that we actually sold it for much higher than the neighbors and a realtor who lived a few blocks away ever though was possible. The comps didn’t really support the asking price. We kind of pushed the envelope and it worked. The buyer was transferring from California, had a tight time line and everything in Lexington looked like a bargain!

The next house I listed on that road was equally nice. They had remodeled the upstairs, bumped out the roofline of the back and added a killer master bathroom and a walk-in closet. Those are 2 things you don’t see often in an older house, especially for the price range we were in. That house posed a different problem for me. See, the downstairs rooms were sooooo small. If you just looked at the comps, you’d have thought the house was worth about $20,000 more than it was. We had to sell it a little under the comps to make up for the small rooms because this time, there was no California transferee to be found.

So, you really have to have a feel for how buyers will perceive the house as a whole to know where to add or subtract value. That is the art part of the deal. Even to the most unemotional buyer, they still have to like the house to buy it. On the comp sheets that all the realtors use, it has the scientific stuff  like values for square footage differences, bathroom count, a finished basement verses unfinished basement, the number of garage spaces, etc. The problem is that if we don’t throw a little art into the comps we’ll just get them wrong…………unless the house is one of those where 3 identical houses have recently sold!

Do you know where your property lines are?

by John Rice

Based on nearly 20 years of experience, I am going to guess you will say you do.

There are two questions on the Seller’s Disclosure about property lines that make me think this.

One questions asks if you know the property lines. I do not think I have ever had a seller answer no to that quesiton.

The next question asks if they are marked in any way. Many sellers answer no to that question.

I have always wondered how they know where the property lines are if the boundaries are not marked in any way?

The truth of real estate is that most of the time, we do not know where the property lines really are. The only way to be sure is to have a pin and stake survey done. Many people assume that was done when a fence was installed but that is not always the case.

When buying a house, few buyers purchasing a home in a neighborhood care to find out exactly where the boundaries are. Most assume it is the fence or if no fence exists, it is the mutually agreed upon line where the neighbors stop mowing their grass.

And for all intents and purposes , if everybody is happy, then that pretend line is just fine.

Buy if you are going to add a fence or some structure that may encroach on the set back lines of your property, the best thing you can do is get a survey done. Nobody likes to spend a few hundred bucks on something they think they don’t need, but if a neighbor doesn’t like where you put your fence, you better hope your fencing company guessed correctly where the property line actually is. It can get even more expensive if you do something like build a deck within the set back line, which is the minimum space required along the perimeter of your property. If the building inspector finds out, you will either need to remove it or apply for a variance. Neither are fun and will cost more than a survey.

Plus, getting a survey done allows you to answer affirmatively that you actually DO know where the boundaries are because they ARE actually marked.

Best question to ask your Realtor

by John Rice

Where is the best place to spend (insert your budget here)?

That is the single best question to ask your real estate agent if you are buying in an area you know nothing about.

I recently worked with an out of town buyer who found a for sale by owner home in a town not too far outside of Lexington. It was a very nice home. Seemed to offer a lot for the money. Large lot. Great view. Nicely updated.

I could not recommend this house though.

My buyer asked me a few questions about this home. I told them that while it is a very nice house, it is NOT in a neighborhood most people in this small town pick at this higher price point. I then mentioned a very popular neighborhood in this town, saying that is the one most local people find the most desirable. I then said that to local people, that super desirable neighborhood is the one they grew up with as the pinnacle place to live. If they reach the point of being able to afford that neighborhood, they move there. I also told them the house they were interested in will likely sell to an out of town buyer who doesn’t know anything about the local real estate market.

Well, when I went to check on the comparable recent sales in this price range, guess what? Almost ALL of the recent sales were in that exact neighborhood I mentioned. Know what else? My buyer told me that the seller had told them that almost everybody who has seen the house was from out of town.

And all this is why you should ask your real estate agent where is the best place to buy within your budget. You do not want to get stuck with a house that will later be hard to sell because you knew nothing about the local market.

This house stinks (Literally & Figuratively)

by John Rice

I showed a really loser house to some friends of mine today. It stank. Literally.

This place looked okay in the pictures. A little 2005ish but nice. It had a huge sunroom and was on an absolutely gorgeous 1.5 acre lot with a lovely view on 2 sides.

I got to this vacant house about 45 minutes before my people. I had plenty of time to work on getting my daily allotment of steps. As I was walking around the house for all that time, I concluded that the floor plan was especially terrible.

It had a nice kitchen and great room. The sunroom was really nice although it had a strong cat urine odor. There was a flex room with a closet with french doors right off the great room by the front door. It had two bedrooms and two baths downstairs. There was a staircase leading to a finished room over the garage. This room did not have a bathroom or a closet and had limited headroom.

SO BASICALLY THIS WAS A 2 BEDROOM HOUSE!

Sure, somebody could use that flex room on the front of the house as a bedroom since there was a closet, but who is going to do that? Sure you could use the room upstairs that didn’t have a closet or bathroom as a bedroom, but who wants to do that? The closest bathroom is downstairs on the opposite side of the house.

When my friends asked what I thought of the house, I told them it was a waste of a really nice lot. I told them that even if this floor plan could work for them, it isn’t going to work for 90% of the buyers when they would later attempt to sell it. They agreed it was a hard no for them. There really should have been either a true third bedroom downstairs or a closet and full bath upstairs.

While I am all about people finding a house they love, there is an investment side to buying a house. One day you will need to become the seller…….so start with a house that most people would want to buy.

Which is better? Older or newer homes?

by John Rice

I often get asked by buyers if they should buy an older house or a newer house. My usual response is to say that it depends on what kind of problems they want to have. I get crazy looks when I say that, but it is just my way of telling them that all houses will have problems. If you don’t have one now, just wait because your newer house will become an older house quicker than you think. Basically, it is your house verses Mother Nature and Father Time……and those parents usually win.

I have lived in both older and newer houses all my life. When I was a kid, I went from a 1910ish four square to a 3-year-old ranch. Next, my parents bought a house in Kenwick  from the 1930s. My first house was built around 1915. My second was 1973. Then from 1997 and 1986, plus a collection of rentals built from the 1940s through 2006. All of them had things to deal with. 

There seems to be this misconception that old houses were built better. True, MOST were built with more care than today’s homes are. I say most because my first house, the one built around 1915, was nowhere near as well-built as my parent’s Kenwick house from the 1930s. I thought it would be, but once I moved in, I started to realize it wasn’t.

Old House misconception #2 has to do with today. Many people think that any older house is better than any newer house is today. After living in a lot of older houses and showing a bunch to my clients, I can tell you that what it comes down to is maintenance. Even the best built house from yesterday will be nothing but trouble today if somebody didn’t keep it up. Remember, an older house has been in the ring with Father Time for more rounds than a newer house will have.

Here are some of the common old house issues: Inadequate electrical, plumbing, insulation, lack of maintenance, and poorly done improvements to any of those prior items.

Newer house issues: Rushed construction by unskilled/uncaring workers sums it all up the best. I have a friend whose house was practically rebuilt after a fire. It had no insulation on one side of the house because the drywall contractors showed up before the insulation contractors were done. On my house from 1997, poor mortar joints on a brick window sill allowed water to run down the inside of the brick veneer and rot some of the sill plate. I only found it out when I did the demo for a new floor in 2010 when it was only a 13 year old house. If today’s workers would apply to their trade the same care they use to draw naked women in their potapotties, we would have the best built houses of all time!

Occasionally I do see both a really well-built newer home and a fantastic older home. I represented a builder who did a great job of making decisions that the buyer wouldn’t even begin to appreciate for years to come. He did a lot of little things way above minimum code. I also just sold an older house that had been well maintained and had recently been overhauled by a good contractor. That combination made it a pretty unique older home and a good pick…..I guess that buyer got the best of both worlds and none of the negatives!