real estate

Always make this your first priority when picking a house

by John Rice

Let’s face it, most houses in any price range are all pretty similar. It is rare in Lexington to get something unique in the sense of a feature or design that is different from anything else. We have old houses that mostly have the same character from the time period they were built. We have new houses with their open floor plans. We have updated houses. We have outdated houses. We mostly have houses with average lots. We also have houses with less than average lots. Basically you can pick what part of town you want, what age house you want, whether you have to have it updated or not and just like that, you’ll find about every house that makes your list is pretty darn similar to every other house on your list.

While this isn’t necessarily a bad think, it can make your house harder to sell whenever the market softens……which right now appears will never happen.

Tastes change. Things go out of style. The 90s saw a bread drawer in the corner of every kitchen plus a built in desk. Cherry cabinets were the rage. It won’t be all too long before white shaker cabinets and shiplap will become negatives to buyers rather than something that makes them want the house.

What should you do to make your house be among the best when you go to sell it? The best thing to do is pick a good lot. Why? It never goes out of style and never needs updating.

I recently sold a townhouse in a nice complex on the edge of downtown. The location is great and always will be. The thing is that about half the units are totally identical to each other. The one I sold was an end unit. That means you only share a wall with one neighbor. It also gives you windows on the other side. This unit backed to the houses in a historic neighborhood. You looked out your rear windows and saw trees and grass with the neighboring houses far away. The other units all backed to each other. This unit was on the edge of the complex. It had some greenspace across the street out front. All the others faced other units. There was plenty of guest parking and since it was on the edge of the complex, it is the least likely to be used. This was the best lot in the entire complex.

I told my buyers to picture it is 2008 all over again. They decide to sell when there are 15 other identical units for sale at the same time. Which unit is that one buyer in the market going to pick? Their unit, because the lot will never go out of style and never need updating.

$30k over list and STILL wasn’t the best offer??

by John Rice

Yesterday was sort of a bummer.

It began with a sale falling apart. My buyers had a contingency contract on a house since they needed to sell their old one first. Somebody else came along without a contingency and kicked them out. Time to start all over.

Then late last night, I found out that another buyer did not get a house on which we had submitted an offer. We went $30,000 over the list price, which was close to 10% over list. There were 22 offers on that house. My poor buyers will likely be competing with those other 20 buyers who didn’t get the house on the next new listing in their price range.

I did at least get one of my listings sold for $5000 over the list price.

It’s shaping up to be another crazy year in real estate. It’s a tough market. It’s tough for everybody except the sellers.

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!

My realtor bucket list

by John Rice

Welcome to 2023. I’m not a big New Year’s resolution type of guy, but I got to thinking this morning about things I would like to experience at some point in my career, so here we go!

#1. I would like to have had somebody use me for 10 transactions over my entire career. I’ve had lots of people use me 3-4 times. I’ve only had one couple use me 6 times so I guess they are the most likely to cross this off the list. YOU KNOW WHO YOU ARE…….hahahaha!

#2. I would like to sell a house designed and built by Richard Isenhour. He was a local architect who built many modern houses in Lexington between the 1950s and 1980s. When I was a teenager, I always enjoyed driving past some of his houses. I didn’t know back then who designed and built them, all I knew was that they were cool. Many are in the Lakeshore Drive and Albany Road area. I do know somebody who currently lives in one of his later homes so I might be able to cross this one off the list.

#3. I would love to show a specific modern house on Warrenwood Wynd in Lexington. I discovered this home when I was a teenager who was just driving around looking at cool houses. It has been my favorite house in Lexington ever since.

#4. I would love to show a mid-century modern house off of Tates Creek Road that was previously owned by Kentucky Fried Chicken owner and former Kentucky Governor John Y Brown. Why? Not only is it a cool example of my favorite architectural style, it played a part in a book I was fascinated by called The Bluegrass Conspiracy. It’s actually a tragic tale of corruption and drug trafficing but it was especially fascinating to me because it happened right here in Lexington and involved my childhood karate instructor as well as the father of a girl I knew in high school.

#5. I would like to show a house in Kenwick that my family lived in when I was in high school. I am sure it might be disappointing to see the changes made, but I can tell from the outside that so much is still the same. My dad built the porch rails so solidly that they will probably support the entire house during an earthquake. He also had the garage built. I would love to see my old bedroom.

#6. When I eventually retire many many many years from now, I hope to have a big party where all my clients come see me one last time.