My realtor bucket list

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.

What happens when first time buyers can’t afford to buy?

I had lunch with a good friend who is also a realtor earlier this week. He started a discussion about statistics for our local area. That got me doing some digging on my own.

I saw something interesting. Sort of scary really.

Now, I am comparing October of 2021 to October of 2022 here. October of 2021 was a crazy time when about every house was selling immediately and often for well over the list price.

Want to guess which price range is seeing the biggest decline in both closed and pending sales since rates rapidly went up? The sub $200k price point. Want to know which price range saw the least decline? Over $500k.

Pretty much all the stats show the first time homebuyer price range hit the hardest. You would think during a period of high interest rates, the more expensive houses would struggle to sell, wouldn’t you? From what I have read about the last time we dealt with inflation in the early 1980s, it was very hard to sell an expensive house back then. That’s why you don’t see many big, nice houses that were built during that time but you see tons of smaller starter homes.

We need these first time buyers. They are the ones that push the rest of the market since they have nothing to sell before they can buy. Think of it like a baseball game where the bases are loaded. The person on 1st base can’t move to 2nd base until the batter swings and hits the ball. The person on 3rd and 4th base are also stuck there until that batter hits the ball. The first time homebuyer is who we rely on to hit a home run since every other buyer is also a seller who has to breakup with their old house in order to move to their next one.

Historically, it has always been easier to sell a more affordable home than to sell a more expensive one. Statistically, it is easier to sell a more expensive house today than a more affordable one.

Talk about luck

I don’t know about you, but I am sick and tired of the media scaring us with doom and gloom headlines about the real estate market. It’s time for some warm and fuzzy vibes to read, so here are a few of my favorite real estate stories spanning my 17 year career.

The oldest story happened back when the market wasn’t so good. I had a young couple who had used me to buy their first house in Masterson Station. Well, it was time to move up. They found an incredible house in Copperfield that had been on the market for a while. It was a relo sale, which is when the seller has been transferred and a relocation company is involved. When the house doesn’t sell by a certain time, the relocation company buys the house and they become the seller. We wrote an offer contingent on selling their old house. It was accepted. We then sell their old house. Everything is good. Until it isn’t.

The sale of their old house fell apart…..while they were on a cruise. Yep, I had to call and interrupt their vacation to tell them that not only are they not selling their old house, they are also going to now lose their new house. It was one of the toughest calls I’ve had to make.

They came home. We put their house back on the market. We sell it again after a little while. Guess what? The Copperfield house is still on the market. Only now the relocation company has lowered the price AND replaced some of the carpet. In the end, they got their house for less money than they were paying the first time and got some new carpet too.

Years later, after moving out of state and returning, this same couple told me what they wanted in their next home. They are really good at remodeling so a fixer upper would be a plus if one was available. They had narrowed it down to two neighborhoods. The husband told me he wanted a spot to park a camper or boat. About that same time, a seller in one of those two neighborhoods randomly called me to list their house. The seller was the original owner. The house was in good shape other than some deferred maintenance but was a bit dated. As I saw the house for the first time, I remember thinking it would be a good fit to my buyers. I KNEW it was their home when I saw the extra concrete going from the driveway to the backyard where the seller told me he used to park his camper!

A couple years after this, another client sent her brother to me to talk about buying a first home for he and his wife. As he was describing what they wanted in a house, I told him that I was about to list one just down the street from his sister and brother in law as soon as the seller’s new house was done. Sure enough, they bought it and started their family there. A couple of years later, they asked me to work with them to find an entry level investment property. I had a friend who had been talking about selling a townhouse I had sold him a few years earlier and sure enough, he was willing to part with it.

Some time later, another seller was referred to me by some clients and friends. I met with her at the house she had lived in most of her life since it was built by her parents. While I was waiting on this seller to do a few things to get the house ready, another client took me out for coffee and told me he was looking for a house. His big requirement was enough space to do his woodworking. I told him about the house I was getting ready to list since it had a huge detached garage that, if I remember right, already had enough electrical service for his heavy duty equipment. He bought it.

I used to think these people and many others I have worked with were just incredibly lucky to have exactly what they wanted drop in their laps. Now I realize I am the lucky one for getting to be the hands that drop it in their laps.

Now, isn’t this better than reading about higher interest rates? Don’t worry. They will come down. The real estate market will soldier on. How do I know? Because it always has and that is because everybody has a dream about what they want in their next house, just like these friends and clients of mine.

The #1 thing to do when picking a house

Don’t settle. There, I said it.

As the market becomes somewhat more balanced, buyers now have choices. A year ago, the choice was to buy any house available or not buy a house at all. Buyers said things like “I don’t really love it but I don’t want to loose it. How much over asking price should we go to get it?” Today’s buyer has the choice between several houses in their price range.

There was a lot of settling going on during the past year or two. I get it. You wanted to move and on Friday there were 15 new listings to be greeted by 75 buyers who were just like you.

During this time, I would always tell my clients what I thought of each house. Most of the time I would say something like “In a softer market, this house will be hard to sell. I would wait for a better one if I were you.” Most of them did.

Here are some big things to not settle on when picking a house:

  1. The location. As more houses come on the market, the houses in the preferred neighborhoods will not only sell faster, they will always hold their value better. It’s worth waiting for a preferred neighborhood, part of town, school district, etc because one day YOU will be the seller and you want to make that as profitable and easy on yourself as you can.
  2. The lot. It is easier to sell a terrible house on an amazing lot than it is to sell an amazing house on a terrible lot…..in a balanced market. In a true Buyer’s Market this is even a bigger deal. That amazing house on a terrible lot will one day be outdated and be a subpar house on a subpar lot. A good lot never goes out of style and never needs updating.
  3. Floor plan. If there is something odd about a house, chances are any buyer is going to notice it too. Don’t buy the “If Only” house. That is what I call a house where you really like it but there are one or more major flaws and you walk out the door saying “If only that 3rd bedroom was larger” or “If only that kitchen wasn’t so tiny.”

Good time to buy rental property?

I get asked this quite a bit. Some people want a long term rental and some are interested in airbnb-ing a property.

Here is the one single thing to know when considering any type of rental: There is no good or bad time. The numbers work or they don’t. If the numbers don’t work it, they don’t work even if it is a Buyer’s Market. If the numbers work, then you buy regardless of what the market is like.

What do I mean by this? Long story short, the house has to support itself without you having to throw in your own money every month. That is called cash flow. Positive cash flow means the house supports itself. It covers your mortgage, taxes, property insurance, maintenance and has at least a little left over for a profit. Negative cash flow is when the expenses exceed the rent.

Now, what about Long Term Rental verses Short Term Rental? I personally think Short Term Rentals are risky right now. I know, I know…..Many of you have made good money with your Airbnbs the past couple of years. I do not dispute that. My concern is that this trendy investment option will get oversaturated AND slow down drastically during tougher economic times. It is much more volatile than long term rentals. If you want a shot at huge returns and can stomach volatility, it’s easier to invest in stocks. So what I tell people when they ask me if they should get an Airbnb is to do it only IF they want to invest in real estate in general. If you do, then you can switch between short and long term rental as demand swings. Move your furniture out and you’ve got a long term rental. Best of both worlds for you.