real estate

What to expect from me for the next 17 years

by John Rice

It feels so strange to think about how real estate has changed over the course of my 17 year career.

Back when I was a newbie, agents hung around the office. We had like 14 phone numbers on our cards and one of them was a fax number. We dressed up….well, others did. I wore shorts year round back then. We licked the back of stamps and mailed people silly stuff like calendars. I did it once but thought it was pointless. All I’ve ever done is Christmas cards.

Then the PDF came along and changed it all. It was so much easier than a fax. There was nothing and I mean NOTHING worse than getting a fax from somebody that was illegible after several rounds of counter offers. Then electronic signature programs made it even better.

The biggest change has been to everything being online and consumer driven. When I got into this, many old school realtors back then didn’t realize that being online meant they were dealing with the public. The MLS had mostly been just for realtors. Before computers, they had books that came out once a week with listings. Since space was limited, you got stuff like “Cute 3/2 on unfin, dining room chandelier does not convey. Lockbox on backdoor.” A lot of realtors were putting that in the marketing remarks still. Also, there was one tiny black and white picture of the outside.

While so much has changed, some things remain the same. At the core, this business is really about people more than about sales or houses. It’s about helping and advising people on something that most people think they know a lot about but don’t really. I often describe my job as “Talking people into good decisions and talking them out of bad ones.”

I’ve probably got at least another 17 years left of my career. The trendy things (like the short lived QR codes) will come and go since the next generation always wants to reinvent the wheel, but I am sure that the core of this business will remain the same. I will be talking people into making good decisions and talking them out of bad ones and I will still be wearing shorts (at least on warm days).

Are we in 2005? Yes and No

by John Rice

17 years. That’s how long I’ve been in real estate. Man, have I seen a lot!

When I got into this in the spring of 2005, here is what it was like:

  1. No realtor wanted to work with buyers.

2. It took no real skill to list a house and sell it since they were selling so fast.

3. We all thought the market would be like this forever.

4. Affordability was an issue and people were considering moving outside of Lexington to find cheaper housing……until gas shot up to $3 a gallon.

Here we are in 2022 and all that is still the same at the moment:

  1. No realtor wants to work with buyers now since all you do is write offer after offer on every new listing in any buyer’s price range.
  2. It takes even less skill to list and sell a house today since you don’t even need to know what the house is worth. Today you could list the house at 9:AM for $1 and by 5:PM the same day you’ve got 5 offers all at market value. The moment being a realtor gets a little tough, you will see 25% of all realtors get out of the business……starting with the ones who suck at being a realtor but are brilliant at self promotion.
  3. We still think it will stay this way forever. It won’t. While I think the market will stay strong short of a major economic catastrophe, it will slow down. Houses still sold in the late 70s and early 80s when interest rates were the highest they have ever been. Don’t think for a minute that 5% or even 7% will kill the market. Don’t think that inflation will kill it either. Wages will rise. They have in every inflationary time. Right now they haven’t caught up to inflation but they will. If you made $1600 a month in the 80s and your mortgage was $400, that is the same percentage as if you make $6400 a month now and have a mortgage of $1600.
  4. Affordability is still an issue. Used to be finding a first home under $100k was hard. Now it is hard to find anything decent for less than $200k. Many people that work in Lexington have been shopping in surrounding towns for cheaper prices. I have always discouraged that for a couple of reasons. I did the same in the late 90s with my first house. I was driving back and forth between Lexington and Winchester all the time and hated it. What I saved on the mortgage I spent on gas, tires and maintenance for my car. I encourage people to live where their life is. If work and your social life are in Lexington, well, you should live in Lexington. Also, I remembered what gas hitting $3 a gallon did to the market back then. It killed the first time buyers interest in buying outside of Lexington. Now $5 a gallon seems to be the magic price that keep people from doing this.

Appraised value verses Market value

by John Rice

Seems no matter what the market is, I’m explaining the difference between Appraised Value and Market Value.

Many people think whatever the appraiser says their house is worth, is what it is worth. The real value is whatever number a seller and a ready, willing and able buyer agree upon. Appraisers study past buyer/seller behavior and give an opinion of current value.

When the market was bad, I was always explaining how appraised value was usually MORE than market value. It was more like the house’s potential. In this crazy seller’s market, I am sometimes explaining how appraised value is LESS than the market value. A lot of the reason is because market value happens in real time. It is right now. Appraised value is saying what the value should be based on the past.

Just this week, a house I sold for $429k appraised for $417k. As I read over the appraisal report, it became clear to me why it did not appraise for the full sale price. Two of the three comparable sales were 6 months old. In an appreciating market, you must make a value adjustment for this. The appraiser gave the two houses 2 and 2.4% appreciation. We have seen much more appreciation in values than that since last October.

In response, I was able to obtain two other offers the listing realtor got. One was $421k and the other was $427,500. If you average those two offers plus the winning offer of $429k made by my buyer, that is an average of $425k.

The appraiser refused to adjust his opinion of value. This is how appraised value and market value differ. Market value is the 3 ready, willing and able buyers who desperately wanted to purchase this home all agreeing the value is between $421k and $429k. Appraised value, in the case of this home, is some stubborn dude with a big ego who isn’t actually in the market to buy anything cutting and pasting a lot of numbers on a sheet of paper and charging $425 for his outdated opinion.

My response to this always disappoints people

by John Rice

As a realtor, you wouldn’t be surprised that people are always asking me the best way to add value to their homes.

What might surprise you is my response.

There are no improvements or upgrades that get you more than a 100% return. All give pennies on the dollar. I know, you are thinking “Then how do people who flip houses make money?” They make money from buying the house below market value. You already own your house so spending money to sell it and getting back less than you spent is just wasting time. Usually you want to do the least you can do, and the best thing is to address the worst aspects of your home before selling it. If you have worn out carpet, replace it. If you have a rusting light fixture in a bathroom, replace it…..but what is the best bang for the buck in getting top dollar for your house when you are selling it?

The absolute best bang for your buck has always been and will always be a fresh coat of paint.

Fresh paint makes any room automatically feel better and cleaner. Fresh paint can be done in whatever the trendy color is at the moment, which gives your home an updated vibe. Fresh paint can be used to unify all the rooms in your house. Buyers will walk around every room in your home within their 30 minute viewing. Having the same color in all the rooms is soothing and calming. Buyers love that. In a vacant house, all you see in most rooms are 4 walls, a ceiling, a light fixture and the floor. Having 80% of all there is to see be new makes a huge impact.

So there you go! If you are getting ready to sell your home and want to know the wisest way to spend your money in preparation, hit the paint isle at the hardware store.

What’s it really like living in the country?

by John Rice

I’ve been in the sticks for almost a year now. I get asked this a lot. For the most part, it has been everything I hoped. I enjoy it. I did have some concerns before we moved, and of course there are a few things I had not thought about.

My biggest concern was getting stuck out here in the winter. I don’t know why, but for some reason ice on my street in the country bothered me more than ice on the street at my old house in a neighborhood. It was about two miles inside the neighborhood at my old house before I got to well maintained road. Well, I live about the same distance from a major state highway. Guess what? Two miles of ice is still two miles regardless of where you live. The good thing for me is that my road gets plowed and salted faster than my old neighborhood road did. My next door neighbor out here is the police chief, so I guess they want him to be able to get out easily if there is an emergency.

I was worried about crime. That is probably because having grown up in neighborhoods, the thought of nobody being close by was scary. That’s been a non-issue. Only your neighbors drive past your house unless you live on a main road and there seems to be a real strong sense of respecting the property of others out here. And for those that aren’t so respectful, they assume everybody has a gun so they don’t really want to risk getting shot at for your stuff.

There are really only two things that I didn’t think about. Neither are big deals thankfully.

The first is that most people in the country keep to themselves. My neighbors will wave to me. Several stopped and introduced themselves to me when I was new. But most of the time it is just like a neighborhood where you mostly just smile and wave. I guess small talk is harder to do at the mailbox when your houses are so far apart.

The other thing, and this one is what bothers me the most, is that there are no storm sewers. In a neighborhood, the rain water runs neatly down the curb into the storm sewer and disappears. Out in the country, the water runs down a hill, crosses the road leaving mud and gravel for daaaaaaaaays after it quits raining. This probably wouldn’t bother me if I wasn’t trying to keep my cars clean. As soon as it all dries up, here comes another rain to do it all again.

And that’s it. Other than these few things, it really isn’t that much different than I expected. Sure, I have to drive longer to get anywhere and I have a lot more grass to mow. That is totally worth it to me to get the peace, quiet, calmness and beauty that county life offers.

I love showing rural properties. Nothing like a fun drive in the country and then getting to see a house and some land. Here are the counties I work in for both rural and neighborhood properties: Fayette, Scott, Jessamine, Clark, Madison, Woodford, Bourbon, Montgomery, Franklin and Garrard Counties.