real estate listings

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.

Best way to get top dollar

by John Rice

It’s sort of a given that almost any house is going to get multiple offers, but how do you get buyers to do even better than the offer they submitted?

Common these days is the quickly becoming old school way of having a deadline for submitting offers. That makes it easy for the realtor, but doesn’t really give the buyers much motivation to get an amazing offer in as quickly as possible.

What I like to do is have the deadline, but add that the seller reserves the right to accept their ideal offer at any point prior to that.

This does a few things: 1. It gets you an offer in hand fast so that when realtors ask “Do you have an offer yet?” you can say yes! 2. It usually gets at least one buyer thinking they might get the house if they throw out a crazy high offer. Sometimes this works if the offer is higher than the seller and I expected or if it is that high and cash. 3. It also helps you if you don’t get more than one offer at all…..but more on that in a minute.

If I have more than 3 offers, I will let the realtors who sent the offers know I have several offers and I will highlight some of the best terms. You have to have 3 or more offers to do this though since each realtor knows what their offer was. I might say “I have 3 offers, all over list price, 2 of them waived the home inspection, etc. This lets realtors know that somebody has a better term than they did on their offer. I usually can get realtors to revise their offer with more competitive terms.

From here it is mostly waiting for the deadline.

But what do you do if you only have one offer and it isn’t that good? Well, a few hours before the deadline, you call up the realtor with the only offer. You let them know that you are willing to cancel the remaining showings and not wait for the deadline if they agree to whatever counter your seller wants to make. I have NEVER had a realtor not take me up on this. If you wait until the deadline and then try to counter, you have lost all leverage because they know they had your only offer. There has to be the fear that one of those remaining showings could be the buyer who outbids them.

So that’s it. It has never failed me and unless every realtor in town reads this, it will be our little secret.

How to make a good choice in a frenzied market

by John Rice

It used to be real estate was all about “Location, location, location.”

Today real estate seems to be more about “Finishes, finishes,finishes.”

This disturbs me. Why? Because one day there will be enough houses for sale that a buyer has a choice on location. Right now, with so few houses for sale, buyers are considering ANY house in their price range. When you only have one or two choices, you can’t afford to be picky.

Something else that disturbs me are all the houses that have been extensively renovated and are selling for twice what a similar non-renovated house is worth in the same neighborhood.

I am not sure why this is but I suspect it has to do with the speed of the market. Nobody has time to do a market analysis and see what the house is worth compared to other recent sales or see if it is overimproved for the neighborhood

This is what I tell my buyers:

  1. Location is still important. Any house can be updated but you can’t easily move a house to a better location.
  2. Only buy at the top of the neighborhood’s price range if there are several other homes equal in finishes and value. You do not want that $400k house that looks like the reveal at the end of an HGTV show and is surrounded by $200k houses. In a balanced market, or even worse in a buyer’s market, potential buyers will love your house but will not buy it. They will be in a $400k price range and expecting a $400k neighborhood. They won’t like the cheaper houses around it. Remember when you buy a house, you are also buying stock in the neighborhood.
  3. Don’t compromise on the lot. Right now nobody cares. Buyers are just excited about any house in their price range. You don’t want the house with the tiniest or oddly shaped lot in the neighborhood. Remember neighborhoods are about conformity……fitting in among the rest of the houses. It’s okay to have the biggest or best lot in the neighborhood of course, but if most of the lots in the neighborhood are flat, you don’t want one that isn’t. If most are large, you don’t want the smallest one. Avoid driveways that are pretty steep. It is better to have a lot where the backyard slopes downhill away the house verses sloping uphill.

Basically, the best thing to remember as you frantically are trying to decide how much over the asking price you want to go is that one day you will be selling the house. The market may not be as tight. You won’t know whether the house you picked was a good decision or a bad one until it is your time to sell it.

So, always go into a purchase being mindful of your exit plan.

Why Zillow is selling homes for less than they paid

by John Rice

This may not be news to you, but Zillow got into the business of flipping homes in several larger metro areas. They recently stopped buying houses and are selling many of their homes for less than they paid for them.

If you read headlines or even worse, get on YouTube, you could conclude that the market is about to crash and Zillow knows it.

I don’t think that is why they are selling their homes for less than they paid for most of them.

I think they overpaid for them in the first place.

Zillow’s paper thin profit margins on these flipped homes was based on their data. I have always said you can’t argue with data. Data is always correct all the time. The conclusions drawn from data is not always correct though.

Their data told them what a house should be worth and they paid that for it. While I don’t know exactly what data they use, I imagine it is very similar to the data an appraiser would use such as general condition, square footage, features, etc. Once you have all that, you look at what houses have sold within a radius or within the same neighborhood, make adjustments for hard data differences and then whatever number is at the end of the equation is their Zestimate of value.

What Artificial Intelligence and computer algorithms cannot tell you though is what a buyer will like or dislike about a house. It cannot tell you that buyers tend to not like a backyard that slopes uphill. That they usually don’t like a steep driveway. That there are two Ball Home floor plans all over the Bluegrass that are same size and one of them always sells for more money. That there can be a huge value difference between two identical floor plans within the same neighborhood just due to where it is within the neighborhood. All of these things are subjective.

Zillow has been telling the public that they don’t need a Realtor any more. All you need is them. Sounds to me like Zillow could have used the local expertise that only an experienced realtor can provide.

Here’s why you’re not winning in multiple offers

by John Rice

Some offers are better than others. Some people think it is all about who makes the highest offer but there are other things to take into consideration.

Here is the hierarchy of offers:

  1. Cash offer.
  2. Conventional loan with large down payment.
  3. Conventional loan with smaller down payment.
  4. FHA/VA loans. (Because the appraiser for these loan types does a minor assessment of the house. If the condition does not meet minimum standards set out for each loan type, the Seller HAS to do the repairs in order for the Buyer to get their loan.)
  5. Any loan with down payment assistance where there are two loans that have to go through two different underwriting guidelines.

Then there is the offer amount:

  1. Offer over list price.
  2. Offer list price.
  3. Offer less than list price.

Then there is the home inspection. Three choices there:

  1. No home inspection at all.
  2. Buyer does home inspection but won’t ask for repairs. Will either accept the house or walk away.
  3. Buyer wants to negotiate repairs with Seller.

Then there is the appriasal:

  1. Buyer will cover any possible gap between sale price and appraised value in cash.
  2. Buyer won’t cover any possible gap between sale price and appraised value in cash.

Then there is the Buyer’s lender:

  1. Buyer will use a local lender that every realtor knows does a good job.
  2. Buyer will use a non-local mortgage company.
  3. Buyer will use a local lender that every realtor knows preapproves any buyer with a pulse.
  4. Buyer will use a bank that begins with the letter C that everybody knows will be difficult to work with and that it is unlikely to close on time.

Then there is the closing date and when the buyer can move in the house:

  1. Buyer’s realtor found out when Sellers want to close and put that date on the offer.
  2. Buyer’s realtor doesn’t know to ask this and that it can really help make their client’s offer more attractive.

Then there are contingencies:

  1. Buyer has no contingencies.
  2. Buyer needs to close their old house first in order to buy the new one.
  3. Buyer needs to sell their old house first in order to buy the new one, meaning it currently may not be on the market and definitely doesn’t have a contract on it.

Then there are closing costs:

  1. Buyer will pay their own closing costs.
  2. Buyer needs Seller to pay some of their closing costs.
  3. Buyer needs Seller to pay all of their closing costs.

What are your numbers? If you are a 1 in all of these, go out and make your offer. You will probably get the house. If you are a low number in any of these, best of luck. If you are the bottom of any or all of these, then you are wasting your time. Sorry, but you are. You are not going to get a house making an offer less than list price with an FHA loan, wanting to negotiate repairs with the Seller and needing to close or sell your old house.

Now that you know all the things a listing realtor is thinking about when they process all the offers, do what you can to make your offer the best it can possibly be. If you are doing a conventional loan and think you are going up against other cash offers, maybe waive the home inspection and offer to let the seller stay in the house briefly after the closing? If you have to close on your old house to buy, make your offer the highest one they get (realize too that moving twice costs money and it might be cheaper to pay the most for a house verses paying to move twice, live somewhere temporarily and then look for another house which will have gone up in value while you wait.)

When I moved in 2012, I was up against 4 other offers. Two of them were cash. That was unheard of back then but common today. I knew I couldn’t compete with cash so I went a little over the list price, waived the home inspection and offered to let the Sellers rent back from me until they found their new house. This was appealing to them since they had not found their new house yet.