Did you get a good deal?

You bought the only house in the neighborhood that doesn’t back to green space?  Did you get a good deal?

You bought the only house in the neighborhood that doesn’t look like the others?  Did you get a good deal?

You bought the smallest home, the largest home, the one with the strange floor plan, the only 3 bedroom home in a neighborhood full of 4 bedroom homes, the one with a one car garage when every other house has a two car garage, the one with the really steep driveway, the only one that doesn’t have a flat backyard.

Did you get a good deal because you paid less than what the other houses in the neighborhood are worth?

Odds are you didn’t.

One of the toughest things to explain to buyers is the difference between actually getting a good deal and the perception of getting a good deal.  Often the odd ball house will appraise for more than it is worth because appraised value is different than market value.  Market value is what YOU or any buyer will pay for it.  Appraised value is what somebody who isn’t going to buy it thinks it is worth based on a formula of assigned values.

It is easy to think you got a good deal because your sale price was lower than the rest of the neighborhood, but value is so much more than price per square foot.  You often don’t discover you did not get a good deal until many years later when you want to sell.  It is only then when you can judge if you really bought it right.

When I buy a house, or am evaluating one for a client, I first determine what is the norm for the neighborhood.  You want a house to fit in.  You don’t want anything drastically different unless it is something like having more bathrooms than the norm, more garage space than the norm, a bigger or better lot than the norm.  Those are good differences because they are better than the norm.

While I am on this subject, I’ll add that having one big positive does not make up for one big negative.  If you have the biggest, nicest lot in the neighborhood but also have the steepest driveway, most buyer’s walk away thinking “If only the house didn’t have that steep driveway, it would be perfect!”

So when you are out house hunting, look around.  Learn the neighborhood.  Find out what the typical house is like.  Then compare it to the one you are interested in buying.   Or, make it easy on yourself and call somebody who knows that stuff already.

Mistakes first time buyers make

Being a first time buyer is tough.  I mean, you go into it with no experience and have to make one of the biggest decisions you’ve ever made!

When my wife and I were ready to buy our first house, we were clueless.  We had a tight budget like most first time buyers.  We would look at terrible houses.  One backed to a train track.  One was in a high crime area.  We finally found one in Winchester.  We had not thought about what happens once we find one we want.  We had no idea what to do with making an offer, the inspection process, or anything else.

We ended up with a pretty worn out house that the seller had only completed 80% of any renovations he had done.  The house did not have central air conditioning, the heat was a fireplace and a giant floor furnace in the dining room.  Usually those giant floor furnaces are in a central location so the heat can move around the house.  Our’s was in the far front corner.  It would get about 110 degrees in that room.  The next room was 90.  The next room was a very nice 70.  By the time you  got to the opposite rear room, it was 50 degrees unless you started a fire in that room.  Also, two of the floor joists were cut when this furnace was added to the house.  It was a really old house and probably didn’t have heat when it was built in about 1915.

We picked sort of a terrible location.  Turns out there was a shooting two doors down right after we signed a contract.  The seller assured me that the shooter only shoots at people he knows.  For some reason, that made me feel better and I made a mental note to never introduce myself to him to avoid being on the list of somebody he might shoot.

We moved in and we were happy living in our craptastic first home.

The house seemed huge at first.  Then we had two boys.  We began thinking about things like school districts and the boys playing outside alone.

We moved.

So, here are some common things that first time home buyers don’t think about……including one first time buyer who would become “THE LEXpert.”

  • Size-Most first timers are coming out of an apartment.  All houses seem big.  I see a lot of people buy a house barely bigger than their apartment.  It becomes too small once a kid comes along.  Try to buy something you can grow into a bit.
  • Location-Most first timers have to choose between a prettier house in a worse location and an ugly house in a better location.  They usually choose the prettier one.  Location never goes out of style, but trust me, one day we will be sick of having everything white and of shiplap.  When that day comes, you’ve got an outdated house in a bad location.
  • Condition-Most first times don’t know how long a furnace lasts, so when they hear that one is 27 years old, they don’t care.  They also don’t know the cost to replace one.  Same for roofs, windows, etc.  I usually tell all buyers that there are 3 biggies in a house, which are the roof, hvac units and windows.  I don’t usually see all 3 that have recently been replaced, but shooting for 2 of the 3 is good.  You don’t want a house that will have a $5000 expense coming up soon.
  • Price-First timers seem to fall into two categories:  The ones willing to pay the full asking price and the ones who will want to make an 80% of the list price offer.  I always tell all my buyers that the first thing we need to do is figure out what the house is worth.    Then we base an offer on the value of the house and not the asking price.
  • Maintenance-Houses are money pits.  Mother Nature is pretty much trying to ruin your house.  She will win the war, but you can win each battle.  You’ll have repairs for appliances, the furnace/air conditioner, your roof may spring a leak, the water heater may go out.  I’ve got a bunch of rental properties.  I usually spend an average of $2k a year for repairs and maintenance.

My goal with all my buyers, especially first timers, is to find a house in a safe location, that won’t need a ton of repairs in the near future, and that will be easy to sell when they want to move up.

The real reason why sales are down

I’m seeing a lot of news articles with accurate data.  My issue is that I think most are drawing the wrong conclusions.

Most seem to want to make you think the sky is falling in real estate because sales are down.

You know who needs to care about the number of sales?  Appraisers, realtors, mortgage people.  Those of us who make money on each transaction.

As a buyer and/or seller, the number of sales isn’t really important to you.  What you care about is supply and demand-the ratio of buyers to sellers in the market.  If there are 3 buyers in the market and only 2 listings, then we have a seller’s market.

I am seeing a lot of articles stating that sales were down in November of 2018 versus November of 2017.  Of course they were.  It happens every election year.  The market pauses until we see which set of morons we will be stuck with.

The ones that really bug me are the ones that say the affordability crisis will hold the market back.  I think they have it backwards.

Sure, we have an affordability issue.  Many people can’t afford to buy a house with rising prices and interest rates.  All I know is that every house under $200k in this town seems to go very quickly, which allows that seller to buy up to their next house and that seller to buy up to their next house and so on.

Back when the market was terrible, I said that it was like a baseball game where the bases are loaded.  The seller on first base needed a buyer without a contingency to buy their house so they could buy the 2nd base seller’s house, who could buy the 3rd base seller’s house.  The first time buyer needed to hit a home run and push all those sales through.

Back then a buyer had a ton of choices for their next home.  The issue was selling their old one.

Today, no buyer really has a huge selection of houses.

For that reason, I think our current market is the opposite.  There are a ton of first time buyers eager to hit a home run and push all those deals through, but what is happening is that the person on 3rd base doesn’t like home plate and has decided to just stand there until they feel like running.

The buyers with the most selection are the people buying their pinnacle home.  The one they stay in forever until they begin to downsize.  These are mostly Gen Xers.  They are in their 3rd base home, which is probably a fairly large home in the $250-350k range.  They want to move up to the $400-600k range, where there are plenty of houses for sale.

Their only problem is that most are just tarted up versions of their current house.  These buyers aren’t getting a better house, a bigger house, or a bigger yard.  They are just getting prettier finishes.  They find the houses in this price range, well, boring.  And we have a TON of them for sale.

So what do these Gen X buyers do?  They wait for the right house to hit the market.  Since they already have a nice house, they are in no hurry.  Because they aren’t in a hurry, that means the people looking to buy their house are in the same position….all the way down to that first time buyer eager to bid their heart out on their first home.

And, that is where we are today.  Sellers wanting to sell but not finding anything they want to buy.

Why buy a house when you can rent?

Now that the market is becoming balanced, I am seeing a lot of articles predicting doom and gloom for real estate.  I get it, nobody wants to read an article that says “The real estate market is about to become boring because it will neither be a seller’s market nor a buyer’s market”.  They’ve got to go to an extreme to get and keep your attention.  I am seeing lots of articles telling people that their home is not an investment.  I’ve even seen some articles suggesting people continue to rent and get into the stock market instead of buying a home.

Which might be good advice if you were going to live in your car, or with your parents the rest of your life.  Sure, you might come out ahead over the long haul, but the reality is you will have to pay to live somewhere, may as well pay to live in your own house.

Why did I want to buy my first house as soon as I could save the down payment?

I used to mow lawns for a lot of elderly people.  I would always enjoy them telling me what they paid for their houses 30-40 years ago and what their mortgage payment was.  I had one little old lady who told me her mortgage was $163 a month and some months it was hard to pay it.

When it was new, her house might have rented for about the same amount.  Do you think rent prices have gone up since the mid 1960s?  Meanwhile, that little old lady paid $163 a month until the house was paid off. (Okay, I am sure her property taxes and insurance went up, but not by that much.)  And when she made her last $163 payment, do you know what she did the next month?  Nothing.  There were no more payments to make (Okay again, she would still have taxes and insurance to pay but both of those expenses would be FAR less than what the house would rent for at that time.)

Let’s take a look at what happens when this little old lady moves out of her house.  She pays a real estate commission and gets to keep the rest because there is no mortgage.

What if she had rented a house that whole time and moved?  She would have paid off the house for the landlord and had nothing to show for it.

I think owning your home is the best decision you can make.

Some of my favorite marketing remarks for listings

One of my favorite things about getting a new listing is writing the marketing remarks.

My sellers often ask me what I am going to say about their house.  I tell them I don’t know yet.  What I like to do is sit down with a cup of coffee and look through all the pictures until something pops in my mind.

I like to use the words in the remarks to tell a buyer what they can’t see in pictures.  I also like to say something that will be memorable.  I know I’ve done a good job when all my realtor friends will text or call me saying how much they enjoyed reading them.

Here are a few of my favorites:

 

  1. “Get out your MUST HAVE list and let’s compare. Do you have these items on it: 1/4 acre level lot that is fully fenced & private? Hardwood floors? Replacement windows? A nicely updated bath? Stainless appliances? Fireplace? Good so far???? Come see it in person. Don’t just peek through the windows. You will love the shape and vibe of this house. The location is amazing.”

runnymede

 

2.  “DO THE OTHER HOUSES you are looking at have a wooded area & a lake behind them? Didn’t think so. Besides the wooded+water view, this house has numerous unique features: *HUGE finished room in the basement plus a full bath down there.  *HUGE storage room in the basement that walks out to driveway.  *End of Cul-de-Sac with nothing but Mother Nature behind you. Come check it out!”

harbor

 

3.  “Like Top 5 lists? The first 5 pictures tell you everything you need to know about what makes this house sooooo special. The rest are there just to make you drool 😉 Classical Character meets a whole house high end reno here….yeah, you CAN have it all, IF somebody else doesn’t beat you to it.”

firebrook

 

4. “Old. New. Modern. Distressed. Pinterest. IKEA. Style. Functional. Character. Unique. Amazing. These are all words to describe what the seller’s affectionately call their Frankenhouse. While you will be amazed at all the detail they have put into this house to make it look so cool, I want you to be sure to notice that you have 3 full bathrooms, an open concept eat in kitchen/family room, a large fully fenced backyard with two decks, a shed and a root cellar. Oh, and the HVAC was all replaced two years ago and the roof is 10 years old….so what you have here is the unique old house you have fantasied about WITHOUT the reality of all the expenses typical to an older house. They have got it all ready for the next caretaker. Could it be you?”

franken

 

5.  “If this house could talk, it would say: I’m a Mid-Century charmer in a fantastic neighborhood. I’ve got lots of hardwood floors, more than one bathroom, and have had updates but still kept my original character. Some people judge me because I back to a shopping center, but you can’t really tell since my large and level backyard has sooooo many mature trees. I mean, just look at the pictures? You have to look really close to even notice. My last people that lived here liked not having another house right behind them. They said there wasn’t any noise and it sure beat seeing a neighbor or hearing a barking dog…………..Since this humble houses doesn’t like to brag, you should know that it is in the Beaumont Middle and Dunbar High School districts.”

traveller

 

6.  “Jessica & Duane looked at many house before picking this one…..and if you’ll take a look at the pictures you’ll see why! For starters, this simply has to be the BEST lot in the whole neighborhood. The house is at the end of a cul-de-sac that is in the very corner of the neighborhood and backs to FARMLAND…..has a bunch of space between the houses too. Step inside, and you will notice that this house feels much more expensive than it is. Sure, it has the open floor plan, fireplace, upgraded laminate floors, separate tub/shower & tall ceilings that everybody wants, but look close and you’ll notice things like an office nook, crown molding just about everywhere, beadboard on the back of the kitchen island, a multi-level deck, cabinets in the laundry area, some floored storage space in the attic, a coated garage floor……well, you get the drift here. Come see it for yourself, but open your eyes so you don’t miss the other cool details of this home!”

crockett

 

7.  “I honestly am challenged to describe this place in less than the 1000 characters I have. I mean, the setting is fantastic. You are on top of a ridge, but don’t have to drive up a steep road nor driveway to get here. Fantastic views & very private. Then there is the house. It has been totally remodeled with attention to design, detail and character. Look at the pictures? This place could be in a magazine!! When you come see this place, walk around it several times to take it all in. Want to be a farmer? A vineyard, orchard trees, chicken house, pond & barn are ready for you. 30 minutes to Lexington & 10 minutes to Nicholasville-can it be any more ideal?? (there is more but I am running out of room.)”

taylor

 

8.  “I don’t often have 61 pictures of a house……but then again, there aren’t many houses like this!! Some thoughts that popped into my head as I toured it today were: Craftsmanship, attention to detail, LOTS of crown molding & trim work, farmhouse sink, awesome cooktop hood, lots of hardwood, wrap around porch, custom built, elegant while being inviting, the best breakfast room I have EVER seen, natural light, I can’t believe it has a great room AND an upstairs family lounge AND a basement family room, Pottery Barn, Southern Living, STORAGE, an unfinished room in the basement that would be a perfect Theater Room. Then as I left, I noticed it is across from dedicated Green space. Before you check out those 61 pictures, let me point out a few other things: The main level bedroom is being used as an office. It works great either way. The basement bedroom has French doors & could be anything you want….Lots to love. Worth a visit!!”

Vanznat

 

9.  4 ooooh 5 ooooh 2.The best zip code in all of Lexington….and this house is in THE most awesome location with access to The Lansdowne Shoppes, The Signature Club, Chevy Chase, Downtown, UK, The Arboretum, Southland Drive, Fayette Mall and The Summit. Map it. This place is right in the middle of all that. You also get mature trees and are in the Glendover Elementary/Morton Middle/Henry Clay High district. But what about this house? Well, to begin with it sits on nearly a 1/3 acre corner lot that offers a very private backyard. It’s got hardwood, tile and a nice mix of updating and all the original charm that you want in a mid century home. My favorite thing about this place is the floor plan. All the rooms are big and bright and flow well. The kitchen is open to the family room just like in a newer house. When you come check it out, be sure to spend a few minutes sitting at the kitchen island. It’s a great gathering space.”

_SEM6025

 

10.  Let’s call this the TRIFECTA house: You get greenspace, a water view and move in ready condition. You also get a lot of natural light, an open floor plan, a walking trail, are close to Hamburg as well as two of Lexington’s newest schools, Garrett Morgan Elementary and Frederick Douglass High. A little extra icing on an already good cake is that there is more space than usual between you and one of your neighbors, the driveway is flat and it is going to be the cleanest most move in ready house you have ever seen. (Even the lawn is in immaculate shape!!)”

3276 Sweet Clover - 013