resale value

Good deals in a seller’s market? (Depends on the seller)

by John Rice

The market isn’t hot enough for buyers to accept two things:

  1.  A nasty house.
  2. An over ambitious asking price.

If your house is nasty, no buyer is going to be able to imagine themselves in it.  I’m talking if it is dirty, messy, desperately needs paint or stinks.   Trust me, buyers just want to exit a house like this.  Even if you slashed the price in half, I bet most of the buyers would still say no.

I recently sold a nasty house.  It had been on the market for quite some time.  It was in a desirable neighborhood and actually priced right.  It has more updates than most in this nice neighborhood.  Problem?  It smells like dogs and has one of the nastiest bathrooms I have ever seen in a house for sale.  It was hard to get excited about the expensive tile in the remodeled bathroom when there was urine and hair all over the toilet.  Sorry to be so graphic…..I have a picture but decided not to include it, so I am holding back a little for those with weak stomachs.

My buyer is one of the rare people who can see past that and is getting a super nice house for a really fair price.  Added bonus:  It was one of the few times recently that I haven’t been in multiple offers with a buyer.  The house was so nasty that my client called me after the home inspection asking if I thought the seller was going to clean it when they moved out.  He just met with a home inspector and heard everything wrong with the house and the thing that was on his mind the most was how dirty it was.

Moving on, the next item is the overly ambitious list price.  A client bought a house for $400k that had been listed originally at $445k.  Nice house, just not a $445k house.  Maybe $410-415k based on the comps.  LOL, the way the market is going, it might be worth that now!  Anyway, it was reduced, reduced and reduced again.  By the time 170+ days had passed, it wasn’t on anybody’s radar.  Nobody cared?  Buyers today are focused on new listings.  If a house doesn’t catch their attention on Day 1, few will go back and reconsider a house.  They’d rather wait for tomorrow’s new listings.

My client actually passed on this house two times, then came back to it.  They were worried because it had not sold.  In today’s market, 6 months is an eternity of buyer’s saying “No” to a house.  Ironically, a house two doors down just sold for $405k the first day on the market.  It was 1200 square feet smaller and had a marginally more updated master bathroom.

While it is one of the hottest seller’s market ever, not all houses are selling immediately in multiple offers.  I always encourage buyers to seek out these good houses that are being held back by the sellers.  You can avoid multiple offers and get a good deal, even in a seller’s market.  My buyer with the nasty house might pay $400 to have it professionally cleaned but saved much more than that.  My buyer who made a reasonable offer on an overpriced listing didn’t have to immediately make a decision to buy it since there were no other buyer’s around.  It felt like a buyer’s market to them.

Neighborhoods that benefited the most from school district changes

by John Rice

I get a lot of questions about school districts and property values.  Most of the time there is nothing to worry about unless your neighborhood goes from having average/above average schools to getting ones that are worse.    A lateral move doesn’t really matter.  The best situation is when you have poorer performing schools and get better ones….which is the topic of today’s blog post.

Here are the top 3 winners in my opinion.  The biggest changes in the district boundaries were in the Hamburg/40509 area, so these are all out that way:

3.  The Home Place/Gleneagles.  The cat got out of the bag early on this one.  The school district bought land in this area and everybody knew that these 2 neighborhoods would go to the new school.  Suddenly it became a more desirable place to buy and prices went up.

2.  Greenbrier.  Several years ago I would get the same feedback from my buyers after showing houses in this neighborhood.  They would say “I love the neighborhood and all the space out here, but I don’t have $100k to renovate this house AND pay for private school.”  So, they wouldn’t buy it.  Now that “The Brier” is getting the new elementary and new high school, houses are selling and being renovated.

1.  Chilesburg.  Use to be only the first phase of that neighborhood went to Athens-Chilesburg Elementary (A.C.E.).  It never really made any sense since the school was right in the middle of the neighborhood.  The neighborhood got the school and prices have really gone up.  Use to be if you were in the mid $200k range and wanted that school, Andover Hills was your only option.  There use to be a big gap between similar sized houses in these two neighborhoods.  Not any more.  Chilesburg can pull the same money per sqaure foot as Andover Hills can now.  A 2500 square foot 4 bedroom house in Chilesburg use to be about $190-225k several years ago.  Practically the same floor plan in Andover Hills was getting $225-245k.  Now both are in the $245-255k range.

Worried about resale value?

by John Rice
I sold a house to a very cool family I have been working with for a while.  We’ve looked at a lot of houses and I have become pretty close to them.  We always have a great time looking at houses and talking about our favorite Lexington restaurants.
But this post isn’t really about all that.  I just wanted to give you the background.
This family has owned several houses before.  This is the first one using me as their realtor.  The last two they ended up selling for less than they paid for them.  Granted, that happened to a lot of people between about 2007 and 2012.  They are understandably nervous about it happening again.
While I don’t have a crystal ball to predict what will happen in the future, I told them I thought they would be in good shape with this house.  Why?  Because the value of their new house is right smack in the middle of the range for the neighborhood.  That is always a safe place to be.
This house is in Hartland.  The range in Hartland is between the low $200s all the way up to over a million.  Most fall in the low $300s to mid $400s.  When you think of Hartland, it is the houses in this range that pop in your head more so than the ones under $300k or over $500k.  Which houses in this (or any other neighborhood) do you think would be the hardest to sell?  It is the cheapest and most expensive ones.  See, somebody looking at the low $200k house might be thinking that they could go to a slightly less fancy neighborhood and get a better house for the same money.  The buyer in the high range for the neighborhood is thinking they might want to be in a neighborhood with more houses in their price range.

Any neighborhood has a range of values.  Most don’t have as wide of a range as ones like Hartland, Chevy Chase, Ashland Park, Greenbrier, etc.  Even if you are shopping in a neighborhood with a narrower range of values, you are usually best to stay away from both the lowest and highest price houses.

So I think my special family is going be just fine with the house they have picked!

New roof add value to your house?

by John Rice

I just don’t buy it.
I read an article put out by the National Association of Realtors and the National Association of the Remodeling Industry.  It said putting on a new roof is the biggest single item a seller can do to get the highest return. They said it increased the value of a house by 105%. Get this, remodeling or updating your kitchen only brings back about 67% in added value.
I laughed so hard I snorted a little.
About 50% of my work is with buyers. I sell a lot of houses. I have been doing for over 10 years. My experience in and around Lexington Ky is that very few buyers even notice the age or condition of the roof. The HVAC too for that matter. Most buyers care more about the appearance of the house than anything…..assuming they were okay with the location to have even considered viewing the house.  Most don’t think about the roof (or windows or HVAC or water heater) until the home inspection. That is why I always try to think about these things for them. I am always telling people the age and condition of the roof and the rest of the house. In fact, I’m working with a buyer right now who fired their old realtor because they kept making offers on houses that were in terrible shape and the deals fell apart after the home inspection. The last thing I want is a client of mine to emotionally move in, tell their friends and family all about the house, and then it fall apart after the home inspection.
Several years ago I listed a house for some clients/friends have used me several times. Their house had new windows and literally a brand new roof. The house was a bit outdated. They found their dream home before doing much inside to this one. The seller knew a lot about houses and wanted to take care of those big items first. LOL, I guess I am the same way because I am sitting in my own home, that has a new water heater, sump pumps and I am about to put in new windows…..yet I have a master bathroom that dates back to when Dallas and Knots Landing were new shows.
I put their house on the market. I showed it several times. It took a while to sell because it was outdated. I would remind buyers that there was $15-20k in windows and the roof that they would not have to spend. I would tell them it is more fun to spend that much on flooring and granite than to buy another house that was updated inside but would need new windows and a roof. It finally sold, but my point is that most buyers make decisions on how updated a house LOOKS. That is just how it works. 99% of the time, I would rather have my sellers drop money on updates that can be seen verses maintenance items than cannot. Unless a roof is just ancient or really ugly, most buyers don’t care as long as it doesn’t leak.
So, I totally disagree with this report. It just isn’t happening in my area.
And ALWAYS consult with a knowledgeable real estate agent in your area before making big decisions. I spend a lot of time advising friends and clients about how to spend money on their houses. You need somebody who knows the market and even your neighborhood to help make decisions.
There are a lot of variables depending on your neighborhood and price range.
We had a hail storm several years ago in South Lexington. Almost everybody got a new roof. The norm in those neighborhoods was to have a new roof. Buyers expected a new roof. It was a negative in that situation to not have a new roof.
There are several neighborhoods that are about 15 years old right now. The norm is to have original HVAC and roof. Since buyers will be viewing houses that all have an older roof or HVAC, a seller would do better to spend money updating the interior if they are considering selling any time soon. If they plan to stay forever, it is okay to spend their money any way they want.