sellers market

Connection to this house made this new sale extra special

by John Rice

Yesterday started out like most busy days in real estate. I had to drive to Salvisa for a home inspection. I was negotiating home inspection repairs on two listings. Talking about radon, missing tub stoppers and clogged gutters isn’t especially exciting or fun. About the only real satisfaction in working on home inspection lists is knowing you’re working hard to make things as good as possible for your clients.

I also had an offer out with a 7:PM deadline. I wrote the offer for my Buyer’s on Saturday afternoon so it was a long wait to see if they got the house or not. And they did get it. That always feels great. It is especially exciting and fun to be the one to drop that news to your clients.

This sale was a pretty special one.

It was a house I had sold last summer.

This house was where two friends grew up. I have worked with this family several times. It was time for their mother to move out after having lived there since the mid 60s. It was a great house with a great floor plan in a great neighborhood. It was also in great shape. It was just a little dated. We got something like 20 offers on the place when I had it listed. It got bid up about $40k over the list price. Unbeknownst at the time the offer was accepted, the lady who bought it had gone to school with one of the daughters of the owner so they had a little reunion at the closing.

It felt great to have gotten so much over list price for this family. It felt great to see the daughter and buyer catch up after not seeing each other in decades.

Flash forward about six months, I saw the house was coming on the market. It had been totally renovated and an extra full bathroom had been added. I mentioned it to a young couple who had been referred to me. It was pretty much exactly what they were wanting in a house (short of having a garage.) I knew it would be a great house. As soon as it hit the market, we checked it out. Later that day, an offer was made.

When I first saw the house prior to listing it, my friend and her mother were telling me stories about their family’s history in that house. The one that sticks out the most was her mom cooking breakfast on a wood burning stove in the basement during the ice storm of 2003 while the power was out. I always love getting these details…….and I totally love that I got to sell it again, knowing that my Buyers will be making their own history there that one day they will tell me about when it’s time to sell.

Nailed it! See how my predictions turned out

by John Rice

I’ll try to remain humble here, but I called exactly what is happening in the market today.

I have always said there will always be a market. There will always be demand. Some times the demand will be pent up with people sitting on the sidelines, but they are there, waiting to feel comfortable about making a move. (Typically these people wait until enough other people dive in and effectively end up jumping into a hot market, which is what they were hoping to avoid.)

I have been saying for months that I thought the market could still be very good with interest rates around 6% or less because historically, the past several super hot markets we have seen in our area had those rates and adjusted to average income, real estate values in our area are similar. I’ve said that rates over 7% won’t last forever. I’ve also been saying for years that once rates start going up again, people would be reluctant to give up their super low rates which would create a shortage of listings and would keep prices stable regardless of the market conditions.

I’ve suggested people buy real estate as soon as they are able regardless of the rate since you can always refinance when/if rates go down but you can’t go back in time to get yesterday’s home prices.

And now you know what stories are making the headlines? That mortgage applications are up recently due to rates dropping below 6%. That refinancing applications are up too. That rates are down. That prices aren’t really dropping in areas that didn’t see crazy stupid price increases.

I am seeing all this myself with my clients. I had two listings that went on the market right around Thanksgiving. One of them was modestly priced, totally updated and in a desirable neighborhood. I really thought it would go fast even though that time of year is usually slow. It hardly got any showings, which is very strange. Then once rates went down we had 5-6 showings in a matter of days and it sold. When I go to show listings to my buyers lately, most of the time there is another realtor showing the house when I arrive or one that shows up as I am leaving, sometimes both!

Time to resume your 2020 plans?

by John Rice

COVID sure changed the real estate market. Everybody knows that. For a while everybody was stuck at home and wanting home offices and separate rooms for things like exercising. Rates got so low that everybody decided to move up the property ladder. A lot of people realized life is short and went in a new direction.

I knew things would eventually stabilize and get back to normal.

The one thing I didn’t realize was that there were a lot of people who had plans for 2020 that were put on hold during COVID. Job searches, marriages, starting families…..and moving. These people are now feeling comfortable enough to resume the plans they had early in 2020. I’ve had several people reach out to me lately who are going to make some major changes in their lives this year.

I am sort of amazed that I didn’t see this coming. I guess like everybody I was so focused on all the changes due directly to COVID that I didn’t even think about those whose plans were interrupted.

Many other realtors I have talked to have said their pipelines are filling up for the year.

I think the 2023 real estate market may surprise us with how well it turns out.

My realtor bucket list

by John Rice

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.

How the market works when there is inventory

by John Rice

Now that we are back to having some inventory in our real estate market, I thought it would be a great time for a refresher on how the market works when there are actually houses for sale.

The recent past has shown that any house will sell fast when there are more buyers than sellers. When your choice is between whatever house in your price range hits the market or hoping the next one is better, people usually make an offer on the one for sale that day.

We are back to a normal market where Buyers have choices and this is how they make their decisions.

Simply put, they pick the best house on the market. Usually this is a house that is priced realistically, that is move in ready and is in the most desirable neighborhood within the Buyer’s price range. Then there is their second, third, fourth and so on choice.

Once that #1 pick house sells, then the #2 pick house becomes the top choice. Once the #2 house sells, then the 3rd pick becomes their 2nd choice. Once the…..well, you get how this works I am sure.

Sometimes what happens though is that a brand new listing hits the market and changes the ranking. If you have the #2 house and are excited to be the next house to sell, a house hitting the market that is better than your house means you will stay at #2 on any Buyer’s list. Sometimes winter is a good time to sell a house that has been the #2 or #3 house because we tend to see fewer new listings. Eventually your house rises to become the best choice in its price range.

The goal of you and your realtor is to make your house as competitive as possible so it ranks high on the list of Buyers. Sometimes it is as simple as rearranging furniture, doing a little updating, doing a few repairs that have been noticed during showings, or even a price reduction.

While we are discussing inventory here, I want you to know that in the coming months you will see headlines about the “Average days on Market” rising. Any time you have inventory, this will happen. It doesn’t mean that every house is harder to sell. There are still plenty of houses selling fast and even getting multiple offers. Those are all the #1 choice houses, the ones everybody wants. All the houses that are further down the list will stay on the market longer, waiting for price reductions or some other change to be made which will eventually lead to a sale. In the meanwhile, those houses will dilute the average days on the market statistics.