My Average Days On Market??

I HATE getting asked that question.  Not because it is longer than average, but because that info is sooooo easily manipulated by Realtors today that it has no real meaning.  Plus, it doesn’t really give a good indication of how good a job a Realtor will do at selling your house.

See, Realtors are the ones who enter the date a listing goes pending.  Realtors are also the ones who can delete a listing and put it back on with a new MLS number, making you think it is a new listing.  When it sells, the report they can print and show you DOES NOT SHOW the days on market from the previous listing!!  They can do the same thing with price changes.  I have seen several times on LBAR where the price of a listing was reduced the same day it went pending.  Then, when it closes, it shows that the house sold for 100% of the asking price.  That is a way to be able to tell prospective sellers that you get a higher that normal List-to-Sale percentage.  It is all a game, and one I don’t play.

I have no idea what my average days on market are at the moment.  To be quite upfront (as I always am), I have sold several houses very quickly and some take what seems like forever.  Last summer, I sold one before it even hit the MLS just by networking.  When I get asked about things like this, I usually tell people about the ones that I have sold fast and the ones that have taken a longer time.  Then I tell them I put the same effort in all my listings.  The difference in one that sells fast or slow has a lot to do with the house and the seller.  An over-priced listing is going to take a longer time.  One in a poor school district will take a longer time.  I then tell them that every seller who has taken my advice about price and work that needs done has sold their house quickly.

So, what is a consumer to do when a Realtor can quote manipulated statistics?  I say ask them questions that make them think.  How about asking them what they are going to do any different from the next agent.  Maybe ask how they get  their clients.  If you hear the word referral, that means that they did a good enough job that somebody promoted them to a friend/family member.  Most agents just think about marketing when they are on a listing appointment.  Ask them questions about what happens AFTER you get an offer on your house.  What is their negotiating strategy?  How do they usually handle inspection repair lists?  What do they do to make sure the buyer’s loan is getting done?  The goal is to get to the closing table with as little drama or surprises as possible. 

And if you do ask about their average days on market, be sure to ask if that includes their deleted listings.  Also ask how far back they went in history to average those numbers.  They could have had two that recently sold fast and are quoting you just the average of those two.

Current Market Trends

It’s that time of year again.  When all the real estate Guru’s look back at 2011 and tell Realtors about “Current Market Trends.”  I never go to these seminars or classes.  See, if somebody has time to put together a Powerpoint presentation with a bunch of bar graphs and is looking backwards in time, then what they are telling you is called history, not current market conditions or trends.

I’m more interested in knowing what is happening right now.   All realtors should really, but I find that most of them can only recite what they have been told.  That’s why there are meetings and seminars for such things.  There are a few in town that seem to be able to analyse the market pretty well.  I like to talk to them because it gives me a broader perspective on the whole. 

So, if you want to know what happened last year, I have plenty of posts from 2011 you can read.  Want to know what is happening right now?  Our current market trends?

1)  This shouldn’t be news if you’ve read my blog recently, but every Monday I check to see how many houses got contracts and what closed.  Houses up to $150k are selling very good.  Then it slows down a lot the higher you go in price.  The closed deals show me what percentage of the asking price the seller is getting compared to their list price.  We’re still holding strong between 96% and 100%.  About the only time I see percentages less than that it is in higher priced houses or ones that the asking price was too high to begin with.  It does drop for surrounding counties.  The Lexington agents seem to want to price a house very close to what it is worth.

2)  Most of the foreclosures we are getting in Lexington seem to be cheaper houses these days.  I think that has really created two markets in town.  When foreclosures first started becoming a large part of our market, many buyers would look at normal sales and foreclosures.  I think we’ve run though most of the middle class and upscale foreclosures, so all that is left are the cheaper ones that investors rent or flip.  A lot of people were caught in a sinking ship when the economy changed back in 2008.  The 2009 and 2010 foreclosures were mostly those folks who were in the wrong place at the wrong time.   I think the foreclosures we are getting now are due to the easy lending practices of yesteryear more so than the economy.  I check the Master Commissioner site every week and it seems that most of the people on that site bought between 2004 and 2007.

3)  I am seeing more buyers staying at the lower end of their price range.  It use to be, and not too long ago, that every buyer would start looking at the bottom of their price range, then move up, up , up and then purchase at the top.  People seem to want to be more fiscally responsible these days.  I think that is a good thing, especially for those of you that own a nice, sensible home in Lexington priced between $100k and maybe $180k.  I’ve also had several buyers not want a lot of square footage.  People aren’t wanting to maintain, heat, cool and clean more house than they will use.  These are mostly the buyers in their 20′s and 30′s.  Use to be that was only something you heard from downsizing empty nesters.   This is bad news if you have a McMansion.

But here’s the truth about any market at any time……Houses that are priced realistically and show well sell.  Buyer’s always want the best house they can get for their money.  Good or bad, there will always be a market.  Location, condition and function play the biggest role in value.  Keep that in mind and you’ll always be able to make good real estate decisions.

Saw the listing online….think I’ll pass

I had something happen the other day that TOTALLY supports everything I’ve ever said about marketing a house these days.  I was talking to a client who said they saw a house online, but weren’t sure if they wanted to see or not.  See, the pictures weren’t that good and it was kind of hard to figure out much about the house from the marketing remarks.  This house is only a 20 minute drive from my client’s house.  Back in the day, a buyer would give the house the benefit of the doubt and go check it out.  That just doesn’t happen now.  (My client isn’t alone, buyers just don’t want to risk it being a waste of time these days :-)

So, let’s flip this around and take a look at it from the seller’s perspective.  The seller of this house has hired a realtor to sell the house.  There is a buyer 20 minutes away who doesn’t know if it is worth it to come see it in person……all because the agent did a poor job of marketing the house in an appealing way.

After working with so many buyers, I’ve learned an important lesson about how they approach houses online:  Buyers are sitting at their computer asking the house “Why should I come see you?”  Since houses can’t talk, it’s up to the realtor to answer that question.   A listing that doesn’t answer that question through pictures and marketing remarks misses out on a lot of showings……even ones in the most desirable school district in town.

Goodbye to my old Kenwick house

 

I use to live here.  Kinda.  back in the mid 1990′s my wife and I rented the little shack that sat on this lot and has since been relocated to the Fayette County Landfill.  I drive down this road frequently to get home after taking my son to school and one day the house was gone.  I would love to have been there to see it one last time before it came down.  It was originally a 4 room house that had a “Great” room addition on the front.  It had to be on the front because the house was built practically all the way back on the lot.  Many of the houses you see in Kenwick are like this.  I was told by long time Kenwick residents that there was some deed restriction loophole that allowed smaller houses to be built at the end of the lot.

I’ve actually lived in Kenwick on Lincoln Avenue twice.  My parents bought the house next door to this one when I was a sophomore at Henry Clay back in 1985.  My parent’s house had two little houses set way back on their lots on one side and another one on the other side.  My rental shack was on the side with the two small houses.  Since there was such a price difference between the houses, we had our fair share of neighbor issues…..this was in the 80′s before Kenwick became trendy.  Back then, it would have been the prime neighborhood to have shot an episode of “COPS”.   A neighbor on one side never fed his chained up pets and always blasted music.  After many friendly requests from my dad asking him to turn it down, he dared my dad to call the police.  My dad did.  When the police got there, the neighbor dared the police to arrest him.  They did.  That house was bought by somebody who remodeled it and it has since been featured in the Homeseller.  Go figure.

The 2nd house down on the other side was the same 4 room shack as my house before the addition.  It had asphalt shingle style siding that looked like brick, whereas my shack had been updated with asbestos siding in the 1950′s.  It always reminded me of the house where The Beverly Hillbillies lived before Jed became a millionaire.  It was torn down in the late 80′s and a wood shake sided house was built in it’s place.

My parent’s moved less than a year after we rented the shack next door to them.  I actually liked having my folks as neighbors except when my dad would fire up his BMW motorcycle at 6 every Saturday morning.  Where the shack sat so far back on the lot, their garage was about 10 feet from the bedroom window.  I’ve always credited my parents with having the foresight to see that Kenwick was on the verge of a transformation.  They were some of the first people to move in and fix up those old houses with something better than wall paper and paneling.  In reality, they wanted Chevy Chase but couldn’t afford it back then.  That’s how it goes for old neighborhoods.  Right now, there are people who’d love to be in the first block of Kenwick but can’t afford it, so they have settled for the second blocks.

I have a few funny memories of life in the house we rented:

1)  The mailbox was on a fence at the sidewalk.  I would park my car at the top of the driveway, get the mail, and then coast down in neutral to the house in my manual transmission car.  One day, I got back in the car, but instead of putting my foot on the brake, I put it on the clutch.  I didn’t figure this out until after I had rolled all the way down the driveway and crashed through the doors of the wooden shed at the end of the driveway.

2)  One night when my wife was away on a pharmacy rotation, a sheriff showed up after midnight to serve a warrant for the previous tenants.  After this house, I have always decided that any time I am thinking about moving to a new place, I would first randomly stop a sheriff and ask if he knew where the street was.  If he said he didn’t, then that would mean I wouldn’t mind living there.

3)  One day, I was doing some yard work and lost my wedding band.  That was kind of sad.  Some kid will be playing in the back yard 100 years from now and find it I bet.

Well, I am sad to see that old shack go.  I have a lot of good memories from my time on Lincoln Avenue.  I hope the people building this house enjoy their new place!

2012 Predictions & Where are the sellers going?

Every week, I check to see how many houses in different price ranges go pending.  I look at under $100k, $100-150k, $150k-$200k, $200k-$300k, $300k-$400k and $400k-500k.  I stop there because there are never many sales over half a mil and I don’t do too much work over that anyway.  I have been totally amazed at how many houses are selling in the $100-$150k range….even the week before Christmas we had a bunch of them.

That price range is where the first time buyers are.  Like I’ve always said, you need the first time buyers to drive the whole market.  You need them to push all the more expensive deals through.  I guess these low rates have brought them out.  Just for fun, I checked to see how many sales there have been in that price range in the past 6 months.  There were 432.  During the last 6 months of the tax credit season there were 552.  Right after the tax credits expired, there was no action in most price ranges, especially this one.  Glad to see it come back.  I knew it would.  Regardless of the economy, people are always going to graduate college, get married, start a family, take a job somewhere else, etc.  People will always be moving.

I am scratching my head over something.  If 15 houses in the $100-150k range go pending in a week, shouldn’t about 15 houses in the higher price ranges also go pending?  You’d think all those sellers were moving up.  In the past, these sellers moved up to the $175k-250k range.  Now, I am thinking that some of the sellers of more expensive houses are moving down, that some sellers aren’t buying houses much more expensive that the one they sold, and that some of them just are getting out of home ownership altogether.

Want to know what I see coming in 2012?  It is almost New Year’s Day, so I guess I better throw something out there.  If interest rates stay low, I see the $100k-150k remaining strong.  A lot of people have refinanced, so they will likely stay put for a while.  I don’t see the number of local sales increasing/decreasing much compared to 2011.  There has been a shift in how people view housing, so I think buyers will be a little more modest with their purchases…..meaning folks aren’t going to be shopping for the max amount of their pre-approval letter.   I think the over $300k homes will be hit by this unless the house is unique, has a great location or is in the better school districts.  I don’t mean to scare anybody.  It’s not like the prices are going to drop by much.   You just need to pick a winner.  Investors will likely keep snatching up the deals under $100k and turn them into rentals.  None of this is really earth shattering…..mainly just more of the same.  I also think that our local list to sale price will creep up a bit.  I’m not seeing buyer fear like in years past.  I think that will mean they may not start offers as low, or counter a counter offer multiple times.  They are just going to know they want the house and will be willing to pay a fair price.

That’s all I have for now.  Happy New Year!!

Before & After Shots of my house…..See what paint & carpet can do?

I’ve been pretty darn pumped up to do this post for quite some time now.  It gives me a chance to show off the work I did on this house and gives me a great platform to yell some more about what a difference carpet, paint and presentation can make.  Plus talk about investment property.

See, this is my house.  I bought it to rent it out…..gotta pay for college for my boys and keep my supply of cool cars fresh you know.  I paid $78k for it.  The foreclosures in this area go for in the mid $60′s.  In fact, an identical house to mine on the same street sold for $65k this summer…..So why am I bragging about paying $78k?  Well, I have been in the other one before and after its renovation.  That one needed a new kitchen and bath.  Mine didn’t.  That one didn’t have the wood trim wrapped in vinyl.  Mine did.  That one had a 27 year heat pump.  Mine has a 4 year old heat pump.  Once you get down to the nitty-gritty and compare apples to apples, I paid about $4k more for mine, but didn’t have to spend as much time to get mine ready nor did I have the risk of unearthing expensive issues during a major reno.   In the end, about the only visible difference between the two houses are color choices and I didn’t put in a dishwasher.  That house was flipped and just sold for $95k.  I think I did pretty good since that house was the same floor plan just about 5 houses down the same road….doesn’t get better than that for comparison sake!

These two pictures are of the same master bedroom.  Can you tell which one is the after?  All I did here was paint, carpet, an $80 ceiling fan, and new outlet covers…..and had a professional photographer snap the picture.

These next two are of the kitchen.  The cabinets and counter top were new just a few years ago.  Literally all I did was paint, a new range and a new ceiling fan….well, I did have an electrician add GFCI outlets just to make sure everything would be safe for my tenants.

These last two are of the bathroom.  All it got was a new toilet to conserve water and fresh paint.  The previous owner had recently redone the bathroom and made great selections!

So, there you have it……if this isn’t a testament to what paint, carpet and presentation can do, I don’t know what is.  I dropped about $3500 in paint, carpet, 5 light fixtures, 2 ceiling fans, a range and a toilet, but added at least $15,000 in value.  This is why I always tell sellers to do these little things because they can get such a big return not only in the sale price but also shorten their days on market.  (The other one just like mine was only on the market for a short time while being surrounded by others that have been on the market forever!)

The LEXpert tours Fayette Park, Elsmere Park & Hampton Court

It’s been a long time, but I broke out the video camera and did a tour of 3 of the best kept secrets in town for old neighborhoods.  Check out the video, but here are some highlights:

HAMPTON COURT

I am in love with this little street.  What makes it so unique is the arched entry made of stone.  There is nothing else like it in town.  There are about 40 houses and condos on this street.  I’ve always heard that the condo buildings on this street were the first in Lexington.  The condos were build around 1905 and the houses were around that same time, up to about 1920.   You can walk or drive through the big arch on the south side of the street, and there is a pedestrian arch on the north end.   The arches and the big trees really define the vibe of the street.  You almost feel like you are were playing hide-and-seek and stumbled onto a new diminsion.

ELSMERE PARK

There are only 29 houses on this street.  All of them build around 1900.  There is one way in and out.  I think that is what has helped to preserve this street’s identity.  The houses here don’t seemed to be restored to perfection like you see in some older areas.   Let’s call it patina.  The ones I have been in seem to make you realize that you are in a house that was build a long time ago, rather than making you feel like you stepped back into 1900 and everything is brand new.  More of a preservation mentality in my opinion here rather than a renovation vibe……and I say that is a good thing.

FAYETTE PARK

There are only 16 houses on this street.  Most were built in the 1885-1910 range.  This was “THE” place to be back then.   You can tell that these were grand houses when new, which means there was a bigger budget for more of the details that we all like in older houses.

I usually hit on values and school district in these videos, but none of these have sold recent enough to tell you anything accurately….and I figure that nobody is picking these streets for their school district.

Google these streets and check them out for yourself!

 

Welcome to the “Post-Housing Slump Era” (Almost)

I’ve been saying that Lexington is in the “Post-housing slump era” for most of this year.  Yeah, prices have stabilized and buyer’s don’t seem afraid to buy like they did in the past, but I do see one segment of the market that still may have a rough time.  It’s the upscale neighborhoods that are more than 20 years old and aren’t in the absolute best school district in town.  The decline hasn’t stopped, so it shouldn’t be news to anybody except those who currently have their houses on the market and aren’t getting any showings.

I’m thinking of one of my favorite neighborhoods in all of Lexington in particular.  I’ve shown dozens of houses in this area over the past year or so priced from $325k to over $500k.  Most of them are still on the market.  Even after the values dropped significantly over the past few years, this area still is taking a hit.  What gives?

For starters, these houses are all big and most are very outdated.  When you go into a $150k house that is 20 years old, the main thing that looks terribly outdated is all the brass door knobs.  In that price range, there wasn’t a big budget to pimp it out with all that 1991 offered.  When the upscale house was built in that same year, the budget afforded pickled cabinets, gold faucets, and mauve toilets.  The ones from the 1980′s could be the set from Knot’s Landing!  Do you know what it costs to renovate 4000 square feet?    On top of that, most of these lots are big.  Few people these days (at least in Lexington Ky) want to mess with maintaining a big yard.  Everybody I have shown houses to in this area all walk away in awe of the house and neighborhood, but I can tell they are doing math in their head trying to figure out how much they’ll have to spend for updating and upkeeping…..needless to say, all my clients have picked different neighborhood!!

About the only older upscale neighborhoods where I am not seeing this are those in the Rosa Parks Elementary district.  Buyers there seem to be willing to overlook a lot just to get the schools.  I’ve shown a lot of houses in this part of town too, and see a lot of outdated houses.  Unless they are grossly overpriced, have a super steep driveway or are on a main road, they all sell quicker than the rest of the neighborhoods of similar age.

I’ve been watching a house in one of my favorite neighborhoods for about a year now.  It is the only house I have ever been in that double wowed me.  It needs everything but the kitchen updated……a new roof, all new HVAC, and windows too.  I think the current price is just under $400k.  I think it will have to get down to $360k before anybody is willing to take on all that work.

 

Dancing with the Stars? No, Dancing with Realtors (who have two left feet!)

Sometimes I feel like I’m the professional dancer on “Dancing with the Stars” who gets paired with somebody who just can’t dance.  No matter what you do, you’re in a tough spot since you are limited by your partners ability.  It is the same way when working with another realtor as you dance to the closing table together.

I recently had a deal where my buyers made a decent offer on a house.  To sweeten the pot, we decided to check the inspection paragraph that said we had so many days to do a home inspection and would either stay in the contract or give written notice that we wanted out of the contract depending on the inspection results.  We would not ask for any repairs at all.  I like to do this sometimes if the buyer is wanting to get the lowest price possible or if they want to have control of the quality of the repairs and can do them after we close.

I gave the offer to this agent, and told her we had checked what is commonly called “Box 2″ for the home inspection.  At that point, the listing agent tells me that the seller will do any major repairs that need done.  (I found that odd……kind of like playing poker and announcing you only have a pair of twos right before the other player places their bet.)

Turns out the house needed a new furnace and the typical laundry list of minor stuff you see on just about any inspection report.  My clients decided not to take the house.  The sellers offered to first pay for half a new furnace, then a whole new one.  My people decided they still didn’t want the house. 

When I called the listing agent to tell her that we wouldn’t be taking the house, she told me she didn’t see how we could get out of the contract.   She said it with a tone like she was a hunter who had just trapped an animal.  Trying to be nice, since you never know when you’ll work with the same agent again, I asked what made her think that?  She told me that since the seller was willing to replace the furnace, we didn’t have a legitimate way to get out of the contract.    I reminded her that we checked “Box 2″ for the inspection paragraph on the contract.  She agreed with that.  At this point, I am wondering why we are both using the same part of the contract to justify opposing positions.  Well, that is an easy question to answer.  She has never actually read “Box 2″ of the contract.  She told me she thought “Box 2″ meant that if the seller agreed to fix anything major, the buyer couldn’t walk away.  I was driving at the time (glad my car has Bluetooth), but I pretty much quoted her what “Box 2″ said from memory while merging on the interstate……see, I’ve read the contract.

So, here I was trying to dance with somebody who didn’t even know she had feet.  I totally feel for her clients because how could they have known the terms that they agreed to if their own realtor didn’t??  FYI, that contract is the same one that all 2000+ realtors who are LBAR members use and has been for as long as I can remember, so it isn’t like she has an excuse for never having actually read it.  If you ever have a chance to interview agents, ask if they have read the contract.  If there is ever a problem in a real estate deal, any broker, mediator or judge are going to use the terms everybody agreed to when settling a dispute……so it is pretty important!

How long will it take for my house to sell??

I get asked this question on every listing appointment I’ve ever been on.  I normally don’t reply with an amount of time, but with a sequence of events that needs to happen to attract a buyer.  The honest to goodness truth is that any house should sell pretty quickly if the seller will do everything on the list I give them and price it correctly.  Granted, there are exceptions…..million dollar house?  Will take time since there aren’t many buyers in that price range.  A unique house?  May need a unique buyer.  An overpriced house?  Will usually only sell to an idiot with a careless/stupid Realtor.  A normal house in any neighborhood in Lexington Ky?  If done right, it won’t take long.

I’ve been doing this long enough that I know how it usually goes with a seller.  I see the house.  I ask the sellers if they are willing to do any work that needs done to attract the buyers that are out there right now.  Sometimes they don’t/can’t/won’t do anything.  If they don’t/can’t/won’t, I tell them the price I think their house will sell for just like it is.  Usually though, the seller picks a few items from the list.  We put it on the market.  They get positive feedback for the things they have done.  They get negative feedback for the remaining items on the list.   After awhile, the seller starts to realize that they are going to have to do more items on that list.  They do one more item.  Still doesn’t sell or offers are way below where they should be since the buyer has subtracted about 5 times the cost for the remaining items on the list.  I’ve been on the buyer side of this.  They almost always say something like “If I have to paint this whole house I’m not paying a penny more than $XXX,XXX!!”  or “I would need to replace all the carpet and I like hardwood, so let’s just subtract the cost of hardwood from the asking price and go from there.”  Can’t blame them, after all, it is their market these days.

Eventually, the seller plugs away at my list until it sells (And sometimes being realistic about the asking price has been on the top of that list since day one).  See, there is the sequence of events I mentioned at the beginning of this post.  Now that the house is ready, it is going to sell because it is competitive and will almost always fall on the short list of a buyer.

But what happens to the people who do everything on the list from the beginning and price it correctly?  Their house usually sells in a matter of weeks.  Why?  Because buyers want the best house for their money.  Make your house THAT house, and start packing.