Real Estate Fortune Cookie Thoughts

Well……I’ve been doing this for a while now.  Long enough to see some things that I’d like to put in  fortune cookies.  So, here goes.

1.   Don’t hire a termite inspector that looks like a bug.

2.  If you brag to friends you got a great deal on a house because of some randomly odd feature, then you will have to sell it cheap enough so the next buyer can also brag to their friends.

3.  You can’t wish away features of a house.  Like, That’d be a great house if only the toilet wasn’t in the dining room.

4.  It is easier to change houses than it is to change your neighbors……….cheaper too.

5.  Don’t expect the benefits of a foreclosure sale without any of the negatives.  Other than a good price, everything else is a negative.

6.  Roof and plumbing leaks don’t cure themselves. 

7.  Purple carpet is never a good idea.

8.  Neither is wall paper.

9.  Loan Officers always believe the glass is half full until the day before closing, then they are all into reality.

10. Realtors never look as good as the picture on their card.

11.  They also are never as great as they think they are.  Even if they have a cool phone.

12.  This years luck numbers are 8000 and 6500, which are the amounts that some buyer’s can get for a tax credit.

13.  Learn  to Speak Realtorese: 

Not a drive by means the house is butt ugly. 

Won’t last means that there is nobody who will want it, so the agent must try to generate a frenzy. 

An adjective like “Copious” or “Adorable” can be applied over and over again to every feature of the house like some Jedi mind control tactic. 

An “Up and Coming” neighborhood means most of it is still trashy, but isn’t expected to be for much longer. 

Close to everything means there is a lot of noise and traffic.

Must see means that the realtor really can’t describe it or doesn’t have good pictures.

Off New Circle Road can literally be ANYWHERE!

 

 

 

 

4 things you need your Realtor to do

I am stuck in my dining room today while the flooring guys put down hardwood in the next room.  What a good time to blog about some of the things that have been on my mind.

I recently met a couple who paid way too too much for their house back in 2007.  They want to sell it now, but they are going to take a big hit.  I know you are thinking that stuff like that is happening all over these days, but there is more to this story that just a slow market.

This couple used a well-known agent in town.  They moved from a much more expensive part of the country.  To them, ALL the houses looked like a bargain.  They told me they didn’t want to use her again since she didn’t tell them that they were buying the most expensive house on the street.  She also didn’t do a Comparable Market Analysis (CMA).

I thought, well maybe there were multiple offers.  Sometimes if a person finds the right house and there are other buyers in the picture, you got to move fast…………Nope.  Not a multiple offer situation.

Well, being a little OCD, I thought that I would do a CMA based on the date they bought it.  It is easy to do.  I just plug in the date of the sale and look back 6 months to see what else had sold that would have been comps for the house.  It was as if it was early 2007.  The exact same info available to the other agent.  The only surprise was that they only over paid by $7-10,000, rather than the $10-15,000 I had suspected.

So, I have 4 things your realtor should do for you.  There are countless others, but these 4 will eliminate a lot of potential bad surprises for you.

1)  You guessed it.  Your realtor should do a CMA.  Sometimes my clients will ask me how much they should offer based on the asking price.  I usually tell them that we first need to find out what the house is worth.  If it is over priced by 10% and you offer 95% of the list price, you have just over paid.  You HAVE to know what the house is worth independent of the asking price.

2)  You need to know who owns the houses around you.  A quick check of the PVA website will let you know if  there are a lot of rental houses around you.  Nothing scares buyers more than buying in a high rental area.  See, the PVA site will tell you where the tax bill is sent.  If it is sent somewhere other than the house in question, odds are the occupant is not the owner.  I once had a client who fell in love with a house and was ready to buy it.  A PVA search revealed that about 40% of the neighborhood was rental.  One of the big builders in town owned about 20%.  I could have sold them that house and saved all the time we spent looking at about 20+ houses after that, but that is not my business model. 

3)  Your realtor should check the crime map before making an offer.  That will tell you what kind of neighbors you’ll have and/or what kind of people are coming into your neighborhood.  Bear in mind that a neighborhood under construction will have a lot of theft from people taking tools, material, copper from vacant houses, etc.

4)  Your realtor should verify the schools for the house.  I see a lot of wrong info on the MLS, especially for schools.  Sometimes agents get lazy and do things like assume that the closest school is the one.  My kids are in a magnet school that you can only get into by lottery.  I was amused to see that one realtor had put the school as the disctricted elementary school.  Can you imagine buying that house and thinking your kid was going there?

There are lots of other things a realtor should do, but to protect yourself, make sure they at least do these 4!

Zillow=TMI

Okay.  I woke up in the middle of the night like a good 40 year old.  I couldn’t get back to sleep because I was thinking about an out of town client who relied on Zillow more than he did me.  It kind of became a real problem for me.

And here is why.  When you check out Zillow and you know nothing about the local market or neighborhoods, you can draw wrong conclusions.  On Zillow.com, there is a tab  that shows you recent sales.  They must mainly sort those by zip code, not the neighborhood.  Often, you see sales from a different neighborhood that can make you think you are about to pay waaaay too much or you are getting a bargain.  If you enter a cheaper listing that is by a nice area, you can think the cost per square foot is a bargain in comparison to those recent sales……….and the other way around.  Apples to apples and oranges to oranges.

Another thing that I had to explain was how the assessed value (Tax Bill) worked.  See, the house he was wanting to buy had been owned by the seller for several years.  It showed a taxable value that was much lower than it’s fair market value.  What’s up with that?  Well, the PVA often only reassess the taxable value when the house is sold.  The new assessed value will be the sale price.  If the house hasn’t sold in several years, usually the taxable value will be lower.

Every so often, the PVA will send out its people in their little white Toyota Pruises to snap a picture of your house and then come back to the office to compare it to recent sales.  They don’t actually go inside the houses.  It is kind of hard to get a feel for value from only the outside of the house.  Plus, they know that tax payers don’t want to over pay, so they are pretty conservative.  That may change in today’s world of budget shortfalls.

I own a house that I know I can sell for about $160,000.  I have been paying taxes on only $135,000.  The house next door sold for that much about 4 years ago and they guessed mine would be the same.  I’m not going to call to tell them that my house is under assessed!

All this leads me right into the next issue.  They have an ariel map of the neighborhood with all the assessed values.  Based on what I just told you above, you are right to assume that most of the dollar figures that appear to be painted on the roof tops of the houses are much lower than what most of them are probably worth. 

You should have seen me trying to explain all this to my untrusting client.  I am sure he must have thought I was making all this up as I was telling it.  What I had to do was pull recent sales from within the neighborhood.  I was able to show him 2 other houses that were the exact same model as the one he wanted and had sold within the past 6 months.  We did a few adjustments for thing like one had a fenced yard and newer appliances, and came up with what the real market value was.   It was much higher than what the seller had been paying taxes on for all those years.

So, feel free to use Zillow.  It is a useful tool.  But realize that you need to know how to interpret the info that they give you.  You always want to compare a house you want to make an offer on to similar ones within the same neighborhood that have sold within the past 6 months.

What’s to love about Masterson Station?

Okay……If you are one of those people that frowns on cookie cutter houses and the lack of character, go a head and hit the back button.  If you like newer suburban areas………well, read on.

Here is what I like about Masterson Station:  It is a big neighborhood, so that helps with stability.  I always see people out walking their dogs, pushing baby strollers, kids on bikes, etc.  It seems like a friendly place to live……..And they have a brand new elementary school on one of the main drags through the neighborhood.

What some folks think is a drawback is that it is kind of away from everything.  There isn’t a whole lot of shopping around that part of town.   Also, there is a minimum security prison across the street from the west end of the neighborhood.  Now this is such a minimum security place that when prisoners do escape, they usually just walk off!  It really wouldn’t worry me unless I was one of the first houses across the street.  I must add that there have been no major problems.  I think the worst thing that happened was a car was taken once.

Probably the draw for most buyers is that you can get a lot more house for the money in Masterson Station.  A house I sold a few months ago would have been an extra $20,000 if it were on the more popular south end of town.  Plus the lots are sometimes bigger too!   There is a lot to be said for getting more for less. 

The prices run from $125,000 to close to $300,000.  The bulk of the area is in the $125,000 to $180,000 range.   Like any neighborhood, I wouldn’t go over the typical value range.

If you want to know what I think Masterson Station will look like in 25 years, take a look at the whole Buckhorn/Squires/Alumni area in Lex.  There are dozens of different names for all the development phases out there, like Century Hills,  Hunting Hills, East Lake, etc.  The whole area pretty much just blends together now.  You have some tiny starter homes and some nice move up homes.  They all seem to happily co-exist.

So, there you have it.  Overall, I give it a thumb’s up for giving you more for less in a friendly environment that will probably age well.

My Top 10 Fave Things about life in 40509

40509.  I use to drive the country roads that are now lined with neighborhoods when I was a teenager.  I always like the feel of this part of town.  A lot has changed since then…….Oh, this isn’t about nostalgia, it is a Top 10 list, so here I go:

#10  You can live out here with just about any budget.  There are townhouses/condos in decent neighborhoods from the $90’s all the way up to McMansions.  Most of the area seems to be $180k to $250k.  There are lots of great neighborhoods like Autumn Ridge, Andover Hills, Chilesburg, Stuart Hall, Brighton East, West Wynd, and Eastwood Club.

#9  The schools are getting better all the time.  There is a lot of excitement and expectation about the new Liberty Road Elementary.  Some of 40509 goes to Athens-Chileburg ElementarySchool (ACE).  It is a good school.  We also have a newer middle school, Edyth J. Hayes.

#8  We are close to the interstate.

#7

Why did I switch to Re/Max??

Well……I finally did it.  I had been thinking about moving to Re/Max for about a year now.  A couple of weeks ago I finally made the move.

I am sure  there really is no perceivable difference between my last place and Re/Max to most people.  Both are well respected places.  If I wasn’t a Realtor, it wouldn’t make much difference to me as long as I still got to use the agent that I liked.

I only wanted to make a change if it was going to be better for not only me, but also for my clients.  I really want to take my business to the next level.  I love what I do and want to do it more and keep getting better at it.  Re/Max is the place to be for all of that.

Re/Max is really set up to be about the agents as opposed to the company.  I pay a set fee for the year rather than a non-stop 80%-20% split based on a full 6%  commission like at the old place.  This gives me the freedom to negotiate my fees.  Real Estate these days takes place on the computer.  You’re really paying me for what I know more than for my time.  In the old days, it took a lot of time to list and sell a house.  The effort and time involved has decreased, but the cost hasn’t.  I’m happy to give people a break!  Oh yeah, plus all the calls from the yard sign go straight to me rather than some agent sitting by the phone who has never been in my client’s house.  Wouldn’t you want somebody telling a perspective buyer about your house to be me??

The training is fantastic!  They have all kinds of videos, webinars, and stuff that is only a few clicks away at all times.  The website is the best.  They even have this thing where if somebody calls me, I can push various websites (school district, crime map, etc) to their screen from my phone!  Is that cool or what??

I really love the cutting edge tech aspect of Re/Max.  A lot of people think I am really in to tech stuff, but to me it is all about the most efficient way of getting something done.

I could go on and on, but I am already up to 377 words.  The bottom line is that as much I liked my old place, I wanted to go somewhere that would make me a better Realtor and help my clients in their needs.

How to make a wise decision when buying

Ever wish somebody could tell you EXACTLY what to do to make sure you don’t buy a house that will depreciate?  That was something that nobody ever thought about just a few years ago.  Back then, any house in this area was selling and selling for top dollar.

Here is my list of what to find in your next house.  The more of these you have, the better your chance of getting a house that will be a wise investment.  Remember, as long as there is a real estate market, people will always buy the best houses that are on the market!

LOCATION:  You hear a lot about this in Real Estate.  A good location really just means that it is convenient to SOMETHING or has a unique asset!  It can be shopping, the airport, the interstate, schools, a park…..really just anything unique or desireable.  A house probably doesn’t have a good location if you find yourself thinking, “Gee, other than being nowhere near anything, that house is great!”  A neighborhood like that will always have to sell on low price.  That is why in large metro areas people buy in the suburbs.

SCHOOLS:  Buy in an area that has at least average performing schools.  People moving within Lexington seem to be fine with a decent school.  Out of town buyers always want to be in the best school district.  Look for an area that has a well rounded mix of elementary, middle and high schools.

NEIGHBORHOOD:  New is nice, but established is always better.  Pick a neighborhood that is large enough to not be negatively impacted by the surrounding ones.  Usually a cheaper larger neighborhood will bring down a smaller nicer one.  The opposite holds true too.  Kenwick use to be an inexpensive area.  It was surrounded by Fairway, Ashland Park and Bell Court.    Its location and surrounding neighborhoods started putting it on people’s radar in the 1990’s.  You also want a neighborhood that has its own distinct identity.  I don’t mean it has to have giant columns in the front with the name chiseled in stone.  Chevy Chase doesn’t have anything that says “You are now entering Chevy Chase”, but you know you are there.  That is identity.  If an area doesn’t have an identity, then it isn’t known for any of the items I am talking about here.

LOT:  Ideally, you want to have a lot that is located well within the perimeter of the neighborhood.  That insulates the impact from cheaper areas that border your neighborhood.  While I am on lots, get one that is at least average size for the neighborhood.  You don’t want one of the smaller ones.  It will turn away a lot of buyers……unless we have another frenzy at the time you go to sell.

FLOOR PLAN:  You want a house that has a useable layout and typical sized rooms.  A tiny kitchen in a 4 bedroom house will not bring in as much money.  You’d need to price it lower than the competition or upgrade it to make somebody be willing to overlook it.  If you find yourself saying things like “If it wasn’t for______, that house would be perfect!”, then you know the person looking at houses when you go to sell will say the same thing.   In a slower market, buyers get very picky.

Basically, the goal is to get a house that will be someone’s top pick when it comes time to sell.  I call this ‘Thinking Outside the House.”  Most buyers just want to find a house they like.  The reality of Real Estate is that a lot of a house’s value is determined by things outside of the house itself.

1994 Grand Tour of Homes~Thoughts

Sometimes I need something to read before I go to sleep.  Being the house junkie that I am, I found myself looking through the booklet for the 1994 Grand Tour of Homes.  Yeah, I know this is kind of nerdy, but houses and cars are the only 2 things that I am really into.  Since this is a real estate blog, I’ll skip going into all the useless car facts I know such as that the 1968 Corvette was not a “Stingray”, even though the 1967 & 1969 Vette’s were Stingrays.  In fact, the ’67s were Sting Rays (2 words) and the ’69s were Stingrays (1 word).

I remember going into all 29 houses on the tour that year.  The new neighborhoods back then were all outside Man-O-War, mainly out Harrodsburg Road and Todds Road.

I guess  my thoughts on seeing this booklet again is that the higher end houses aren’t worth as much today as you’d think they would be.   Back then, pickled cabinets were all the rage.  The higher end houses had things like gold fixtures and mauve toilets.  I remember thinking that they looked good for right NOW, but like all things high style, they would become tomorrow’s eyesore.

That is why I think the higher end houses from 15 years ago haven’t appreciated as much if they have not been updated.  It costs a fortune to update any house yet alone a big one.  Plus, the buyers of those big houses don’t want to revisit the trendiest styles of 1994.  Meanwhile, the modestly priced houses back then had chrome fixtures and oak cabinets.  Those finishes are totally acceptable today for buyer’s of  average priced homes. 

Even in my 10-15 year old neighborhood I see the non-updated houses selling for just over $200,000 and the recently updated ones quickly getting over $250,000.  My own house could have been on the cover of the 1998 Tour of Homes.  It has a green counter top and floor PLUS those dreaded pickled cabinets in the bathroom. 

As I update my own house this year, I am going for more of a timeless look.  I don’t want somebody to look at it in 15 years and say “That is sooooo 2009!”

(Kind of random today, but the point is that I recommend NOT getting the trendiest finishes when you build or remodel.  They hurt you in the long run.)

Neighborhood Review: Beaumont Enclave

You know, it is amazing to me how spending a little time in an area can change your perception of it.  I have been in Beaumont Enclave several times before.  I always thought it was a nice area in a convenient spot of town, but it never really impressed me as some place that I would want to live. 

I have been working with an out of town buyer who will only be here for 3 years.  They wanted a house in a great school district that would be easy to sell when that time came.  After doing some research on which neighborhoods in SW Lexington seemed to sell the quickest, I determined that Beaumont Enclave would be a wise choice.

This area was built by Cutter Homes, which was later acquired by Beazer Homes.  Many of you may remember a few years back that Beazer replaced the brick and most windows on much of the neighborhood.  During that time, it was a little harder to sell one of them.  That is now history.  With all the repairs done, the neighborhood is pretty hot on buyer’s lists!

Why is that?  Well, for starters, you have the premier elementary school, Rosa Parks, right in the neighborhood.  You also have Dunbar High School very close by.  There is a great, open park with a walking trail.  Many of the houses on Allegheny face the park.  Add all this to the fact that you are in an area where houses usually are priced from $350,000 to over a million dollars, and you can see why people in the $200,000 to $235,000 range want to live here.

Having been in many of the houses, I can say that they have a real livable floor plan.  Most don’t seem to have a formal dining room, but nobody really uses those these days.  All the ones we saw had either a loft upstairs or a huge 4th bedroom.  From the original marketing sheets I have seen, it looks like there was a choice to make that space open or close it off if you needed the 4th bedroom.  I was amazed  that many had walk-in closets even in the secondary bedrooms!

The one by peeps are buying inspected wonderfully.  They even had a radon test done.   I was a little concerned since I have always heard that Beaumont has a higher level of radon than usual.   Their house came in at less than half the level that needs abatement.

Predictions:  This area will stay stable.  Being on the low end of a high end area, I can see new owners doing some major upgrades to their houses.  The area will support it.  Don’t know if this is a trend, but  2 of the sellers I met are buying in the more expensive parts of Beaumont.  That is always a good sign when sellers stay in the area!

Pros:  The park, Rosa Parks Elementary being in the neighborhood, Dunbar High School district, shopping/dining within Beaumont, easy to get on New Circle Road or Man O War, 5 minutes to the airport.

Cons:  Maybe some traffic when school starts and ends.  There is a no left turn sign during specific hours on Sovereign by the school, so that makes me thing there is some traffic.  Some of the houses on Allegheny back to New Circle Road and the Beaumont Apartments.  Granted these apartments are very upscale, but some buyer’s don’t want that.  You’ll probably hear some traffic from the airport, but no more than anybody else living in Southwest Lexington.

I am more of a East Lexingtonian, but if I were ever to move to that part of town, I would put Beaumont Enclave at the top of my list!

why you can’t believe everything on HGTV

I finally got satellite a few weeks ago.  About the only channel I watch is HGTV.  One of the shows that I get a kick out of is called “Bang for the Buck.”  It is where they feature 3 home owners who have all spend about the same money on a similar improvement.  They bring in a realtor and a designer to evaluate what percentage of the money spent translated to an increase in the value of the home.  Sounds simple, right?

There is more to figuring out the return on investment than just evaluating  the design and materials used in the projects.  Believe it or not, the neighborhood these houses are in play a more important role in determining the “Bang for the Buck.” 

Why is that?  The main reason is that appraisers and Realtors base a house’s value on 3 similar houses that have sold within the past 6-12 months that are ideally in the same neighborhood, or a similar one within a mile radius.  We do that because that gives us an idea about what buyer’s consider a fair price.  It is all about tracking recent buyer behavior.

Here is an extreme example to demonstrate my point.  Homeowner A has a 1300 square foot ranch in Masterson Station.  He spends $50,000 to update his kitchen.  Homeowner B has a 3000 square foot house in Beaumont and spends $50,000 to update his kitchen…….Which one will surely get the highest percentage back on that investment?  The dude in Beaumont will.  Why?  It is easier to convince a buyer for a $350,000 house to pay the seller back for doing the improvement than it is for a buyer of a $130,000 house.  Would you want to pay $180,000 for a house with a pimped out kitchen surrounded by $130,000 houses?

Something else they fail to mention when they talk about adding value is the timing of the sale.  The homeowner’s in my examples are really only going to get a maximum return if the updates are current and in good shape. What happens when all the new flashy stuff is outdated and/or worn out?  It decreases the value of the house.  Think shag carpet, paneling, mirrored walls and gold bathroom fixtures.  People spent good money on all that stuff when it was the latest fad.

~John