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615 Property Update

a weekly discussion about Nashville's real estate market 

Stay informed about Nashville real estate trends by staying in touch. We work hard to provide the most up-to-date market data in every area of the Nashville real estate market so home values are easier to understand. Sign up for our weekly edition of 615 Property Update here.

July 7, 2017

Nashville Real Estate: Strongest 2nd Q on record

Strongest Second Quarter on Record for Nashville Area Housing Market
 
In Nashville, there were 3,887 homes sold in the month of June, according to figures provided by Greater Nashville REALTORS. That figure is up .4 percent compared to the 3,869 closings reported for June 2016.
 
     Second-quarter closings are 11,155, a 2.8 percent increase from the 10,851 closings reported through the second quarter of 2016. Year-to-date closings for Greater Nashville areup 5.6 percent with 19,493 closings compared to the 18,452 closings reported through midyear 2016.

     “The second quarter was our housing market’s strongest on record,” said Greater Nashville REALTORS® President Scott Troxel. “The last time our market performed this well in the second quarter was 2006, with 11,046 closings. We’re a few units short of being ahead of midyear 2006, but with half a year left for sales, I suspect we’ll come close to the 2006 record of more than 40,000 annual closings.

     “Closings for the month of June were virtually flat. This is no surprise given the current disparity between supply and demand in the market.”

     A comparison of sales by category for June is:
 
 2016
2017 
CLOSINGS
3,869 
3,887 
 Residential 3,188 
3,263 
 Condominium  470 
418 
 Multi-Family  33 
18 
 Farms/Land/Lots 178 
188 
 
     A comparison of sales by category for the second quarter is:
 
 2016
2017 
CLOSINGS  10,851 
11,155 
 Residential  8,948 
9,210 
 Condominium  1,238 
1,234 
 Multi-Family  74 
85 
 Farms/Land/Lots  591 
626 
     A report for midyear is:
   YTD 2016
YTD 2017 
 CLOSINGS
18,452 
19,493 
 Residential  15,244 
15,975 
 Condominium  2,069 
2,230 
 Multi-Family  143 
177 
 Farms/Land/Lots  996 
1,111 
     The median residential price for a single-family home during June was $293,753, and for acondominium it was $199,350. Last year’s median residential and condominium prices for June were $260,148 and $186,495, respectively.
 
     There were 3,914 properties under contract at the end of June, compared with 3,863 at this time last year. The average number of days on the market for a single-family home was 25days.

     Inventory at the end of June was 8,842, down from 9,865 in June 2016. The current inventory of properties by category, compared to last year, is:
 
   2016 2017 
INVENTORY  9,865  8,842 
 Residential  6,288  5,859 
 Condominium  542  507 
 Multi-Family  87  62 
 Farms/Land/Lots  2,948  2,414 
     "The data for June and second quarter home sales prove our market has the necessary stamina to continue forward,” said Troxel. “Even with challenges, buyer demand is still strong and homeownership remains a priority for many of our residents. Working with a Realtor who brings knowledge, experience and professionalism to the transaction helps to remove any anxiety a buyer or seller may have about finding success in one of the country’s most thriving markets.”
Posted in Selling
June 7, 2017

Nashville's Best May on Record

NASHVILLE, Tenn. (June 7, 2017) – There were 3,943 closings reported for the month of May, according to figures provided by Greater Nashville REALTORS®. This represents an increase of 6.6 percent over the 3,698 closings reported for May 2016.

Year-to-date closings total 15,606. That is a 7 percent increase compared to the 14,583 closings reported through May 2016.

“Greater Nashville made May a record-setting month by continuing year-over-year sales gains,” said Greater Nashville REALTORS President Scott Troxel. “In spite of the low supply levels, Middle Tennessee joins the majority of the country in experiencing healthy market trends.

 “The National Association of Realtors predicts an overall annual increase in home sales of 3.5 percent. Last year, locally we experienced an annual increase of 5.6 percent over 2015; based on current pacing, I expect we will see somewhere between the estimated national prediction and the five percent increase we saw last year.”

 A comparison of sales by category for May is:

There were 3,540 properties under contract at the end of the month, compared to the 3,730 properties under contract at this time last year. The average number of days on the market for a single-family home was 27 days.

Posted in Buying, Selling
April 25, 2017

The HOAs Will Kill Ya!

If you are shopping for a condo or home and believe that you qualify for either property type of the same value, think again. Homeowners Association Fees, or HOAs diminish your purchasing power significantly. Every $100 of monthly HOA fees reduce the amount you can qualify for by $20,000 compared to the purchase of a home with no HOA. That's because your lender requires that the HOA be added to the monthly payment burden when calculating the amount you will qualify for. In today's mortgage market, every $100 of mortgage payment finances about $20,000 of a 30-year loan at 4.25%. $98.39, to be precise...

When we think of HOAs, we often think of condominiums. While almost all condos have HOA fees, many single family homes have them as well, especially those embedded in planned unit developments (PUDs) and subdivisions with common areas, pools, clubhouses, etc. It is critical to understand whether the home you've found has an HOA fee before you fall in love with it and to add that burden in your calculus.

Consider a $200,00 mortgage for a condo with a $300/month HOA fee, here's how it works out.

Monthly principal and interest equals $983.90. Add the HOA fee and your monthly payment will be calculated at $1,283.90 by the lender. Of course, the lender also adds property taxes and insurance to this number, but since that's the same whether there is an HOA or not, we can mute that impact for our purposes here.

If you qualify for the $1,283.90 monthly payment, then you can get a $200,000 loan on a condo or home with a $300 HOA fee. On the other hand, given the fact that you qualify for that monthly payment, you can also get a $260,000 loan for a home without an HOA fee. A thirty percent increase in qualifying power is something that every homebuyer should consider carefully. Yes, there are savings that come along with many HOAs including reduced utility costs and insurance costs, and an more rich amenities package to enjoy. But the HOA is a huge hit to your qualifying capability and significantly alters your options.

 

 

 

Posted in Buying
Dec. 14, 2016

What Kenny Rogers Can Teach Us About Buying/Selling Real Estate

 

What Kenny Rogers Can Teach Us About Buying and Selling Real Estate

 

Have high prices put you on the sideline?

 

Singer, Kenny Rogers gives it to us straight. “You got to know when to hold ‘em; Know when to fold ‘em….”

Now may be the time to pounce.  

Compare US economic conditions today vs. December of 2006, just before the recession.

We find that in many instances, the economy today is performing the same, if not better than it was then. However, mortgage interest rates then were about 2% higher. Bottom line: Rates are still near historic lows making purchase money extraordinarily affordable.

 

4 Keys to Success

1. Inflation was higher in 2006 (2.54% vs. 1.64%).

However since July, the inflation percentage has been on the rise. Higher inflation means higher mortgage interest rates.

2. The Federal Reserve remains the largest purchaser of mortgage-backed securities (mortgage bonds).

This is keeping demand high and bond yields artificially low.

3. Global economic news, particularly out of China and European countries, is impacting our markets and has helped bond yields to stay low.

Since interest rates follow the bond yield, they remain low as well. The unemployment numbers are essentially the same as then, and the GDP shows our economy has grown about $4.6 trillion in the last 10 years.

4. New Pro-Business Administration

Like it or not, the incoming administration is going to move heaven and earth – perhaps at the peril of long range concerns – to expand U.S. economic growth. Given the pro-business forces that are going to make up this new administration, most analysts are betting on further expansion, at least into 2019.

We have a long way to go with interest rates. We need to watch the economic data closely as they will signal further increases in rates. Keep in mind, as the economy continues to improve, interest rates will continue to rise.  We may have missed the bottom of the market with rates in the 3's, but historically speaking, “…There’ll be time enough for counting when the deal is done.”

Posted in Buying, Selling
Oct. 14, 2016

Top 10 Tax Benefits for Landlords

There are substantial tax benefits available to income property owners. It's one of the BIG FIVE that make investment real estate stand alone as the highest valued investment. The list of tax advantages is long but here are the top 10.

1. Interest

Interest is often a landlord's single biggest deductible expense. Common examples of interest that landlords can deduct include mortgage interest payments on loans used to acquire or improve rental property and interest on credit cards for goods or services used in a rental activity.

2. Depreciation

The IRS lets you depreciate the building portion of your property (minus the land) over 27.5 years, which means much of your cash flow will be tax-deferred.

3. Repairs

The costs of repairs to rental property, provided the repairs are ordinary, necessary, and reasonable in amount, are fully deductible in the year in which they are incurred. Good examples of deductible repairs include repainting, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows.

4. Local Travel

Landlords are entitled to a tax deduction whenever they drive anywhere for their rental activity. For example, when you drive to your rental building to deal with a tenant complaint or go to the hardware store to purchase a part for a repair, you can deduct your travel expenses.

5. Long Distance Travel

If you travel overnight for your rental activity, you can deduct your airfare, hotel bills, meals, and other expenses. If you plan your trip carefully, you can even mix landlord business with pleasure and still take a deduction.

6. Home Office

Provided they meet certain minimal requirements, landlords may deduct their home office expenses from their taxable income. This deduction applies not only to space devoted to office work, but also to a workshop or any other home workspace you use for your rental business. This is true whether you own your home or apartment or are a renter.

7. Employees and Independent Contractors

Whenever you hire anyone to perform services for your rental activity, you can deduct their wages as a rental business expense. This is true whether the worker is an employee or an independent contractor.

8. Casualty and Theft Losses

If your rental property is damaged or destroyed from a sudden event like a fire or flood, you may be able to obtain a tax deduction for all or part of your loss.

9. Insurance

You can deduct the premiums you pay for almost any insurance for your rental activity. This includes fire, theft, and flood insurance for rental property, as well as landlord liability insurance. And if you have employees, you can deduct the cost of their health and workers' compensation insurance.

10. Legal and Professional Services

Finally, you can deduct fees that you pay to attorneys, accountants, property management companies, real estate investment advisors, and other professionals. You can deduct these fees as operating expenses as long as the fees are paid for work related to your rental activity.

 

Did you know:

·    Landlords can greatly increase the depreciation deductions they receive the first few years they own rental property by using segmented depreciation.

·   Careful planning can permit you to deduct, in a single year, the cost of improvements to rental property that you would otherwise have to deduct over 27.5 years.

·   You can rent out a vacation home tax-free, in some cases.

·   Most small landlords can deduct up to $25,000 in rental property losses each year.

·   A special tax rule permits some landlords to deduct 100% of their rental property losses every year, no matter how much.

·   People who rent property to their family or friends can lose virtually all of their tax deductions.

I Can Help

I have over 10 years experience buying and selling investment real estate including single-family homes, apartment buildings, and small retail centers. If building a better retirement strategy is important to you, click the Contact button above to schedule a time to talk.

Oct. 13, 2016

How to Beat the Market's Bouncing Ball

Your Retirement

How is your 401-K or IRA performing? Will you have enough to retire on? Since 2000, firms have abandoned Defined Benefits (DB) pensions in favor of Defined Contribution (DC) retirement plans. Now, you likely have no assured amount to retire on and all you can do is watch the stock market bounce your nest egg around like a globetrotter. Despite the upward market in recent years, volatility has wrecked performance such that typical returns for an individual are 5-6% before inflation. 

The reality of our new self-funding retirement environment is that once you factor in inflation, it is very difficult to get ahead beyond a cash benefit that might last two or three years. Even if you sock away $500,000, will that last? Your retirement will likely be greater than 20 years. And more frightening, the last three to five years may require expensive care. 

There is an even scarier scenario that has gone unnoticed - or at least, unchallenged - in financial planning since DC plans have gained prominence. Nobel Prize Economist, Robert C. Merton,  recently wrote for Harvard Business Review a scathing criticism of the new regulations related to retirement savings accounts. "Our approach to saving is all wrong: We need to think about monthly income, not net worth." 

Consider Investment Real Estate

Have you considered rental property as the appropriate solution for retirement income? For many, building a rental income strategy for retirement is the best way to prepare for the future. You don’t even need to produce a profit now to make the purchase worthwhile. Barbara Pietrowski, a CPA in Roanoke, Virginia, specializes in rental real estate. "Real estate can be a wonderful asset to have in retirement, because when you have tenants, you have money coming in every month and, if you don't have pensions, that's important." 

Andrew McLean, author of “Investing in Real Estate” says, "Rents are always going to go up; the value of your property is almost always going to go up and most of your costs are going to stay the same, particularly if you utilize a fixed-rate mortgage. Eventually, even if you're only making a little in the beginning, you will watch your income climb over the years."

Home Price indexConsider the market results for the US and Nashville over the past 36 years. Home values have risen 5.4% per year every year on average. If this was the only attribute of investing in real estate, then real estate would not be a superior investment to the stock market. In fact, in looking at the chart, one might reasonably predict that the future trend is to flatten or even recede somewhat. And it is exactly this limited view that keeps many investors out of the real estate market. But the chart fails to demonstrate all the additional benefits that come from real estate ownership. 

Comparing the Stock Market

According to Ben Carlson, financial columnist and blogger, the stock market has gone up by an average of 6.5% per year, on top of inflation since 1982. But prior to 1982, over a long stretch of history, it went up by one-tenth as much. That's right. From 2015 through 1982, the average annual rise of the stock market, after accounting for inflation, was just 0.6% Yikes. Many feel that conditions are currently emerging that might bring a return to that kind of stagnation in the years ahead. But even if there is not a coming stagnation, this simply isn't comparable to the financial benefit of real estate.

With real estate, an investor gets myriad additional benefits:

  1. income
  2. asset appreciation
  3. leverage
  4. tax benefits
  5. inflation hedge

With stocks, an investor gets

  1. income (if dividend exists)
  2. asset appreciation
  3. leverage (in upward market)

With bonds, an investor gets

  1. income
  2. tax benefits 
  3. inflation hedge

Read more about the superior advantages to real estate investing here. 

Oct. 5, 2016

5 Unique Benefits of Owning Investment Real Estate

“The best investment on earth is earth.”

-Louis Glickman

While the stock market continues to show significant volatility, and less risky asset classes such as treasuries offer little to no return on investment, investment real estate continues to provide an excellent risk/reward profile to investors.

1. Substantial Current Income and Spendable Cash

One of the biggest benefits to Commercial Real Estate Investments is that the assets are generally secured by leases which provide a regular income stream, significantly higher than typical stock dividend yields. Click to see a comparison between stock dividends vs commercial real estate dividends (otherwise known as capitalization rates).

2. Excellent Appreciation of Asset Value

Commercial Real Estate Investments have historically provided excellent appreciation in value that meet and exceed other investment types.  Properties generally can go up in value from internal factors such as proactive management – making cost-effective improvements to the property that improve the usability and desirability of the asset, and external factors such as supply and demand imbalances.

3. Accumulate Significant Equity through Leverage

Another important characteristic of commercial real estate investing is the ability to place debt on the asset which is several times the original equity. This allows you to buy more assets with less money and significantly magnify your equity as the loans are paid down. Moreover, when investors place “positive leverage” on an asset, they effectively multiply their net spendable cash by borrowing money at a lower cost than their property returns back to them. A quick example: your friend loans you $10 and asks for $11 back, one dollar interest….you immediately loan that $10 to someone else and ask for $2 interest…paying back the $11 owed and making a profit with no additional investment…you just participated in positive leverage. This happens all the time in commercial real estate investments.

4. Provides a Superior Hedge Against Inflation

According to a recent report by expert Martha S Peyton, Ph.D. and head of Global Real Estate Strategy for TIAA-CREF, commercial real estate investments had the highest correlation to inflation when compared to other asset classes such as the S&P 500, 10 year treasuries, and corporate bonds.  As the United States, Asia, and Europe continue to carry out policies to print more money to spur economic growth, it is important to recognize the benefits of owning commercial real estate as a hedge against inflation.  Generally speaking, when inflation occurs, the price of real estate, particularly multi-tenant assets that have a high ratio of labor and replacement costs, will also rise.

5. Tax Benefits

The US Tax code benefits real estate owners in a number of ways.  Mortgage interest and depreciation deductions can shield a large portion of your income stream.   It is recommended that one consults his/her tax advisor to understand all of the benefits.

BONUS: Unique Security Advantage

Commercial Real Estate is one of the few investment classes that is a hard asset that has meaningful intrinsic value. The property’s land has value, as does the structure itself. By choosing the location and asset quality wisely, investors can benefit from the security of knowing that they own an asset that has the potential to earn income regardless of what happens to the existing tenant(s). For this reason, commercial real estate investments do not fluctuate with the same volatility as the stock market.  Review this case study of a stock versus the value of its underlying real estate.

July 14, 2016

Retirement: 5 Reasons to Own Investment Real Estate

Retirement is coming like a speeding locomotive. Will you be ready? You're busier than a one-legged man in a butt-kicking contest and yet you are expected to spend time evaluating your IRA or 401-K performance like a fund manager. Is that realistic? Even if your portfolio performs well in the short run, will the assets you are trying to pick today actually be where you need them to be when its time to turn them into income? What about the tax implications? Perhaps you believe you will be in a lower tax bracket by then. Maybe, but without the tax credits that come from large mortgage interest deductions, business expenses and dependent children, most find that the tax burden remains unchanged even with a lower overall tax rate. If you are ten years from retirement, you can avoid these risks by initiating a strategy to build constant and ever-growing income by accumulating investment real estate. 

Here are 4 reasons investment real estate is superior to betting on the stock market.

1.  Income

Investment real estate provides perpetual income superior to stock dividend income. Even with a rational debt service payment and typical fixed and variable expenses, the cash-on-cash return will exceed stock dividends because of the unique ability to use leverage and historically low mortgage rates to control the asset. 

2.  Appreciation

When appropriately leveraged with a mortgage, you can expect investment real estate to provide an annual return of 9 to 18%, far superior to latter-day stock market performance, particularly in light of broader global risks that may lie ahead.

3.  Leverage

Another important characteristic of commercial real estate investing is the ability to place debt on the asset which is several times the original equity. This allows you to buy more assets with less money and significantly magnify your equity as the loans are paid down. Moreover, when investors place “positive leverage” on an asset, they effectively multiply their net spendable cash by borrowing money at a lower cost than their property returns back to them. A quick example: your friend loans you $10 and asks for $11 back, one dollar interest….you immediately loan that $10 to someone else and ask for $2 interest…paying back the $11 owed and making a profit with no additional investment…you just participated in positive leverage. This happens all the time in commercial real estate investments.

4. Hedge against Inflation

Real estate is a great hedge against inflation as historically, rental rates and home prices rise with inflation. This provides an inflation hedge for both your rental income and sale of the property. Since your mortgage payments will not increase with inflation, it offers a benefit over time.

5. Tax benefits 

 

Rental real estate offers more tax benefits than any other investment. In fact, its not even close. Interest, depreciation, repairs, travel, office expenses, admin and other employees, insurance, professional costs, make for a good start. Strategic planning can take your advantages even further. For example, Landlords can greatly increase the depreciation deductions they receive the first few years they own rental property by using segmented depreciation. Careful planning can permit you to deduct, in a single year, the cost of improvements to rental property that you would otherwise have to deduct over 27.5 years. Most small landlords can deduct up to $25,000 in rental property losses each year, and a special tax rule permits some landlords to deduct 100% of their rental property losses every year, no matter how much.

 

 

June 20, 2016

3 Must-Dos for Sellers

Selling real estate in this market can be a mind-blower. The twists and turns, the surprises, the delays, the egos... Its enough to make even the most serene grandma a homicidal maniac.  If it is time for you to sell your home or investment property, take some advice from someone who has closed over seventy transactions. Most importantly, know this: It doesn't have to be a bad experience. In fact, it can and should be a moment of extreme joy, liberation, and strength. Here is my short list of must-dos. Follow this advice and you will come away from the experience counting profits with a smile on your face. Ignore it and you might end up in a padded room sucking your thumb in the fetal position quietly muttering atrocities you plan to visit on the relatives of certain past acquaintances.

Most of the difficulties with selling your home will be human problems. Said another way, most of your problems will be between your ears. There. I said it. Perhaps it's unwise for me, a lowly broker, to suggest that you might have a tendency to get in your own way, but it has to be said. Moreover, when dividing up the sins between parties, I see much more tendency toward turpitude among sellers than with buyers - at least in this market. As a member of the transaction, one should always be asking himself whether the great lengths he is going to in order to maintain the upper hand are worth the $271 dollars it might net him. Weighed against the lost humanity and the enemy - or enemies - he is creating for the remainder of his days, is it worth it?

Keeping the Main Thing the Main Thing

Sellers, when challenged by buyers who don't seem to understand that the property is in fact, priceless, tend to take offense at the notion that their home is not worth the full asking price and more. After all, the flower boxes below the front windows were built by you, painted by you, hung by you, repaired and maintained by you. The wall colors were chosen so carefully and in fact were repainted twice to make them absolutely perfect - by you. It's the home you have lived your lives in, raised your kids in, where you embraced over victories and defeats. No amount of money is too much to spend for such hallowed ground.

I get it. I am a homeowner, too. Rest assured, I too, would (will) need constant reminding that my home, for the next family, is but a blank slate of possibilities - just like it was when I moved in. Yes, my memories are real, and true, and worthy of commemoration and honor, but they are my memories. Sadly, while memories are arguably the most relevant possession one might have, they have no market value. The important thing here is to extract the highest price the market will provide for your home given the time horizon your personal situation will afford.  We'll talk more about time horizon below but it is not job-1.

1. Invest in The Leadership of a Competent Broker

The first word in this subtitle is chosen carefully. To invest infers that a positive return is expected. Some sellers believe that engaging a listing broker is an unnecessary expense; a cost that diminishes net earnings. Further, most of these sellers feel even more strongly that engaging in an exclusive right to sell agreement with a broker is overly constraining and that it might even diminish exposure. Both of these notions are misguided. The truth is that the money you allocate to a broker through an exclusive rep agreement will make you money.

For Mobilizing the Broker Community

An excellent listing agent is a market maker for your home. She strategically leads agents into the full knowledge of your home by enumerating the salient features enthusiastically and cogently. Brokers are very busy, especially if they are good at what they do. A great listing agent understands that it is critical to get the attention of his fellow brokers' regarding your home in the final days before it goes live on MLS. This opportunity to see the property before it hits the market is a real and impactful advantage, especially in today's market. Many brokers don't even work the buy-side without this kind of advantage because the fallout of lost bids can be demoralizing for their buyer-client. Such lost deals are notorious for causing buyers to move on to search for new representation, even though it is usually caused by a factor beyond the broker's control, such as a lack of aggressiveness in the financial terms. So for the listing agent, the key is to push the right buttons, to unlock previous conversations from recent memory, to call to mind all the clients an agent has spoken to in the past 30 days that might be interested in your home. Providing brokers with a preemptive look at your home and arming them with two or three reasons to buy literally launch them into attack mode. By the way, this is the most important reason to choose a large local brokerage firm who's culture is interactive and cooperative. Every firm has its own unique culture. What you are looking for is lots of busy brokers who interact extensively. Do your research. You will find that Village Real Estate Services is Number 1

For Objectivity

You may not realize it, but you need to be led through this process. You need an advocate that will work for your best interests but is dispassionate about the intrinsics that lack market value. Why? Objectivity. You lack it just like I lack it when I am selling my home. I know the value that a seller's representative has to the transaction. I would never even consider selling my home without an objective, dispassionate agent that I trust helping me through the mine fields. Yes, the final word will always rest with me, the seller, but unless I have heard from a trusted but impartial advocate, my bottle rocket may set the barn on fire. I've seen the unintended damage I can do to myself and it's not pretty. If you intend to live out your days with peace and joy, then you need objectivity like a flower needs rain. It is absolutely vital to your interest. A good agent will help you "be the buyer" long enough to determine if the complaint is a condition or merely an objection. Conditions must be dealt with carefully because conditions are unscalable walls, whereas objections are easily stepped over.

For Market Pulse

So you want to dispose of your largest asset alone. You want to be an independent operative in an evolving market with ever-changing dynamics, even though you spend all day every day doing something completely different. Did I mention this is your largest asset? As much as you need objectivity, you need relevant market information about lending, insurance, national, state, and local laws regarding disclosure, and more. There is simply no way you can execute this task well on your own. And why would you try? When a real buyer sees a For Sale By Owner sign in a yard, he assumes one of five things and only one is good.

  1. that you, the seller, are greedy, smarter than everyone else, or both;
  2. that you are not committed to selling, but merely 'fishing' for irrational offers;
  3. that you are a seller but remain irrational about your home's value;
  4. that you intend to operate below the "property condition disclosure" radar that brokers - and the state of Tennessee - require of all home sellers.  
  5. that you, the seller, do not have to pay a selling commission and instead, intend to offer it to the buyer.

Hear me now, believe me later. FSBOs repel more good buyers than they attract.

They attract insidious practitioners that intend to tie your property up without closing for months, even years. If you enter a transaction without the kind of constraints that force a buyer to perform in explicit ways with explicit deadlines (like the forms provided by every member of the Tennessee Association of Realtors), then you are asking for trouble. Even with an honest buyer, the lack of a broker acting as mediator and facilitator on such things as property inspections, financing, insurance, and coordinating myriad interconnected deadlines, the probability of success is in the single-digits. 

2. Prepare the Home Before You Go Public

Several years ago, I put my home on the market hoping to catch the wave of ascending prices. Even though I was licensed, I hired a very successful agent with whom I was familiar to list the property. When I met with the agent and agreed on the asking price and terms, he told me to take 30 days and work though a punch list of needed repairs and amendments. I said, "Thirty days?! We don't have time! We need to get this on the market!" So against my agent's advice, we listed, launched, and wasted a dozen early visits because the home did not inspire the necessary first impression that is so important. Your best days are the first days. Don't expect your home to stand up well against the homes where this factor has been dealt with expertly. It won't.

3. Prepare Your Family - and Yourself - for Living in a Staged House

For the next few months, your house will not feel like home. Keeping it show-room straight, constantly maintaining readiness for buyers to view your home with very little notice, takes discipline, focus, and leadership. The more you can speak about this prior to the launch date the better. Don't start talking to your kids about the importance of this after a meltdown has happened. Preparing everyone for a period of weirdness and imposition before it starts will grease the wheels. And the more it is discussed, the better. 

Posted in Selling
June 19, 2016

3 Things You Must Do to Get the Home You Want

Whether this is your very first home or your tenth, its always exciting! I want your purchase experience to be as painless as possible. You've probably heard by now that the best homes are often sold very quickly. Today, it is not uncommon to see multiple at-list offers within the first few days of a home's marketing period. That means that as a buyer, you need to make it as easy as possible for a Seller to say yes to you. For that to happen, there are 3 things you must do to get the home you want. 

1. Get a competent broker working for you.

Buying real estate in this market has become a sophisticated process. It is complicated further by the fact that this is a seller's market. But that doesn't mean you can't get what you want and get it at price and terms you need. What it does mean is that you need - more than ever - a competent broker representing your interests. A competent broker won't just find you your dream home, but will lead the entire process from showing to close. A competent broker will schedule inspections, maintain compliance with deadlines, facilitate connections with lenders, insurance agents, various inspectors, and a host of necessary items that must be accomplished along the way. If you are working with a broker without a Buyer's Representation Agreement (BRA), you may be working with someone who is not qualified to get you through the transaction. I know. It seems less invasive. It seems smarter. But after $300 million in real estate transactions I can say with confidence that no broker worth his or her salt will give more than casual attention to your interests if a pay check may not be forthcoming.  Hear me now, believe me later. This is a must. Read more about hiring a competent broker here.

2. Sell or lease your current home.

In buyers' markets, sellers are often forced to accept offers that include the contingency of the buyer's own home selling prior to closing. That is not the market we are in! In order for sellers to be interested in accepting your offer, you will have to take care of this issue either by first selling your home, or by signing a lease as landlord with a tenant. Most lenders and loan products accept written leases of at least six months as an offset to your monthly expenses. If you qualify with that lease payment factored in, then you should be approved. 

3. Get Pre-approved

There is a big difference between being pre-qualified and being pre-approved. Pre-qualification is useless. It really means nothing because it is based on a review if what a person claims to be his or her financial picture but it has not been verified by a lender. On the other hand, pre-approval means that a lender has verified your income and credit history and approved you for a maximum loan amount. Over the years I've watched clients lose their dream home simply because they failed to get their ducks in a a row. They found the home they wanted, but couldn't compete with another buyer that was holding a pre-approval letter. I've even seen sellers accept offers for less money because the surety of pre-approval was more important than that last five thousand dollars. This also goes in the category of "hear me now, believe me later..." Get this done before the searching begins. Your broker will assist you in putting together the entire package and assist with communication and other 3rd party solutions. 

  

Posted in Selling