Southport & Brunswick County NC Real Estate Blog
5 Things To Do NOW If You Want to Buy A Home In 2012
If you’re one of the millions who has an eye on 2012 as the year in which you’ll buy a home (first or not), here are five things you can do now to put yourself on the right path:
1. Check your credit. Take my word for it: there is no bad surprise worse than a bad credit surprise. Okay, maybe there is one thing worse – a credit surprise you receive while you’re in the midst of trying to buy a home!
Recent studies have revealed that a record high number of real estate transactions are falling out of escrow, and that credit “issues” are a leading cause of these dead deals. Your best chance at catching and correcting score-lowering errors and other derogatory items before they destroy your personal American Dream is to start checking and correcting while you still have time on your side.
2. Do your research. The more rapidly the real estate market changes, the more it behooves smart buyers to study up before they jump in. And now’s the time – you can start doing online and in-person research into topics ranging from:
• Target states, cities and neighborhoods. Whether you’re relocating or simply trying to narrow down the local districts to focus on during your 2012 house hunt, now is a great time to start your online research into decision-driving factors like tax rates, school districts, neighborhood character and even prices in various areas. Resident ratings and reviews sites like Trulia and NabeWise can help you make the neighborhood-lifestyle match.
Once you narrow things down and start speaking to local agents, ask them to brief you on the local market dynamics, including how long homes typically stay on the market and whether they generally go for more or less than the asking price, so you can be smart about how you search. (And yes, Virginia, there are areas where homes sell for more than asking, even as we speak!)
• Real estate and mortgage pros. If you don’t already have your pros picked out, now is the time to get on the horn or drop an email or Facebook message to your circle of contacts, asking them for a referral to a broker or agent they love. Follow up by: checking whether these pros are active in answering questions on Trulia Voices, searching for their name and seeing what sort of feedback on them you can cull from the web, then giving them a ring and launching a conversation about whether you and they might be a good partnership.
• Short sales and REOs. Distressed property sales are not for the unwary. If you want to target upside down or foreclosed homes, or are planning to house hunt in an area where many of the listings are described as short sales or foreclosures, get educated about what you can expect from a distressed property purchase transaction before you get your heart set on a short sale.
• What you get for the money. Online house hunting is a powerful tool – especially when it’s cold and wet! But there comes a point in your house hunt where you’ve got to just get out into the actual physical homes you’re seeing online in order to get a strong, accurate sense of what home features, aesthetics and location characteristics correlate with what price points.
• Mortgage musts. You can read a bunch of articles about mortgages and get yourself pretty far down the path toward qualifying for a home loan, but you can only get a personalized action plan for a smooth road ‘home’ by talking with a local mortgage broker and having them assess your basic financials. They might say you need to move funds around, pay a bill down or off or produce some sort of documentation from your employer. And the time to start all that is now.
3. Fluff up your cash cushion. So, you’ve saved up your 3.5 percent down payment. Perhaps you saved a little extra for closing costs. Or maybe you’re even managed to put away 20% or more for your down-payment. No matter how much you’ve saved, you’ll find that you could use more once you activate your home buying action plan. Mark my words – after closing, you’ll crave extra cash to do some repairs, upgrade a couple of things, buy appliances or even just to hold onto in order to minimize your anxiety about depleting your savings!
4. Shed some stuff. Sell it. Donate it. Physical clutter creates mental clutter; clearing the physical clutter also clears the mental clutter and helps prepare for your move in advance.
5. Sit very, very still. Sometimes, the best way to further our goals is to stop tripping ourselves up. In that vein, commit right now to refrain from making any major financial moves until you buy your home. Don’t quit your job to start that personal chef business (yet), don’t pull a bunch of cash out of your savings account (without getting clearance form your mortgage pro first), and don’t start buying cars and boats on credit – even if you do love the idea of putting the red bow on the car you give your wife, like in the commercials.
I assure you, the bow you’ll be able to put on that house or condo will be much bigger, redder and more tax-advantaged!
Shopping for a Home in Winter
If you’ve been thinking about buying a new home, winter is the time to start getting serious. Here are a few reasons to brave the cold and go on a house hunt:
The winter season has fewer units on the market, and sellers tend to need to move from their property. You can use that to your advantage to get a favorable deal.
Winter has fewer buyers in the market. Looking for a home in the winter can be inconvenient, and people are less likely to move. Families also tend to be on a September to June cycle because they are unwilling to move their children to a new town in the middle of the school year. Fewer buyers means less competition.
Lenders also usually have fewer loans to process and less paperwork to deal with. With lenders less hassled, you can expect a smoother process to get approved for a mortgage. But, as reported in Bankrate.com, there are exceptions to this rule, most notably in warmer parts of the country (especially Florida), ski towns, and in parts of the country where demand is so strong that it will not slacken during the winter months.
Finally, as all savvy shoppers know, after the holiday season comes the season of bargain opportunities. This includes houses, as well.
Show Your Work (As Applied To Professional Real Estate Agents)
During our school days we always dreaded the “show your work” statement from an instructor as they were handing out a test or perhaps having us work in front of the class. Of course, we thought we knew the answer and shouldn’t have to prove it over and over again. After all, multiplying 24 x 5 and reaching the result of 120 wasn’t that difficult. The instructor should know our math skills are strong enough to easily handle the multiplication. Well, not really. The fact is the instructor needed to see the work to be sure you not only provided the correct number but that you actually understood how you reached that number.
That was school. Today’s real estate market is the real world. However, the same rule should still apply. Whether you are a Seller or a Buyer of Oak Island NC homes, Southport NC homes, Boiling Spring Lakes NC homes or St. James NC homes, you should be able to confidently ask an Agent to “show your work” when discussing the value of the property you are selling or buying. No matter how experienced or “successful” an Agent may be, simply sitting at your kitchen table and or at their desk and stating a value for the property should not suffice. A higher standard should be met. After all, Buying or Selling real estate is not determining a price for an old Coke bottle at a yard sale.
Here are three major items a seller should look for when meeting with an Agent to discuss selling a property:
- The Agent works hard to determine the market value. Market value is the highest price a buyer may be willing to pay. Working hard means he has done his computer research and actually visited all of the comparable properties, making notes to share with you. The assessed tax value really shouldn’t be part of this discussion. The market value should be based primarily on sales activity of like properties in your immediate vicinity. Other current listings should be provided and discussed but today’s real estate world is all about the sales.
- The Agent analyzes that information to recommend an initial asking price.
- The Agent puts all the information into a form that makes it easy to share with you; so that it is easy for you to understand why the Agent is making their initial asking price recommendation. The Agent should be confident and persuasive about their recommendation but in the final analysis be clear that the decision of what price to ask is up to you, the Seller.
- After you have confidently reached an initial asking price you should have the discussion about marketing; if the price is wrong all of the marketing in the world won’t sell the house.
Now, let’s talk about the standard a Buyer should set for their Agent. After all, the Buyer is bringing the money to the transaction and buying real estate is one of the most important financial transactions a person will ever be a part of. Thus, the standard for a St. James NC Buyer’s Agent should be as high as that set for a St. James NC Seller’s Agent, maybe even higher.
Here are several items that should be part of your Buyer’s Agent standard:
- Discuss, in detail, the process of house hunting, looking at homes, making an offer, negotiating the initial price and terms, completing inspections and negotiating issues that arise from the inspections; the attorney’s role and the current issues that may arise in the mortgage approval process; final inspections and closing process. In other words you want to have every question answered by the agent, even ones you didn’t know to ask until the Agent raised your awareness. You should feel comfortable knowing the Agent is representing your interests (they’re watching your back).
- The Agent should ensure that you have met with a mortgage lender so that you are confident and clear on the type of mortgage, the amount you can borrow, the payments, and the cash needed to complete the purchase. In today’s market, having a pre-approved mortgage is an absolute requirement when considering placing an offer on a home. Very few, if any, sellers will consider an offer if it does not include pre-approved financing or proof of funds available for a cash purchase.
- The Agent listens closely so he fully understands your needs and wants as you discuss the type of property you are looking for. When searching for homes to show you, he should have these needs and wants at the top of his mind.
- While showing you the homes, the Agent should ensure you are comfortable in taking the time to thoroughly look at the home, answer your questions, and alert you to any issues or problems that come to the agent’s attention. When you find a home in which you are interested the Agent should provide information on other homes sold and for sale in the immediate vicinity to give you real data and discuss any other factors on which to base the price you will offer. The Agent should provide a square foot comparison, different features and location, etc.
How does a Buyer or a Seller choose an Agent with this level of competence? Warning: Do not simply take another person’s recommendation; consider the recommendation but still look for the level of service and attention described here. Whether they are a friend, referred to you, contacted at an open house, over the Internet, or you walk into their office, review the above criteria and ask how the Agent works. Listen and ask questions to discover whether providing the level of service described here is their normal way of doing business. If the Agent is not prepared to show his work, perhaps it is time to interview another Agent.
When you find the Agent that does measure up to this standard you will have found a professional that will be valuable to you for as long as you live in the community.
As anyone who knows me will attest, I’m not one to pat my own back or toot my own horn. However, I will tell you that I do my very best to provide this level of service to each client that I am privileged to work with. If you are considering buying or selling real estate in Southport, St. James, Oak Island, Boiling Spring Lakes or anywhere else in Brunswick County NC, please call (910-538-4270) or send an email so we can have a thoughtful, factual conversation about your needs.
Price vs. Time
Price vs. Time
Contrary to the belief of many, when selling your home it’s value is determined by one thing and one thing only – what a qualified buyer is willing to pay for it. No more and no less. Sure, many sellers will argue that their home has an insurance replacement value, or an appraised value, or a tax assessed value, but unless your insurance agent, your banker, or your tax assessor is willing to write you a check for the home, guess what? None of that matters. A home without a buyer has no value in the market place. Sure it might have a value to you the seller, and it might have a value to your banker, and to your insurance agent, and to your appraiser. But none of these people are buyers.
So here is the secret to pricing your home to sell – It’s not what you think the home is worth that matters, it’s what a reasonable buyer will think your home is worth that will ultimately determine if your home will sell.
Now you may be thinking if you left it up to a buyer, they would pay you as little as possible for your home. True, they would. But in the real world every buyer knows that you, the seller, have no obligation to sell your home at any price. To purchase your home the buyer will have to make you an offer you can’t or won’t refuse. One that will motivate you to pack up your Ken and Barbie collection, hire a local mover, and wave good bye to a home full of memories.
Here is the trap that many sellers fall into; the mistaken idea that you can hold out for an inflated price and eventually the market will come to you. Wrong! Buyers are under no obligation to buy any particular home, and no amount of marketing, open houses, websites, or signage will motivate a buyer to purchase an overpriced home. Why? Because they can buy one of your neighbors homes for less! This reveals one of the most important considerations in pricing your home – Price VS Time.
Understanding Price VS Time. The dilemma that has faced buyers and sellers since the dawn of private property rights is a simple question: What is more important, price or time? Believe it or not this question underlies and controls every sellers decision to sell, and every buyers need to complete a purchase. For sellers this boils down to the need to sell within a set time frame or instead to hold out for the best possible price, and as you might guess, for buyers it’s the need to buy within a set time frame or to purchase a home for the lowest possible price.
A seller who would like to sell for top dollar should be prepared to potentially wait longer for a buyer willing to pay a premium price. Like trying to sell ice during December, a seller might have to give the stuff away just to get rid of it, but if they wait long enough, say until mid-August when temperatures crest over 100 degrees suddenly that same ice can have real value. On the flip side, a seller who needs to sell quickly, and doesn’t have time to wait, should expect to discount their price somewhat because of the limited time they have to expose their home to the market.
What’s the difference? Timing!
Buyers are in the same boat. A buyer who has the luxury of shopping for a home over a long period of time can probably wait to find a bargain, while another buyer who must buy a home in the next few weeks will probably be willing to pay a premium. Again it boils down to price vs time. So you might ask yourself what is your highest priority – Selling quickly or selling for a higher price?
When I pose this question to my own clients they often smile then answer – I want both! The funny thing is that they aren’t kidding! Most of my clients want their cake with the icing generously slathered on top. Because of this, many homeowners will attempt to put the responsibility of getting both top dollar and fast sale on the back of their hired gun, the real estate agent. The result can be summed up in one word – frustration. Why? Because no matter how much a seller yells, screams, and kicks a real estate agent, they don’t do miracles. This is why successful sellers understand that while a real estate agents job is to provide marketing, expert advice, and negotiating services, in the end they don’t own the property. They don’t make the final decisions on pricing. The seller does, and ultimately the seller’s asking price will in large part determine how slowly or quickly the home will sell.
To frame this discussion in a different way, consider what you will do at the end of your listing period and the home has not yet sold. At that point are you more likely to give it a little more time or adjust your price? I know – neither. I’ll just fire the agent! That is exactly what many sellers do, they fire their agent and reboot the marketing. Does it work? Sometimes it does, but often these sellers end up three months later in the same slow boat to nowhere.
Successful sellers, on the other hand, take ownership of their pricing decisions by making a clear decision about which is more important to them, selling quickly or selling for top dollar.
Successful sellers have learned that to price their home accurately means they need to think like a buyer, they need to get inside a buyers skin and look at the world through a buyers eyes. For instance, imagine for a minute that you are moving to another area of the country, to a city that you are completely unfamiliar with. If you were faced with buying a home in strange city what would be your first step?
If you’re like most buyers you would probably start online by viewing listings at websites like www.realtor.com or www.yahoo.com/realestate to get a general feel for local home prices. Next you might narrow your search down to a specific community or neighborhood by comparing utility costs, school reports, and crime statistics with other online tools like www.homefair.com or www.neigborhoodscout.com. Feeling good about your findings you might then venture out into the real world to begin viewing homes in person.
As a typical internet empowered real estate buyer you will look at an average of nine homes over eight weeks with the assistance of a real estate professional. By the end of your journey, like many buyers, you become so knowledgeable about the market that by the last showing you are able to guess, with reasonable accuracy, each homes listing price before your agent can even tell you.
So what happened here? As a buyer you went from a blank slate, with no impression of the market to having the ability to predict listing prices. A big leap sure, but this description is exactly what most buyers experience. But this is only the build up, the next step for buyers who have found their dream home is to review a Comparative Market Analysis.
A Comparative Market Analysis is a report that compares a specific home, often called the “subject home” with other homes in a specific neighborhood. This analysis is then used to provide an anticipated sales price or price range for the subject property. Although not formally called an appraisal, the report provides a similar function by giving home buyers and home sellers a clear understanding of the market data that might affect their opinion of value.
To learn more about using a CMA to help price your home talk to your local REALTOR®. If you are looking at Southport NC Homes For Sale, St James Homes For Sale, Oak Island Homes For Sale or Boiling Spring Lakes Homes For Sale, that would be me!!
Brunswick County NC Real Estate Tax Values vs Market Values..
Here in Brunswick County, tax valuations are required to be completed every four years. The last valuation was completed in 2007 so a valutation is due this year. In fact, the new valuation has been completed and the new assessed values have been published for Brunswick County and for most of the municipalities. To say they have caused an uproar would be a mild understatement.
Most of the problem appears to be based on the fact that our tax records have a field that says ‘Market Value’. Believe me, the tax office has no idea what the real market value is of any given property in the county. So, let’s talk about tax value vs. market value.
Property taxes are the major source of revenue for not only Brunswick County, but all of the towns/cities in this county and every county across the nation. The assessed value of your property is simply a number to be used for generating revenue. In most cases, if it happens to be close to the actual value of your property it’s coincidence. For this year, the county had no choice but to reduce values since everyone with a pulse knows the values have dropped significantly since 2007. So, the county uses a calculation to reduce values by a given percent. Then, to be sure the county does not lose revenue, the tax rate is raised. The 2010 rate was .305 which is 30 1/2 cents per $100 of assessed value. The new rate has not been offically set but I have seen/heard a rate of .420. Provided the net revenue generated for the county is the same this is called being “revenue neutral”. So, that’s an explanation of how the assessed value is used. It’s a number generated by/for a government/political body so they can take money out of your pocket and put it in theirs to provide services, etc. Certainly, you can’t believe it’s an accurate number…..
Now, let’s talk about the true Market Value of your property. First, you have to accept the fact that ALL real estate is local. As an example, homes built on pilings in the NE section of Oak Island sell for a different per-sqft amount than the exact same size and style homes on the NW side of the island. Homes built on a crawl-space or slab sell for different per-sqft amounts than a piling home on the same street, perhaps even next door. The market value of your property can only be truly determined by selling the property; the price it sells for is it’s true market value. However, at a cost of about $350 an appraisal will give you a very good idea of the true value. At no cost or obligation, most real estate professionals can/will provide pretty much the same service in the form of what is known as a CMA (Comparative Market Analysis). Either way, the value provided is determined by an analysis of the current market in the immediate vicinity of your property. This is the only way you can know what the market value of your property is without selling it.
Let’s recap. The assessed tax value is simply a number used by a government body to generate revenue. If your assessed value is close to the market value as determined by a CMA or appraisal, it’s correct in the same way a broken clock is correct twice a day. If you want to know the market value of your property, contact your local real estate professional (me!) and ask for a CMA.
I hope this blog has provided some education and perspective. If you have any questions please feel free to call or email and I’ll contact you.