Tuesday, August 24, 2010

Home Sales Slip Nationally in July 2010

Nothing burns me up more than misinformation. Unfortunately, our media have fallen into the bad habit of generalizing the entire nation's economy and housing market with just a few examples of desperate markets across the nation. Yesterday's Tennessean printed an AP article that cited that July's home sales were the worst in 15 years.

While this statistic can be very accurate, the Tennessean was remiss in reporting what the Middle Tennessee market has done and is doing. Laziness in fact-gathering perpetuates nothing less than accelerated and unnecessary fear among our citizens.

Here are the facts for Middle Tennessee:

1 - There are 99 different regions in the Middle Tennessee Multiple Listing Service. Statistics are for all of those areas combined.
2 - Average SALE PRICE for July 2009 was $199,534 for residential homes, selling at 95.09% of list price with an average of 107 days on the market.
3 - Average SALE PRICE for July 2010 was $213,641 for residential homes, selling at 94.91% of list price with an average of 95 days on the market.
4 - There was an increase of $14,107, an INCREASE of 7.1% in sale price.
5 - In both months, the sale price was about 95% of list price. That screams consistency in our market.
6 - Sales in July 2009 were 2640; in July 2010 they were 1962, a difference of 26%.

Is this cause for alarm considering the INCREASE in sales for the first five months of 2010? No. In ANY market, what goes up, MUST come down. First-time home buyers RUSHED to get their homes closed prior to the June 30 deadline. It makes sense that there would not be as much activity in the month immediately following that deadline.

Personally speaking, I have helped several first-time home buyers buy homes this year. In fact, the last three closings were first-time buyers. NONE of them qualified for the tax credit because they bought after the June deadline.

With the "facts" that the media uses to justify it's articles, it is easy to see why people are afraid of our economy, but there is no justifiable reason for this fear.

Is our market lower and slower than it was three years ago? Yes, it is. There's no denying that. But has it "tanked"? No, it hasn't. Yes, it's down some, which should have been expected. There is no reason why we should expect any market to stay high all the time.

With this being said, there is hope. Not only do we have a fairly stable market in Middle Tennessee, rates have NEVER been lower. At only 4.25%, this is a great time for people to buy homes. And it's also a great time for people to sell homes. What's stopping you?

Working with buyers and sellers in today's real estate market is what Jack Jernigan does best. He knows the market and expertly guides buyers and sellers through the buying or selling process. If you're looking for a competent and professional agent to help you with a real estate need, give Jack a call at 615-373-3513.

Tuesday, August 3, 2010

Summer Is Over and School Has Begun!

In some areas of the country, the beginning of school is nothing more than a distant thought. August provides opportunities for the last hoorays of the summer, just before a September school start date. In Middle Tennessee, August marks the end of the summer and the beginning of the new school year, so WELCOME BACK, students!

Yesterday marked the first day of school for Wilson County students. My son, Hunter, made the band this year, so he's already been at school since July 19, practicing in the horrible heat we've experienced. Wednesday the 4th is the first day for Rutherford County students. It's an abbreviated day and the first full day is Monday the 9th. Thursday, August 12th is an abbreviated first day for students in Davidson County, and their first full day is the 16th. And Thursday, August 12th is the first day for Williamson County students.

Interestingly, summers are getting shorter and shorter. It seems like time flies by, with no break in it's rapid pace. If you haven't had a chance to take your family on vacation this summer, there's always Labor Day weekend, just a month away. Maybe you can head to a local spot such as Huntsville, Alabama to take in the NASA Space Center. Or maybe Hot Springs, Arkansas may be beckoning you there. And then there are always the short day trips to the Corvette Museum in Bowling Green, Kentucky, or Fall Creek Falls, not far from Cookeville.

Whatever your schedule, whether you have kids or not, it's time to gear up for the next year again .... so enjoy ...

Looking for a real estate agent who's in tune with our real estate market? If so, then give Jack Jernigan a call at 615-373-3513 or email him at jack@jackjernigan.com

Monday, August 2, 2010

The Real Nashville Real Estate Market

Lately many buyers are approaching all sellers with the idea that "sellers are desperate and will do anything to get their homes sold." Nothing could be further from the truth, so I want to set the record straight.

Buyers are actually very innocent and naive in their understanding our market. The information they have been fed is mostly propagated by the national media. The media have continued to preach a doomsday mentality in the housing market - i.e. nothing is selling and that the only way a seller can get a home sold is to give it away.

There are some markets where sellers are very desperate. Michigan is still very much that way. However, Florida is not quite as bad as it once was, and California is rebounding as well. Other markets, such as Henrico County, Virginia (the Richmond area) is actually doing very well. Overall, the midwest saw no change in their market. And the south and west markets are both up.

Here in the Nashville area, we actually have TWO real estate markets. There's the "distressed" market and the "normal" market.

Distressed sales include foreclosures and short sales. With foreclosures listings, banks have already typically discounted the price of the house, so an offer substantially below the list price would probably not "fly" very well. In fact, I have seen sale prices actually increase when the buyer placed the offer asking for closing costs to be paid. If the house does not sell within the first 30-45 days, then the foreclosing bank may lower the price. However, if a buyer intentionally waits for that to happen, he or she may "lose" the house to another buyer. It's a gamble that a buyer should not take if they absolutely love that house.

In a short sale situation, there are two strains of thought. First, a savvy and experienced short sale real estate agent will have already sent over all of the necessary paperwork to the seller's lender(s). The lender(s) will have already named the price they will accept for the house, and the agent will have added in closing costs for the selling side, any possible closing costs the buyer may ask for, the agent commissions, etc., to come up with the list price. Rarely, in our market, does this happen.

Second, and most frequently, a short sale becomes a guessing game. The seller has been unable to make his or her payments due to one or more of a variety of reasons, and the listing agent has determined a list price for a home based on area comps. No paperwork has been submitted, and sometimes the lenders have not been contacted. A good buyer's agent will know what questions to ask the listing agent so that the buyer can have appropriate expectations.

In the first situation, since the price has already been determined, the buyer should make an offer very close to the list price, and can expect a very quick response from the seller's lender(s). In the second, a long wait can and should be expected, and there will be no guarantee that the lender(s) will approve the contract that the seller and buyer have for the sale of this home.

When the listing agent has done all of the necessary homework for a possible short sale, the bank will order a BPO to determine the market value of the house. This is NOT a hard-line appraisal, and it is done by a local real estate agent. In each short sale situation, a bank is looking for a certain percentage of the market price. Percentages vary by type of loan the seller has on the property. There are several types of loans that mortgage banks hold: (1) FHA loan; (2) VA loan; (3) Conventional loan; (4) Multiple loans on the property. The multiple loans can be FHA or conventional. Each type of loan has a different percentage the bank is looking for.

In the normal market, sellers should have already priced the house to sell. A higher price indicates that the seller is unrealistic about the price or that the seller is really not motivated to sell. A realistic price reflects the current market and is an indication that the seller wants to sell the house.

However, when buying in the normal market, a buyer should expect to buy a house at a purchase price of about 95%-97% of the list price. It is unrealistic for a buyer to expect foreclosure or short sale prices in the normal market.

When working with your real estate agent, the best and first thing you should do is trust him or her to guide you through the process. The best agent will understand both the normal market and the distressed market. Your agent can provide advice for you in making your offer so that it can be a win-win situation.

When selecting an agent, look no further than Jack Jernigan. He continues to use his 10-step plan with buyers, providing them only the best and most professional service. Jack knows the two current markets in Middle Tennessee. To contact Jack, give him a call at 615-373-3513 or email him at jack@jackjernigan.com.