The Bluffton City Sun

January 2007

REAL ESTATE

Is Now A Good Time to Buy (or Sell)?

A one word answer: Yes and No. Let me explain.

If you don’t have to sell your property right now, don’t. Inventory is at an all-time high since early 2002, as opportunistic sellers are still trying to cash-in on the appreciation run-up that hit the wall in late 2005. When buyers (and investors) were flocking here in droves, many sellers said, “Why not test the market” and popped their property for sale to see if someone would “pay their price.” The aftermath of the Katrina and Rita double-punch accelerated a softening of demand, as the market had finally reached the point where prices couldn’t continue to escalate at the same torrid pace. Demand has to pick-up (and there are signs it’s improving) and inventory needs to shrink before prices can start trending upward again.

Of course, with the ying, there’s always the yang. Attention Buyers: you’re in the driver’s seat and you’ve got the pedal to the medal. If you are in the market (primary residence or vacation home), you have a unique opportunity. You have a wide variety of properties to choose from and there’s someone in the bunch that is motivated to sell. Selection has not been this attractive since I can remember. The rise in the prime rate over the last year hasn’t impacted financing, as long-term interest rates are actually lower now than a year ago. So Buyers benefit from the best of all worlds: 1) Affordable financing 2) Wide-selection of inventory  3) (a hand-full of) Motivated Sellers.

Your trusted Realtor’sâ due diligence can provide you valuable data, which will give you an edge in your quest to find the right property at the right price.

"Reprinted courtesy of The Bluffton City Sun."

The Bluffton City Sun

December 2006

REAL ESTATE

Local Realtors say, “Bah – Humbug!” Well, not really

The real estate market juggernaut of the last three and a half years more closely resembles a horse and buggy as the year comes to an end. The old saying, “You don’t know what you’ve got ‘til it’s gone,” truly applies to those right-place, right-time realtors who were competent “order takers” in most cases over the last couple years, courtesy of record-low interest rates and the insatiable appetite of real estate investors.  Those were the good ol’ days; now it’s time to hunker down and do a reality check.

The holiday season is one of reflection – both to acknowledge all of our blessings but to also review and evaluate what’s transpired over the past year and what we should expect in 2007. Since April, the local real estate market has down-shifted into low gear, as the vast sea of potential buyers looks more like a kitchen faucet trickle. Sellers abound (and the number continues to grow) and some have wisely adjusted their selling price expectations to compensate for the anemic market.  Homes are selling; but not at the torrid pace witnessed over the 2004-2005 period. Compare our current absorption rates with 1990 or 1991 and the numbers are actually better, so we do have reason to celebrate.

So what about next year? Boom or bust? My guess is neither. Interest rates are still favorable (and improving), “Baby Boomers” continue to migrate south in search of our Lowcounty lifestyle and even though there’s too much inventory for sale, the area hasn’t been overbuilt like Florida and Nevada. Bluffton builders may be in a crunch the first half of next year, but by fall, I predict demand will pick up and prices will start edging upward. So this holiday season when you see your favorite Realtorâ, smile and offer an enthusiastic “Merry Christmas!” because they could probably use a dose of good cheer.

The Real Deal Maker

You’ve had your home on the market a couple of weeks and right out of the blocks you get a great offer, 98% of your list price. You’re smiling all the way to the bank. But the offer includes a clause that states, “Subject to appraisal,” which means the buyer is going to have your home appraised to see if in fact it will appraise for the selling price. If it doesn’t, no deal; or, you have the option to renegotiate at a lower purchase price.

Let’s say the buyer does not include a “Subject to appraisal” clause in the contract, but has a financing contingency (purchase is subject to buyer getting approved for a loan), for 80% of the purchase price (ex: $400,000 home would require a $320,000 loan). The buyer must get approved for the loan based on the contract price. The buyer’s lender contacts a licensed appraiser who completes an appraisal of the home to verify it’s “real value” by taking into consideration, past like-property closed sales, value trends, property replacement cost, land values, etc.

If the appraisal comes in at $380,000, compared to the contract price of $400,000, the buyer will now only be able to borrow 80% of $380,000 instead of $400,000, which will then require a greater downpayment to purchase the home. As the real estate market fluctuates, appraised values can go up and come down. A home that was appraised in May of 2005 may be valued less today based on recent closed sales of similar homes.

If your contemplating selling your home and you don’t know what the value is, you can ask a realtor for their opinion based on recent sales activity. Real estate agents have a tendency to be a bit more optimistic, but they have access to valuable information that will be helpful. But, if you want the “real deal” hire an appraiser to evaluate the value of your home and provide you a “bankable” number. Having an appraisal will help you in pricing your home (you can always have a higher asking price) and it will give you an accurate assessment of what your home is worth “today.” Appraisals generally start around $350 to $400.