The Importance of Interest

The mortgage interest a buyer receives for the purchase of a home is a major factor in how much home they can buy.  I have reported in several posts that the interest rates at this time are extremely low and can truly work to the benefit of both buyers and sellers!  Buyers for obvious reason, and for sellers, a good incentive for buyers to buy if the home is priced right.

The most recent interest rate for a 30 year fixed mortgage is 4.2%.  A rise of 1% interest rate to 5.2% may not sound like a lot, and it is still a remarkably low-interest rate, but that increase can be a substantial amount of money.

For example: A home purchased for $250,000 with an interest rate of 4.2%, 30 year fixed would result in a P&I (principle and interest) monthly amount of $1,222.54. (These examples do not factor in insurance or taxes.)

That same scenario with an interest rate of 5.2% would result in a P&I monthly amount of $1,372.79.

The difference of $150.23 may not sound like a deal breaker (although it may be in some cases) over the life of the mortgage the homeowners would pay an extra $54,082.80.

These numbers are the reason I urge people who are thinking of buying a home, or moving up to their dream home, to act now.  The low home prices and extremely low-interest rates make buying a smart choice.

As always, if I can help with any of your real estate needs, please feel free to contact me.



To buy, or not to buy, that is the question.

Over the weekend I received an email from someone who was asking if I thought this was a good time to buy real estate in Tennessee.  My reply: Absolutely! Let me tell you why I think that.

I am always amazed at watching the stock market.  The market goes down and everyone jumps on the bandwagon and wants to dump their stock.  The old adage, “Buy low and sell high” goes right out the window.  I am not a stock expert, and I too, want to get rid of stock when it is going down instead of buying more, but you have to admit, it makes sense to  buy when the price of a stock is down.

That being said, real estate is no different.  The last couple of years have been tough for the real estate market, but homes are still selling if they are priced right and builders are still building.  Sure there are areas that are harder hit than others, but in the Middle Tennessee, especially Greater Nashville and Williamson County area, sales are definitely on the rise.

In addition, the interest rates are historically low.  As of August 25, 2011 the interest rate for a 30 year fixed mortgage was 4.22% (actually went up from a 4.15%); a 15 year fixed rate is 3.44%.

The biggest indicator of the housing market was the falling prices of homes on the market.  Comparing home prices in the nation for the second quarter of 2010 to the second quarter of 2011, home prices fell 5.9%, which made homes very affordable.  The price of homes nationally comparing the first quarter of 2011 to the second quarter of 2011 only dropped .6%.  This clearly indicates a stabilizing of the prices at a time when interest rates are extremely low.

As homes continue to sell and the inventory goes down, you will eventually see an uptick in home prices and in all likelihood a rise in interest rates.  These two factors will result in getting less home for your money in the future than what you can get right now.

As the market heats up, it is important for sellers to have their home priced to sell.  Many times sellers list their home for the amount they want to get out of it.  If you are looking to sell, talk to a REALTOR® who can do a CMA and provide you with an amount to sell, not list, your house.  Having the correct price on your home is imperative.

If you are looking to buy a home, I strongly urge you to talk to a REALTOR® and a mortgage professional and see about making it happen.  Just as buying stock when the market is down, so is buying real estate.

As always, if I can help with any of your real estate needs, please don’t hesitate to contact me.  I look forward to helping you.


Technology in Real Estate

Technology is jumping by leaps and bounds and the world of real estate is no different.  I remember when I started in real estate,  the piles of paper that everyone had to sign.  It became a joke that buyers had cramps in their hands from signing all those documents.  Now, buyers in one part of the country can electronically sign their documents a half a world away and buy a house with the click  of their mouse.

One of the neatest advances is the QR code.   A QR code (abbreviated from Quick Response code) is a type of matrix  barcode (or two-dimensional code) designed to be read by smartphones. The code consists of black modules arranged in a square pattern on a white background. The information encoded may be text, a URL, or other data.   Created by Toyota subsidiary Denso Wave in 1994, the QR code is one of the most popular types of two-dimensional barcodes.

You will see these codes on many products and advertisements.  One of the areas that you will see a QR code will be on some real estate ads, especially flyers for listed homes.   You only have to have the QR application on your smartphone and when you scan the QR code, it will take you to the web site pertaining to that listing.  It is one of the many ways that technology is being used in real estate.

Technology is a tool, much like the Internet, to help buyers find the home they would like.  But after all is said and done about technology, it is important to remember that it is here to help us, not to do the work for us.  The bottom line is a REALTOR can still help you ask the questions that you may not even know need asking.  Having a professional help guide you through this maze of today’s real estate is a real plus.

As always, if I can help you with any of your real estate needs, please don’t hesitate to contact me.


Home Protection Plan – For Buyers AND Sellers

During this difficult time for real estate there is one item that I would suggest both buyers and sellers consider, and that is a Home Protection Plan.

Home Protection Plans cover a wide range of items and it is important that you read the details of the plan in its entirety.  As a real estate agent with Coldwell Banker Barnes we use American Home Shield, which is a ServiceMaster Company, but there are other options out there that buyers or sellers can use.

The Home Protection Plan has its obvious benefits for home buyers.  A basic plan will include such things as: heating, air conditioning, ductwork, plumbing, water heaters, electrical, exhaust fans, dishwashers, garbage disposals, ovens and many other things.  This coverage helps home buyers to feel at ease when making such a major purchase as a home.  It will help defray the cost of home ownership should anything go wrong during the life of the plan.

To give you some idea of repair costs, the average repair cost for an air conditioner is – $368; a furnace – $270; a dishwasher – $164.  Hopefully you will never need the service, but it is nice to know at a time when you are already dishing out money for a sundry of other expenses, that some of the appliances will be covered should anything go wrong.  Should the item be unrepairable, the plan will replace the item.  To replace these items would be more expensive: average air conditioner replacement cost – $2,009; average furnace replacement cost – $2.671; average dishwasher replacement cost – $423.

Buyers may want to talk to their REALTOR® and ask that a Home Protection Plan be provided by the seller at closing.  If the seller does not agree, the buyer will still have the option to purchase their own protection plan.  I always suggest to buyers that they look at the plan and think seriously about it, especially for existing properties.

If you are buying new construction, a Home Protection Plan will be effective after the year of coverage by the builder.  ALWAYS check with your agent for specifics of what is covered by the builder and when the plan would kick in.

If you are selling your home it might be a good idea to offer a Home Protection Plan at no cost to the buyer.  This could be a good incentive to buyers to look more seriously at your home.  This is more true the older your home is.

I have on occasion offered a Home Protection Plan to anyone listing or buying their property with me.  I have done this to entice business, but also to encourage buying during difficult times.  I have found at times that it is just the nudge needed to bring a deal together.

Whether you are a buyer or a seller I hope you will consider a Home Protection Plan and as always, if I can help you with any of your real estate needs, please feel free to contact me.


Real Estate and Earthquake Predictions

On Tuesday afternoon the east coast was shaken by a 5.8 earthquake that shook and shocked many.

 My wife and I happened to be in Maryland that day and had taken our two grandchildren to a movie about Smurfs.  The granddaughter, who is 6, is a bit of a wiggle worm and finally at one point my wife turned to the granddaughter and said, “You have to sit still, you are shaking the seats.”  She stopped her little wiggling and my wife and I looked at each other and thought, “It is still shaking!”  My wife and I looked at each other for a few more seconds, but it wasn’t until people in the movie started getting messages on their cell phones that we realized there had been an earthquake.  Yes, I know, we blamed our sweet granddaughter for an event that shook a good portion of the country.

Although that story had no direct impact on the posting today, the earthquake does.  Scientists have told us for years that there are certain places where earthquakes, however seldom, occur and that in all likelihood they will occur again.  In fact, many times the scientists simply say that it is not a question of if, but when.  They may not know exactly when, but they know they will occur again.

Real estate is the same.  Everyone you talk to in real estate will say the same thing – the market is down, but it will come back – we may not know exactly when, but we know it will.  Real estate always has, and in my opinion, always will.  Home ownership is too much a part of our way of life.  It may take several months or a few years, but it will return.  People that buy houses now, may see some drop in the price of their home, but eventually it will come up. In Williamson Co. Tennessee home prices are already stabilized and may be heading up.  A contractor for new homes in the area has already raised the prices on his new homes.  The question is: Do you wait until the prices go back up and then kick yourself for not buying.

A listing that I talked about in an earlier blog was bought by an investor several months ago.  He re-did the hardwood floors and painted the interior.  It is a great house with 3,944 square feet and it is listed for $369,000 – that is listed for less than $94 a square foot.  It is in a great location and is priced to sell.

As I have also mentioned, interest rates remain very low.  Many times lenders have buyers jump through a few more hoops, but it may be worth while.  I have one client, who did not think he could ever buy a house.  After we talked for a few minutes and he saw the prices of some of the houses he would be interested in, he is very optimistic about buying his first house.  I got him in touch with a mortgage broker who agreed that at this time, he is not going to qualify for a mortgage, but she was able to get him in the direction of what he needs to do to get in on this buyers market.  I am sure that in less than a year he will be able to buy a house.  I hope that the prices do not increase enough to price him out of the market.

I hope that anyone who is thinking about buying a home or selling their home,  will seriously consider contacting a REALTOR® to help them look at what is truly going on in the market.  Then they can make decisions based on facts and not the hype of the media, to determine what is best for them.

As always, if I can help you with any of your real estate needs, please don’t hesitate to contact me.


The Emotions of Buying or Selling Real Estate

Anyone who has ever bought or sold their home knows that there are a lot of financial and emotional  areas to consider.  Every step along the way there are decisions to be made that will affect the financial outcome of real estate transactions, and your REALTOR® will be a valuable source of information.

Whether you are buying a home or selling a home it is both a financial  and an emotional matter.  Buying a home, especially your first home, can be an extremely emotional time.  It is exciting and at times may seem over whelming, but it is important to keep a balance between the financial considerations and the emotional issues.  Your agent can be a great asset during this process and clients should be comfortable turning to their agent for that information.

For example: Before a buyer makes an offer on a house, the buyer’s agent should do a CMA (Comparative Market Analysis) to determine if the asking price is reasonable and to ensure that the buyers are not offering more than what is reasonable.   Many times home buyers will “fall in love” with a house and they will want it at any price.  Unless the buyers have  cash or at least a sizable down payment, they will still have to have an appraisal for the house in order to get a mortgage.  Mortgage companies do not operate on emotion!

Remember, the seller’s agent most likely did a CMA and advised the sellers what the home would reasonably sell for, but it is the sellers who make the ultimate decision as to the price to list the home for.  Finding common ground between the sellers and the buyers can be a tough negotiating time and the agent can be a good buffer between the two parties.

I had clients several years ago that were looking to buy their first house.  They were excited and had thought through the process and were approaching the buying experience very rational.  While showing one of the homes I noticed that the couple became very quiet as they were looking around, and you could tell this was going to be the house.  After a few minutes the husband said rather quietly “…and we could put the Christmas tree right here.”  To any buyer’s agent, that is a good sign, they are personalizing that house into their home.  But this home had a basement that was not finished and would require a considerable amount of expense on the part of the buyers that may have put it out of there reach.

That weekend they wanted to look at the house again and decided to put in an offer that to me seemed reasonable, but was down sufficiently to help with the cost of finishing the basement.  The sellers countered, but with a price that the buyers just did not want to go to.

I remembered during the time they were looking at the property that both of the buyers said their fathers were very handy at construction and could certainly help finish off the basement.  I approached them with the idea that if the sellers would provide the raw materials needed to finish the basement, would they be able to finish off the basement themselves?  They were positive that would be possible and their excitement returned that maybe, just maybe, they would be able to buy this house!

During the negotiation process, the buyers made a list of the raw materials they needed to finish off the basement.  The sellers purchased those items from Home Depot and had it delivered before the closing and we were able to complete the transaction and both sellers and buyers (and agents) were happy.  The point that I am trying to make is that many times there are strategies that agents can do to help with negotiations.  Use your agents expertise to be a buffer between the sellers and buyers.  We want these transactions to be a win-win.

In another example, I was representing the buyers and were looking at a house that was very nice, but the rooms were painted, lets just say, according to the sellers taste.  The buyers wanted to look at the house, but the seller was unable to leave at that time and said she would just stay in the back ground (but of course, within hearing range).  The buyer – wife made the comment that they would have to repaint the interior and of course the seller – wife heard that and was offended that the buyers did not like her “designer” paint.  If you have ever seen a verbal cat fight, that is what I had on my hands.  In this case, the buyers did not buy that house.  The truth of the matter is paint is a relatively inexpensive fix to a house that has a color you don’t like.

Once emotions start ruling decisions, it is difficult to find common ground.  Your agent will be in a good position to help guide you and negotiate on your behalf – use your agent.  They can be a tremendous help

As always, if I can help with any of your real estate questions or needs, please don’t hesitate to contact me.


Real Estate Agent vs. REALTOR®

Anyone who has ever purchased or sold their home has undoubtedly heard the terms real estate agent and REALTOR®.  (The term is REALTOR®, not REAL A TOR).  Many times the terms are used interchangeably, but there is a distinct difference.

When a person decides they want to get into real estate as a profession, they must take classes on real estate that includes state issues and national issues.  They also learn about the terms and a sundry of other areas involving real estate.  All states require the licensing of anyone who wants to sell real estate “for a fee and for another.”  There are some exceptions to this requirement, such as an attorney who is settling an estate, but for the most part the person must be licensed by the state as a real estate agent.

To get licensed in Tennessee, as in most states, you are required to successfully complete courses as determined by the Tennessee Real Estate Commission and pass a state mandated test consisting of two parts: National and state.  Upon completion of the classes and the passing of the exam you can then apply to the TREC for a license.

Once you have been granted a license in Tennessee you are considered a real estate agent, but in order to be active in handling real estate transactions, you must sign on with a broker, usually a company such as Coldwell Banker Barnes, which is where I signed on.

However, in order to sign on with almost any major broker, you must join the National Association of REALTORS® and herein lies the difference.

In addition to joining the NAR, and the state and local REALTOR® boards, you must also take additional classes AND adhere to NAR’s strict code of ethics.  This is not to imply that those real estate agents who are not REALTORS®, are not ethical, but having the REALTOR® designation does indicate an additional level of training and committment.    All REALTORS® must adhere to “a strict code of ethics which is based on professionalism and protection of the public”. 

Some of the Codes that REALTORS® must adhere to include:

  • Protect and promote your client’s interests, but be honest with all parties.
  • Avoid exaggeratons, misrepresentation, and concealment of pertinent facts.
  • Disclose present or contemplated interest in any property to all parties.
  • Provide equal service to all clients and customers.

These are some of the standards that REALTORS® are required to follow.  You will notice that the theme of those standards is fairness, openess and transparency to all involved.  It is aimed at providing a service to the community that creates confidence in professional real estate agents – REALTORS®.

I am proud to say that I am a real estate agent AND a REALTOR® in Tennessee.  If I can help you with any of your real estate questions, please feel free to contact me.