Second homes sales fell from approximately 1,050,000 in 2006 to approximately 550,000 in 2009 (nearly 48% drop)

• Approximately 70% of second/vacation home buyers obtain financing
• Nationwide, home prices appear to be stabilizing (although I haven't seen evidence of that yet in the Franklin market)
• 3% of all home sales nationwide are to foreign buyers. Mr. Yun feels that the global economy is here to stay (including in real estate sales)
• With the Euro's decline and the crisis in Greece, foreign investors are increasingly viewing real estate in the US as a good investment
• It is estimated that it will take approximately 4 years for a full job recovery (which has a major effect on the real estate market)
• Foreclosures are continuing an uphill spike with Short Sales adding to the 'distressed property' sales (which negatively impacts property values) – THIS ISN"T GOING AWAY FOR AWHILE so if you plan to sell property in the near term, you need to price it to sell or wait the market out!!!!  
• Mortgage rates will increase from ~5% to ~7% over the next 5 years
• New home inventory is at its' lowest since the 1990's but the forecast for new home starts will slowly rise.  New home starts will mean additional competition to sellers of existing homes.

So, what does this all mean?  Well, no one knows for sure how it will all play out.  I would deduce that, based on the information presented above, the housing market will continue to be challenged for the near term.  With inventory levels at an all time high in the Franklin MLS and average sales prices continuing a downward trend (as of 7/9/2010), sellers MUST be realistic in list prices.  They need to present a spotless and uncluttered home to potential buyers.  Buyers have the upper hand in this market.  There has never in recent times been a better time to buy!  Almost all buyers will have 2-3 homes selected with which they are happy.  If the negotiations for their first choice don't pan out, they know they can move on to the next.  Buyers and sellers must stay current with real estate information.  What is selling, what isn't selling and why, statistics such as the average selling price compared to the list price, are just a few examples of what buyers and sellers need to know.  Working with a REALTOR®, is in my opinion, the best way to keep this competitive edge.  It's a complicated world, and a complicated real estate market that changes daily!  AND, I LOVE IT.  What other field is as challenging and rewarding?  You can see Mr. Yun's full presentation by clicking here:

The tax credit for first time home buyers (and existing home owners) is now GONE!  What was a good opportunity for first time buyers to get up to $8,000 and existing homeowners to get up to $6,500 from Uncle Sam is now behind us.  During the last year, I had two clients who qualified (both existing homeowners).  That doesn't seem like much but in other markets that are not vacation destinations, the impact was likely much better.  Here in Macon County, many of the homes sold are vacation (second homes) or investment properties.  In order to qualify for the tax credit, the home purchased had to have been a primary residence.  Therefore, the tax credit programs didn't impact the Macon County area as much as it did other areas. 

The good news is that it appears that the economy is turning around albeit v...e...r...y slowly.  As of 5/3/2010, statistics from the Franklin MLS show that a total of 97 residences were sold between January 1, 2010 - May 3, 2010.  Compare that to last years' sales (January 1 - May 3 of 2009) of 84 residences.  So, from a transaction volume, sales are up about 13.5%.  Some of that may very well be a result of the homebuyer tax credit that just expired. The average price per transaction however is down approximately 12.4% (from $151,345 in 2009 to $132,595 in 2010).  Economists predict that this recovery will be much slower than previous downturns. 

Former President Ronald Reagan once said, "Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States".  Let's not forget that in Macon County we excel in the fostering, creation and operation of the entrepreneurial spirit and its resulting business ventures!  It's up to us to revive a strong economy in Macon County and WE CAN DO IT! 

I recently spoke with an acquaintance that has had their home listed for 18 months.  Of course, I would like to think that had he listed with me, the home would have sold long ago.  Regardless, he is in an uncomfortable and difficult situation as he can no longer make his loan payments. The home is no longer worth what he paid for it.  In addition, he is facing a major illness and he is no longer living in the home.  He mentioned to me that he is 'going to give the home back to the bank'.  Unfortunately, that isn't how it works.  Giving the home back to the bank, "a deed in lieu of foreclosure", may work in selective situations in a robust real estate market but it is almost non-existent in a poor real estate market.  Banks don't want or need real estate.  They need money to continue to do business.  So, what will likely happen in this situation is that the homeowner will wait, receive late notice after late notice and finally, the lender will foreclose.  This is not what you want to happen!  The consequences to your credit report are financially crippling (could be a 200 point credit score hit that stays on your credit report for seven (7) years)! Keep in mind that your credit report is queried not just for applying for new credit.  When you interview for a job, you may be asked to give the employer access to check your credit! Some employers who find poor credit for prospective employees will interpret this in a negative light.

The huge increase in foreclosures has resulted in lenders owning real estate they don't want.  The government knows that real estate is a piece of the bigger economic picture and is finding ways to incent economic growth.  One way they are working to help this market segment is to create programs that incent lenders to re-work the loan (lower payments) and ultimately keep homeowners in their homes.  The lenders qualify to receive TARP (Troubled Asset Relief Program) funds from the government, and the lender offers distressed customers with possible mortgage assistance.  HAMP (Home Affordable Modification Program) and HAFA (Home Affordable Foreclosure Alternatives Progam) are programs established with the goal of keeping people in their home.   Visit http://makinghomeaffordable.gov/modification_eligibility.html to see if you qualify for HAMP or visit http://makinghomeaffordable.gov/hafa.html  to see if you qualify for HAFA.  Don't wait until you are 4-6 months behind in your mortgage payments.  If you are even one payment behind, check into it today.

The Home buyer tax credit deadline is looming.  Buyers have until April 30, 2010 to have a home under contract and must have the transaction closed on or before June 30, 2010.  First time home buyers (those who have not owned a home for at least the past 3 years) may qualify for up to $8,000 in tax credit.  Current homeowners looking for a replacement primary residence may qualify for up to $6,500 in tax credit.  There are income qualifications.  Go to: http://www.irs.gov/newsroom/article/0,,id=215791,00.html for more information on the credit and qualifications.  Don't miss out on this unprecedented offering by none other than the United States government!

Everyone wants to make a deal these days.  Buyers, in my opinion, should consider the situation.  The Franklin real estate market, for example, is not like a major metropolitan area that is swamped with foreclosures.  Our foreclosure rate is unusually low. Your perception of what a good deal is can be very different than what the 'market' says is a good deal.

There is a lot of hype in the market over foreclosures.  Buyers who climb off the fence into home buying want the perfect home, in perfect condition, with the perfect view, on a perfect road, with perfect amenities and they want it for next to nothing.  Some think it is their due based on the economy.

In real estate there is something known as "market value".  Market value is whatever someone is willing to pay for a property.  If you pay attention to the market in which you are looking, you will get the feel of the market value of the perspective properties.  Your money may not buy the perfect home on a mountain just because the market is not as hot as it once was. You still pay market value. In the example of foreclosures in the Franklin area, if a decent one hits the market (decent meaning the lender is motivated and realistic based on local market conditions), lenders have an offer or multiple offers within a few days and the lender doesn't have to accept your low ball offer.

So, the lesson is that not every market is desperate. Some are doing quite well, and here in Franklin the market has picked up nicely in the past few months.  Here, a good home at a good price is still going to get a good offer. Be realistic about what you can accomplish. The reality is that you can get a deal when you compare the price with prices of several years ago, but market value prevails.

Foreclosures are not always the best value in the Franklin area.  Why?  First, the real estate market in the greater Franklin area has long been a second home and retirement market.  Up until mid 2007 (when the mortgage meltdown hit), a large number of homes purchased in this area were cash sales.  Many of the homes sold had no mortgages.  They were owned free and clear from the get-go.  So, our area does not have a large inventory of foreclosures which is much different from the national scene.  Nationally, one of every three homes that went to closing in May was a "distressed" situation -- foreclosure or short sale. In some hard-hit areas, the percentage was much higher -- well over half.

Second, many of the foreclosures in the Franklin area are owned by local or regional lenders.  These local/regional lenders don't have the foreclosure experience and also don't have as much to lose as the national loan holders (ie: Fannie Mae/Freddie Mac).  Many of them are not desperate to sell so they price the properties at or near the appraised value.  The Franklin area rarely sees a foreclosure sell at less than 50% of the list price but it is common in large metropolitan markets. 

Therefore, foreclosures in this local market may not be the best purchase value as other homes.  This is true especially for homes that have been on the market a long time.  I advise owners to hold off listing at all until the market improved – unless they have to sell.  So, many of the properties on the market now, are motivated sellers.  With more than 750 homes on the Franklin MLS (as of July 1), the competition is fierce and prices are low, low, low.

If you plan on purchasing a home in today’s market and you need financing, you need to know what your DTI ratios are.  Don’t know what DTI is?  It stands for Debt-To-Income and it is a crucial piece in the lenders qualification process.   DTI ratios are crucial to determining an affordable house payment.  With the new loan guidelines being used by lenders, one of the key items they use is what is a reasonable house payment based on the borrower’s income.  Different lenders have different ratios.  There are front-end ratios and back-end ratios.  I have seen front-end ratios between 28% - 31%, depending on the loan program.  The front-end ratio is related to the house payment or PITIA (principal, interest, taxes, insurance, and any association fees) on the first mortgage.  If the lender’s front-end ratio is 28% that means the house payment cannot exceed 28% of the household’s gross monthly income.

Back-end ratios take into consideration all monthly expenses (house payment plus recurring debt such as car payments, credit card payments and other loan payments).  Generally, lenders like to see back-end ratios that do not exceed 36% of the household’s gross monthly income.

So what does this mean?  Let’s suppose that your household gross monthly income is $3000 and the lenders front-end and back-end ratios are 28% and 36% respectively.  That means that your house payment (PITIA) cannot exceed $840 per month and that your total monthly payments cannot exceed $1080 per month.  So, it is important to meet with a lender BEFORE you begin looking for a new home.  It will save you time and will also help set your expectations. 

Hopefully we all learn from history and do not expect different results when we repeatedly do the same thing!  I am talking about previous economic downturns.  As recently as the 1970's, the US economy was fighting back after a major economic downturn.  The unpleasant result of fixing the economy was horrific inflation.  This time of spiraling costs and interest rates was just one of many experienced in the 20^th Century.  Economists tell us that whenever the money supply is increased by an amount equivalent to 20 or 30% of Gross Domestic Product (and sometimes more), inflation is the only possible result. That means that prices of fixed assets and services rise to keep pace with the devaluation of the currency.  The difference between those economic recoveries and what we are about to experience is that then, the US was less dependent on other countries for it's' goods.  Today, we are in a global economy and our success or failure echoes throughout the world and the same is true for other countries. 

What is of interest to me is what is going to happen to home prices over the next few years?  No one knows for sure, but based on history, it is likely (and many economists say a certainty) that a side effect will be a quick and ferocious increase in inflation. Some of you may remember the mortgage interest rates, in the mid to late 1970's, being as high as 21%!  It is likely that within a few short years the housing value lost during the past few years will be fully regained. But at a cost…..inflation.  To curb inflation, the government would have to curb the recovery. And the government can't, in my opinion, let that happen. We must recover – at any cost.  And, inflation is that cost.

I firmly believe that I will never in my lifetime see home interest rates this low again. And, the price of buying the American dream, a home, will likely never in my lifetime be this low again. It is intimidating to think about spiraling interest rates.  As a REALTOR®, my livelihood depends on people buying homes.  I fervently believe that now – not next year – is the perfect time to buy a home.

Our nation must fix the economy and we're going to, whatever it takes. If you have any thoughts of buying a home, buy it this year because interest rates below 5% won't be here long and the housing market hit by merciless inflation may tomorrow, put that dream home out of reach. 

1. Real estate cycles
All markets are cyclical. While markets differ dramatically, a cycle is common in many places. The market has ebbed and peaked over the past years.  There are some trends.  Here in Franklin, our market peaked in 2006 and then began the current downward trend.

The Franklin market should soon be pulling out of the bottom and be on its way to a more normal market. Exactly when we hit bottom, no one will know because the statistics that prove when the bottom is hit will not appear until after the fact.   One big indicator will be that listing inventories will stabilize and mean home prices will begin to rise (not yet happening in Franklin based on MLS statistics).  When this happens, prices will stabilize and will eventually begin to rise.

2. Built-up demand
Buyers and sellers alike have been telling their agents that they are waiting for the presidential election to be over before they buy or sell any real estate. Now that the presidential election is in back of us, the rescue plan is in motion and the most recent stock market plummet seems to have passed,  an uptick in buyer and seller activity could very well be next. There will always be weddings, people having children, retirees and people who have to relocate for their jobs. Many of them postponed selling or buying waiting for market conditions to improve. It is likely that this built-up demand to make its way into the market in 2009.

3. The credit crunch eases
Credit is still tight but the new administration will not allow things to remain the same.  The resue plan in conjunction with the new guidelines for FHA, Freddie Mac and Fannie Mae will soon result in more money in the system. Many local Franklin banks are flush with cash and ready and willing to lend to qualified buyers. As credit eases, buying and selling becomes easier.

4. Inventory and days on market decline
The amount of inventory and the "days on market" statistics are the best forecasters of market changes. Prices always lag behind these statistics. When there is a strong seller's market with upward pressure on prices, there may be only two or three months of inventory. Price stability normally occurs when there are six to eight months of inventory. Thus, when there has been a shortage of inventory, it can take 12 to 24 months before the market recognizes that there is an oversupply. The converse is true for a buyer's market with downward pressure on prices. Unless you're tracking inventory and days on market, you may not be aware of the shift until months after it started. Currently, inventory and days on market are dropping in many areas. Here in the Franklin market, inventory is beginning to decrease but days on market remain high and median home prices remain low.  Keep you eyes on these statistics for the best information on where our local market stands.

5. Demographics
In 2008, the size of Gen Y (born 1977 to 1994) surpassed the size of the Baby Boom generation. Gen Y wants to own real estate!  On the other side of the coin, baby boomers (born from 1946-1964) are most likely to buy a second or a retirement home between the ages of 50 and 60. While builders have cut back substantially on the numbers of new homes being built, an increase in future demand and a limited inventory will eventually result in higher prices.

The question is not whether there will be another real estate boom -- there will be. The real issue is how long it will be before it starts. Watch Franklin's inventory levels and days on market to see when our next boom arrives.

Excellent News for Economic Development in Franklin!

The town of Franklin is the newest member of the North Carolina Small Towns Economic Prosperity (NC STEP) Demonstration Program.  This is great news for proponents of economic development activities in our rural community.  NC STEP focuses on three objectives:

1. the support of economic revitalization and economic recovery in small towns;
2. the testing of a model to aid in revitalization efforts, and
3. sharing of information for development of public policies that support the economic liveliness of small towns.

Initially, the town will receive a $30,000 grant to support the planning phase.  The town will budget funds to help support the program.  Franklin is one of twelve communities in North Carolina to receive the grant.  This program, along with the Franklin Main Street Program, Inc which was created in 2007 to foster community involvement in revitalizing Franklin’s

Trying to buy a home in these troubling times?  If you have attempted to obtain a conventional loan and been denied, all is not lost.  If you are a low or moderate income earner, you may qualify for a Rural Development (RD) loan. These 100% financing loan programs are available in rural areas across the country. The advantages, in addition to no down payment, are no private mortgage insurance, a 30-year fixed rate, fees can be rolled into the loan, as well as flexible credit and qualifying guidelines. Of course there are certain restrictions however, these programs are designed to enable individuals or households who cannot get conventional financing, afford a home.

There are two types of RD loans: “direct” and “guaranteed.” Both types require that the subject property be located in an eligible area and both require that you meet income eligibility requirements.  Go to www.rurdev.usda.gov and click on “housing and community facilities.” Each State, at the County level, has identified areas that qualify for these programs. Macon County, NC is considered a qualifying rural area.  In addition, qualifying income levels can vary at the County level. Qualifying income is determined by adding all income for individuals that will be living in the home less certain expenses for children, child care and certain other expenses.  There are a few other eligibility requirements so verify your eligibility prior to looking for housing.

The subject property can be new or existing homes and must meet minimum FHA standards. Condos and townhomes may also qualify.

Direct Loans are funded directly by the USDA. These loans are for low income households (under 80% median income for the area.) Applicants for these loans need to prove that they can make payments on the property and have “reasonable’ credit histories.

Guaranteed Loans are loans for moderate income families (with an income level of up to 115% of the median income for the area.) Applicants for these loans apply with Lenders approved by the USDA. In these cases, the lenders set the interest rates, which are guaranteed by the government.  You can call area banks to find out if they participate with these programs.  Also, keep in mind that these loan programs require more paperwork and it will likely take longer for the overall ‘loan process’ than conventional loans so be patient.  If you and the home qualify, it will be well worth your patience and perseverance.

Macon County (under a state mandate) implemented a new Private Drinking Water Well Program on July 1, 2008.  Under this new program, property owners who intend to provide drinking water via a well will be required to obtain a permit prior to installing a well and must also have four on-site inspections (location of the well on the property, a grout inspection, a well head inspection and finally a water sample for testing).  The current permitting/testing program will cost $375.00 for new construction.

According to an article published in the Franklin Press on August 6, 2008, Macon County is among the top 10 counties in the state for number of wells going into the ground.  This is not surprising since Macon County does not have a county wide water/sewer program nor is there a plan in place for one at this time.  And, out of 100 North Carolina counties, there are only 5 that will be charging more than Macon County for these services.  The good news is that the county has hired two full time well specialists and have cross-trained several others so the turn around time for these permits and for testing should be minimal. 

Another item noted in the same August 6 newspaper article was that the state legislature wants to amend the new program to include testing for Volatile Organic Compounds (VOC's) which 'could' raise the fee another $200.00.  This amendment is currently on Governor Easley's desk awaiting signature.

How can a buyer assess when the market has 'bottomed out'?  Historically, two indicators are a decrease in the number of new listings and an increase in listing and sold prices. A buyer, therefore, should want to make their move right before these two items begin to manifest in the market.

Your Realtor can help you track the listing volume over the next several months but assessing the statistics on sold prices is going to prove more difficult. Bank-owned property or property in some stage of the foreclosure process has been driving the price point for real estate for some time now.  With a significant volume of lending institution-owned property on the market selling at discounted prices, I doubt there will be an increase in sales prices in the near future.

In the Franklin area, we still have a large listing inventory, and problems in the overall economy will likely prolong the market conditions we are currently experiencing.

The current housing market conditions have never before been experienced (meaning the housing market with chaotic stock market fluctuations and a general economic slump all at the same time) so no one can predict exactly when the market has bottomed out.  My suggestion is that if you find a home or property you love and it is within your means to acquire it, buy it now.  Savvy buyers are looking for deals and your favorite property may be their favorite as well.  If you wait, you risk losing it to another buyer.  However, a point to keep in mind is that self respect and common sense should remain at the top of everyone's list. This has been, and remains, the basis of buyer success.

Ok, maybe strange isn't the best way to describe the current real estate market.  I can think of a lot of words that come to mind.  After all buying and selling real estate is more often than not an emotional transaction.  And, when emotions get going, powerful and 'colorful' words often get tossed around.  Keeping your emotions in check and focusing your attention on the business of real estate is critical to reaching your goal.  That goal being obtaining the highest price and optimal terms for your property if you are the seller or obtaining the property for the lowest price and optimal terms if you are the buyer.  By highest price and lowest price I don't mean manipulating, lying or using any means to artificially inflat or deflate a fair value.  What I encourage is for the spirit of cooperation in a free market to prevail.   I have seen negotiations stall and dissolve often so keep your options open, discuss your questions and concerns with your Realtor to ensure they understand what is important to you and remember the golden rule.  If everyone in the transaction can come away with a 'win', then the best possible outcome has been achieved where every party feels respected and fairly treated.

It is a tough market.  Sellers are feeling the pain and more may be ahead.  It is imperative for a seller to price their property 10% below market in order to sell quickly and avoid being left in the long line of expired listings. Currently, in the Franklin area, we have nearly three years of inventory on the market.  It will be a long wait for the inventory levels to decrease to a balanced market.

A Turkish proverb says, "No matter how long you are traveling down the wrong road, when you figure it out, turn around."  Overpricing almost never results in a sale.  If a property is receiving little activity, it is overpriced. Or, if a property is receiving adequate activity, but no offers; it is also overpriced.

By suggesting to a seller that their property is overpriced, the real estate agent runs the risk of being the messenger that gets shot. Courageous agents tell the truth. Cowardly agents wait for sign or ad calls while the seller reduces the price and stigmatizes the property with additional days on the market.

This is not the greatest time to sell property!  But if you have to sell, call me today.  I will provide you with a Competitive Marketing Analysis.  I want to be your Real Estate connection in Macon County!

Franklin, NC is a large second home location for many.  According to the National Association of REALTORS, nationally, a full 84 percent of second home buyers wanted to use the home for vacation or as a family retreat. Thirty percent planned to use the property as a primary residence in the future. More than a quarter (26 percent) of vacation-home buyers purchased their property to diversify investments; 25 percent to rent to others; 16 percent for the tax benefits; 14 percent for use by a family member, friend or relative; and 6 percent because they had extra money to spend.

When asked about the most important reasons for their purchase of an investment home, 51 percent of survey respondents indicated they made the purchase to provide rental income; 39 percent to diversify investments; 21 percent to use for vacations or as a family retreat; 16 percent for use by a family member, friend or relative; 11 percent for tax benefits; 10 percent to use as a primary residence in the future; and 4 percent because they had extra money to spend.

While overall, second home purchases are down from 2007 along with the rest of the market, second home purchases still accounted for 33 percent of all home sales in 2007.

If you currently have your home listed with a REALTOR, you know how competitive the local real estate market is right now.  Most published statistics identify information on homes that have SOLD.  But, what about homes that didn't sell?  For example, between September 30, 2007 and March 11, 2008, a total of 399 new residential listings appeared on the Franklin Board of Realtors Multiple Listing Service.  Of those 399, only 47 have sold (as of March 11).   So, 1 in 8 homes listed in that period sold; 7 out of 8 didn't.  And, that doesn't even consider the hundreds of other homes that have been on the market for longer than the 6 months outlined above.

If you have your home on the market, you need to ensure that you have a few things going for you.  First, the listing price should be on the lower end of the prices of "comparable" homes in the area.  Buyers have a huge inventory of homes available so you need to price to sell!  Second, don't discount the importance of curb appeal.  Curb appeal is what gets the buyers from the car to your front door.  Often, buyers tell their Realtor to keep driving if they approach a home that appears neglected from the outside.  So, keep the lawn mowed, keep the weeds at bay, remove almost everything - meaning 'your stuff'/children's toys/dead flowers in pots, etc.  Do place one or two rocking chairs (if your porch size allows) and place some colorful and healthy potted flowers on your porch.  These touches will intrigue buyers and invite them to your door.  Getting the buyers into your home is critical.  You have a tremendous amount of competition so do everything you can to ensure your home shows well - inside and out.  If you are unsure what you can do to improve your curb appeal, ask your Realtor. 

The proverb "when the going gets tough, the tough get going" is attributed to Joseph P. Kennedy (1888-1969), the father of (U.S.) President John F. Kennedy and can be applied to almost any challenge imaginable.  It is true also in today's real estate market.  It's a tough market.  The availabilty of money for mortgage purposes is literally shrinking before our eyes.  More than 100 major lenders active in 2006 went out of business or were absorbed by stronger financial institutions in 2007.  The job sector is down.  We continue to hear the "R" word.  I could go on and on with all the negative news we are barraged with daily.  I say "baloney".  Yes, you may quote me on that. 

This is a time of opportunity - a time to break out of traditional ways of thinking.  What worked last year isn't working anymore and we all need to begin stirring new ideas and in general stirring things up.  In the real estate profession, that means we need to focus on new ways of finding clients.  We need to focus on discovering new avenues for advertising.  We need to focus on becoming better listeners.  We need to focus on improving our professional knowledge and exceeding client expectations.  All this, a tough challenge to our profession.....but worth the results. 

In tough times, it is more important than ever to stay positive and of utmost importance according to Winston Churchill "never, never, never, never give up".

Ok, so you've lived in your home that you and your spouse lovingly built some years back and now you want to downsize or perhaps you need to move for another reason.  During the building process and throughout the years you have been in your home you have upgraded and improved to your taste.  Now it's time to select a Realtor and get your home SOLD.  So, you interview a few Realtors who provide you with their suggested list price.  Most homeowners in this situation, all other things being equal, will gravitate toward the Realtor with the highest price.  But, watch out for what I not-so-fondly refer to as the 'price wizard'.  Sometimes, especially when the housing market isn't performing very well, someone may want your listing so badly that they choose a marketing tactic known as 'buying a listing'.  In this scenario, the Realtor knows that based on current local market conditions, your home is unlikely to sell at the inflated price they are suggesting.  If they succeed in duping you, they will list high and then several weeks/months into the listing, they will advise you to lower the list price.  Don't fall into this trap!  You need to right-price your home from day 1.  Properties that hang on the market for months on end send a message to consumers that something is wrong with it and stale properties do little to attract Realtors who know within a small margin or error what the prevailing successful price should be.  Look at the track record of the Realtors.  If you truly want to sell your home (believe it or not, many people who list their homes, really don't want to sell), price it to sell.  Leave the sentiment out of your decision on price.  Obtain a Competitive Market Analysis (CMA) from the Realtors you are considering.  A CMA identifies comparable homes that have sold in the past 6 months in your area.  The CMA will reflect the current local market conditions. 

Regardless of how much love, energy and money you have invested in your home, it is worth exactly what someone will pay for it.........and not a penny more.  This is difficult for many people to accept (myself included) but it is the truth.  It is where we are right now in today's real estate market.  Remember the law of supply and demand reigns.  Price follows demand.  If demand is high, price is high.  If demand is low, price is low.  Add to that the fact that supply is currently very high in Macon County and you have a very unbalanced real estate market heavily favoring buyers.  They have a huge inventory from which to select.  To sell, you need to list on the low side of the competition's average price point.

The more you know, the better you can navigate through the tumultuous housing market and the better you can rule your financial destiny.

What happens when you tell someone not to think of pink elephants?  The same thing that happens when you tell someone not to panic.  First, let me say, if you want to panic, then panic.  I certainly can't stop you.  If I were about to take a huge loss because I had bought when the market was booming and now my property value was dropping, I just might be hitting the panic button too.  Fortunately for me, I am not in that situation.  Let me say, however, that people will always need housing.  It is not going to go away.  With that said, let's begin to look forward.  What's done is done. 

Moving forward, consider that today, if you don't have to sell, don't.  It is a buyer's market, meaning buyer's have the upper ground in terms/conditions and prices offered.  Remember property is only worth what someone will pay for it – it really has nothing to do with assessed value or appraisals. 

If you know the law of supply and demand, you know that price follows demand – always.  When demand is up, prices rise.  When demand is down, prices fall.  Today in Macon County, NC, demand is down/supply is up.  If you want to expand your investments into real estate, now or in the near future, when prices are down, is the best time to buy.

So, follow the crowd and panic if you must; lead by trusting the law of supply and demand; or just get out of the way.  For the near future, it's going to be a bumpy ride.

Real estate is a local market!   The only relevant and meaningful information about real estate in Macon County, NC is to look at local Macon County, NC statistics.  While national statistics may be factual, they generally have little to do with local conditions.  There are significant local variations in the housing climate.  To listen solely to the national hubbub in which media sources sensationalize the woes of the housing market is misleading and fails to provide context.    Let's keep our eye on Macon County. And, let's keep in mind that home ownership brings with it significant benefits over the long term.  Unless you get an interest only mortgage, you will very likely see equity gains if you hold the property 5-10 years.  And, home ownership gives you a great place to live and to raise a family.  There are also social benefits to home ownership including: higher student test scores, higher educational attainment, higher civic participation, higher self-esteem and even better health conditions, according to various academic studies.

I don't want anyone to rush into buying a home.  You need to be ready and you need to do your homework, especially when it comes to financing.  Home ownership is serious business.  Nonetheless, it would be a shame if someone who is financially able to buy didn't  due to fear in the marketplace brought on by sensationalized national news.  If you are one who recognizes a great opportunity to buy while it remains a buyer's market, there is a vast inventory of homes to choose from in Macon County and a variety of mortgage products at historically low interest rates.

Of course, the best source of information about the Macon County, NC real estate market is a Macon County REALTOR®.  For consumers considering buying or selling a home in Macon County, there is no one better informed than a local neighborhood REALTOR®.  Call me today.  I want to be your Macon County REALTOR®!

I don't want anyone to rush into buying a home.  You need to be ready and you need to do your homework, especially when it comes to financing.  Home ownership is serious business.  Nonetheless, it would be a shame if someone who is financially able to buy didn't  due to fear in the marketplace brought on by sensationalized national news.  If you are one who recognizes a great opportunity to buy while it remains a buyer's market, there is a vast inventory of homes to choose from in Macon County and a variety of mortgage products at historically low interest rates.

Of course, the best source of information about the Macon County, NC real estate market is a Macon County REALTOR®.  For consumers considering buying or selling a home in Macon County, there is no one better informed than a local neighborhood REALTOR®.  Call me today.  I want to be your Macon County REALTOR®!

Have you ever had difficulty putting something quite extraordinary into words?  Well, this is the situation I find myself in each fall here in the mountains.  The annual leaf season has just begun.  Our foliage is anticipated to reach peak color the 3rd or 4th week of October.  Here are two photos. One was taken very recently - the colors just about to change; the other was taken a year ago during peak.......phenomenal!  Come join us in beautiful Western North Carolina.

Real Estate Compensation

Is this a can of worms or what?  Recently the Editorial pages of the Franklin Press have been rife with commentaries on Realtors®.  The purpose of this BLOG entry is to help sort out the truths and untruths about one of the topics contained in the commentaries; compensation to Real Estate Agents.

What I'd like to know is how Real Estate has become one of the most reviled professions in modern times.  As in all professions, there are "a few bad eggs" that stink up the entire chicken coup.  But by and large, we are ethical professionals that truly want to help people through what. to many, is the most important financial transaction of their life….buying or selling a home.

So, back to the topic at hand…..compensation.  How is a Real Estate Agent compensated?  Many of you will be surprised so read on.  Generally, Agents are compensated by the seller.  But, let's dissect a real estate transaction and see who really gets what.  The following is used for illustration only…..all real estate firms establish their own rates based on local market conditions. 

In our example, a home sells for $100,000.  Let's say that the Listing Firm's standard commission is 7%.  That means that there is $7,000 in commission.  This commission will be dispersed at or subsequent to the closing meeting.  So, the parties involved have been working for their client for months and it is only at the close of the deal that they see any compensation.  Now, here is where many people misunderstand.  That $7,000 must be divided amongst 1) the Listing Firm, 2) the Buyer's Firm, 3) the Listing Agent and 4) the Buyer's Agent.  No one entity is getting $7,000.

Let's break this down further……..again this is an example only.  Each Firm will have varying compensation agreements with their Agents.  Some will split the Seller's portion 60/40; others 50/50, etc.  The same with the Buyer's portion; the Firm might do a 60/40 split.  To make it math friendly in this example, let's assume that the Buyer's Firm gets 50% of the $7,000 and the Seller's Firm gets 50% of the $7,000.   Let's further assume that the Firm/Agent split is 50/50.  So, in our example, each firm and each agent get $1,750.  But that isn't the end of it.  What do you suppose the Firm and Agent have been using during the months they have been working with and representing their client?  They have been using their own money.  Expenses often eat up more than half of the proceeds.  Firms and agents (again depending on the agreement in place between them) pay for their own:

• Promotional materials (business cards, web-sites, web hosting fees, mailings, postage, advertising - traditional and web-based, give aways – annual calendars, printing fees, public relations campaigns, billboards, signage and much, much more).
• Education.  The NC Real Estate Commission requires every licensee to take Continuing Education, some of which can be costly.
• Insurance
  • Health insurance
  • Additional car insurance
  • Umbrella liability policy
  • Errors and Omissions (generally paid by firm)
• Gasoline and auto maintenance (much higher costs in this profession than in most)
• Client food and beverage expenses
•  Professional organization membership
• Annual/monthly expenses (ie: MLS fees, local board of realtors, office – sometimes monthly desk fees/phone fees, office overhead fees
• Open house
• Federal and State Taxes

Most of the Agents I know take home between $700 - $900 of the $1750 used in our example.  This is payment for months of dedicated professional services.  It is a common misconception that Real Estate Agents are paid exorbitant fees for relatively little service.  Not so.  Real Estate Agents are professionals with professional standards.  Since generally we get paid after the sale, most are fiercely competitive with one another.  That is good news for the consumer because highly competitive professions weed the bad eggs.  No one wants a few bad eggs stinking up the entire hen house!!  If you think about it, you receive a lot of services from competent Agents.  Just a few of the services you get include:

• Access to the multiple listing service (MLS)
• Referral services – usually national
• Strong newspaper and online advertising exposure
• Open house(s)
• Sales planning
• Virtual tours
• Just listed mailings
• Written market report
• A trained negotiator
• After sale follow up

Hopefully, I have given you something to think about.  The vast majority of real estate professionals I know are motivated, honest, ethical and truly want to help their clients.  While a few among us make extraordinary money that usually translates to extraordinary service that savvy consumers want and for which they are gladly willing to pay.

Thanks for reading.  Let me know what you think.

Carol Lynn Johnson, Broker

Prudential Markham Bankston Realtors

Hello and welcome to my Real Estate BLOG.  Here you will find useful information and commentary on trends in real estate, current happenings in the local market of Franklin, NC and related material.  I hope you will visit often.

I'm shaking things up in Franklin!

Carol Lynn Johnson, Broker

Prudential Markham Bankston REALTORS