Smart sellers get creative with mortgage alternatives
After 20 months of gradual interest rate increases and rates reaching a 22-year high, many sellers are offering innovative strategies to make their properties more attractive. One of those plans is a 2-1 buydown, which offers a rate of 2% lower during the first year of the mortgage, then 1% lower the second year before settling on the market rate for the remainder of the loan. That worked for the first six or eight increases when rates were driven up as high as 6%, and those rates look good in the current market with rates running into the 7.67% range.
In the early days of the buydowns, there was confidence that interest rates would simmer over the ensuing two years, allowing a refinance at an attractive rate. That confidence has dissipated, and the prolonged death by 11 rate hikes is not here yet, but the market is in a coma. Read more...
The early bird gets nothing without an above-list offer
The Nashville-area real estate market is hotter than hot, as anyone involved can attest. And heading south on I-65, a reasonable solution in markets past, offers no relief.
In all of Williamson County, there were some 18 houses on the market Friday in the $550,000-$800,000 price range, with several of those entering the market Friday. These properties were in Brentwood, Nolensville, Franklin and all points between those municipalities.
The 10 houses new to the market attracted scores of showings, with enough Realtors and buyers streaming through to make it look like a celebrity estate sale. Read more...
Restaurants, homes for sale have predictable death spiral
As Nashville evolved into the 'It City," the only sector that proliferated more than real estate was the restaurant industry. As restaurants begin to slow, there are signs — real signs with writing on them — that point to the falling revenue. The same is true for real estate.
When things slow at eateries that opened serving only lunch and dinner, temporary signs pop up stating, "Now open for Brunch Saturday and Sunday." In the real estate world, the need for a sale is announced with the less-subtle "REDUCED" sign being added atop the "For Sale" sign. Realtors and restaurants alike often add balloons or lights or special signs with stars and lightning bolts. Nothing says cold food or bad house more than a deflated balloon or a burned-out bulb. Read more...
Fraud alert. Never accept wiring instructions from your Realtor.
Buyers beware! A recent federal court case highlights a new scam that puts home buyers and Realtors at risk. Cyber criminals are hacking into Realtor email accounts for information on upcoming closings. Using a very similar email address, the hacker requests that buyers wire funds. Protect yourself from fraud. Never accept wiring instructions from your agent or broker.
It boils down to this. A house is worth whatever the buyer and seller agree in writing on a contract that it is. Unfortunately, in real estate, the wrong buyer and the wrong seller sometimes agree at the wrong price at the wrong time.
The moral of the story is that sellers should fix all of the broken things before placing the house on the market. The real estate handbook will tell sellers there is no value for a new HVAC, water heater, etc., as will many lazy agents suggesting sellers merely reduce the price. It doesn't work that way. The circle needs to be unbroken, along with everything else.
One of the most often-occurring conditions when selling home is that of "child erosion," as any home occupied by humans under the age of 12 is subject to abuse that is incomprehensible to those that have never shared a home with toddlers or adolescents.
"What is the hottest area in town?" Realtors are often asked. The answer: "They all are." Any area not seeing price increases now never will. If a house is on the market and is not selling, it is overpriced.
If a tree falls in the woods and no one hears it, is there sound? That's a question for the ages. If a tree falls onto a neighbor's house, whose insurance pays? That one is not debatable. It's the insurer of the damaged home.
As if things were not crazy enough in Nashville real estate — with inspectors now writing 50-page reports with scores of photographs, underwriters overwriting and overriding, new disclosures and disclaimers proliferating the transaction — appraisers are requiring more and more documentation.
Termites are back. Swarming in their swat-evasive flurries, they can exact a debilitating toll on anything that stands in their way. While there looms a tendency to exaggerate the capability to do harm in a number of germs, parasites and insects, the termite has the power of the wrecking ball. Give a termite a joist, and he can eat for a lifetime.
Looking for a bargain? Find a home with structural issues. They are the ugly ducklings swimming around in the rainwater under filled gutters and unpiped downspouts. Flip a few and head over to the Swan Ball.
Almost all home sales stipulate that a home inspector will evaluate the condition of the house. The person who coined the "fine-toothed comb" phrase may well have had visions of these detectives crawling into places fit neither for man nor beast and ascending high into the heavens shingle by shingle. Armed with more devices than Neil Armstrong carried to the moon, they can shuck a home down to the cob, as the saying goes. They also are regulated by the state and must be licensed to perform their craft. They are paid to find everything and they do.
There was a recent story that referred to "real estate's dirty little secret" and suggested Realtors prefer to have homes inspected by inspectors that will give homes a clean bill of health. It has, as one might expect, raised the ire of area real estate practitioners.
Selling or Staying, a Home Inspection is a Good Idea
Radon inspections can be administered without a home going on the market, as can any inspection, of course, yet rarely are. Home owners and renters alike would be wise to have their homes inspected routinely. A person could be living on a mold-ridden radon pit with gas leaks and exposed electrical wiring around a termite infested, compromised floor system.
Following the grueling negotiations between buyers and sellers, the inspection ensues. There is one item in particular that has been included in a number of inspection reports that I have seen over the years that hit home — literally — this week. The citations made by the inspectors pertain to canned, or recessed, lighting.
The closing attorney is the final piece of the puzzle in a real estate transaction — and the most important. If the closing attorney fails in that role, the transaction might not occur, even if both parties — buyer and seller alike — sign every document. Things can go horribly wrong there, and have in the Nashville market over the years.
Here is a scary Halloween tale: Many real estate transactions do not close on the actual date specified by the legally binding contract. This is not a recent phenomenon and has occurred since the time buyers required funding by third parties to purchase homes.
For the past two years, developers, property owners and Realtors alike have been treated to what some call the best real estate market in the country. Sellers are realizing astronomical returns on their investments as they shed properties that they have been strapped with for years.
Affordable Housing Gets Foot in the Door in Mayoral Election
In recent weeks, the mayor's race has taken a new focus: Affordable housing. Some in the community feel this is unwarranted and take issue with organizations such as NOAH (Nashville Organized for Action and Hope), which are forcing the candidates to spend more time on social issues, which I support.
As the poet William Cowper wrote: "Variety's the very spice of life that gives it all its flavor." And without the big houses, there will be no affordable houses, since the economy would halt. So, keep them coming. Leave a little something for the up-and-comers.
Mike Smalling is a mortgage loan originator with F&M Mortgage and is a lifer in mortgage lending. He recently penned a book entitled "Your Mortgage Matters," and the work provides information for those new to home buying, as well as those that have bought and sold numerous homes.