The real estate roller coster leaves many questions

Let’s face it, times are tough and on any given day the mood is a different one than the day before.  The market’s up, then down, we’re in a recession, we’re recovering, it is hard to know what is really happening out there with so many mixed signals.  Real estate is difficult to figure out, and remains relative to where you are. Is real estate improving?  Sales are up, inventory is down but foreclosures are expected to keep coming, especially with unemployment figures on the rise.  To find out if real estate in your area is improving talk to a real estate agent and look at the statistics that they provide. Each market has it's experts and in Gatlinburg you can find yours at Century 21 Four Seasons Realty.  Have we hit bottom?  Parts of the country have hit bottom other parts still have a way to fall.  Home prices are apparently steady in parts of the country and climbing in others.  In Sevier county where you'll find Gatlinburg, Pigeon Forge and Sevierville, the fall of home prices has slowed and the number of sales has increased. This gives some professionals in our market the feeling that we are in for a persistent increase in the number of homes sold while the prices will start to increase modestly by the Summer and continue an incremental upward trend into next year.   It's not a return to the lofty prices of a few years ago but a steady rate of appreciation will be welcomed by everyone. In a nutshell, real estate is relative.  It is improving in many areas and as soon as our recovery includes job growth real estate is going to improve in many more areas. Click here for an article about real estate on Yahoo Finance.

Waiting for the bottom in real estate is similar to grabbing a yo-yo at the bottom, you are usually a little early or a little late

There are many people out there waiting for the bottom to hit in many facets of the economy, including real estate.  Perhaps there will be a big announcement one morning across newspaper headlines and across the internet “THE BOTTOM IS HERE: NOW IS THE EXACT MOMENT TO BUY”.  Of course by the time the announcement comes the bottom will have hit and the exact time to buy real estate will have come and gone. A great analogy to the bottom of the real estate market is a yo-yo.  Take a yo-yo in your hand and use it.  Can a person grab the yo-yo at the exact moment it hits bottom every time?  Chances are a person will grab it just before it hits bottom or just after, rarely at the exact bottom.   Real estate is the same game, if it is indeed a game.  If people knew, absolutely knew, the exact time to buy stocks, real estate, or any other investment then no one would ever have a financial worry. For people who believe in investing in real estate now is a great time to buy.  Interest rates won’t be low forever, real estate has either already hit the bottom, is about to, or is already on its way up, we’ll know for certain sometime in the future.  If you want to buy at the bottom, buy now or wait until it’s too late, when you can look back and say, “If only I had bought then.”

A 1031 Exchange can be a great way to invest in real estate and defer taxes

A 1031 Exchange is the process of buying and selling investment real estate, enabling a deferment of taxes at the same time.  A 1031 exchange involves the selling of a qualified property and the buying of a qualified property yet the transactions are seen as an exchange instead of a traditional sale and purchase. What makes the 1031 exchange different, and often complicated, is that in order for properties to qualify they both need to be “Like Kind”.  They need to be business or investment properties and the new property must be equal or greater than the property being exchanged in terms of debt. The process of selling and buying property during a 1031 exchange has requirements.  When a property is being sold the owner has a 45 day period to identify a new property.  The 45 day period cannot be extended and often more than one property is identified. The next time period is the “Exchange” time period.  After the closing of the selling property the exchanger has 180 days to close on the new property.  Again, according to IRS rules, the time period is firm and cannot be extended. The 1031 exchange can provide a great way for real estate investors to sell property and buy new property without having to immediately pay taxes on their capital gains.  For more information on the rules of a 1031 exchange contact one of our Four Seasons agents for an attorney referral and to find your next property.

There are a million ways to improve the look of your home, some are more expensive than others.  If you are thinking of selling your home or already have your home on the market here are some tried and true, inexpensive ways to improve your home and make it more appealing to a potential buyer.

• Paint.  Painting a home is something that anyone can do themselves, or hire a painter to do.  Fresh paint on the interior and exterior of a home makes it instantly appear clean and fresh.
• Clean & De-clutter.  Remove clutter, family photos and other personal items and clean and organize your home.  Clean your carpets.
• Repair & replace.  Have a broken window?  Fix it.  Does your screen door squeak, oil the hinges.  Look at your home with a fresh set of eyes and fix what looks broken or is broken.  Duct tape may be fine for you, but probably not a prospective buyer.

These are just a few things that you can do yourself.  It is a competitive real estate market out there and to sell your home quickly and for the most money it has to look its best. Here in the Smokies painting in natural, earthy tones instead of those more associated with beach colors adds more value. Also, in the mountains of Gatlinburg and Pigeon Forge the properties that blend with the surroundings get noticed first. 

Home inspections can often make or break a deal.  If possible sellers should have one done ahead of time so repairs can be made and a home can be in its best possible condition.  However, often a seller does not do a home inspection first and is caught off guard by a long list of repairs presented in the due diligence portion of the contract process. The most common home ailments that show up in the home inspection process are:

• Faulty electrical wiring
• Roof damage
• Plumbing issues
• Poor drainage
• General lack of upkeep

These are issues that can add up to a potential home buyer walking away if a seller is unable to step up and make the repairs or commit the money to make the repairs.  Examine these aspects of your home yourself, if you know everything is in good condition and the work that has been done to your home has been completed by professionals then you can rest easy, otherwise be prepared to make repairs in order to sell your home.

Low interest rates have been gracing the real estate market with their presence for the past year but the word on the street is that they won’t be here much longer.  While mortgage rates aren’t going to skyrocket out of sight, it is doubtful that they will decrease and certain that they will steadily begin to rise.

For those wishing to lock in at below 5.5%, the time just might be now or never (or at least for a very long time).  This past week, the first week in April, the average 30 year fixed mortgage rate was 5.16%. Today, the rate is listed at 5.23%. The general sentiment among economists is that rates are not going anywhere but up from here.

The strengthening of the economy equals less chance for discounted rates.  If you want to refinance or purchase real estate, now might be the best time to do so.

For more information on mortgage rates click here to look at a recent article from CNNMoney.com.

When preparing to sell your home it is important to find a real estate professional that will best suit your needs.  A warm handshake and a friendly smile is all well and good but if you want to sell your home pick a broker that is experienced and knowledgeable, someone that will do the best job for you.  When selecting your real estate agent here are a few things to keep in mind:

Data.  Get a prospective Realtor to bring in a copy of what they have listed and closed.  They can present you with an MLS report that displays their inventory. In some markets, especially where secondary homes and investment properties are prevelant like Gatlinburg, email is how you’ll receive most documents and information so make sure your agent is proficient with technology.

Price.  Get an evaluation of your property.  A solid real estate professional will be able to detail what has been selling and for what price.  He will be able to evaluate your home and your location, giving you a value for your home that will help sell it not deter people from looking at it. The experienced agents at Century 21 Four Seasons can easily give you all the information you need to select the best price.

Plan.  What does your Realtor plan to do for you in terms of marketing, sales, listing, etc.  Make sure he has a plan for your house and find out what he is willing to do to get it sold for you. Each agent at our offices has a detailed market plan that they will present to you for your approval.

Real estate is often a person’s most valuable asset.  Do your legwork and choose the best broker for your home.  He or she should be a salesperson.  If they can sell themselves to you perhaps they are halfway to selling your home for you as well.

Real estate is showing strong signs of recovery.  Last month, real estate sales were up over 7% for sales of existing homes.  The increase in real estate sales was seen in every region of the United States, due mainly to the first time home buyer tax credit, which was originally set to expire at the end of November, 2009.  Low mortgage rates and low home prices have also been catalysts.

Foreclosures will continue to rise with unemployment, keeping real estate prices from rising in harder hit areas, and home values as a whole are expected to remain flat for some time.

Interest rates are not expected to continue dropping and will most likely head in the opposite direction, expected to hold steady around 5.2%.  According to the Wall Street Journal, Federal Reserve chairman Ben Bernanke himself recently locked in a refinance on his residence, a clear indication that rates just might be as good as they’re going to get.

For now, the data shows that real estate sales are on the rise and will continue to improve as long as the mortgage rates stay low and the tax credit remains in place.  What happens during the latter half of 2010 is up in the air, but for now the good news is far better than the news of a year ago.

The government is putting pressure to decrease foreclosures

With unemployment figures on the rise, the number of foreclosures is expected to keep rising over the coming months and the federal government is trying to do something about it.  President Obama created legislation in February that was expected to help those facing foreclosure, yet the programs set in place are reported to have been enforced sluggishly by many of the lending institutions.  The pressure is starting this week. The Federal Government is saying “Help these people out!” to the 71 financing companies that are participating in the program.  Teams of three people are being sent  to monitor the eight largest companies, and these teams will be requested to submit reports twice a day on their progress. Another part of the problem has been incomplete paperwork on behalf of the borrowers.  Those that qualify for assistance need to complete their paperwork to move forward on getting assistance.  Under the mortgage assistance plan borrowers who qualify can get 2% rates for up to five years, quite a healthy boost for homeowners facing foreclosure.  Borrowers will be  communicated with to help them complete their part. We've seen a decrease in the number of foreclosures coming to the marketplace here in Sevier County and Gatlinburg which is creating a stabilization of pricing. If this trend continues, we have not reason to doubt it will, with foreclosures trickling on the market and not flooding it, prices may start to increase as early as Spring 2010. For more information on the government’s plan to enforce help for those facing foreclosure, click here.

Price declines are getting smaller, sales volume is getting larger and the overall real estate market appears to be mending.  October sales were up for pre-existing home sales, 23.5% up compared with October of 2008.  Homes sales for October were predicted to be 5.70 million, but the sales volume turned out to be 6.1 million.

Encouraging words are being spoken about real estate by NAR’s chief economist who stated that, “Existing home sales have already bottomed. Home prices are almost there. We are seeing less of a decline in house values.”

Approximately one third of home sales in October were made by first time home buyers taking advantage of the first time home buyer tax credit.  The median home price fell 7.1%, still affected by distressed properties which accounted for 30% of October’s home sales .

In addition, inventory of homes for sale has dropped slightly, indicating that the housing market is indeed recovering slowly.  Tax incentives, low mortgage rates and decreasing home values continue to make their mark, helping real estate sales to increase.  The housing market’s recovery will hopefully seep into the minds of consumers, giving a bit of peace and spurring on recovery in other sectors.

Click here for a Yahoo Real Estate article about real estate sales.