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.”

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.

Being a landlord can be easier that you think.  Many people are holding on to their real estate these days, some by choice, because they are waiting for a stronger market, and some by necessity, those that simply cannot sell their homes.  What this means is that there are many first time landlords out there, a job that can be a bit daunting, especially if you don’t live near your property.

If you are lucky being a landlord is easy and you get a monthly check with no real involvement.  Many landlords have a more difficult time however, chasing down rent, making repairs and having to constantly oversee their tenants and their properties.

Here in Sevier County, more specifically Gatlinburg & Pigeon Forge, being a landlord can be surprisingly easy. One of the many companies who manages the overnight rentals that dot the mountains in our area is Chalet Village Properties. Management companies like Chalet Village take care of everything from advertising, leasing, cleaning and general maintenance of the overnight rentals.

Another thing management companies do that makes our job selling real estate much easier is to document the rental incomes of the properties for sale. This documentation makes it much easier for a buyer to decide which rental property is the right choice for them.

Investing in REO/foreclosure properties may seem like the thing to do these days but just because a property is being sold at a bargain price doesn’t necessarily mean it is a bargain. The number of foreclosed properties has increased dramatically over the past year and the number of bank owned properties is not yet diminished. It is important to remember that the banks or lenders that have the property on their books want to unload it. What does this mean to you? Cash offer wins. If you need to get a loan to purchase the property then you could be waiting a few weeks to acquire financing. It's important to become pre-qualified prior to viewing homes for sale so that you may act quickly if the right one appears. If someone else has their eye on the property and walks in with cash you will be out of luck. No money, no property. The bank doesn’t care if you get the property or not, they just want the property off their hands. If you are looking to buy an REO property for an investment be aware of two factors: condition and location. Just because a property is inexpensive does not mean that it will make a good investment. Have your Century 21 Four Seasons agent provide a complete CMA prior to submitting an offer to purchase. Is it in a good location? Remember that location matters, whether you will be living in it or not. What is the condition of the house. When it comes to REO property many times you will not be allowed in for an inspection and buying sight unseen can be a real gamble. Do some research and find out what you can about the property before committing to buying it. Your Century 21 Four Seasons agent can help you select the right contractors and inspectors. Certainly buying REO property can be a good investment but it can also be a risky one. Do your homework and have the right real estate partner/agent to make your purchase a success.

Like most of America the Great Smokies and more specifically Sevier County has seen a very large increase in the number of foreclosures and short sales in the past 2 years. However, in the past few months the quality and quantity of those properties has started to dwindle.

The opportunities that were available to get a good deal (one of our clients always says, ’I wants steals not deals’) on a great home are not lasting as long on the market and their are fewer of them. Several of the short sales and foreclosures that don’t need major repair now have multiple offers.

I know the arguement that these properties bring the average sales price down and hurt the overall market. I can’t disagree. They do, however, generate an incredible amount of future income for the people who now have the capital to take advantage of these deals and provide entrance into the market for some who couldn’t otherwise afford such properties. Neither is a bad thing for a battered segment of our economy.

The decrease in the number of these properties tells me that our market, like so many others across the country, has started to stabilize. I know it will be some time before prices increase but this is the first step in a very anticipated recovery.

Does Spring create irrational optimism? I hope not. I’ve been feeling a sense of optimism with the warm days, flowers blooming, and sunshine. I hope everyone else is feeling it too.

It appears that everyone else could be feeling the same way. When looking at the headlines today regarding our financial state (I think we’re definetly all in this together so I say ‘our’) I see good news. The stock market is up, manufacturing orders are up, and most importantly home sales are up.

So, maybe it’s just Spring but I sure hope not.

I’ve been speaking to some of my agents about pricing their sellers’ homes ahead of the market. That was an easy thing to do when the market trends were going up. Now that they are headed in the opposite direction I find that many agents do not want to have that conversation with their sellers.

Pricing ahead of the market as prices were increasing was almost a pleasure. “Mr./Mrs. Seller” the last home on your street sold for $305,000 last week, so with appreciation at 4% per quarter this year and the average time on the market at 100 days your home should sell near 318,000. GREAT! That was an easy conversation to have and meant that you could be the bearer of good news on almost every occasion.

Today the conversation is not so eagerly anticipated. “Mr./Mrs. Seller” the last home on your street sold for $280,000 100 days ago and the market is declining at a rate of 4% per quarter with an average time on the market of 180 days. That means your home should sell in the range of $245,000. OUCH! That’s a conversation most people want to avoid.

However, we are in the reality/real estate business and to indulge the fantasies of sellers to their own detriment is not in either of our interest. They want to sell, we want to help them sell and ultimately be paid at closing for our efforts and knowledge.

It’s still a tough conversation to have with most sellers. Especially for a group of people who care about their customers and clients the way these guys do.

I know we all look forward to changing the conversation as foreclosures slow and prices level off.

I’m going to say it, WE’VE REACHED THE BOTTOM! I’ve been thinking it since the first of the year but now I really believe that in 6 months the media will be saying it too. I’ve been waiting because I didn’t want to sound like somone with their head in the clouds. Some guy who says the market is on the verge of a turn around (turn around being a little subjective, I believe stabilization to be a turn around at this point) every 4 or 5 months just to have to eat crow and start all over again.

Looking at the number of foreclosures and short-sales (and the sellers who qualify for a short-sale) in our market leads me to believe that the end of the malaise is near.

Of course, by then all of the truly exceptional deals on property will have been snatched up by investors. That’s OK because I’m ready for someone to ring the bell and say ‘yep their it was 6 months ago and now we can move on with the rest of the economic recovery.

I have to admit that I’ve been aprehensive about 2009. It’s not as though 2008 gave me that much to look forward to in the way of business, the type of business you can count on, can budget with. 2009 is proving to be much more agreeable though. Beginning the last 3 weeks of December we started seeing marked improvements in our real estate business.

Short-sales, foreclosures and just great deals on some of our rental properties have inspired many buyers to act (along with almost comically low interest rates).

Someone once told me that ‘no one rings a bell when you reach the bottom, you only recognize it when it’s already past by at least 6 months’. I have the distinct feeling we could be hearing a bell soon and I couldn’t be happier.

Happy 2009!

Being in the real estate business is an exercize in constant change. Even in the boom periods we are always adapting to new technology, new customer demands, and the ever changing regulations that guide us.

I get bored easily so the persistent need to change hasn’t bothered me. I remember our first web site back in the 1990’s and training my agents to use email and send attachments some time after. It seems that the advent of the IDX web site came quickly with some local brokers skeptical but it was an exciting time for me.

I wonder what the next change will be. I wonder if we have reached a point where great innovation has stopped and we’re just going to experience fine tuning of the internet tools and services we use? Will the downturn in real estate sales produce some sort of new market or marketing technique?

I think about what an instructor from a class I attended several years ago said, ‘The real estate business is and always will be one agent working with a buyer to find the right house, it’s a face to face business.’ Has the internet really changed that? Sure, people start their search online but when it comes time to look at the houses, write an offer, and negotiate they still look to us (the people who have spent thousands of dollars and hours educating ourselves) to help them navigate the waters and find their way. I guess, even thought I like change, I can take some comfort in the fact that we’re still needed.