dothanhomesearch.com

By: Charles Woodall
Managing Broker

http://www.dothanhomesearch.com

Last week at a closing, one of our sellers got a not-so-pleasant surprise. Here is their story. The names have been changed to protect the innocent.

Mr. Seller took out a $10,000 home improvement loan with a national department store back in the early 80’s. Not realizing it at the time, said store placed a second mortgage on this home as collateral. Mr. Seller made his improvements, repaid the loan early, and continued to enjoy his home.

Fast forward 25 or so years, and the seller discovers, at the closing table mind you, that said national department store never recorded a satisfaction of the loan. In other words, they never publicly recorded that the loan had been paid in full. When properly recorded, a subsequent search of the title of a property, such as when the home is sold, will reveal the recorded satisfaction. But what happens in this case? Now obviously the loan was paid off, or Mr. Seller would have long ago ran into trouble with the store, right? Regardless, the title company is now obligated to hold $15,000 of this seller’s money until such time as the seller can prove he paid off the loan.

Think about that for a minute. If you were in this situation, how easy would it be to prove? Do you keep your home financial records for 25 years? Do you check your records at the county courthouse regularly to make sure everything is as it should be? Maybe you should, because you just never know when you will run into a problem.

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By: Charles Woodall
Managing Broker

http://www.dothanhomesearch.com

A couple of things that are on my mind as we start the week.

Jim Duncan had lunch with Dr. Lawrence Yun, Chief Economist of The National Association of REALTORS, one day last week. Dr. Yun had some interesting comments on a lot of things, including the days on market statistic. Take a quick read of Jim’s post, paying particular attention to the part on this subject.

Jim and I agree on the irrelevance of days on market as a statistic, although for different reasons. Withdrawing and re-listing a property (Jim’s beef) to reset days on market to zero skews the data. I have been guilty of doing this, as have most REALTORS, reasoning that sometimes a listing needs a fresh start. Yes, that is gaming the system and shouldn’t be allowed. However, if you read my earlier post on this subject, I have come to feel that days on market should not be relevant to a buyer anyway, regardless of whether it is accurate or not.

Dr. Yun gives the impression he isn’t too keen on using DOM as a meaningful measure either.

Phil Hoover is another real estate blogger that I like. Phil blogs about the Boise, Idaho real estate market and posted this gem last week about listing agents auditioning for sellers.

Phil couldn’t be more right. Too many sellers think they are hiring the best agent when they hire one that will tell them what they want to hear. Look, you need to know exactly what is going on in the market if you want to have any chance at a sale. Are they telling you the real estate market in Dothan is down over 24% so far this year compared to last? Are they telling you what you need to do to get your home sold when competition for buyers’ attention is tougher than it has been in years? If they are, then you’ve likely snagged a good one. If they aren’t, you might want to look elsewhere.

Ok, now on with the week!

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By: Charles Woodall
Managing Broker

http://www.dothanhomesearch.com

What is your plan for getting potential buyers into my home?

That?s it in a nutshell. Job one for a listing agent is to get your home in front of as many potential buyers as possible. Everything else a real estate professional brings to the table, such as negotiating skills, taking care of closing details, or years of experience, are useless until a buyer is found.

If you aren’t getting foot traffic, then one of two things is wrong. Either your home is overpriced, and potential buyers are eliminating it, or enough buyers aren’t seeing it, which is a marketing problem that lies at the feet of your agent. If the problem is price, then an independent appraisal will tell you if it is priced competitively. If the problem is marketing, then a look at how your agent is marketing your home is important.

A full 84% of homebuyers search for homes on the Internet. Doing a Google search of your address will give you a good idea of how easily your home is found on the web.

Here are a couple of examples of comparable listings and how readily they are found on the Internet.

• 100 Clam Gulch ? 94 search results
• 107 Clam Gulch ? 28 search results

• 471 Pat Wells Road ? 54 search results
• 151 Pybus Road ? 9 search results

The same percentage of buyers list a real estate professional as an information source when looking for homes. Ask how your agent is going to market to other REALTORS. Agent open houses are one idea. Input in the MLS is a given, so don?t let them use that as the end all, be all of their marketing plan.

Logic says that your REALTOR should include a heavy emphasis on marketing to these two sources. Of course there are other important marketing avenues, such as a yard sign and various print advertising. These are further down the list though, and a good listing agent will have the first two covered.

You don?t know what their plan is until you ask.

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By: Charles Woodall
Managing Broker

http://www.dothanhomesearch.com

So your agent calls and says that he/she has received an offer to purchase your home. What are your options? More importantly, what is your best option? First, your agent is required by law to prepare what is typically called a net proceeds estimate, or seller net sheet, that shows you what your bottom line with likely be. Your decision on which of these options to choose should be based on a thorough understanding of this net proceeds estimate. Say it with me now…Focus on the bottom line!

Accepting the offer

If you can live with the numbers, then this is absolutely the best option. As I mentioned before, focus on the bottom line of the net proceeds estimate your agent prepares for you. An offer asking you to pay closing costs and down payment assistance may net you as much as a cash offer, depending on how the numbers work. Don’t get caught up in everything the buyer is asking for. Ask yourself, “Is this bottom line number a number we can live with?”

Making a counter offer

If the offer is not something you can live with, then a counter offer to the buyer might be in order. Your best strategy should be to change as few items as possible in your counter offer. Give the buyer, based on their original offer, everything you can. It makes everything easier when you adjust the price and leave everything else the same. That is not to say that nothing should be changed except the price. This is where your agent earns part of their commission, by advising you and helping you formulate a good counter offer.

Turning down the offer

Probably the least advisable of the three choices, declining an offer outright can work against you. You have a ready, willing, and presumably able buyer that likes your house enough to make an offer. By summarily rejecting their offer, you can completely turn them off and send them to your competition. Even if the offer is ridiculously low, make a full price counter. Doing so shows them that you want to sell, but they need to make a more reasonable offer.

Offers are too hard to come by, especially in the current market. Focusing on getting your house sold at terms and conditions you can live with should be yours and your agents top priority.

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By: Charles Woodall
Managing Broker

http://www.dothanhomesearch.com

Buyers like to use a high number of days on market as a tool to eliminate a home from consideration, or as reasoning for a low ball offer. There has been some discussion around the web recently (here and here) about listing agents withdrawing a home from the MLS and immediately re-entering it to make it look like a new listing. I myself have been guilty of doing that in the past. However the time has come for us to educate buyers as to why days on the market is an irrelevant statistic. Let me begin by dispelling two myths.

“This home has been on the market for a long time. It has to be overpriced.”

At what point in time does it become overpriced? Sixty days? 120? If you are looking at two very similar houses, priced exactly the same, with the only difference being one has been on the market a week and the other for six months, are they both overpriced, or just the one that has been on the market longer? My point is that if it is overpriced, it is overpriced on day one of the listing. If you as a buyer are working with a competent real estate professional, they should be able to show you, even on day one, an analysis with a reasonable determination as to the market value of a property. If you are not working with an agent, then an appraisal can show you. Unless you are in a market with rapidly falling prices, the determined value will be the same, no matter how long the house has been on the market.

“This home has been on the market a long time. The seller must not be motivated to sell.”

Circumstances are different for every seller, and there are multiple reasons why a home that has been on the market for any length of time is still there. Fairly common in today’s market is a situation where a seller doesn’t have any leeway in their price and is selling at near what they paid. Another reason is they may have selected a poor listing agent. Take for example a listing that has been on the market for 150 days. There is no way to determine, just by looking at days on the market, whether a home is still on the market because the seller has refused to budge on their price because they don’t have to sell (read not motivated), or whether they are desperate to move but can’t negotiate on price because they owe more than they can sell it for.

What’s the lesson for buyers? Don’t judge a home by the number of days it has been on the market. Focus instead on price, location, and desirable amenities. Days on market can be a useful number for a seller to determine what a realistic time to sell will be, but it is of little or no value to a buyer.

EDIT: I inadvertently left out another post discussing this topic on Jim Duncan’s blog. An callous and unintentional oversight on my part.

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By: Charles Woodall
Managing Broker

http://www.dothanhomesearch.com

Think again. We?ve yet to see a significant increase in foreclosures here in Dothan. I think we will. And even if you are current on your mortgage and are set to ride out the storm, the ripple effect foreclosures have on the market can have some impact on you and your home.

Terry McDonald, fellow real estate blogger, had an excellent overview of this subject a few days back. There are basically two ways this can affect you, the average Dothan home owner.

It will affect you if you are trying to sell

Foreclosures typically sell for less than true market value, occasionally significantly less. And a high number of foreclosure sales will only exacerbate the problem. When foreclosed properties selling for 80 to 90 cents on the dollar in a neighborhood increase, all other homeowners will begin to lose equity, and in turn sale price, because appraisals will start coming in lower.

It will affect your property taxes

As resale value is lowered, there is the possibility that come property tax time, assessed value will be lowered. While everyone likes to pay less in taxes, widespread decreases mean less tax base, which means less money in government coffers for schools, public services, etc.

Terry brings to light other effects as well. Take a couple of minutes to read his post.

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By: Charles Woodall
Managing Broker

http://www.dothanhomesearch.com

Rich Rodriguez has problems. The University of Michigan football coach, formerly at West Virginia, is having some issues with a contract. The way I understand it, his contract with West Virginia called for a $4 million dollar payment to the university if he left for another job. He says he doesn’t owe the university because promises made at the time the contract was signed were not kept. The university of course disputes that. A federal court will get to decide who is right.

I know you are asking yourself, “What does this have to do with real estate?” It has to do with contracts, and the fact that disputes between two parties, whether they be a coach and his former employer, or a home buyer and seller, are settled by what is written in the contract. Any discrepancies, vague terms, or gray areas are left open to interpretation. If you want to avoid having a court determine what your intent was when writing a contract, make sure your agent knows the real estate contract forward and backward. Although real estate agents are not attorneys, we typically use a template real estate sales contract that has been approved by an attorney. We must fill in the blanks.

A solid contract is one that accurately and completely expresses the understandings and agreements of the parties. Agreement is the key word; a mutual meeting of the minds. Most contract disputes are not the consequences of cheating or fraud, but develop because there never really was an agreement. There are a couple of ways this can happen. First, ambiguous contract terms can mean different things to different people. Second, the contract may not address important issues or anticipate unexpected changes. The normal give and take process of offer, counter-offer, and acceptance does not necessarily lead to an agreement, although it can lead to a signed contract.

Here are four steps you and your agent should take to help avoid contract disputes

1. Avoid vague, subjective words such as ?satisfactory? or ?reasonable?.
2. Say everything you need to say and don’t be reluctant to spell contract terms out in excruciating detail.
3. Contingencies must always have an IF followed by a THEN and a WHEN
4. The contract should address the tough issues, so there is a clear understanding from all parties and all possibilities are dealt with

Have something to add? Have you had an interesting experience with a real estate sales contract? Let us know by leaving a comment below.

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By: Charles Woodall
Managing Broker

http://www.dothanhomesearch.com

I was over at my brother’s house just before Christmas helping put a trampoline together for my niece. His neighbor, who has her house on the market, came over to check out what we were doing. Without knowing me or what business I am in, she starts talking about a recent offer that was presented to her by her agent. From what I was able to put together, the offer was not just lower, it was substantially lower (a ?low ball? in real estate vernacular) than her list price, so she instructed her agent to reject the offer outright, and admonished her “friend” the agent for bringing her something so ridiculous. She basically blamed her agent for the low offer.

I haven’t done a market analysis on this particular house, and I haven’t been inside of it to know what condition it is in. I do know that the current list price does not at first glance look to be far out of line. So why did she get such a low offer? Simple economics. There were three sales in this area of Dothan in the last three months, and there are currently six houses for sale in the same area. Why wouldn’t a buyer, with ample supply to choose from, look for a bargain?

I never let on to this lady that I was in the real estate business, as she wasn’t really talking to me anyway. There will be a time and place for that. My unsolicited advice would be to never outright reject any offer. At a minimum, make a counter offer at or near full price to determine the motivation of the buyer. You just might be suprised when you find out that really want this house above the other five, and they would have bought with just a little negotiation.

What is a seller to do to combat these low offers? We’ve talked about it before here, here, and here. It never hurts to go back and re-read. Let us know your experience with low offers by commenting below!

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By: Charles Woodall
Managing Broker

http://www.dothanhomesearch.com

There were 94 homes sold in Dothan in November, according to the Dothan Multiple Listing Service. Looking at the statistics, each spent an average of 128 days on the market. Out of those 94 homes however, 25 sold in less than 60 days. Why?

The median price for these quick sellers was around $133,000. No significant difference from the overall market median for the month of just over $134,000. 16 of the 25, or 64%, were inside the city limits of Dothan. So far this year, 62% of all sales have been inside the Dothan city limits. Again, no significant difference.

So why did these 25 homes sell in half the average market time? What makes them so special? What sets them apart from the rest if it isn’t location or price range? Read some of these remarks taken directly from the MLS listing:

• “Ready to move in”
• “Totally remodeled”
• “new appliances, countertops, flooring”
• “Best price in subdivision”
• “lots of extras and upgrades”
• “easy to show”
• “mint condition”

Only two of the 25 were listed to sell as-is, and both of those were foreclosures. The rest had three things in common. First, they were priced at or slightly below their competition. Second, they were in excellent condition. Third, they were easy to show buyers. Not a single one was listed as having an allowance for new carpet. None were listed as needing updating. Only one asked for a 24 hour notice for showings.

The most interesting statistic however is that the list-to-sell price ratio of these 25 homes was 98.24%, nearly 3% better than the market average. In other words, these sellers pocketed an extra $3,000 to $4,000 by having their home priced right, in market ready condition, and available to show AT THE TIME OF LISTING.

Time is indeed money. How does your home stack up against these quick sellers?

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By: Charles Woodall
Managing Broker

http://www.dothanhomesearch.com

I picked this up on Jay Thompson’s blog a couple of days ago.

Shelly Banjo has an article posted on Wall Street Journal Online titled “Online Sleuthing for Home Buyers”. In the article, Banjo discusses the ever increasing amount of information available on various websites to Internet users searching for real estate. In particular, she talks about