Temporary Resident

The downturn in the housing market in recent years has had a memorable effect on both buyers and sellers, and of course, real estate brokers.  One particular segment of buyers has had a particular impact on my business, and that is the medical school residents.  In years past, I would help a number of medical school residents purchase homes for their two year residency.  At the conclusion of the residency, and following their appointment to their next destination, I would usually help them sell that same home.  However, the decrease in housing prices coupled with the increased inventory has led most residents to choose rentals during their time in Triad.   By renting, they do not have to deal with negative equity in their homes after two years and they do not have to contend with an increased “days on market” during which time they have to pay such expenses as vacant homeowner’s insurance and lawn maintenance among other others.  Besides, many of the residents can rent great homes at an affordable price, considering many sellers decide to become landlords.  Until the housing market hits full recovery, I can only lament the loss of an important segment of my sales, but I can take comfort in knowing that I now offer property management among my services.  All is not lost……

Labors of Love

Viewing homes each day gives me the opportunity to witness things that are fascinating if not outrageous.  You can be the judge on the following “features” I have found in various homes I have viewed this past year.

*An jagged square drilled right through a laminated kitchen counter top about 12” square.  A recycling bin was tucked under the kitchen cabinet beneath the hole.  You can just sweep your cans and bottles right into the hole without ever leaving the kitchen.

*A glossy black urinal in a basement bathroom right beside the toilet.

*A digital thermostat that was meticulously painted to match the walls. Neither the temperature nor the settings were visible through the paint.

*A vinyl, louvered shutter that was mounted over the air return.  I guess the shutter was cheaper than the metal, air return grate that is designed to cover the hole.

*Metallic, silver wallpaper with the pattern of the Rolling Stones logo of the lips/tongue (in the living room no less)

*A master bedroom “suite” where the owners had completely removed the wall separating the master bedroom from the master bathroom.  The toilet, bathtub, sink, and bed were all with a few feet of one another and the plumbing was not hidden in the walls anymore.

*A television cable wire coming from a cable splitter at the neighbor’s house and strung about 100 feet to the house I was showing, where it entered the house through a hole in the vinyl siding.

Credit or Debit?

The Home Buyer Tax Credit from recent years seemed to be a reasonable effort to jump-start the dramatic decline in home sales.  The tax credits attracted buyers who were eager to take advantage of the free money, and rightfully so.  However, several years have now passed since the last tax credit, and the fallout from the conditions are starting to be felt.  A recent buyer contacted me to sell their home which was purchased with the tax credit in place.  After talking with them, they realized that they had not lived in the home long enough to be exempt from paying the credit back.  Unfortunately, they did not have the cash to pay back the credit, and even if their home sold at market value, there would not be enough equity in the home to cover the monies owed to the federal government to repay the credit.  Plus, they needed the equity (cash proceeds from the sale) to make the purchase on their next home, which was a smaller and less expensive home than they were selling.  Although all of the conditions of the tax credit were explained at the time of purchase, the euphoria of buying their home caused them to forget the occupancy requirement because they thought it would be their “forever” home.

Radiation Backup

For anyone that has a septic tank in place of city sewer, you will find this information unusual but certainly believable. As you know, the bacteria contained in a septic tank breaks down waste and toilet paper to enable the fluids to leave the box and enter the drain lines. This balance keeps the tank free from buildup, thereby preventing a backup inside your home. However, it has been discovered that the chemicals from cancer radiation will stop the proliferation of the bacteria and cause tank buildup. In other words, if a household member is going through radiation, the chemicals that leave his/her body and enter the septic system (through the toilet and the shower) can inhibit the system from breaking down waste properly because the radiation chemicals destroy the tank bacteria. Possible solutions would include and annual inspection of the system during the period of radiation or buying a bacteria booster, which achieve mixed results depending on who you ask. As if the cancer wouldn’t be bad enough, the symptoms and pain extend all the way into household maintenance.

Uncommonly Common

Foreclosure surges will always catch the attention of home buyers and real estate investors.  However, don’t let the list price set unrealistic expectations of how much you might pay to purchase the home.  I was recently contacted by a client who wished to view a foreclosed property listed for $109,000.  She liked the home and the lot, and we decided to offer full price.  After all, the home had only been on the market a few days, and it fit all of her needs and it was the perfect location.  Besides, there had already been numerous showings that day and the tax value was $143,000.  The buyer did not want to risk losing the property by offering a low price when the value was evident.  Our offer was rejected, and several days later, we noticed that the bank reduced the price to $94,000.  We submitted yet another offer for $109,000, only to have it rejected, followed by another price reduction to $89,000.  I informed by buyer that the bank was using price reductions to create an auction-type atmosphere, with the full knowledge that the bank was looking for a much higher offer than $109,000, even if it was now listed for $89,000.  The property eventually closed for $131,000.  These teaser prices are designed to get the attention of buyers, yet it does not offer any insight into what price the bank expects to receive after all the offers are evaluated.  When was the last time you offered more than list price to buy something and were subsequently ignored?

Improved Maintenance

There is a distinct difference between an “improvement” to your home and “maintenance” to your home. Suppose you have a leaking roof, and it results in ceiling discoloration. Since you don’t want the penetrating water to permanently damage drywall and you don’t want dripping water to damage your computer, furniture, or other valuable items inside the home, you call and roofer and have a new roof installed. Besides, your old roof was 23 years old and needed to be fixed anyway. Your new roof is considered home maintenance, not necessarily an improvement. It is maintenance because the only reason you fixed it was because it was broken. You fixed it when it broke because neither you nor any prospective buyer would want to buy your home while the roof leaked. Therefore, fixing the roof did not make your home more valuable. Now suppose that you got a nice IRS refund this year, and you decided to replace the kitchen cabinets. You add additional cabinets from the old arrangement, and the laminated cabinets are now solid maple with raised panels. You also replace the butcher block laminated countertops with a solid surface countertop. This project is considered an improvement because the characteristics of the new materials, added space, and attractiveness of the components may cause someone to pay more for your home than they otherwise would have with the old kitchen. Before you spend money to improve or maintain your home, consult a REALTOR and find out what choices are available and what will make your home more attractive should you decide to sell in the future.

College (un)Savings

It comes as no surprise that jobs and the unemployment rate have a profound impact on the health of our housing market.  With higher than normal competition for jobs in a limited hiring environment, workers are trying to gain every advantage available. Statistically, 2010 proved that college graduates weathered the recession better than others.  I offer that statistic with conditions, however.  I work with a large number of first time home buyers who are burdened with a high amount of student loans. It could be undergraduate loans and post graduate loans.   These debts cause an unusually high amount of stress and can inhibit their ability to get a mortgage, car loan, or small business loan to develop or reinvest in a personal business.  Last year, 4.6% was the unemployment rate for workers aged 25 and older who held a college degree, while the unemployment rate for the same age with only a high school diploma was 10.3%.  This clearly demonstrates that a college graduate can find job opportunities, but you have to measure the cost when deciding what college to attend, be it the more affordable state supported school or perhaps an out of state private college or university. Community colleges are also a great value.  I offer these options because I see a large number of my clients who are struggling with debt, and that debt is standing in the way of them pursuing simple pleasures and large dreams.  In fact, student loans are not discharged in bankruptcy, so when you decide to pursue an educational goal for yourself or your children, look at the facts and most importantly, your budget.

What’s a Picture Worth(less)?

At some point in time, we have all benefited from digital photography.  Perhaps we took out our red eyes or enhanced our skin color.  We may have even cropped a photograph of ourselves to remove the football game playing on television set in the background.  These one-click alterations can change the moment or the appearance of the subjects in the photograph.  As you can expect, similar alterations can occur in real estate photography also.  Of course, a Realtor tries to maximize the appeal of the property and its contents using high mega pixel cameras, wide angle lenses, or positional lighting.  However, I have also been disappointed on a number of occasions when I visit a property with a prospective buyer to find that the shady oak tree is mysteriously missing, or that the glossy, charcoal colored shutters are actually a faded, battleship blue.  Some listing agents have decided to walk the fine line between enhancing a property’s appeal and being negligent.  I have seen trees added, decks enlarged, and wallpaper “removed” through editing digital editing when the pictures are displayed on real estate websites.  This intentional misrepresentation is a clear attempt to deceive buyers and agents, and it really does make a picture worth a thousand (unkind at best) words.

Duty Free Zone

As I traveled past a well established real estate brokerage today, I was strangely amused at something I had seen countless other times with little or no reaction.  A sandwich board on a sidewalk read “Agent on Duty.”  At some time in every firm’s past, it has probably displayed a similar sign, notifying passers-by that there is a real estate sales person inside that building.  However, today that tickled my funny bone.  The “Agent on Duty” sign seems redundant, doesn’t it?  After all, assuming that the firm’s doors are unlocked, a buyer or seller paying a visit would hope to find an agent inside.  By placing notice beside a public street that there are agents inside, the firm is acknowledging the age old stereotype that agents are always playing golf at the country club or relaxing by the pool drinking apple martinis.  However, we know it simply not true if an “Agent on Duty” sign is parked outside.  Can you imagine entering a restaurant and asking the hostess if wait staff and cooks are inside?  Go to the grocery store, and before shopping, ask the customer service manager if cashiers are on duty.  If I were a buyer and seller looking for real estate service, I would be less angry if the doors were locked than if the doors were unlocked but no agents were on duty.  Thank goodness there will always be signs to clear up the confusion.

Last call…

When I leave the office or finish a meeting with a client and head home for the evening, I generally call my wife and ask if she needs me to pick up anything on my way home.  Almost 100% of the time, she tells me a few items that we may need that evening; lunch meat for bag lunches, milk, paper towels, batteries, dry cleaning, and so on and so on.  Recently, however, I ran a test.  I did not call for a whole week on my way home, and we were never without any item that could not be picked up or purchased the following day, if at all.  Similarly, I recently spoke with a client who had just purchased a home very close to a Wal-Mart and a Target.  Their previous home was in a rural area with few stores close by.  They acknowledged that living so close to grocery stores and shopping centers had increased their propensity to eat out and spend money.  Most of the buyers I work with tell me that they want to be close to stores where they frequently shop.  However, I should start asking them to consider whether or not their household budget feels the same way!