There is a seasonality that is very consistant for home sales.  The graph below shows the typical shape of the sales curve for home sales in Wake County.

The first thing you’ll probably notice about this graph is the peak in June.  June or July is typically the month each year with the highest number of sales.

There is a build up of sales that occurs each year, beginning in January, peaking somewhere around June, and hitting a low point in November.

Looking at this graph you might think the best time to sell a house is June.  And statistically speaking that’s true.  The odds are highest in June because the number of sales is also highest.

But what if the right buyer for your home isn’t looking in June?  And what do you do about competition?  We don’t sell every house that is listed in June.  Some get selected by the available buyers while others do not.

So let’s consider a strategy that takes advantage of the seasonality of home sales while making sure your home gets exposed to the widest possible range of potential home buyers.

If you have the luxury of choosing when you will list your home, the best time to sell a house begins in the Spring.  Putting your home on the market in the February/March timeframe makes a lot of sense.

This puts you at the beginning of the build up of sales.  All of the months ahead have increasing sales up through June.  Right now well priced, presented, and marketed homes are selling in about 120 days.  Listing at the end of February puts your 120 days in the build up months of March – June.

As long as you are listed by April you will be able to capture the highest volume months within the typical 120 day selling cycle.

So without any other consideration I would say that the best time to sell a house is to list it March 1st.

Having said all that, I would be remiss if I did not address having to sell a house with other time constraints.  Perhaps you get a new job in the fall and need to list your home in October.

Well, the good news is we actually do sell houses in October.  As a matter of fact December can be a fairly active month.  Lots of people want to take advantage of the tax write-off of a home purchase in the current year and this is always a little boost in sales.  And don’t forget that our robust relocation market provides buyers throughout the year.

The important thing is to know what part of the selling season is ahead when you list.  If there are no other constraints, then Spring is the best time to sell a house.  If you have a need or opportunity that requires you to move at a different time, you should contact a real estate professional to discuss strategies.

People who sell their home in November, the low point on the graph, might very well tell you that is the best time to sell a house.  If listing in the Spring is not possible for you, then we’ll simply come up with a plan that takes full advantage of the competitive landscape whenever you need to sell.

Get Your Home’s Value

Anyone who has a home to sell has a big decision to make.  Or so it would seem.  Do I sell now, or wait for the real estate market to come back?

Let’s take a look at the facts, on a local basis, and see if we might be able to come up with a good answer to that question.

When will prices begin to improve?

Ah, piece one of the puzzle. Prices have not yet began to improve.  That much we know.  Here in the Raleigh real estate market prices have fallen 5-10% in the best and most popular neighborhoods.  More in areas where foreclosures have been concentrated, or where commute times are long.

My best guess is that prices will remain flat for 2011 and that we will begin to see modest improvement in 2012.  I base this on the fact that the overall economy is expected to perform in a similar way.  Flat to maybe marginal growth in 2011 with more improvement in 2012.

Since we did not have a big price correction that needed to take place locally, most, if not all of the fall in housing prices has been due to economic pressures.  Job loss, reduced demand for housing, etc.  Once the overall economy recovers and begins to grow our home prices should follow that trend.

How long will it take for prices to recover?

This question is a little easier to answer.  Our local real estate market has always appreciated about 2-3% per year when the economy is growing.  Since run away prices in other real estate markets did not seem to have an influence on our housing prices, it seems logical to expect a similar growth rate in price during the next cycle.

Let’s look at an example of a $200,000 home that has lost 10% of its value over the last 3-4 years.  Conservatively that home should appreciate about $6,000 per year when things start to improve.  In this example the seller is looking for a $20,000 increase in value to be back to where he was in 2006-2007.  This process would take about 3-4 years if everything goes well.

I’m estimating  that 2012 will be the first year that it will be possible for home prices to improve.  That makes it 2014 or 2015 before the price of a $200,000 home would be at 2006-2007 price levels.

Should you sell now or wait for the real estate market to come back?

I think this depends on why you want or need to move.  If you are just tired of your house and want a different one then maybe you should consider waiting.  If you need to move for a new job, expanding family, or similar reasons then maybe moving now might make sense.

The price of all homes will rise together, just as they fell together.  If you want to buy a more expensive home you might actually come out ahead in the long run.  A loss of 10% on a $200,000 home and savings of 10% on a $300,000 home is a net gain of $10,000 in equity.

The interest rate factor

A 1% increase in interset rate on a $250,000 loan amount is a 12% increase in monthly payment.

Low interest rates give you incredible buying power.  The example above represents a $157 increase in monthly payment amount as intrest rates move from 5% to 6%. That’s all towards interest and zero towards principle.

How long before the real estate market comes back?  A better question might be “what are my options for moving and how will this affect me financially?”  If you want to discuss your particular situation feel free to contact me.  Do what’s right for you, but make sure you have all the facts first.

Due Diligence Period: The biggest change to the NC real estate contract is the addition of a due diligence period.  This is a mutually agreed upon period of time that the buyer will have to fully investigate the property and decide whether to proceed.  The length of time and the fee for the due diligence period are negotiable between the buyer and seller.  The buyer purchases this period to fully contemplate the purchase of the property and may terminate the contract for any reason or no reason, and at their sole discretion, prior to the expiration of the period.

Due Diligence Fee: A negotiated fee will be paid to the seller by the buyer for the right to conduct due diligence.  It would stand to reason that the longer period of time required by the buyer, the more the cost of the fee.  The fee becomes the property of the seller and is a credit to the buyer upon closing.  It is important to note that this does not replace the earnest money deposit.

Due Diligence Process: During this period the buyer must complete any of the following items that are important to them and critical to completing the purchase.

• have all inspections performed
• secure final approval for any financing
• review all relevant property documents
• investigate insurance availability and affordability
• have the property appraised
• have the property surveyed
• investigate zoning, schools, proposed roads, etc
• investigate potential flood hazards and and flood insurance requirements
• any other investigation the buyer wishes to perform

Gone is the process of inspecting the property and then debating what is a “necessary repair.”  The buyer is free to request that the seller make any repairs and improvements they wish without regard to whether the request is for an item on the previously used necessary repair list.  Likewise, the seller is free to refuse to make any repairs or improvements.  The buyer can accept the property in its as-is condition, negotiate a written agreement as to what will be repaired, or terminate the contract prior to the expiration of the due diligence period.

Note: There is no longer a finance or appraisal contingency. These matters must be resolved prior to the expiration of the due diligence period.

Simplified Dates: Eight dates have been reduced to only three.  The new NC real estate contract contains 1) effective date 2)  due diligence date 3)  settlement date.

Seller Breach Provision: In the event that a seller breaches the contract, or materially fails to comply with their obligations to deliver the property at settlement, both the due diligence fee and the earnest money deposit are returned to the buyer.  The seller is also now obligated to reimburse the buyer for reasonable costs actually incurred during the due diligence period.

There are other changes as well, however, this pretty much covers the major differences between the previous contract and the new one.  From the big picture perspective, I think that this new real estate contract gives both sellers and buyers more protection from harm and levels the playing field with regards to risk.  There are new considerations that should be made by sellers before they list their property for sale and certainly new considerations that any responsible buyer should think through prior to beginning the home search process.

Contact me if you would like to discuss how this new contract applies to your specific situation.

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5 Reasons The New NC Real Estate Contract Will Benefit Buyers

My friend Jay Papasan explains this concept in simple, plain language.  Take a look at this video and then contact me to talk about exactly what it will take to get your home sold.

When a home seller has a new job in another city, or a loved one somewhere else who is in need of their care, sometimes they must move on before their house sells.  Chances are good that their insurance policy only has coverage for an occupied home.  When a home is left unoccupied or vacant the terms of the insurance policy could be inadvertently violated by the home owner and the home could be effectively uninsured.

Insurance companies price policies based on risk.  The higher the risk, the higher the premium. For residential homes there are three categories of insurance coverage.  Occupied, unoccupied and vacant. Each carries a different risk and therefore a different price or premium. Insurance companies place terms in policies that define the risk for which you are buying insurance.  When you violate the terms, such as leaving your home vacant versus maintaining an occupied home, you add risk that you are most likely not insured against.

Insurance companies consider an unoccupied or vacant home a greater risk for the following reasons.

Burglary and vandalism. Thieves actively seek out vacant homes. This is an easy target for them and it is typically easy to figure out that no one is living in a home.

Emergency response. If a small fire starts in an occupied home it can many times be handled without even involving the insurance company.  If no one is home it could spread and burn the home to the ground.  If someone is at home to call 919, even damage from rapidly spreading fires can be minimized. The same risk would apply to a small plumbing leak that left unattended could flood the house and result in tremendous damage and mold growth.

Accident liability. When the home is vacant there is no one available to prevent others from entering the property or supervising their activities.  If someone gets hurt on your property, even though they were uninvited, there is a good chance you could be held liable.

How to Protect Yourself

The first step is to read your insurance policy.  Boring, I know, but there’s no other way to know about your coverage. Then speak to your insurance agent about your situation.  Be honest and ask for clarification on your coverage and alternatives such as increased premium pricing to cover a vacant home.  Yes, you may have to pay more for coverage during the time you are not in the home, but experiencing a catastrophic loss without coverage could cost you more.  Much more.

Be sure you understand the insurance company’s definition of vacant.  Most policies define this as a certain number of consecutive days that no one is living in the home.  Your insurance company may also differentiate between unoccupied and vacant. Discuss your exact situation. When you will move out, if furniture will be left in the home, if anyone else stay in the home during the time you are not there.

And of course the best way to avoid this issue altogether is to sell your home quickly. Ironically selling quick can sometimes mean selling at a higher price too. If you would like to discuss what it will realistically take to get your home sold for top dollar in the shortest time possible, please contact me for a private, no-cost and no-obligation consultation.

You want the same thing every other seller on the planet wants.  Your home to sell fast and sell for the most money.  But the hard cold reality is that currently only about 11% of houses listed sell in any given month.  How do you get to be a member of the 11% group?

The quick answer is to give buyers what they want when they look at your marketing.  Find out what they’re seeking and offer it to them. If you think it’s nice hardwood floors, or granite counters, fresh paint and carpet, or a nice flat back yard, you’re right.  The problem is these things alone are not enough in today’s market that is already crowded with excess inventory.

Today’s buyer is seeking a bargin.  That’s the mindset.  Price is the primary criteria buyers are using to filter the huge lists of possible homes they could see.  There is no shortage of beautiful homes filled with all the eye candy the typical buyer wants.  But there is a serious shortage of buyers.

All things being equal, buyers will choose houses to look at based on price.  Condition and marketing cannot be compromised, but price is the differentiating factor that will put your house at the top of the list.  And price can also be the reason you don’t even make the list.

Our market may have shifted to a buyers market but the principles of selling houses has not changed.  Stand out from the crowd, attract as many buyers as possible, and watch the price go up.  I have seen this happen many times in sellers’ markets and in buyers’ markets.  Including the buyers’ market we’re in right now!

Even in today’s sluggish market selling houses is really a numbers game.  The more buyers you attract, the more offers you can expect.  More offers almost always result in a higher price; if the negotiations are handled by a professional, experienced negotiator.  So why do many sellers fail to list their homes in the range that gets them on the short list?  I think there are two reasons.

I want to try a higher price first.  On the surface, this might sound reasonable.  In reality, it’s the kiss of death. The first few weeks are when your house will get the most attention.  The listing is fresh.  Buyers looking in your neighborhood will spot the new listing.  So will their agents.  The problem is at this point they pretty well know the market price for your neighborhood.  If you are too high, they won’t waste their time.  They will simply pursue the large group of other suitable homes that are priced lower.

Stacey Anfindsen, publisher of the Triangle Area Residential Realty Report, did some interesting research. He looked at two groups of recent sales in the Triangle area. The first group was all homes where the final list price was equal to the original.  The second group was all homes where the final list price was lower that the original.  The group that was priced right from the beginning (no reductions)  sold in an average of 49 days for 98% of original list.  The group that was priced too high in the beginning (had been reduced) sold in an average of 144 days for 88% of original list.  Which group do you want to be in?

What if I don’t get multiple offers? A home priced strategically really should bring multiple offers.  If that does not happen, perhaps you still missed the mark on price.  If  you only get one offer, I wouldn’t necessarily call that a complete failure.  Evaluate it honestly and stand your ground on price.  If you’re too high, you cannot successfully do that.  Have a great negotiator on your team.  Getting the home sold for the most money in the shortest time with the least hassel is the goal.  If you set your price where your house continues to be eliminated from the competition, you will not even get showings.

If you’re ready to explore what it will take to get your home sold in today’s market, request a no obligation home value analysis.  You’ll get an honest, no-pressure evaluation of your particular scenario.

As we try to understand the impact of the Home Buyer Tax Credit, the first place we should look is closed sales. What does a normal, unstimulated year look like?  We’ll have to go all the way back to 2008.

For our purpose today the important thing to notice is the shape of this graph.  It increases from January, peaks in June, then decreases through the end of the year.

Now let’s compare the unstimulated year of 2008 with the stimulated year of 2010 to get an even better understanding of the impact of the Home Buyer Tax Credit.

Easy to see the difference, isn’t it?  Look at the relatively flat January sales activity in 2010. Think this might have been a mindset that said let’s wait, we have until April 30th to be under contract?

Now look at the sharp increase in sales activity from March Through April.  The mindset among buyers during this time was hurry up before time runs out.

Now for the most chilling fact of all.  Take a look at the incredibly sharp decrease in closed sales for the month of July.  Here are the exact numbers of closed sales for July of both years.

July 2008 – 1424 Closed Sales

July 2010 – 865 Closed Sales

That’s a 36% decrease in sales.  It’s clear to see from the data that sales in general are down from 2008, but July sticks out as the sharpest decrease of the year.  Think this might be due to the Home Buyer Tax Credit?  Does it look like sales were moved from the months of June and July into the months of February, March and April?

Want to take our study of the impact of the Home Buyer Tax Credit even further? I think the effects are still not over.  Showings precede purchases in the real estate business.  Showings are down too.  Take a look at the difference in showings for the month of June.

Wow… showings were down by 30% in June!  Taking this into consideration, we easily have another 30-60 days of lingering effects left to deal with.  That puts us out to September or October when the market normally starts to slow down for the holidays.

So back to my original questions about the impact of the Home Buyer Tax Credit.

Was the impact of the Home Buyer Tax Credit positive of negative? I believe that overall it will be a non-factor if we look at 2010 as a whole.  I have always said that the government cannot make anyone buy a home who does not need one.  It’s pretty clear to me that the results of this tax credit was that buyers were moved around relative to when they purchased.  I think it’s safe to say that no new buyers were created.  Our government does not have that power.

Was the tax credit good for buyers? If you got $8,000 for buying a house that you intended to buy anyway, you would probably answer yes to that question.

Was the tax credit good for sellers? Maybe.  If you timed your best pricing and marketing efforts for the February through April timeframe, you at least had a great number of motivated buyers look at your home.  But if you are still trying to sell you are dealing with a 30% reduction in showings at a time when it should be peaking.

Stay tuned… things change quickly!

Does installing a fence add value to your home?  I get lots of questions about making home improvements.  Some from clients who are selling their home and want to be competitive when we list.  Some from past clients who want to add a feature or improvement for their enjoyment and want to know if there will be some return when they sell.

The most shocking thing I tell some people is that no home improvement project will return 100% of the cost.  Well, almost none.  There are exceptions to everything.  And most of the exceptions to this rule exist because of location.  Improving a older home in a super popular  location could very easily return above 100% of the cost when you sell.  But let’s talk about the homes most of us own.  Homes in average locations.

Fences for the average back yard can cost anywhere from a $2-5 thousand dollars.  And in general, you should expect to get about 50% of that investment back when you sell.

Appraisers have told me that they will add somewhere between $1-2 thousand dollars when they are comparing a home with a nice fence in the back yard to one that has no fence.

The problem with nailing exactly what value a fence adds when you list and sell your home is that other factors are influencing price too.  General appreciation over time for your location.  Condition of your home.  The market when you sell.

I can definitely tell you that having a fence in your back yard increases the available pool of buyers who would consider your home.  I show lots of homes and have never had anyone tell me to only show them homes without a fence.

I have, on the other hand, had buyers tell me to only show them homes with a fence in the back yard.  Then if we cannot find the right house with a fence already installed, they will begin to look at homes with a nice flat yard where a fence could easily be added.

This is where not having a fence can cost you.  Someone who must have a fence, and otherwise likes your non-fenced home, will offer some amount that includes a discount for what they perceive they will have to spend on a fence.

So, will installing a fence add value to your home?  The better question is, do you need a fence installed for enjoyment or the safety of a child or pet?  If a fence in your back yard will improve your lifestyle, then do it.  Chances you will sell your home faster when the time comes.  And there is a real good chance the price you get will be higher that it would otherwise.

Finding a real estate agent to list your home for sale is clearly the first step for many people.  The National Association of Realtors (NAR) reports that 84% of all home sellers used a real estate agent.  So if you are like the vast majority of home sellers, you too will need to spend some time finding a real estate agent who is right for you.

When beginning the task of finding a real estate agent, a good place to start is by describing for yourself the perfect agent.  That way when you find him or her, you’ll be able to recognize them.

NAR does extensive research every year, interviewing thousands of home buyers and home sellers, and compiling the results.  I thought you might like to take a look at this very interesting data.  It reveals what is important to most home sellers when faced with the task of finding a real estate agent.

Help pricing the home competitively. This was the top service most sellers wanted from their real estate agent.  Of those surveyed, 22% said an agent who has the knowledge and experience to price their home competitively was their top priority.  Make sure your agent is on top of his market stats and knows the right prices for your neighborhood.

Help finding a buyer for their home. This was in second place with 21% of the survey respondents choosing help finding a buyer as their top priority.  With the reduced number of available buyers in the current market, and the increased inventory levels, this is clearly important.  This is where your agent’s knowledge of buyer behavior will come into play.

Help marketing the home to potential buyers. Tied for third place, at 19%, the role of a real estate agent as marketer was deemed very important to many home sellers.  Make sure your agent is able to clearly articulate why their marketing plan works and that it looks for buyers in the right places.  With 90% of all home buyers using the internet to search for homes, a good marketing plan should have a solid internet strategy at its core.

Help selling the home within a specific time frame. It’s no surprise that 19% of respondents said the time it takes to sell a home was of major importance to them.  The time on market ends up being the result of a carefully orchestrated balance of price, preparation, and marketing.  Fortunately you and your agent have total control over all three of these factors.

Help finding ways to fix up the home to sell for a higher price. Here’s the third factor that is critical to how long it takes to sell a home.  Preparation.   The condition of a home has a great deal to do with time on the market and the eventual selling price.  Intelligent choices about what to do (and what not to do) to prepare a home for sale on today’s market can make the difference between success and frustration.  Make sure your agent has a proven team of home inspectors, contractors, and home stagers to help prepare your home to crush the competition.  10% of home sellers chose this as their top priority.

Help with negotiations came in at 5%, and help with paperwork at 3%. I think these received such low marks only because they were overshadowed by how much actually getting the home under contract concerns most home sellers.

Clearly the sellers in the NAR survey are very concerned price, marketing, and time on the market. Are these same things your top concerns too?

The right real estate agent can insure your success in all of these areas.  Finding a real estate agent should be a relatively simple task if you know what you’re looking for.

If you are in the process of finding a real estate agent right now, feel free to contact me for a private consultation.  You’ll get complete honesty and the truth about what it will take to sell your home.

How is the Raleigh real estate market doing?  I get asked this question many times every day.  I’ve tried the short answer.  You know the ones… great… awful… better… up and down.  But no quick answer really paints an accurate picture of the Raleigh real estate market.

The best way for me to reply is probably, “why do you ask”?  The Raleigh real estate market is actually made up of several sub-markets.  They are all performing differently.  And depending on what home you are selling or buying, for you this real estate market can be anywhere from great to terrible.

Homes for Sale Under $200,000

This is the sweet spot for the Raleigh real estate market.  Homes under $200K, priced properly and professionally marketed sell quickly.  We are even seeing multiple bids in this price range.  In the past six months 2,669 homes in Wake County priced under $200K have closed.  This accounts for exactly 50% of all sales.

Homes for Sale Between $200,000 and $300,000

It slows down a little in this price range, but the Raleigh real estate market still gives this group considerable favor when the home is priced very competitively, presented in a sensible way, and professionally marketed.  If a seller will price their home just below the last few comparable sales a home in this price range will sell quickly as well.

But I cannot emphasize enough just how unforgiving this real estate market is for this price point.  If your home needs painting, or the carpet is worn, and you do not address these kinds of things, you will not be happy with your results.  Your home will either sit on the market for months and months, or you may get really low offers from deal seekers who happen to like your floor plan.

Professional staging always helps in any price point, but in the $200-300K range it is particularly important.

We have seen 1,375 closings in Wake County in the past six months in this price range.  This represents 26% of all sales.

Homes for Sale Over $300,000

This is where we have a real problem.  We sold 1,286 homes in Wake County priced over $300K in the past six months.  That’s only 24% of the total sales in the Raleigh real estate market.

When you consider that we currently have 3,364 homes listed for sale in this price range, that’s not good news.  This inventory represents a 15 month supply.

Contrast that with an 8 month supply of homes priced under $300,000.

And if you are buying a home in the Raleigh real estate market, my answer is completely different.  In that case my answer to your question will range somewhere between great and amazing.