(4) Questions Today for everyone who needed an answer yesterday

We've all heard the rumors about the economy, the struggles American's face and the woe's of the lending institutes. But today's market faces other issues.

In just a short period of ten years I have seen three different styles of markets. I've seen the "buy when ready", "Buy before it list" and now the "I can buy it later" approach.

In today's market, clients have almost all the information available to them that we as real estate agents have. We are no longer the paved avenue for information. Our reach has to be farther than it's ever been to obtain any new clients. Our knowledge has to be deeper, more easily understood and better prepared than the client or the next agent they interview with.

While most seller's only think about the current "worth" or value of a property, both buyer's and seller's must look ahead to what their homes could be worth not only today, but 2, 5 & 10 years down the road. The most common (4) questions I get everyday that clients wanted answers to the day before are:

1. Why are the prices of homes in my area not dropping like they have in the rest of the country?

While some areas of the country have been hit hard by recession, depression, aggression, CNN, FOX and MSNBC, our area of the world has stayed modest. In all serious though, clients ask me this question each time I go to a listing appointment and tell them their home is worth more than they paid for it 2-3 years ago. Each time they are surprised.

Johnson City, TN earned a Real Estate Safe Haven because of it's steady growth, stable econony and reasonable prices. Eastman Chemical Company, ETSU, Wellmont Hospital and several other areas businesses have all kept Johnson City safe on the real estate market front. http://www.kiplinger.com/tools/slideshows/RealEstateCities/7.htm

Our area in my opinion was just "raised right" by our parents and grandparents who taught us the true value of hard work and the value of one's hard earned dollar from that work. That instinct has been installed into each of us in this area and has lead us not to go out and buy more than we can afford, it has allowed us to miss most of the foreclosure crisis because our banks still lended on those premises even when they weren't making as much as the other banks who are now extinct or facing major financial obstacles.

Our area is strong because of the people in our area know how to spend their money. Because of this, our homes value's have increased rather than decreased even in the tough economic times.

2. How do I determine the direction of prices in my market, have we hit rock bottom?

A two fold question, but basically has to be asked together. Buyers want to know if we've hit rock bottom just as much as sellers.

So while there are no steadfast rules to determine future pricing, the month's supply of inventory (or total inventory divided by the number of houses sold per month) is a great guideline.

Normal markets should have 5-7 months of inventory available to the public. So if 50 houses sale in a month, then there should be 250-350 available on the market for a "balanced market".

Based on this figure, if you have 100 homes sale in a month and only 200 homes on the market when there should be 500-700 homes, then you are in a seller's market and should expect appreciation, perhaps in the double-digit range even.

However, on the polar opposite side of things, if you have 50 sales in a month and over 1,000 listings, that would represent almost a full 11-13 months of inventory (double that of a balanced market) and sellers should anticipate a "buyer's market".

The Johnson City, TN market including zip codes (37601 & 37604) have 518 current active listings and 66 sold houses from May 1, 2009 - June 20, 2009. There are another 28 homes in Pending status (under contract and cleared for closing). So with those numbers, we are actually still in a seller's market based on the national "balanced market" numbers set forth by the NAR (National Association of Realtors). However, we are very close to a "balanced market".

3. Why should I buy now?

Because if you are a first time home buyer you receive an $8,000 tax credit (please check out my blog on the 8k tax credit if you are unfamiliar). In addition to this, if you are buying new construction you are buying in a market in which contractors want to move products quickly, thus meaning better deals.

Likewise, Sellers are reading into the negative astigmatism of the real estate market from AP media, CNN, FOX & other news outlets and not realizing the picture available within their own backyard of the current market here. So seller's are nervous to sale and are allowing their properties to slip away at below market prices at times.

Any buyer is eligible for the record low interest rates that we've been having. So whether it be your first or your tenth home, there has never been a better time in terms of market rates, government assistance and seller impatience as now.

4. Is homeownership really a good way to build wealth in today's market?

The answer is YES. Whether or not your home appreciates or depreciates in the next 30 years, you control where your money is going. Your home will always be worth something to someone. Your rental apartment though is not worth a dime to you when you move out.

According to the NAR, home values appreciate at 4.5% annually on average. Our area is closer to 3.3%. That's a great return; however, very few buyer's pay in cash. Most buyers try to finance as much as possible to keep money in their pockets.

So the amount of cash buyers put into their homes determines their return on their equity. So it's easy to see that real estate isnt just a good investment; it's a great investment even in today's market.

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Additional Notes on Appreciation .vs Depreciation

Inventory of:

1-2 Months: Double Digit Appreciation
3-4 Months: Single Digit Appreciation
5-6 Months: Balanced Market
7-8 Months: Single Digit Depreciation
9-12 Months: Double Digit Depreciation

I hope that this information has been useful to you, please feel free to use the post a comment box at the bottom of this blog or contact me at (423) 773-5569 or josh_jwoodsrealty@yahoo.com if you have any questions concerning Real Estate in this area.

(3) Sure Fire Ways to Lose a Client's Trust

In today's market there are Realtors waiting on every corner it seems like to snatch up good qualified buyers.
What seperates the good Realtors from those who are ready to hang up their license is their ability to listen, comprehend and respond.

For those few "specialist" in the market you add the ability to tell the truth regardless of outcome and the ability to ensure a professionally executed contracted that will not come back at a later date to cause problems.

While this may sound overly simple, the majority of my peers do not possess this trait. In speaking with my clients of both old and new here is the

(3) Sure Fire Ways to Lose a Client's Trust.

1. The Flip-Flop Agent

The Flip-Flop Agent is the agent who agrees with everything you say, regardless of what you are saying.

Most clients will show their true feelings for a house within seconds from their first view of the house. Comments like "Yes, this is it" or "Wow, this is nice" are generally heard when a client sees a home they think they could call their own. A pretty traditional response from a Realtor who has not done their homework is "Why yes, this is a great home....as if almost surprised they found it for you."

Then comes the disappointment of seeing the house up close. Remember that most Realtors now use professional level camera's or even professional photography for their homes. This makes an up close view of a house rather deceiving.

Upon closer inspection, you now realize that this home was not on the inside or the outside what you had expected it to be, in expressing this to your agent you now receive the traditionalist agent response of "This is a nice home, but I never liked the lot size". Thus flip-flopping his/her original response to the house.

For a common buyer, this may go overlooked. But astute buyers such as yourself who are obviously doing your homework by being here now have to question "Is my agent just trying to sale me anything? He knew this wasn't a great house, but brought us here anyway. Why?"

Clients, a good agent should preview the home for you or at least be familiar with the floorplans, houses of the area. It may not always in the hottest of markets be able to be done, but in today's slow market, agent previews are essential to a clients time. This agent should have said upon arrival that "Guys, this is a nice house...but I want you to be aware of some factors with the lot and other issues before you see yourself moving in." This honesty shows that the Agent has done their homework and also shows that they are willing to "work with you" rather than "sale quickly to you".

2. My Agent Showed Me This, Why?

Once, twice or sometimes several times a week or month I will hear from either a potential buyer or a potential seller "My Agent doesn't listen to me".

Folks, it's simple. There are 1,000's of Agents just in this area alone, each working for the same buyer/seller to earn a living. If you say "I want a house with a garage" and then 8 houses later you've still not seen a garage, it's time to tell that Agent "Thank you, but this is not working out."

In today's market your initial contact with your agent should include the following: (Email Address, Your Name, Your desired location, Bedrooms, Baths, Square Footage, Price Range and desired features).

From there, your agent should send you through email a list of properties matching your criteria. If they cannot do this, then move on to the next agent. It's ok to work with one or more agents, but when you find the agent you like, it's time to make your committment to them by signing a "Buyer's Agency Agreement". Showing faith in that Agent's ability to listen, comprehend and respond to your needs is also an essential part of a smooth transaction between client/agent.

3. The "Yes" Agent

Today I get a call on a house that has expired it's listing contract with another agent. This happens on several occassions with expired listings that the client calls me back after the listing expires.

So here is why....

Client: "Josh, our listing has ran out with ABC Agent....we weren't able to get the price we had set out to get and now realize that in order to sale the house we need to lower our price, fix the hardwood floors and update the fixtures. Would you be willing to come back by and give us another opinion of our home if we do these things?"

While this client is wanting to sale their home, they reached what so many sellers reach before they ever get their home sold, they reached the "Yes" agent. The "Yes" agent is the agent who has too many listings because they can never say no and their listings never sale.

I told client X 6 months ago that their home was worth $225,000 as it set. However, "Yes" agent came in and told the seller's what every seller wants to here. "Your house is worth $275,000".

Clients, it's simple. Your house is only worth what someone is willing to pay for it. So while "Yes" agent got a few offers in the $215-220k range, they never got anywhere close to what they told their seller they could get. A "Yes" agent will never go back to their seller with mud on their face and say "I've made a mistake in the price of your home". So while Client X made 6 more payments on their home @ an interest rate of over 7%, they finally came to realize that the Agent who tells them the truth is the Agent best fit for the job.

At Jim Woods Realty Company I never take a listing that I don't feel that I can sale. My advertising $$ come out of my pocket so getting your house sold and moved is just as important to me as it is to you.

If I know you want more for your home than it's worth, then I will tell you. If you have to have a certain price for your home, then I'll tell you what you have to do in order to get there.

So if you would like to work with an Agent who understands clients needs, then a simple phone call to (423) 773-5569 or email to josh_jwoodsrealty@yahoo.com is all that is needed to get our relationship off on and running.

Our company offers the following to all clients who sale with us:

1. Free 1YR American Home Shield Warranty

2. Free Pre-Home Inspection from John Lerch of Master Home Inspection

3. Expert knowledge of your neighborhood

4. Professional negotation of your home's price to assure that you get the best buyer's at the best price.

5. Web & print based advertising.

I look forward to an opportunity to work with you soon.

Josh Woods

JimWoods Realty Company

http://www.jwoodsrealty.com/

(423) 773-5569