Many of you have been following me on Facebook or Twitter…or this blog…and you see that my listings are going under contract at an insane rate right now. Some of them have never even made it to the blog because they go under contract too quickly! (I’m not complaining, by the way!) But the posts have raised quite a few questions from my followers and clients.
Is the market on the rise? Are we finally looking at recovery? Can I get out of my house what I need to in order to sell it? These are the types of questions I get every day.
It may depend on what news channel you are listening to at the moment but real estate news in general is finally sounding hopeful! Many of us hear that the market is on the rise and we want to know what that means for us–as homeowners and as Charleston residents. Let me give you a few things that I have learned to be completely unchanging over the past few months.
1. Bank-involved properties (REOs, short sales, foreclosures) ARE being used in appraisals.
2. Past sold comps (appraisals) determine your home’s true value.
3. Therefore, transactions are up, prices are NOT.
Even if a buyer wanted to buy your home for higher than market value, their loan is contingent on the appraisal and therefore, they wouldn’t be able to unless they had enough cash to make up the difference. And, let’s be honest, that isn’t happening. No intelligent buyer (especially when represented by an intelligent Realtor) would overpay for a home in today’s market. So the value of our entire market right now is based off of a flood of foreclosures and other bank-involved homes.Appraisals are tied to values set by the banks…and so the wheel turns.
As a seller, you may be thinking that you want to wait this out–not sell now–hold it. That sounds smart and, for a few months last year, it was. But now, all you need to do is to tune into the news, read about the banking crisis, or call your local mortgage officer to find out that this unique problem is only going to get worse. In our Keller Williams office in Mount Pleasant, we have a fantastic Bank of America mortgage officer named JoAnn Terrell. She keeps us up to date with everything that is going on with mortgage rates, new loan offerings, and–most recently–the foreclosure epidemic. I would be more than happy to pass you along to her for the exact specifics but basically the amount of foreclosures JUST from Bank of America is set to increase in 2011 to FIVE TIMES what it was in 2010. And the forecast for 2012 is even worse. So no matter what happens with people’s personal lives and how strong their desire to move–either to a different state or just a different house– our values over the next several years will be determined by what the banks are willing to take for their properties.
It kind of makes you feel like that Econ-101 class you took Freshman year was a waste, huh? If supply goes down or demand goes up,prices increase…right?! Well–not in this case.
So really the conclusion is that if you want to sell, need to sell, or think that you might need to sell in the next 3-5 years, DO IT FAST. I mean, really quickly. Get the house on the market and priced to sell in 90 days before we hit our Fall slump. And, if not, stop thinking about it and wondering. Plant a garden, build a deck, bunk up the kids…just know you’re staying put for a while.
All Things Charleston! 