It’s like a massive, pre-holiday sale on real estate in Franklin NC and Otto NC!
Nevertheless, home sales are only “gradually” creeping up, according to the most recent data published by the National Association of Realtors. And sellers are clearly still feeling price pressures; on Trulia’s October price reduction report, an all-time high percentage of American homes listed for sale had had their price cut at least one time or two times!
So, what’s stopping buyers from running out to grab up all these affordable homes at affordable rates? And what can savvy sellers (and listing agents!) do to offset these obstacles?
1. (Perceived) difficulties in qualifying for a mortgage. Mortgage guidelines have tightened up significantly over the last few years, now requiring good (but not perfect) credit, documented income, a proven stable job history and cash for down payment and closing costs. Some buyers find it difficult to scrape the down payment money up; others find that they can qualify, but not for a large enough mortgage to buy any home worth owning (banks have tightened up debt-to-income ratios, too). Many would-be buyers don’t even consider themselves serious prospects, disqualifying themselves in their own heads because they heard somewhere that a 20 percent down payment is necessary – in actuality, many buyers can qualify for a 3.5 percent down, FHA loan. Between actual difficulties qualifying and perceived difficulties that don’t actually exist, lots of buyers are not biting because of loan “issues.” You can apply for loan qualification right here.
Seller Solution: Ask your agent to have a mortgage broker colleague prepare flyers reflecting various loan options, to give open house attendees a reality check about what it would actually take – including down payment, closing costs and monthly payment – to buy your home. Also, consider offering closing cost credits or being willing to chip in for lender-required repairs to empower buyers who are struggling with mortgage qualifying to close the deal.
2. Fear of buying a foreclosure.
More and more, buyers are fearful that if they buy a foreclosed home, that sale could be reversed down the road if it comes out that the banks wrongfully foreclosed on the former owner. And that could be stopping buyers from, well, buying foreclosed homes.
Seller Solution: If your home is not a short sale, all of your home’s marketing materials should be trumpeting this fact – especially if most of your home’s competition (e.g., similar homes in the area and in the same price range) are bank-owned homes and short sales. Seeing ‘Not an REO/Not a Short Sale’ on a listing or flyer is quite magnetic to buyers right now.
3. Waiting for the shadow inventory to come out. The phrase ‘shadow inventory’ refers to the homes that have been (or will soon be) foreclosed on by the banks, which are not yet on the market; Many buyers who are actively house hunting — and who are disappointed with the homes that are available — are fearful of pulling the trigger because they believe the banks are going to start releasing their ‘shadow inventory’ soon, and that those homes will be better than what’s out there on the market right now.
Seller Solution: Work with your agent to strategically stage your home and even do basic, inexpensive repairs, to make it stand out against the competition as a desirable property. Also, ensure that your pricing is in line – or even slightly below – similar homes on the market right now, to ensure that your home seems like a very strong value for the price.
4. Waiting for the bottom. Given the trajectory of home prices over the past couple of years, there’s a large contingent of buyers who are afraid that after they buy, home prices will continue to fall and they will lose their hard-earned investment in the home. These are folks who are still waiting for the bottom (although by some accounts, including that of the Case-Shiller Price Index, the bottom is here or has already passed, in many cities like Franklin NC).
Human nature is always to wait too long for the bottom, miss it, and then end up wishing we had bought sooner. The behavioral economics theory of myopic loss aversion explains this phenomenon as being due to the fact that the pain of losing money generates a greater psychological fear and avoidance than the prospect of gaining the same amount of money. Buyers can set themselves up to gain over time, even if they lose equity in the very near term, by making smart decisions about the home they buy and how much they pay for it, and planning to stay in their home for a longer term than previous generations of buyers did.
Seller Solution: This is a difficult one to counter, because it’s really more about the would-be buyer’s interpretation of the market than about their reaction to your home. If you live in a market that has had recent increases in home values, include that data in your marketing – make sure buyers are aware that they may already have missed the very bottom, and create a sense of urgency to buy your home before prices go up even more.
5. Unemployment/underemployment. Take California, for instance. The national unemployment rate is 9.6%; California’s is a whopping 12.8%. But right around the same number of Californians are underemployed, meaning they work part-time, but want full-time work. That’s right, a quarter of Californians are unemployed or underemployed, and — right again! – none of those people are buying homes. On top of that, many people who do have jobs lack job security, the confidence of believing they’ll be able to keep their jobs in the future. Interest rates could be zero, and people will not buy homes as long as they have no jobs or job security.
Seller Solution: If there are major employers in town that are within an easy commute of your home, both you and your agent should consider marketing it directly to employees there. Share your home’s listing with Facebook friends who work there or even send an email out to your own contacts, if you work there yourself! Major companies’ Human Resources Departments might help you get the word out to their employees – especially if you offer some incentive to an employee who buys your home, like a year’s worth of subway passes. If you have universities nearby, there are likely online bulletin boards that offer housing options directly to relocating professors and employees.
Third best for business. Third best for declining unemployment. Fourth in the nation for job creation.
Gov. Bev Perdue has made creating jobs her major focus since she took office. There’s still plenty of work to do, but the numbers show that North Carolina is moving in the right direction.
This week, Forbes magazine ranked North Carolina the third Best State for Business in America, an improvement from last year’s ranking of fifth. Meanwhile, figures from the U.S. Bureau of Labor Statistics told of even more dramatic improvement in the state’s economic outlook.
Gov. Perdue shared the news and the stats with an audience at the Charlotte Chamber’s retreat in Pinehurst.
The indicators :
• Unemployment declined from 11.1 percent in January to 9.7 percent now;
• Corporate profits are up 10 percent.
• North Carolina is fifth in the nation for personal income growth since June 2009.
• The stabilization of the construction and manufacturing industries, which are no longer losing jobs.
“This shows that the hard work of the past year has paid off – our investments in education to build the workforce of tomorrow, policies that create a more business-friendly climate and our aggressive recruiting,” said Gov. Perdue. “When I took office, I pledged to take any meeting and make any call to bring jobs to this state. There’s nothing I love more than convincing a corporate executive of what a great place this is to live and work.” (read more here)
6. Need to keep options open. Because home values are so volatile, currently, there’s no guarantee that you can resell today’s new home tomorrow without taking a loss. If we’ve learned anything from this crisis, we all know that it just doesn’t pencil, financially, to buy a home on today’s market unless you plan to own the home for at least 7 years (give or take a year or so, depending on how your market has fared in the housing recession).
Many Americans don’t want to be tied to one location, given the changes in the job market, because they simply don’t want to be stuck in one place, geographically speaking. They want to be free to meet someone via online dating and move if the match sticks. They want the freedom to move across the country or even to the next city or state for a job, if that’s the direction their career takes them. The more mobile the person, the less likely they are to buy a home.
Seller Solution: Price your home well – if it’s been lagging on the market, make sure you get aggressive and cut the price below a common buyer search cut-off price point (see this post for more details: Sellers: 5 Signs It’s Time to Cut the List Price of Your Home). Even buyers who are seriously in the market, get nervous about buying a home when it seems a bit overpriced, because they fear the price will drop some more in the coming months and years, extending the period of time before they can sell it at a break even or (hope beyond hope) a profit! Don’t let overpricing cause you to lose buyers who otherwise would have bitten the bullet, pulled the trigger and hopped off the fence in order to buy your home.
GreaterTownBlog: 6 Reasons Buyers aren’t biting
Exit MidSouth Blog: 6 Reasons Buyers aren’t biting
Global Network Blog: 6 Reasons Buyers aren’t biting
Macon County NC Real Estate with Specialty in Franklin & Otto
“Offering Solutions to My Clients”
our gateway to Paradise in the Smokey Mountains of Franklin, NC. John Becker / Bald Head, provides a superior level of informed, professional real estate service to Buyers and Sellers. You can obtain any information you require in order to make an informed purchase regarding Franklin NC Homes for Sale and Franklin NC Properties for Sale with John Becker at Exit Smokey Mountain Realty. Call 828-506-3719..
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