The Long and Short of It

You've been reading negative stories about the housing market, and while some are experiencing a slowdown, it's still no reason to keep you from pursuing the American Dream.

Anyone who's watched the industry for the last thirty years will tell you that it's a natural cycle, much like the adjustments the stock market experiences. All's well that ends well after a period of time passes.

Remember that housing is a long-term investment. Some people tried to create high yields over the short term, and that’s part of the reason so many markets are experiencing readjustments now.

Regardless of whether housing is up or down, individuals and families will always have a need to buy or sell. Home sales last year actually surpassed those of five years ago, which was another record year. Interest rates and prices are at historical lows, creating an excellent atmosphere for qualified buyers.

When reading the gloom and doom about foreclosures, it's important to keep the reports in perspective. Most defaults are associated with sub-prime loans, which account for less than 10% of all mortgages. Of those, only 0.6% are currently in foreclosure.

Now is the time to turn to the advice and guidance of a trusted local real estate professional, whether you're buying or selling. Keep a level head and take advantage of positive forces in the current housing market.

Michael Jewett Joins Cora Bett Thomas Realty & Associates

SAVANNAH, Ga. – D. Michael Jewett, a real estate professional who specializes in the listing and sale of luxury residential property, recently joined Cora Bett Thomas Realty & Associates as a sales associate. In his new position, Michael represents clients in buying and selling distinctive property throughout the South Carolina Lowcountry area.

An exclusive affiliate of Christie’s Great Estates, Cora Bett Thomas Realty & Associates is considered by many to be the pre-eminent real estate marketing firm serving coastal Georgia and South Carolina. The firm was recently the recipient of a Leading Real Estate Companies of the World® Member Achievement Award as well as two first place awards in the Leading Real Estate Companies of the World® Marketing Contest with a 1st Place - Company Brand Advertising category and another 1st Place - Property Advertising category.

“We warmly welcome Michael to our team of accomplished sales professionals,” said Cora Bett Thomas, founder and CEO of Cora Bett Thomas Realty & Associates. “Our firm and our clients will truly benefit from his extensive experience and knowledge.”

Click here for more on Michael Jewett

MONEY GROWS ON THIS TREE!

Let's plant two “money trees” and watch their growth. We'll plant the first by placing $20,000 in a savings account earning 5% interest, and leave it there for five years. After five years, we'll withdraw our initial investment ($20,000) plus the interest ($5,525). We invested $20,000 and received back $25,525, a 5% yield.

Now, let's plant the second tree. We'll buy a home for $100,000 and invest $20,000 (as the down payment). For the sake of argument, we'll assume that the home appreciates at 5% each year, just as the savings account earned 5% interest. At the end of five years, the home will be worth about $128,335, a $28,335 gain (that's at an annual rate of 5%).

We invested the same $20,000, and received back our $20,000 investment plus another $28,335 (the increase in value) for a total of $48,335. The rate of return is a sizable 19.3 percent! By purchasing the home, we were able to earn 5% appreciation on the entire $100,000, whereas on the savings account we earned 5% only on the $20,000 investment.

Incidentally, if we had invested only $10,000 in the same $100,000 home ($10,000 down payment - $90,000 loan), we would have received the same $48,335 in return for only a $10,000 investment - a whopping 37.04 percent return! Now you can see the obvious benefits of home ownership!

NO DEPOSIT, NO RETURN!

When buying a home, would you consider asking the sellers to "hold" their home off the market without offering to give them a deposit? As a seller, would you take your home "off the market" for purchasers who were unwilling to give you a sum of money as a deposit?

In both cases, the answer is probably "No!" A very important message is communicated from buyer to seller by the so-called "earnest money deposit." It is understandably common for homebuyers to want to offer as small a deposit as possible when signing an agreement to purchase a home, and just as common for the sellers to want as large a sum as possible to be placed on deposit.

Here's why the amount offered can be so important. For the buyers, one way to impress the sellers with their sincerity is by offering a higher than normal deposit. Their willingness to go beyond the minimum requirements is a positive indicator that they plan to complete the purchase on time and as agreed.

From the sellers' point of view, a solid offer to purchase from buyers - when accompanied by a substantial deposit - can quickly become an attractive offer, one which is easy to accept. In a nutshell, a larger than expected earnest money deposit can yield a positive return for both homebuyers and sellers!

THE TIME IS ALWAYS RIGHT!

Perhaps you've thought about selling your present home, but have put off that decision, thinking that now is not a good time to sell. Want some advice? Wait no longer!

Consider what happens during the "bad times." Most homeowners want to sell their homes for the highest possible price in the shortest possible period of time. So, during those periods that are perceived as "a bad time to sell a home" or a “buyers market,” those homeowners put off their selling decision until a more favorable selling climate exists.

Since the so-called "bad times" can last from a relatively short period to a couple years, a backlog of frustrated would-be sellers builds up. It is sort of like the force that builds up in a pressure cooker.

Then, finally, comes the good news: "Home sales are rising - buyers are buying!" Guess what happens? Like the pressure cooker, the lid blows right off the top. Sellers by the thousands begin to flood the market with homes to sell. The competition is incredibly fierce and prices must be competitive to generate a sale.

The best time to sell a home is when you are ready to sell. Make sure your home is in top condition, price it fairly, and employ the best realty professional available. Through careful planning, your house will sell successfully in any market!

NO TIME LIKE THE PRESENT!

How do you know when it's a buyer's market? Look at your watch. If the date is today – then it's a buyer's market! How can that be? Because a buyer can find just the right home at a favorable price 365 days of each year.

Start by defining for yourself the meaning of "buyer's market." Does it mean purchasing a home at a bargain price? Well, there are always homes available at below market prices, but be careful. While you're waiting for prices to drop, you may be faced with higher interest rates, and thus higher payments.

The reverse can happen, too. If you’re waiting for rates to drop (to match the lower home prices), inflation may suddenly increase, raising an otherwise affordable home into an unaffordable price range.

Another definition of a buyer's market may be the availability of a wide selection of homes from which to choose. Naturally, you want to have some choices, don't you? But are you aware that the inventory of available homes has been increasing significantly for a number of years?

Perhaps waiting for a buyer's market is a form of procrastination. If so, don't wait any longer. Each week many happy buyers purchase the home of their dreams, while others watch from the sidelines. Will you be a spectator too, or a player on the winning team?

DOUBLE YOUR PLEASURE!

How would you feel if you owned two homes, with two sets of monthly mortgage payments, two sets of taxes and insurance, and the responsibility for the maintenance on both?

When you're ready to buy your next home, it could happen. Let's take a look at why. More often than not, buyers begin looking at prospective new homes before they have sold their existing home. When they find a home that suits their needs, a potentially painful dilemma may arise. How do they make a commitment to purchase the second home when they have not yet sold the first one?

One common solution is to sign an agreement to purchase the second home that is made contingent upon the sale of their existing home. In other words, if the first home doesn't sell, the buyers have no obligation to complete the purchase of the second one.

You can make the most of this situation by remembering one very important concept: work exclusively with the same real estate professional on both homes.

Here's why. When you decide on which new home you plan to buy, your agent will help structure the purchase, taking into account your existing home. By letting the same agent market your present home, both purchase and sale can be coordinated to your benefit, resulting in deep satisfaction rather than a deep dilemma.

The Savannah Condo Market

Today, condominiums are more popular than ever in Coastal Georgia and South Carolina. Hilton Head Island and other resort areas have always offered condos as affordable ways to own property near the beach. Now urban locales such as Savannah are getting into the game. Savannah has enthusiastically embraced condo culture, with conversions, renovations and new construction resulting in exceptional lofts and condos for every budget.

In June, there were nearly 300 condos listed for sale in the Historic District of Downtown Savannah. Cora Bett Thomas Realty & Associates sold 27% of all condos in the Historic District in 2006. With many new developments on the way, the condo market will only improve, and become even more vibrant and exciting than it already is.

The condo lifestyle is attractive to people in many walks of life, from students to retirees, young professionals to investors. Condos are generally low-maintenance, often have many amenities, and are positioned in great locations. Options in Savannah are varied for every taste, including loft-style studios with modern finishes, renovated Victorians with old-world charm, and luxury residences with city or water views.

If you’re looking to buy, be sure to check out our Condo Gallery for information on condos for sale in Savannah!

Don't Wait, Renovate!

There are all sorts of loans for all types of homes, and "fixer uppers" are no exception. Lenders can offer attractive terms to buyers who want to renovate their purchase. One well-known lender offers three different types of renovation loans, with the most popular requiring a downpayment of only five percent.

So how does it work? Along with their application, borrowers submit architectural drawings of the proposed improvements. Then a completed home value is determined and financing terms are offered, with interest rates usually coming in just slightly higher than those on conventional loans.

Payments are often separated into six parts during the renovation, with disbursements issued at the satisfactory completion of each stage of the project. If you're familiar with construction loans, you'll find that it works in a similar fashion.

What's really attractive about purchase-plus-renovation loans is that some lenders will even roll the first six months of interest into the total loan amount. That can free you from making payments during those first six months while you're heavily involved in your improvement project and may even need to be living elsewhere.

In any case, there is a dizzying array of financing options out there, and it's best to start the discussion with a real estate agent who is well versed in matching homes to buyers and buyers to loans!

Enter the Buffer Zone!

What is the primary objective for a buyer when negotiating the purchase of a home? Would it be fair to say that the buyers want the lowest price possible with the most liberal terms? And what about the sellers of a home? Would you agree that the sellers want the highest price possible with the terms most favorable to them?

It’s pretty easy to see then that the buyers and the sellers in a real estate transaction each have goals that are diametrically opposed to one another. As a result, they can each become highly anxious, emotional, and especially frustrated by the negotiating process. The solution is to create a "buffer zone," or an arena in which negotiations can be carried out in a logical, businesslike and objective manner.

This can be accomplished through the use of a reputable real estate company and its agent. Here's why: although a real estate agent may represent either the seller or the buyer (or sometimes both) in a purchase transaction, all parties must be treated fairly.

Also, not being emotionally involved in the transaction, the agent becomes an objective or "neutral" participant - the "buffer." Thus, both buyers and sellers can make comments, offers, and counteroffers without fear of raising each other’s anxiety levels. The result can be a highly rewarding home purchase and sale for buyers and sellers.

It Works Both Ways!

In slower housing markets, most sellers understand that attracting buyers becomes more of a challenge. With more homes for sale at ever more competitive prices, buyers tend to have more power to choose and negotiate under these circumstances.

What steps can you take to insure a faster sale at a higher price? First, seek representation. Over the last ten years, the number of homes that sold "by owner" fell by one third, and that statistic includes all markets, both hot and cool. What does that trend mean? Sellers have come to realize that real estate professionals are better equipped to produce top dollar offers, especially in slower conditions.

In 2006, the National Association of REALTORS® reported that the median selling price for homes listed through agents was 16% higher than those homes that were sold "by owner." Beyond putting more money in your pocket, an agent also saves you untold headaches associated with marketing your home, orchestrating showings, and coordinating paperwork.

Last year, a significant number of unrepresented sellers ended up finally turning to a professional. Why wait until your home has already become stale inventory to reach the same conclusion? Remember that what works in a slow market also holds true in very active markets - a professional representative simply brings more knowledge and experience to the table, resulting in higher offers in less time.

You're Not Alone!

Foreclosure. The very term strikes fear into the heart of any homeowner. Would you believe that one in every 1000 homes in the U.S. were in the process of foreclosure at the end of 2006? If you're facing such circumstances, first understand that you are not alone.

Most people got into this position by taking advantage of ridiculously low introductory rates on adjustable rate mortgages (ARMs). Now that those loans are resetting, consumers face dramatic increases in the interest rate, and consequently, the monthly payment. Even a reasonable rate like 7% becomes a burden to those who have grown accustomed to the 1 or 2 percent introductory rates.

Ideally, a short sale coordinated by a real estate professional provides the opportunity to satisfy all the motivated parties - seller, buyer, and lender. The seller wins by liquidating the property before foreclosure proceedings begin. The buyer benefits by securing property at a good value. Finally, the lender benefits by not having to initiate the foreclosure or take the property back.

A real estate agent may even have suggestions to help keep you in your home. Granted, it isn’t a sale, but agents appreciate the subtleties of building good relationships with loyal clients who will refer business to them in the future. Trust a professional to guide you through this difficult time with experience, courtesy and respect.