Murfreesboro Information and Resources

Q:  We’re thinking of adding a swimming pool.  How will that affect the value of our home?
 
A:  Swimming pools can have a significant impact on the salability of your home.  In general, pools don’t greatly affect the price of a home in our marketplace.  But they can sometimes severely limit the number of buyers interested in buying your house.  Especially in the case of an in ground one, pools can be a huge turnoff to many people, causing them to cross your home off their prospect list without even seeing it.  On the other hand, that same pool can be a huge added value that encourages other buyers to take a closer look at your house when they otherwise might not have done so.  Above ground pools are fairly easy to put up and take down, so they don’t have to limit your buyers when it comes time to sell your house.  However, if you have a septic system, make sure you don’t install your above ground pool on top of it.  Crushed field lines are potentially expensive mistake that can be easily avoided with a little research and forethought.
 
The bottom line is that you shouldn’t install a pool with the expectation that you will recoup the money poured into it.  Base your decision on whether or not your family is going to get enough fun and enjoyment out of the swimming pool to justify the expense of buying it.

Q:  Is it wise to pay extra on your house each month or to send in a 13th mortgage payment to attack the principal?  Or should I invest that extra money and then use the profits to pay a large amount on the principal to get my house paid off more quickly?
 
A:  Here’s one way to look at your situation.  Putting your money into the stock market or other investments by its very nature includes some risk to your capital.  When you pay down the principal owed on your home, there is no risk – the total amount you owe goes down every time. 
 
I guess the bottom line is that you need to ask yourself, “What is my ultimate goal here?”  If you’re working toward paying down the loan on your house more quickly, I suspect your best move is to use your extra money to directly reduce the principal you owe on your mortgage.
 
Considering the unexpected twists and turns our economy has experienced the past few years, there is something to be said for the peace of mind that comes with eliminating your debts.  You’ll just sleep better at night knowing your house is paid off.

Q:  I’m considering selling my house and purchasing another but I think I may not get top dollar for my home.  Is it a good time to purchase with the low interest rates and housing inventory or should I wait since I may not get top dollar for mine?
 
A:  If you’re selling your home in order to buy another home – especially if you’re moving up in house – the current market requires you to look at the situation as a package deal.  Sure, you’re probably going to get less for your home than you would like.  But the flip side is that on your purchase you’re going to be able to find a heck of a deal because of the incredible seller competition out there right now.  Add into the mix that interest rates have been hovering around all-time lows and that means you can get more house for the money than ever before.  Plus on the listing side, the market has shown very clearly that homes priced to sell are still moving very quickly—even in this competitive buyers market.

Q:  Can you address ways to get my house ready to sell? What will make it more attractive to buyers?
 
A:  In a buyers market, sellers have to realize that their house is in a price war and a beauty pageant.  Not only does your home have to be priced right to sell, but it also has to be in great shape so buyers will see more value in your house than other property on the market. 
 
Of course, the biggest thing you can do to make your house attractive to buyers is to price it properly.  But aside from that, there are plenty of things you can do to make your house show well:

• Curb Appeal – Make your house look as good as possible from the outside so buyers will be excited about getting inside.  Manicure your yard and garden; put fresh mulch around trees and shrubs.  Pressure wash siding, decks, and sidewalks.  Caulk around the doors and windows.
• Cleaning – Clean the inside of your house like never before.  Pull out the stove and refrigerator.  Scrub the toilets and tile until they sparkle.  When a house doesn’t look and smell clean, buyers tend to search harder for other problems.
• Move Pets Early – Once the house is clean, find someone to keep your pets while the house is on the market.  Pets and pet odors are a huge turnoff to many potential buyers.
• Staging – Consider hiring a professional stager to help you put your home in the best possible light.  They don’t cost as much as you think and can be a real difference maker in the sale of your home.

Q:   Is it a good time to own rental property?
 
A:   Ten to 12 percent is normally considered a strong the rate of return in the stock market. Believe it or not, owning rental property has the potential to more than triple that 10 percent return on your money?
 
Here’s a realistic scenario that demonstrates the power of putting your money in rental properties. Imagine you buy a single family home in Rutherford County for $120,000 with a 20 percent down-payment of $24,000 out of your pocket.  On the remaining $96,000, you get a 30-year amortized loan at seven percent interest, which has a monthly payment of $640.  Add $1,500 per year to cover insurance and property taxes and your total payment comes to about $765 per month.
 
It is possible today in Rutherford County to pay $120K or less for a home that rents for $900 or more per month.  If your purchase is in this category, it will produce a monthly cash flow (rent minus expenses) of $135 per month.  In many cases, this cash flow completely covers other non-regular expenses that occur, such as repairs, property management, etc.
 
Now let’s say that your rental property appreciates in value an average of three percent per year, which is less than the average annual home appreciation in Rutherford County over the past 10 years.  With this conservative estimate, in 10 years your home will be worth $161,270, or $41,270 more than you paid for it.  Additionally, your principle balance on your loan will have dropped to $82,380 — that’s $13,620 of your loan that has been paid down by your tenants through their rent.
 
Overall, you will be sitting on $78,890 in equity.  Remember, your original cash investment was only $24,000.  This means the value of your investment has more than tripled in just 10 years with an average annual return of 32.9 percent.  There is no other investment that allows you to leverage your money like real estate. 
 
Of course, being a landlord is not for everyone.  This investment is a little more involved than sending a check to your stockbroker.  However, you can take much of the stress of owning rental property off your own shoulders by hiring a skillful property manager and giving him the space he needs to do his job properly.  And there is something comforting about being able to see and touch your investment.
 
Now you can see why I believe it is always a good time to own rental property.

Q:  If I know that I’m likely to get a low offer on my house, why wouldn’t I price it a little high to leave some room for negotiation?
 
A:  In a buyer’s market, the asking price for your house should be based on the value a prospective purchaser can get for the money compared to the competition.  When a buyer surveys the marketplace, he is going to take a closer look at properties that seem to offer the most value while weeding out houses that appear overpriced.  Even though you may be willing to take significantly less than your asking price, a buyer looking at it on the MLS or the Internet has no idea that might be the case.  When the competition is this fierce, it’s much better to have a low offer to work on than no offer at all.  There’s nothing to negotiate if you don’t have an offer.  If you price your house high in an effort to leave wiggle room, you risk the market rejecting your home before anyone even gets a chance to look at it.

Q: We have our house for sale and want 24 hours notice before any showings so we can get the house in presentable condition.  Our agent wants us to show the house on a moment’s notice, which we think is unreasonable.  What do you think?

A: The bottom line is that in a buyers market like we’re currently experiencing, there are many more people trying to sell their homes than there are people looking to buy.  If you don’t make it as convenient as possible to show your house, there is little doubt that you will miss the opportunity to get potential purchasers inside.
 
There are some buyers who are looking at houses and making a decision which one to purchase all in the same day.  What if their agent can’t show your house because you’ve made it difficult to get access?  Also, many showings get set up when buyers see a yard sign while looking at other houses in the neighborhood.  If you ask for 24-hour notice from a buyer who is sitting right outside, there’s a good chance that person will never see the inside of your house.  These are opportunities to sell your home that you just can’t afford to miss.
 
We always encourage our sellers to keep their homes in presentable condition at all times while it is listed.  Certainly this can be inconvenient, but missing out on a potential sale because a ready, willing, and able buyer doesn’t get inside your house could be both inconvenient and expensive.  And worst of all, it is totally preventable!

Q:  I don’t see any way that my home will regain the value it has lost in the past few years, so I’m considering a ‘Strategic Default’.  What are the pros and cons of doing this?
 
A:  A ‘Strategic Default’ is when homeowners who have the capacity to continue paying their mortgage choose to walk away from the house, allowing it to go into foreclosure, simply because they owe more than the home is worth. 
 
Unless you live in a state that does not allow deficiency judgments (Tennessee does allow banks to pursue deficiency judgments), there really are very few benefits to choosing this course of action, other than you no longer own the house that was underwater.  I can tell you that the banks look at this strategy as using a fancy name to justify walking away from your obligations.  And lenders are now striking back at people who employ this strategy.  Fannie Mae has already announced that Strategic Defaulters will be ineligible for a Fannie Mae-backed mortgage for seven years and they are very likely to aggressively pursue deficiency judgments in those cases.  Expect other lenders and investors to follow suit.  And all of this is in addition to the havoc the foreclosure will create with your credit.
 
The bottom line is that if you are having trouble paying your mortgage, you need to talk to your bank or a competent real estate professional about foreclosure avoidance alternatives.  If you can continue to pay your monthly note, you may be forced to stay where you’re at or rent out the home if it has lost value.  But it’s worth the effort to talk to your bank about what options might be available.  For instance, some lenders consider a job transfer a suitable hardship to approve a short sale on your home.  You never know what you can get worked out until you ask.

That all depends on what you consider “normal” to be.  If you’re longing for the days of 2001-06 (like most Realtors are!) when sales prices were rising and anyone could sell anything within a few days, then you may be waiting for awhile.  Unfortunately for sellers, they will likely continue to be unhappy for at least a year or two as excess listing inventory is cleared out of the marketplace and the percentage of short sales, foreclosures, and other distressed properties continues to rise.
 
The other side of that coin is that buyers are in a great position to find a fantastic deal on a house.  This may very well be the best buyers’ market we’ve ever seen in Rutherford County .  Of course, one reason why there are so few buyers right now is that financing has become increasingly difficult to secure.
 
The bottom line?  This market will probably remain “normal” for our area for the foreseeable future.  Don’t expect to see much of an increase in the number of home sales or prices until unemployment starts to come back down.  If you’re thinking of listing, be realistic on your price and get your house in great condition or it will sit.  If you’re thinking of buying, make sure you have your financing in place and get out there already to take advantage of great deals on the market.

The first thing you need to do is act quickly.  If you have already received a foreclosure notice from an attorney, time is likely running out.  There are several ways to get a foreclosure sale postponed or canceled. 
 
·        Ask the bank to postpone the foreclosure sale – you’d be surprised what you can accomplish by just getting on the phone with your bank.
·        Bring the loan current – if you have the necessary money available.
·        Work with the bank to set up a modification or forbearance agreement that lowers your monthly payment and allows you to stay in the home.
·        Sell the house before the foreclosure sale date (if you don’t have any equity in the house, you may have to do a short sale).
·        Convince the bank to accept a “deed-in-lieu of foreclosure”.
·        File bankruptcy.
 
Some or all of these options may be available to you, depending on how deep you currently are into the foreclosure process.  Even if you can use them to stop the foreclosure, each of these methods is not necessarily the best move for everyone.  Talk to a knowledgeable real estate professional that can help you figure out what options you do have.  No matter how late you are in the process, you probably still have things you can do to mitigate the situation.
 
We have set up the website HomeSaverGuys.com as a resource for Middle Tennessee families who are facing foreclosure.  There is a ton of information there about the foreclosure process and options available to people who are behind on their mortgages.