JOHN: Hey, guys. John Jones with another edition of Tuesday Morning Coffee. We’re talking about June market statistics today. We saw this coming, guys. Last June, as you remember, was the last month to get your home closed to benefit from the tax credit. So we had kind of a crazy time last spring and June was a crazy closing month. We were 32% off at pace. We did 390 sales last June. This June 264. Our median price dipped down 4%, 150 last June, 144 this June.
Our average sales price 171 last June. This June 162. So it’s down 5%. Our pendings are pretty much equal. We pended 331 last June. We pended 329 this June. And our inventory is pretty much equal with last June, where last year we had 2,170 residential homes on the market. This June we have 2,163. So I do think for the rest of the year it’s going to be interesting to see, but my gut is that we will outpace the months from last year just because the tax credit kind of moved everybody to the front of the bus last year.
I’m optimistic that we’ll hopefully equal at least equal last year when this year is over with. Rates are still crazy. I got quoted a 4.25 yesterday. That’s almost like not paying interest. So there’s a lot of cool things out there right now and a lot of possibilities and opportunities for buyers or investors. Still got a lot of foreclosures and short sales to get through. Obviously, we’re going to have to get through that before this thing is going to start going up again.
People ask me how long. I don’t know for sure. But if I had to put a number on it, I would say another 24 months barring some kind of divine intervention like a thousand white-collar jobs showing up out there on the gateway or something like that. But we’re still in great shape compared to a lot of the nation. It’s still a vibrant community. If you go out to a restaurant, you would never know there’s something going on with the economy. So I appreciate you. Call us if we can help you, 867-3020, and I appreciate you tuning in.
JOHN: Hey, guys. John Jones here with another edition of Tuesday Morning Coffee. Today, I have Mr. Joe Hafner, and Joe has been with the John Jones Real Estate Team for approximately what? Ten years, Joe? Eleven years.
JOE: Yeah, ten or eleven years.
JOHN: Yep, and has been a huge asset to our company. In the last two or three years, Joe has worked himself into being our short sale specialist. Joe has the CDPE designation, which is the highest form of foreclosure or short sale training in the United States, and has worked probably what? Fifty to sixty short sales in the last year or so.
JOE: Yes.
JOHN: Last couple of years. Five years ago, we couldn’t spell short sale. Now it’s a household word, unfortunately. Joe, what is the first thing you would tell a homeowner out there right now who is feeling hopeless because they’re behind on their payments. They feel like maybe foreclosure is imminent. But what’s the first thing you tell somebody like that? It’s a tough situation.
JOE: I would tell them first off that doing nothing is making a choice, that the worst thing to do is nothing. Because when you’re behind on your mortgage or you’re about to be behind, time is your biggest enemy. So the best thing you can do is get with someone who knows what they’re talking about, who knows the process and get some advice. Figure out where you’re at and where your options are.
JOHN: Right. And you find that a lot of the people that come to see you is there sometimes a state of denial? Are they past that point?
JOE: People who get behind on their mortgage, it’s really the financial equivalent of going through a divorce. People are beat down. They feel bad about themselves. They feel like they’ve failed in some way. Even when it’s not their fault at all, the economic downturn or whatever. And people go through like the five stages of grief. And a lot of times they’re in denial, and by the time they come out of denial, they’re looking square at a foreclosure date.
JOHN: The people that you’ve been able to help, once you are able to get a short sale approved and it closes and you get that burden off their shoulders, how do they feel typically?
JOE: People typically feel like a huge burden has been lifted off them. On our website, actually, we have some testimonials of people who have just gotten done with their short sale.
JOHN: Video testimonial.
JOE: Yeah, video testimonials where if you look at those, you can just see the relief in their face. You can see the lightness that they have where they’ve gone through this process, which sometimes from the moment you fell behind to the moment you’re able to get a short sale done, it could be six months or a year that you’re going through that.
And people who get to the end of that and are able to escape with their credit somewhat intact without a foreclosure on their record, there’s just an incredible sense of relief and a sense of thankfulness that they were able to escape a financial disaster.
JOHN: Joe, what would you say your success rate is of the people who actually come through here and say, “Joe, we want to try to do a short sale”? What would you say your success rate is with those people?
JOE: I would say people who come to me earlier enough in the process. You know, if someone comes a week before their foreclosure date, it’s like a hail Mary pass where if you’re able to get it stopped, that’s great. But a lot of times, you’re unable to. But if they come to me at least a month before foreclosure date is set, I would say our success rate is probably about 85%.
And of that 15% that is unsuccessful, honestly, about 10% of that is people who aren’t able for whatever reason, either unwilling or unable to cooperate, and get us the things we need to give to the bank. And that last 5% is there’s just sometimes that for whatever reason, the bank’s just not willing to work with you.
JOHN: So basically, 85% is pretty good odds. As far as the difference between a foreclosure and a short sale, as far as the impact it would have on someone’s credit, give me some differences between a short sale and a foreclosure and how it affects somebody’s credit and I guess we can go into maybe a little bit their psyche?
JOE: As of today, because these things are always changing, the way people report things to the credit reporting agencies, as of today, a foreclosure is on your credit as a foreclosure and it’s going to take seven years for that to be removed basically from your credit. And it’s never really removed because once you’ve been foreclosed, every time you fill out any kind of loan application, you’re going to have to say, “I’ve been foreclosed.”
A short sale, there is not currently anything on your credit that’s listed as a short sale. Basically, what happens is most of the time in the course of a short sale, people get behind on their payments. Not always. We’ve done short sales where people have not been behind at all. But most of the time, you’re going to get behind on your payments, and that’s going to show up and beat up your credit a little bit.
But in the typical short sale versus typical foreclosure, you will be able to qualify for a loan within two or three years of the short sale. With a foreclosure, you’re looking at seven to ten years.
JOHN: Okay. I get questions every day Joe, is how much longer is this going to last? How much longer are we going to see the amount of foreclosure or the foreclosure activity we’ve seen in the last couple of years? What are you seeing because I know you track these things and you look at realty tracks and that kind of thing?
JOE: It’s hard to say, but until we see unemployment numbers go down, I think we’re going to continue to see the number of foreclosures and short sales. Now, a lot of banks have been limiting their short sales. As you know, we track all the foreclosures in Rutherford County, and at the sales, the foreclosures have been postponed or delayed and they’re not doing them at the rate they were.
So a lot of banks are relying on short sales that kind of clear out this excess inventory. Because the short sale really is a best case scenario for the bank and for the homeowner because the homeowner is able to get out from under that mortgage. They’re able to leave with a little bit of dignity intact. And the bank, they get to have someone living in the house, taking care of the house, and then selling it for close to market value.
Where if they foreclose, they suddenly have a vacant house that’s deteriorating every day that no one’s taking care of, that they have to sell, that they’re going to typically get less than they would if they did a short sale. So it’s kind of like a solution for everyone. I hate to put numbers on it, but I think even if the economy turned around tomorrow, I think we’re looking at another two years of this, and longer if the economy takes longer to turn around.
JOHN: Interesting. That’s good stuff, Joe. You can find out more about foreclosure relief by going to theforeclosurereliefteam.com. It’s on the screen. And please give us a call. This guy is literally—and I’m not saying this because he works with me—he is the best that I’ve seen as far as understanding what the banks need, but also holding the hands of the potential homeowner that would be in this situation and working this through with them and having compassion and empathy in the things that these folks need.
So please give us a call if we can help you in any way. Thanks so much. We’ll see you next week.
JOHN: Hey, guys. John Jones here with another edition of Tuesday Morning Coffee. Today, guys I’ve got a real treat for you. I’ve got Lea Anne Bedsole who is one of my finest and best and shining agents that we have in this company. And I was looking at Lea Anne’s production the other day for the midyear, and she has done an exceptional job this year.
And we went out to have lunch and I asked Lea Anne. I said, “Lea Anne, what’s been the difference? Where are you getting your business? Blah, blah, blah.” And she said, “You know what, John. This year, I’ve worked with a large amount of first-time homebuyers. So this segment today, we want to talk about first-time homebuyers. And Lea Anne, my question to you is since you’ve been working with so many first-time homebuyers, what are the couple most important things in your opinion to a first-time homebuyer as they go through this home buying process?
LEA ANNE: Right. There’s two things, John, that I have found that have been integral in the success of getting something to closing with a first-time homebuyer. Trust and communication.
JOHN: All right. That’s interesting. Trust and communication. Let’s talk about trust for a second. What do you mean by trust?
LEA ANNE: Well, what I found is that a lot of these people, they are either coming to me after maybe seeing a couple of houses with another agent or someone else. And they’ll say, “They never told us that” or “Can my mom come to view the property with me?” or “My dad’s coming.” There’s lots more people involved in this process.
They want to trust that what I’m telling them is that they’re going to get the best house for them and at the best price. And that nothing bad is going to happen because I think everybody likes to share their story at a party about their experience with somebody that’s never bought a house. So we’re overcoming that.
JOHN: So how do you help build that trust? I mean, what do you do? Because obviously, they’re not just going to call you and say, “Hey, I trust you.”
LEA ANNE: Sure. I think it’s really important John, I get them to come into my office. They come into the office; we sit down at the conference table; we just get to know each other. We do a really intense hour or so of bonding, as long as it takes for me to get to know them, to know what they’re looking for. Their lifestyle, their family. Then they’ll open up and start talking about mom and dad or why we’re here or what we’re doing. And that’s kind of how we base the buying process.
JOHN: So first session is mainly you just asking them a lot of questions.
LEA ANNE: Yes.
JOHN: Trying to figure out what’s going on.
LEA ANNE: Listening and asking some questions and letting them just talk about what they’re expecting and me sharing with them this is what’s going to happen. That’s where the communication comes in.
JOHN: Setting expectations. Let’s talk about communication. Trust and communication.
LEA ANNE: Okay.
JOHN: Communication. What do you mean by that as related to a first-time homebuyer?
LEA ANNE: I think it’s different in the buying process for them in that (A) there may be more decision makers in this than just your traditional homebuyer. Like I said, mom and dad and my older brother and his wife and Uncle Bob are all going to come and see the house. And do you mind if we bring my grandparents back? Of course. And I think just letting them feel comfortable with it and letting those could be important decision makers know that I am going to take great care of their loved one.
JOHN: So in a way do you have to kind of build a relationship with those decision makers as well?
LEA ANNE: Absolutely.
JOHN: You’ve obviously got to make them feel important.
LEA ANNE: Very important because I think that it walks a fine line and they want these people to make the decision on their own, but they also want to make sure that everything’s being taken care of properly.
JOHN: So if granny and Uncle Billy and daddy and momma trust you—
LEA ANNE: And Joe Bob.
JOHN: —it’s going to make this process go a lot smoother.
LEA ANNE: Very much so. And I think asking some questions and also, I know that sometimes we tend to think that people watch a lot of HGTV and they know what’s going to happen, but they really want you to guide them through. I’ll say, “Now this is what’s going to happen next and then this stage is coming next. This is what you need to be doing now.”
It’s almost like providing a road map for them because they really don’t know. There are no dumb questions. And I tell them that right away. I said, “Listen, you’re not supposed to know everything about this.”
JOHN: So you try to make them feel real comfortable.
LEA ANNE: Absolutely.
JOHN: And obviously, you’re doing a good job.
LEA ANNE: Thank you, John.
JOHN: Because you’re having a heck of a year. And I think that’s very important. I think sometimes even us being in the business, we forget that it’s a first-time homebuyers first time. We get a little cynical. We’ve got to slow it down. You said a keyword in there. Listen. Listen I believe is the key.
LEA ANNE: Yep.
JOHN: So thank you so much for coming on today.
LEA ANNE: Thank you for having me.
JOHN: Guys, if anybody needs a great, great buyer’s agent, here she is in the flesh. 867-3020. Thank you guys. We’ll see you next week.
JOHN: Hey, guys. Here with another edition of Tuesday Morning Coffee. I have a treat for you today. I’ve got the best buyers specialist in Murfreesboro. All kidding aside, Tommy Davidson is with me. Tommy’s been with me for gosh, how long now, Tommy?
TOMMY: Twenty years at least.
JOHN: We started when we were twelve. Actually, Tommy’s been with me for seven or eight years. And Tommy has probably walked through about every home in Murfreesboro on the market. He shows a ton of property, works with a lot of buyers. So a segment I wanted to do today was talk about buyers’ fears. So I’m just going to pose it to Tommy. Tommy, in your opinion, what is the No. 1 biggest fear in a buyer right now?
TOMMY: I think definitely the No. 1 biggest fear is that they have a fear of paying too much for the home right now.
JOHN: Now is a lot of that because of the market we’re in and the media’s telling us it’s a buyer’s market?
TOMMY: Definitely. And they had a friend that bought in ’07, ’06 maybe and they see that they’re struggling or they’re upside down in their home. Or they turn it on CNBC and they hear about all the foreclosures.
JOHN: Okay. So how do you help them subside that fear? How do you help them quench that fear, to handle that objection? What do you say to them to give them kind of a clarity that they’re not going to pay too much?
TOMMY: Well, one thing, I try to build their confidence because I usually put them on some type of a search where they see what’s out there. And I tell them they probably know the market as well as I do or probably even better. They get an e-mail every day and they’re looking at homes, and one day, they might get a home that’s priced so much better than one they saw two weeks ago. So I really let them know that hey, they know a lot about this market as well.
JOHN: You know, I was at a seminar a couple of weeks ago, and the teacher said typically the buyer is the smartest person in the market. They get it. So a lot of times, they’re going to get it themselves. But they need reassurance.
TOMMY: Definitely.
JOHN: So how do we reassure them that they’re okay?
TOMMY: Well, once they pick the home that they want, we’re going to come back in here and we’re going to do our homework like you said. And we’re going to pull up homes in that area probably in the subdivision, and we’re going to compare what the last home that sold for. And what I tell them is in this type of market, we’re probably not going to want to pay what the last person paid because the market’s declining.
So I reassure them, look, we were paying less usually per square foot—that’s what our market looks at—we’re paying less than what the last person paid. And usually, we’re paying less than anybody else has.
JOHN: Right, right. What’s another safeguard in our market that they have, just in case everybody’s wrong?
TOMMY: The final say so is the appraisal, and appraisals aren’t like they used to be where you could go get your home refinanced and pull all that money out. The appraisal is much more accurate.
JOHN: Much more conservative.
TOMMY: They are very conservative. Very conservative.
JOHN: A lot of reform to that industry.
TOMMY: Definitely.
JOHN: All right, Tommy. So we talked about one of the biggest fears is paying too much. Let’s talk about another fear that a buyer might have. What are other fears you’re seeing out there from a buyer?
TOMMY: If they find the one they want, it seems like they get a little hesitant because they think something may be wrong with the home.
JOHN: And why do they think something’s wrong with it?
TOMMY: Because it’s on the market.
JOHN: Tommy and I kid around because that’s always been one of my favorites. You’ll see people when they walk in a home, their eyes light up. You can tell this is the home for them. And then they’ll go, “Why is it still here?” And I’m like, “Well, we only show you homes that are still available.” But I guess that’s just human nature. We want to know other people like what we like and sometimes we don’t understand. Well, how do you help subside that fear?
TOMMY: Well, some days, it may have just been on the market four or five days and I’ll let them know we’re in a buyer’s market and it could take 30 to 60 days for something to sell. The other thing is it could be overpriced. Four out of ten homes I think are what you’re saying that are going to sell in our market.
JOHN: Uh-huh.
TOMMY: So there’s a lot of good homes out there that do not sell. And I see them all the time where I don’t know why they haven’t sold. They seem to be priced well. They’re in great condition, but it’s just a challenging market out there for sellers right now.
JOHN: And sometimes, I’ve noticed it’s still on the market 120 days later, but when you really do your homework, you’re like, “Well, they started here and finally 120 days later, they’ve gotten the price down to where it’s reasonable.”
TOMMY: Right.
JOHN: And they’ve probably been hurt by that because they were at a high price so long. So there’s many reasons, but we all have fears. Buyers have fears; sellers have fears. As the human race, we have fears. That’s a lot of times what holds us back from doing anything. So hopefully, this helps you if you’re a buyer out there on some of the common fears and that you’re not alone. That you’re just like a lot of other people.
So if we can help you in any way, subside your fears, answer questions, please give us a call, 867-3020. Thanks a lot, Tommy.
JOHN: Hey, guys. John Jones here with another edition of Tuesday Morning Coffee. We have May numbers today, and not a big surprise. We thought that the closed sales would be down over May of last year. Remember, we compare everything to prior year, same month. And because of the tax credit running out last year in April to be under contract but closing before the first of July, we knew that our May this month in closed sales would be less than last month. How much less? We didn’t know.
It was down 26% over last year, same month. But a cool statistic is our under contracts are up 14.3% over last May, which is kind of interesting because now we’re getting more on a level playing field. For sales, our inventory is down 7.6% over last year. Our median price for the month of May was down about 8% in Rutherford County to 133,000. It was 145,000 last May. But if you take out Smyrna and LaVergne no offense to those fine communities, but if you take those out, our median price is 145,000 in Rutherford County.
So kind of some interesting things going on. If we look at our comparisons this month to last month of this same year, May to April, our closed sales were up 10%. Under contracts were up 26% over last month. And our inventory was up slightly, 3% over last month. So it’s going to be interesting to see what kind of year we have from here on out. The skewing of the prior months because of the tax credit being in play last year will be gone for the most part, and it’ll be interesting to see what we do going forward.
So anyway, rates are still extremely low and the sun’s shining. Our phones have been very active. A lot of showings the past couple of weeks, which is encouraging. It’s still the best time ever to be a buyer. So if we can help you in any way, 867-3020. Thank you.
Today John shows you how pricing your home right from the beginning makes you more money, and will also show how pricing your home right will sell it faster.
Hey, guys. John Jones with another edition of Tuesday Morning Coffee. Today, we’re going to talk about something that’s near and dear to my heart. It’s called pricing the home right. And I’m going to prove to you today why pricing the home right on the front end will sell your home in quicker time, but also most importantly make you more money. For years and years, we said this to our clients or I said this to my clients, “Guys, if we can price it right on the front end, we’re actually going to make you more money.”
But I had a hard time proving it because I didn’t really have any great visual to show my clients. Well, in the last few months, I’ve gotten involved with a data system that is able to go in and dissect MLS. So it’s given me some valuable stuff, and you’re going to see it at the bottom on the screen here in just a second. But just in the last 365 days in Rutherford County, between 150,000 and 250,000, there’s been 922 properties that have sold and closed. Out of the 922, 516 of them never had to have a price change. Not one.
Those properties sold in the average of 56 days. Days on the market: 56. The average square footage price was $85 per square foot. Now let’s compare that to the 406 properties that had to have a price change. Well, the interesting thing is if they had to have one price change, they actually averaged two price changes. Their days on the market compared to the ones without a price change went to 129 days. So more than double the ones without a price change.
But most interesting, the price per square foot was $3 less, $82 per square foot. I think there’s a couple reasons why. One is right now we’re still in a declining market, so the longer a home stays on the market and has to sell, the lower the price is going to be. Another big factor is the longer a home stays on the market, it’s going to receive fewer showings and it’s going to solicit lower offers. And that’s the type of offers you end up dealing with.
So therefore, in my opinion, you end up selling for less. Not in my opinion. I’ve got factual data to prove it. So in that particular scenario, $3 a foot less. The average square footage in that range was 2,300 square feet. So guys, that is 3 x 2,300. That is like $6,900 difference between pricing it right or pricing it wrong. I hope this helps you. Call us if you need us, 867-3020.
JOHN: Hey, guys. John Jones here with another edition of Tuesday Morning Coffee. Today, we’re going to talk about four strategies you need when buying a home. And I’m telling you this because right now we have I think one of the most dynamic times I’ve ever seen with our summer selling season upon us to buy a home. Not only are rates at an incredible low, 4-1/2% is what I saw toady, but also we’ve got great pricing, great value out there.
But a few strategies that I want you to take with you when you go buy a home. I want to start out with number one: have a clear financial picture. Have a clear financial vision of what you want to buy and also what you can buy. So I highly recommend sitting down with a mortgage professional before you even go out on this hunt. Find out what you are qualified for. Not only what you’re qualified for, but what do you feel comfortable with. What is that number? And we all know that number. And stick to that number.
Secondly, be careful about trying to find the deal. We have so many buyers right now that because of the news, because of the foreclosures, because of the short sales that’s all they want to focus on. And then we take them around; they look at 20 of them; and none of them meet their needs. Because what you end up doing a lot of times when you go that route—and it’s okay to buy one—but you end up trying to settle because you think you’re getting a deal.
But once you really look at it, we’ve got to put paint; we’ve got to carpet; we’ve got to do all these things. Or you end up finding it in a neighborhood or a house you really don’t want to live in. Pricing is so good right now and an appraiser is going to be your check and balance system so you’re not overpaying in this market, that go out and find what you want. Sometimes the best deal is finding the best home for your family.
Number three: find professionals. Surround yourself with professionals. Find a professional realtor, one that’s good, one that can guide you through this maze, that’s been through the battles. Also, a professional home inspector, a professional mortgage person. As I said before, if you don’t know a good professional realtor, give me a call. I can suggest a great one. Wink, wink. Lastly, do the math. And don’t do it in your head. Don’t do mental math, but really write down everything on paper.
When you go in to look at a home and you’re going to have to recarpet and repaint, get estimates. Know exactly what you’re dealing with. Don’t just guess at it because more times than not, you’re not going to be right. Good luck. I’ve equipped you with the tools you need to go out and find a great home. Give us a call if we can help you, 867-3020. See you next week.
JOHN: Hey, guys. John Jones here with another edition of Tuesday Morning Coffee. Today, we’re going to talk about how much money do you need to buy a home. I get that question often, especially with all the changes that we’ve had in the lending environment here in the last few years. Really, four loans we’re going to talk about, and I’ll go through them briefly. There’s still the good old-fashioned conventional loan which requires the highest credit score. And on a conventional loan, the least amount of money that you can get away with putting down is 5%.
That’s a 95% conventional loan. There will be mortgage insurance until that gets to an 80% loan-to-value ratio. And like I said, it requires to have the best credit score. Another loan that we see a little bit down here in Rutherford County is the VA loan. The VA loan still is a 100% loan if you have served our country and are eligible for this loan. It’s also a loan where we can work usually the closing cost paid by seller into the contract negotiations. So it is a loan where you can still get away with $0 down.
The most popular loan and probably about 70 to 80% of what we see here in Rutherford County is the FHA loan. And that is the government-insured loan that allows people to get into a home with the most lenient credit scores and lenient down payment. But you still have to have a 3-1/2% down payment for an FHA loan. That money can be gifted by a close relative. There’s still going to be a little bit over 3% left in closing cost, but that can be negotiated in and paid by the seller if that’s what you need. So 3-1/2% is what you would need on an FHA loan.
Another loan that is out there that we see a little bit of is the rural housing loan, and that is subsidized by the Rural Housing Association. And there’s limitations to this loan. It has to be in certain rural areas. There’s a map, so it can only be in certain areas, and there are income requirements. A two-person family can only make so much money. If you make too much money, then you wouldn’t qualify for that loan. But that’s a 100% loan where the seller can pay all your closing as well. So those are two loans, VA and rural home, although they’re not for everybody, that someone can still get $0 down into a home.
So the loans that we saw the last few years, the 80/20s, what we call the “liar loans,” those are a thing of the past. You don’t see those anymore. There are certain exceptions to that rule, but for the most part, we’re not seeing those loans anymore and I doubt we ever will after what we’ve just gone through. So if you have any questions about any of this, please call us, 867-3020. We’d love to help.
JOHN: Hey, John Jones here with another edition of Tuesday Morning Coffee. Today, we’re going to be talking about April numbers. Something I think we need to think about and we need to take these numbers with a little bit of grain of salt when we compare them to April of 2010, is last April and May we were in kind of a feeding frenzy of everybody still trying to get the tax credit. So these numbers are going to be a little distorted because of that.
But our numbers this April are down. In closed sales, we’re down 35% over last April, and once again, a lot of that was due to the tax credit. Our under contracts are down 18% over last April, which there again, the tax credit ran out in May, so that number is also affected by the tax credit. But what’s kind of interesting is our inventory is down. Our sales are down, but our inventories are down, which that surprises me a little bit. Our inventory over last April is down 18% as well.
So we’re going to be looking forward to next month. I feel like it’s going to be pretty much identical to this again because the tax credit was still in effect. I think June, July, August are going to be where we can get a clearer picture of where our housing market is trending. So anyway, if you need anything or need this information e-mailed to you, please give us a call at 867-3020 and have a great week.
