There are four different kinds of distressed property that you will typically find for sale in our marketplace. Here is a quick rundown of each type:
· Short Sales – In a short sale you are buying the house from an individual who is seeking the bank’s approval to sell the home for less than what is owed on the mortgage. Even though the bank is heavily involved in the process, the homeowner is the person selling the house.
· Foreclosure – A true foreclosure sale is an auction at the county courthouse where the bank sells the home to the highest bidder for cash. The bank takes ownership of the house if no investor offers an acceptable bid. Foreclosure is the bank’s ultimate legal remedy when the borrower gets behind on his mortgage.
· Bank Owned – The bank’s Real Estate Owned (REO) Department sells those properties that the bank has gotten back through the foreclosure process. This is what the average consumer means when talking about foreclosure properties.
· HUD Foreclosure – These are homes that were originally purchased with a government-insured FHA loan. After foreclosure, the US Dept of Housing and Urban Development (HUD) sells them to the public, offering purchase incentives to potential buyers who will be owner occupants.
There is the perception out there that all distressed properties are great deals. The truth is that just like any other house, there are both great opportunities and potential money pits. Figure out what you want in a home, examine the whole market, and choose the property that offers you the best value for your money.
In this edition of Tuesday Morning Coffee John Jones interviews Murfreesboro's most knowledgeable short sale and foreclosure expert Joe Hafner. Joe was middle Tennessee's first CDPE (Certified Distressed Properties Expert) and has just returned from the national convention for CDPEs "Momentum". Joe shares with us a little about this year's Momentum and gives us is expert opinion on where the Rutherford County market is headed in regards to short sales and foreclosures.
Transcript
JOHN: Hey, John Jones here with another edition of Tuesday Morning Coffee. Today, guys, I have a treat for you. It’s my distinct pleasure to bring to you one of my best buddies and team members, Joe Hafner. Joe is our short sale specialist who has been working with me for about seven or eight years but recently has been more specializing in helping people avoid foreclosure. And this week, Joe just got back from Phoenix, Arizona, for a week-long conference called “Momentum.” Joe tell us a little bit about that conference. What was it about?
JOE: Momentum, John, it’s the premiere event for short sale experts in the nation. It’s put on by an organization called CDPE (Certified Distressed Property Experts). We are the first team in Middle Tennessee to get that designation. And as far as I could tell, we were the only people in Middle Tennessee who had attended the conference. And basically it’s looking at what’s going on in the industry in terms of short sales, distressed properties, foreclosures, that sort of thing. And also just cutting edge tools that people are using and the latest in the laws.
JOHN: I’m sure there were some economists there. I’m sure there were some people there from RealtyTrac, the national company, kind of the leader in tracking foreclosures. As a country, where are we on this foreclosure ride that we’re on? Where do we stand? I mean, are we getting to the hump? Where are we?
JOE: The foreclosure rate has been increasing every year for several years now, as everybody knows. And to look at what’s coming, and this is on the national basis, not necessarily locally. But the best estimates are that—even the most optimistic estimates—are that we’re three years away from getting to the top of the foreclosure rate going up before it starts settling back down.
JOHN: You keep hearing this word called shadow foreclosures where the big banks are holding some of the foreclosures back. Is that true? Is that happening?
JOE: There’s a big fear about what they call the shadow inventory, which is all the properties that are sitting out there that the bank owns but they haven’t put on the market to sell. And there’s a lot of people worried that this shadow inventory is going to hit the market all at once and cause another decrease in property values, like a huge drop-off like falling off a cliff. And there is a shadow inventory. There is a group of houses like that, bank-owned property foreclosures.
Currently, the banks own about 800,000 properties and they’ve only got about 300,000 on the market. But the banks are too smart to put it all on the market at once. They’re kind of piecing it out a little bit at a time. And they’re putting a lot more emphasis on doing short sales. The banks have all been increasing their departments in that area because they want to get some of these properties sold before they become bank owned.
JOHN: Joe, up until about three years ago, how many short sales had we worked here as a company since we’ve been a team? Prior to three years, how many do you think we even did?
JOE: Maybe two.
JOHN: How many have we done probably in the last 12 months?
JOE: We have listed well over 30 in the last 12 months.
JOHN: Right.
JOE: And sold a bunch of those. And it’s only going to increase as we go forward.
JOHN: Right. What was probably your biggest take away from the event? If you could tell somebody out there that’s watching this that they’re behind on their house payment; they’re not sure what to do, probably a lot of fear, probably don’t know what their options are, what’s the first thing you would tell somebody out there who is maybe getting behind on their house or about to be behind on their house payments?
JOE: One of the statistics that really hit me the hardest when I was there that out of all the foreclosures that happen, only 20% of those had been listed with a realtor for sale as a way to try and stop the foreclosure. So 80% of foreclosures right now are likely not even talking to anybody. So the worst thing you can do if you’re behind on your payments is be in denial and pretend that it’s not happening because time is your biggest enemy when you’re in that situation. So the best thing you can do is get with someone who knows what they’re doing, someone who understands what’s going on.
There’s a lot of programs, government programs. There’s a lot of tools and techniques you can use when you’re in that situation to either possibly modify your loan and stay in the house, possibly sell the house as a short sale. There’s even programs in place that give incentives to sellers that on a successful short sale you can get $3,000 to $5,000 to put in your pocket as a relocation allowance that’s just cash that you take from that sale. So there’s options out there for people who think they don’t have any.
And I would say don’t talk to your neighbors. Don’t talk to your family. Talk to someone who knows what’s going on, who understands how all of this works because things are constantly changing and people need to be aware of what the latest developments are so that they can give the best possible advice to people.
JOHN: Okay. Guys, you know that I don’t usually don’t use this segment as a commercial for my company or anything like that. It’s usually used to give you guys information and value. But I am going to do a little bit of an infomercial today, and that’s going to be if anybody out there knows anybody or it’s you that has got this fear of foreclosure looming, there are a lot of options and this guy right here is by far the best that I’ve ever seen. I’m thankful he’s on my team. But he understands it. He can explain it. And his track record of helping people avoid foreclosure is phenomenal. Please give him a call. Our number is 867-3020, or you can go to the Web at www.JohnC.Jones.com.
In this episode of Taste of the Town Tim Dutton visits with Randy Ahart, owner of Ahart's Pizza Garden on Old Fort Parkway (behind O'Charley's) in Murfreesboro. They discuss Ahart's unique style of pizza and cheese bread, as well as the pizzeria's fantastic chicken wings and the pub garden style patio for dining outside on those warm spring and summer evenings.
This week's Taste of the Town Special? Buy any Ahart's pizza and get your second one of equal or lesser value for half price just for mentioning Taste of the Town!
TIM: Tim Dutton here with another edition of Taste of the Town. Today, I’m on the patio of Ahart’s Pizza Garden, and I’m sitting here with the owner, Randy Ahart. Randy, we want to thank you for having us.
RANDY: You’re welcome, Tim. Glad to have you.
TIM: Now Randy, I guess to start this thing out, help me explain to folks where you guys are located.
RANDY: Well, we’re a little bit hidden back here, Tim. But we’re near Sam’s, next to O’Charley’s, and across the street from Kroger, behind the bank and the Oil Express place there. We’re in an L-shaped strip center, right in the middle.
TIM: On Old Fort Parkway, kind of behind Sam’s.
RANDY: Right.
TIM: Right behind O’Charley’s.
RANDY: Right next to it. And over here in a little L-shaped strip center.
TIM: Now Randy, you can always get your pizza, cheese sticks, or cheese bread. Tell me a little bit about what you guys do that’s different than the other places that are in business.
RANDY: Well, most people, unless you come from New York or Chicago or some place that’s famous for real mom and pop pizzerias, have never really had a mom and pop pizzeria—pizza made fresh and from scratch. First of all, we make our own dough right from scratch here. We cook our own sauce. We shred up all of our own cheeses and vegetables. Everything comes in fresh. No preservatives and things like that. It doesn’t come in frozen or in a can. And it’s all done right here. And if you know what you’re doing when you use those type of ingredients, you come out with a great product.
TIM: Randy, tell me what we’ve got right here. This is a cheese bread, but tell me a little bit about what you guys do to make it so good.
RANDY: Well, that is our pesto cheese bread. We have three or four different kinds of cheese bread here, but the homemade pesto is one of my favorites and it’s a great appetizer. Most people have had pesto at some time or another. But there again, you have to know how to make it. And it’s made with fresh virgin olive oil and fresh basil and things like that and various spices. Ours is a walnut pesto, as opposed to some people use pine nuts.
But it’s very, very delicious. It’s got the fresh garlic taste to it. And then we top it with our pizza cheese, our mozzarella/provolone cheese, run it through the oven and cut it into the fingers there and that’s our marinara that we use on our pizzas right there in the sauce bowl you’re using with them.
TIM: And it’s not canned marinara. It’s marinara made from fresh tomatoes.
RANDY: It’s cooked right here.
TIM: And I’m going to tell you, man, that’s a perfect combination of flavors.
RANDY: Thank you.
TIM: We’re going to go on to the pizza, and tell me which pizza we decided to put out here, Randy?
RANDY: We’ve got a number of signature pizzas here, 21 or something like that now I believe. And that is the Chopatoulis, and it’s kind of a Cajun-style pizza. It’s number 6 on our menu, and it’s made with andouille sausage. And it’s got Cajun spicy shrimp on top, along with red onions, green peppers, roasted red peppers, and fresh garlic. And of course topped with our blend of mozzarella/ provolone cheese on our famous thin-crust pizza. How do you like it?
TIM: Guys, you need to try this right here. Randy, none of this has come in frozen?
RANDY: Absolutely not.
TIM: And I heard you say you cut the shrimp up before you put it on the pizza?
RANDY: Absolutely. Yeah. We put the Cajun spice, which is our blend of spices that we put together right on the shrimp and blanch it off in the oven. You know, chop it up a little bit so you can get more than just one bite of shrimp on your pizza there. And that’s one of my favorites as well.
TIM: It is good. Now one of the things that some folks don’t know that you guys do here at Ahart’s is the hot wings.
RANDY: Yeah. Our wings are actually pretty well known among our regulars, the people who come here and eat. Probably 90% or better of them eat here every week. And those that know about them really like them a lot. But people hearing about us for the first time might not know that we do things like that. And those are our hot wings. And we cook them right here. They come in raw; we cook them; and then we deep fry them when they’re ordered and put whatever sauce you’d like. That’s the regular hot, but we have mild, and we also have Ahart’s Afire, and you can do them barbecue.
TIM: And once again, this is your own sauce?
RANDY: Yeah, that’s our sauces there. A little messy though, huh?
TIM: Hey, Randy, you know what you’re doing here. This is great. They may be the best wings I’ve ever put in my mouth. And I’ll tell you something else. The patio here, you guys are handy as far as your location, but you’ve got a patio out here to sit and enjoy whether it’s beer or tea, your pizza, or whatever.
RANDY: You bet. It’s kind of hidden back here, the patio. People don’t know that we have a patio when they walk in our front door. But because we’re in an L-shape center and the back opens up, it’s kind of like a big pizza slice area back here that’s open and kind of secluded and you don’t have a lot of cars or noise back here. It’s pretty nice.
TIM: It is. Randy, do you have a special for the people who say they saw you guys on Taste of the Town?
RANDY: You buy one pizza, say a large pizza, and you get your second pizza for half price. So if you get a signature pizza like the one you’re getting there, you can get a second signature pizza for half price or if you want one that’s a little bit different as long as it’s equal value or less.
TIM: The same value. If you come in and say you saw it on Taste of the Town, your first pizza is full price; your second one is half prices as long as it’s the same value or less. Well, let’s wrap it up for this edition of Taste of the Town. And remember, if you’re thinking real estate, think Tim Dutton.
John Jones presents a comparison of the April 2010 Rutherford County real estate statistics to the statistics from April 2009 to derive a measure of the health of our local real estate market and the effectiveness of the $8000 First-Time Homebuyer Tax Credit.
Transcript
JOHN: Hey, John Jones here with another edition of Tuesday Morning Coffee. Guys, I sit here in front of you. I’m embarrassed. It’s a very messy desk, and it’s the result of the last month was just kind of crazy around here. And that’s what we’ll talk about, April numbers today. Obviously, it wasn’t just crazy for me. It was probably crazy for a lot of folks because the new numbers came out, and we are 54% up over last year, same month, which is an incredible boom. A lot of that obviously probably had to do with the tax credit.
I’m not saying that these people would not have bought or sold during this year at some point. I just think it just really moved a lot of people’s timetable up because of the tax credit. So 54% more sales this month than April of last year. Pendings, contracts written, because remember, if you were just under contract by the end of April you were okay. The pendings are up 43% over this time last year. One thing that does kind of disappoint me a little bit, our inventory has shrunk but only by 3%.
And with that amount of sales, I would have hoped it would have shrank more than that. So we’ve still got a pretty good inventory there to deal with. What does this mean for the future? I think what you’re going to see is a little lull the next month or so because so many people went ahead and got this done before April. But I do think things will start evening out here in the next month or two, and we’ll get back on track with kind of the numbers we’ve been doing.
For the year, we were up 24% more closings than this time last year, and that number should increase next month as well because of all of the pendings we have in April. So if you guys should need anything, please give me a call at 867-3020 or come to our website at JohnCJones.com. Thank you.
The Home Affordable Foreclosure Alternatives (HAFA) Program is the latest government-sponsored initiative to help people facing foreclosure. Overseen by the US Treasury Department and administered by Fannie Mae, HAFA assists eligible homeowners in avoiding foreclosure through short sales or deeds-in-lieu of foreclosure. A deed-in-lieu of foreclosure is when the homeowner voluntarily turns his home over to the lender to avoid foreclosure.
HAFA offers financial incentives to lenders, borrowers, and junior lien holders that successful implement the program’s foreclosure alternatives. Homeowners can receive up to $3,000 of relocation funds in a successful short sale. HAFA was introduced in part with the intent to remove the stigma from short sales and help keep communities from being destroyed through massive foreclosures.
To qualify for the HAFA program, the following criteria must be met: · The property is the borrower's principal residence. · The mortgage loan is a first lien mortgage originated on or before January 1, 2009. · The mortgage is delinquent or default is reasonably foreseeable. · The current unpaid principal balance is equal to or less than $729,750. · The borrower's total monthly mortgage payment exceeds 31 percent of the borrower's gross income. · The mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac.
Learn more about foreclosure, short sales and the HAFA program at TheHomeSaverGuys.com.
This week Tim visits Five Guys Burgers and Fries, located in The Oaks shopping center on the corner of Thompson Lane and Medical Center Parkway, and sits down with Five Guys Murfreesboro's General Manager Steven Coleman to find out what gives the famous Five Guys burgers their signature fresh taste and why they insist on cooking their fries in peanut oil, as well as what the Five Guys in Murfreesboro is offering as this week's Taste of the Town discount.
TIM: Tim Dutton here with another edition of Taste of the Town. Today, we’re at Five Guys Burgers and Fries where the hamburgers are the boss. And I’m sitting here with Steven Coleman who’s the general manager of Five Guys Burgers and Fries. Thanks for having us Steven.
STEVEN: Great to have you here.
TIM: Man, tell us a little bit about what you guys do that’s different than everybody else that’s in the burger business.
STEVEN: What we do here at Five Guys Burgers and Fries is fresh—fresh burgers, fresh potatoes, fresh French fries. We don’t have a microwave. We don’t have a freezer. Everything is made fresh to order. No fillers, no preservatives. It’s the real deal.
TIM: You had made the comment and that stuck we me. Guys, there’s not a freezer on the premises. Right?
STEVEN: No.
TIM: So it’s all fresh. Now you also cook your fries in peanut oil?
STEVEN: Yes sir, we do.
TIM: And what does that do?
STEVEN: It gives it a bit of flavor. Peanut oil can cook at a higher temperature than regular oils and doesn’t deteriorate as quickly. So you can cook it at a higher temperature and it gives it a better flavor.
TIM: Okay.
STEVEN: That’s what we’re looking for.
TIM: All right. Steven, tell me a little bit about the sack deal here. What have you brought us today?
STEVEN: Well, inside here, what people like to do is just take this sack, tear it open, because we don’t have trays here or anything. This is your tray. On the inside here, you’ve got one of our famous Five Guys burgers all the way and our Cajun French fries.
TIM: I’ll tell you what. That’s a whole role of potatoes right there.
STEVEN: Oh, yes sir. These potatoes that we have here at the restaurant, they’re on display out in the lobby. They are not for decoration. Well, they are to an extent, but it is mainly to show people that this is what we do.
TIM: You guys get them out of the sack, cut them up…?
STEVEN: Yes sir. Every day.
TIM: And guys, look a there. What a burger. Steven, what’s this particular burger you fixed for us today?
STEVEN: This is our bacon cheeseburger, and the toppings on here are what we call “all the way.” That’s mayonnaise, lettuce, pickle, tomato, mustard, ketchup, grilled onions, and grilled mushrooms.
TIM: And the way I understand it now, is this right? That all your items you can choose whichever ones and your burger’s the same price no matter how you slice it.
STEVEN: Exactly. All the toppings are free.
TIM: Well, guys I’m going to taste a little bit of this. Go ahead and twist my arm. I want you guys to look at that burger right there. Steven, you’ve outdone yourself.
STEVEN: We try to make sure it’s the same way every time.
TIM: Guys, this is one juicy and tasty burger. Now Steven, tell me a little bit about the potatoes that you guys use to make your fries.
STEVEN: Now all of our potatoes we get in fresh every week. They’re all grown in either Idaho, Washington, or Oregon. They all have to be grown north of the 42nd parallel. What that means is the potatoes grow slower. It’s a firmer potato and it produces a better fry.
TIM: You guys are specific about what you choose to use.
STEVEN: Yes, sir. Every week we get a list of where the potatoes we get are grown, the name of the farm, and the city they’re from. And we display that here in the restaurant.
TIM: So you actually display the name of the farm that the potatoes were grown on?
STEVEN: Yes sir.
TIM: Now, you had told me something else about your hamburgers. They’re all-American beef.
STEVEN: All-American beef. The percentage is 80/20 and the reason being is that we cook all of our patties well done. Now if you want a well done juicy burger, you have to have a certain fat percentage in there.
TIM: Right.
STEVEN: And because of that, that’s the reason why we use that.
TIM: That’s something that a lot of people don’t know is that the beef that they get at different places, it can be Mexican beef. It can be Canadian beef.
STEVEN: Yes sir.
TIM: It’s not necessarily American-grown beef.
STEVEN: Exactly.
TIM: But what you guys use here is.
STEVEN: Yes sir.
TIM: Now, Steven, do you have a special for the people that come in and say they saw it on Taste of the Town?
STEVEN: For any of our guests that come in that have seen us on Taste of the Town, we’re going to offer a free drink. All they have to say is that they saw it on Taste of the Town, and they’ll get a free drink with their meal.
TIM: Hear that, guys? Come on in here to Five Guys Burgers and Fries and get you a fresh, tasty hamburger. Now Steven, do you want to tell the folks where you guys are located?
STEVEN: Okay, we are at 536 North Thompson Lane here in Murfreesboro, located in The Oaks Shopping Center. We’ve also got two other locations here locally. We have one in Smyrna and one in Mt. Juliet.
TIM: Okay. Now the fries, they’ve got a little bit different of a taste. Kind of a spicy…
STEVEN: This is our Cajun fries. We offer two different styles of fries here. We offer Five Guys style, which is just salt, and then we also offer the Cajun seasoning. Cajun seasoning is a little spicy, but it’s not what I would call hot. People like a little spiciness to their fries.
TIM: Well, dude, they are good. What about the hours? Do you guys close any days of the week? What kind of hours are you open?
STEVEN: No, we’re open every day of the week. We’re open from 11:00 in the morning and close at 10:00 at night. Generally, we try to be open at least half an hour before. And then we’ll close at 10. So generally, we’re ready to go by 10:30 in the morning.
TIM: Good, good. Well, guys, that’s about it for this edition of Taste of the Town. And remember, if you’re thinking about fresh hamburgers, think Five Guys Burgers and Fries, and if you’re thinking real estate, think Tim Dutton.
In this episode of Tuesday Morning Coffee Murfreesboro real estate agent John Jones covers the Nashville flood relief efforts as well as Rutherford County flood relief efforts and some of the organizations that are taking donations of time and/or money to assist those effected by the flooding. Please take a moment to see what you can do to help aid the victims of the flood and assist in the relief effort.
Help us spread the word and assist those in need, share this with a friend or just send them www.tuesdaymorningcoffee.com
Transcript
JOHN: Hey, guys. John Jones here with another edition of Tuesday Morning Coffee. Guys, today with we’re going to talk about the devastation we just experienced in Middle Tennessee. And I’m encouraging each and every one of you, or each one of us, to do something to help those people that were affected by the flood. FEMA aid will average about $3,400 per victim. There was over 1.5 billion in damage estimated just in Nashville alone, so this money is not going to go that far.
United Way of Rutherford County is accepting donations of food, water, and clothing— www.UWRutherford.org.
The Red Cross of Nashville is accepting donations at www.NashvilleRedCross.org. Also, Music City Keep on Playin’ is a telethon that’s going to be May 16, this Sunday night from 7 to 9 pm on GAC. And there’s another way you can call in and donate money. But guys, all of us need to do something.
We can also text to the Red Cross, and I’ve already done this. This is a real simple thing all of us can do. Ten bucks will go straight off your cell phone bill. All you have to do is text “Red Cross.” Put that in your text and text it to 90999 to give ten bucks. If we all just do that in Middle Tennessee, I mean, that would be a ton of money for those folks.
We’ve all got to help. We’ve all got to do our part. Thank you for listening. And once again, I encourage you to hit one of these sites and to do something. Thank you.
This week on Taste of the Town Tim Dutton visits Wasabi Japanese Steakhouse on Franklin Road (Old Fort Parkway) in Murfreesboro for some good hibachi showmanship and Japanese food and even better sushi. This week's Taste of the Town Special? Free drink with your lunch at Wasabi just for mentioning Taste of the Town!
Show the world how much you "like" Taste of the Town...please visit our Facebook page and "like" us www.facebook.com/TasteoftheTown
Transcript
TIM: Tim Dutton here with another edition of Taste of the Town. Today, we’re at Wasabi Japanese Steakhouse, and I’m sitting here with Mike, the owner. Mike, thank you for having us.
MIKE: Thank you.
TIM: Listen man. Y’all have prepared some of this tremendous food, but one of the things that I want to get out of the way is where you guys are located. You guys are located on Franklin Road or Highway 96 West, three quarters of a mile—
MIKE: From Interstate 24.
TIM: From Interstate 24.
MIKE: Yeah.
TIM: Yeah. Three quarters of a mile on your right, right there in the corner. And the name of it is Wasabi. One of the things, Mike, that I want to bring up, you guys do a lunch for your hibachi grill—
MIKE: Yeah. We have a very good deal.
TIM: You have a great deal, man. You want to tell the folks a little bit about it?
MIKE: Yeah. We have a very good deal for hibachi lunch. A lot of chicken, $5.95 and then it comes with everything —soup, salad, fried rice, vegetable with chicken.
TIM: And the chicken. And guys, we sat here, and folks like Harry will cook it in front of you and he does a tremendous job. And we’re looking at $5.95. Now one of the things that I noticed when you walk in the door, y’all sushi looks just fabulous.
MIKE: Yeah. We have very good sushi.
TIM: You also—I didn’t try any—but the Sake…
MIKE: Yeah, Sake is good. You order sushi and you order Sake, it’s very good.
TIM: Be easy on the Sake though!
MIKE: Yeah.
TIM: Because it will ruin your next day if you go too heavy with it. Won’t it, Mike?
MIKE: Yeah!
TIM: Now something else that I just learned today, you’ve purchased an existing Japanese steak house across town. Is that right?
MIKE: Yeah.
TIM: You want to tell the folks a little bit about that?
MIKE: We have a new one coming. Fuji Japanese Steakhouse on West Northfield Blvd.
TIM: On West Northfield?
MIKE: Yeah.
TIM: And the name of it is Fuji?
MIKE: It’s name is Fuji. We’re thinking of changing the name to JK Fuji.
TIM: J.K. Fuji?
MIKE: J.K. Fuji and we'll try to open for lunch in June.
TIM: Right. I had a buddy of mine, Mike, who was hoping that you guys would start doing lunch over there so he wouldn’t have to drive all the way across town to get some of the good food.
MIKE: There you go.
TIM: Now, Mike, do you guys have a special for anybody that comes in and says they saw your restaurant on Taste of the Town?
MIKE: Yeah. At lunchtime, we can give like a drink for that.
TIM: You hear that guys? You can come in, get the $5.95 chicken, and get your drink for free. You cannot beat that for a lunch special with a hibachi grill. Well, that’s about it for this edition of Taste of the Town. And remember, if you’re thinking real estate, think Tim Dutton.
Several years ago when we were in a seller’s market, pricing a home was as simple as checking comparable sales in the neighborhood and then listing your house slightly above the highest comp. That worked because there were many more buyers than sellers in the marketplace which created upward pressure on prices.
That way of pricing simply won’t work in our current buyer’s market. There are many more sellers than buyers, which is creating downward pressure on prices. In order to have a successful sale in this market, you need to use a method called “absorption rate pricing.”
With absorption rate pricing, you look at the entire market of homes that you could reasonably expect a potential buyer of your house to consider purchasing. Then you examine the last 6-12 months to determine how many homes on average have sold each month. This number is called the absorption rate. Then based on the absorption rate of homes in your area, you look closely at the competition (other homes for sale) to figure out where your house needs to be positioned in order to reasonably expect that your home will be one of the available inventory absorbed by the market with an offer.
For example, if the market is absorbing four homes per month, your home needs to be positioned among the four most desirable listings in terms of price and value for the dollar. Stray from the top four and you risk having your house ignored by potential buyers who know how to find the best value for their money.
In this edition of Tuesday Morning Coffee Murfreesboro TN based Realtor, and owner of John Jones Real Estate, John Jones speaks to the expiration of the $8000 First-Time Homebuyer Tax Credit and discusses what he forsees ahead in the Rutherford County real estate market and local economy.
Transcript
JOHN: Hey, John Jones here with another edition of Tuesday Morning Coffee. Guys, we’re winding down on the tax credit, and I wanted to speak to that a little bit. The tax credit is running out this week on the last day of the month. So really, this is our last week for it. If you’re hanging out there waiting on something to find, this is your last week to get the $8,000 if you’re a first-time homebuyer and the $6,500 if you’ve lived in your previous home for five years.
So what has that done to our business? The last couple of weeks have been pretty crazy. I told somebody the other day it feels like 2006 again, and it has for the last couple of weeks, which is good. What’s going to happen after this tax credit? A lot of people are asking. Well, I can tell you this. The tax credit hasn’t had the impact that Congress thought it would have. So therefore, I don’t think it’s going to be extended. I don’t even think there’s really any serious talk about it.
But what’s going on in the economy overall—I’ll tell you a few things I’ve heard this week that have really made me get kind of excited about the economy and where our country is heading. The first thing, I sat down with my stockbroker. We were reviewing my 401K and he told me that what he was seeing in corporate America in the Dow Jones stocks is companies were reporting better earnings. So companies are making money, which is a good thing.
Now a lot of that has probably been due to some downsizing and cutting expenses as we’ve had to tighten our belts the last couple of years, but that’s cool. Those companies gotta make money before they even think about adding more employment. So that’s the first sign. They’ve gotta make money, and that’s happening. Another interesting comment I had—I have a real good friend of mine who owns a tool and dye business. They make dyes for cardboard boxes. So when his business is booming, that means that the cardboard box business is booming, which means people are buying things off the shelves, whatever can come in a box that you can imagine.
His business has started to trickle up since December, and he said he’s very cautiously optimistic but feels very good about it. Ever since December, things are looking better for his company. The same day, I talked to a guy in the transportation business, a past client of mine who’s in with a big trucking company, large, over several states. They do a ton of business, a very large company. And he said since October of ‘08 to December of ‘09 his company had hit a little bit of a decrease every month until December of ‘09 when they had their first increase again.
It was only 3%, but he said the next month in January it was 10%. February it was 15%. March it was even a little higher. And he says, “John, we transport everything. Any consumer good, tires, toothpaste—whatever you can imagine, we transport it.” Which tells me, tells him that this economy is slowly coming back. A guy made a good analogy the other day about our economy, and I agree with it. He said, “It’s kind of like a marathon race.” You know, in a marathon race you have thousands and thousands of people—we just had one here in Nashville—that are running.
And a lot of times the leaders or the best runners leave the finish line and it may be another hour or so before somebody else leaves or you could be in the back of the pack before you actually take off. I think our economy is a lot like that. I think the lead runners are out there and it’s started. The race has started. But some of us are still standing at the starting line. It’s going to take a while. So I think that our economy is coming back. I think that real estate is still definitely a buyer’s market.
But I do think the economy is on its way back, which means hopefully more job growth, which ultimately means housing will come back because people can buy houses when they have jobs. Anyway, I hope that helps you. That’s my two cents. And if you need us, call us or visit us at JohnCJones.com.
