Home seller questions are common for me these days, and they are also favored (after all, that what we do here at Century 21 Manausa and Associates, we sell houses )

I often use analogy to explain things to people who are getting ready to sell a home, because it really is a process that is fairly easy to grasp and it does not take months to sell a home. So if you are getting ready to ask somebody to “sell my house,” read on!

Stock Market Showed Me How To Sell My House

Of all the analogies that I use to explain how we sell a home these days, I like the simple comparison to selling a share of stock on any of the large exchanges in the world.

The key to selling a share of stock is understanding supply and demand. We look at the “ask” and we look at the “bid,” but your local real estate market liquidity is going to tell us the likelihood for variances between the two parties.

Here’s what I mean. If you want to buy a share of HP, and it is trading over 17 million shares per day, that is ample liquidity to give you a feel for what you will have to spend. Similarly, if you are looking to sell a share of HP, you will have a great understanding of what you should expect to receive.

When we look at HP shares from yesterday’s market, we see it fluctuated from $21.03 to $21.37 per share. Additionally, 17,685,000 shares traded hands, so we have a lot of evidence that a share of HP is worth between $21.03 and $21.37 per share. So let me ask a stupid question …

What if I wanted to sell my share of HP for $30, would me putting it on the market right now at $30 get it sold? How about $28? or $25?

Exactly, if you price yourself above the market when there is ample liquidity, buyers will ignore you.

When I wanted to sell my house, I was able to use this lesson from the stock market to price it correctly. And if you ask me to “sell my house,” I will use this same process to show you how we will sell your home in 4 to 14 days.

Sell My House In 4 To 14 Days

The key to the analogy of comparing selling a house and selling stock is market liquidity. If you are selling a high end home in Tallahassee, you might not have enough liquidity to price your home with the same confidence level as if you were selling a home in the middle price ranges (where thousands of transactions will occur this year).

So the greater the liquidity in the market, the tighter and greater confidence I will have for a quick, top dollar sales when you plead “sell my house!”

We have been working all the correct marketing channels to create a real estate exchange of ready homebuyers so that when we promote a new property, priced correctly, we are able to effect a quick sale. If you are thinking “let’s get Joe to sell my house,” then simply drop me a note and we can schedule a time to get you started.

For any long-time readers of the Tallahassee Real Estate Blog, you know that I have reported about the large new construction premium you must pay in this buyer’s market, and how I strongly advise you to find an existing home for your purchase.

But there are some reasons why you really should build a house right now if you fit into a certain category.

Four Reasons To Build A House Today

Nobody is immune to real estate market conditions, the supply and demand dynamic is real, and it is measurable for every price point in Tallahassee.

Currently, there are more existing homes for sale in Tallahassee than there are buyers for those homes, and that means there exists pricing pressures in many of our price ranges in Tallahassee. Specifically, there is pricing pressure for Tallahassee high end homes, and it is among these higher prices that we find people who think now might be the time to build a house.

But building a home is not just a financial move. In fact, it could very well be a life goal for many people, the successful culmination of many years’ hard work and sacrifice to save enough money for a dream home. If you fit into the category of “always wanted to build a house,” than the time could be most right for you today. Here is why:

1. The new construction market is just coming off a bottom, so there are hungry builders and subcontractors in Tallahassee who will likely compete for your business.
2. The cost of land has regressed to values last seen more than 10 years ago, so it is likely you will get an exceptional value on the land.
3. If you are financing any of the building, mortgage interest rates are at a historical low so your payments will be lower than ever.
4. Most other costs you incur when you build a house (sticks, bricks, and labor) will continue to rise over time, so it won’t likely get any cheaper to build.

First Plan To Build A House

So how do you go about starting the process to build a house?

We will be writing some follow-up articles to address this in detail, but I can tell people who build a house often make the same first mistake as people who buy an existing home.

The biggest mistake they make is they start looking at houses, at house plans, and once they become emotionally invested, they try to make sure they are getting a good deal.

It is better to choose a buyer’s agent first, then to scour the market with that agent to select location and home types, and then put together a plan, with a real estate buyer’s agent, which will save you a lot of money.

It is OK get to crazy-emotionally invested, just do so after you make sure you will build a house that fits your needs, wants, and budget.

And if you would like to sit down for free initial counseling session to determine whether or not to build a house, simply drop me a note and we can schedule a time to review your specific wants and needs.

Everybody knows that part of being a homeowner includes having to carry your share of the local property tax which supports the city, county, and other public services.

Calculating property tax for the potential purchase of a home for sale in Tallahassee is fairly simple, once you understand all the rules.

Home Price Is Basis Of Tallahassee Property Tax

Recently, in the middle of a correspondence with somebody considering a move to Tallahassee, I was asked about property tax information. Specifically, the reader wrote if I could send

a couple of examples of what property & school taxes on $150K listings are like in & around Tallahassee? -Bill T.

This is a common question, loaded with a common misconception.

The property tax you will pay on a home once you move to Tallahassee will be based upon the purchase price, so knowing the current taxes being paid on the home is not helpful for a homebuyer.

How To Determine Property Tax In Tallahassee

In “Tallahassee,” you are either in the city, in downtown Tallahassee, or in the county “Leon County.”

After you purchase a home, the taxing authority (city or county) will assess your home based upon what you pay for it (meaning it does not matter what the current property tax is on the property).

This makes it simple for you to know fairly accurately what your taxes will be. Your home’s value for property tax assessment should result in an amount of roughly 80% of your purchase price.

• The city millage rate (2012) is: 20.2614
• The county millage rate (2012) is: 16.5614
• The downtown millage rate (2012) is: 21.2614

(Hang in there, we are getting to the answer)

Additionally, there are exemptions for homestead and low-income seniors (over 65).

The Florida Constitution provides for a $25,000 exemption in assessed value for Florida homeowners. In 2012 the exemption resulted in a savings up to $505 in Leon County. There is an additional $25,000 exemption on Non-School taxes for the valuation between $50,000 and $75,000. This worth up to $313 in Leon County.

The Leon County Commission and the City Commission have adopted ordinances providing an additional $25,000 homestead exemption for low-income homeowners (total household income of less than approximately $27030), who are age 65 and over. The tax savings is approximately $313.

So, boiling it all down …

If you buy a $150,000 home, it should be assessed around $120,000

If you are married, you and your wife will each use your $25,000 homestead exemption resulting in a taxable value of $70,000.

Assuming you are not a low income senior, your property tax should be $70,000 x (the millage rate). Assuming you are in the city, that would be $1418.30.

How’s that for easy math?

So if you are ready to buy a home in Tallahassee, just know that your property tax assessment is not going to vary much based upon where you want to buy, rather it will be based upon what you spend.

And if you want some insight as to where to buy a home in Tallahassee, just drop me a note and we can schedule a time to review your goals and objectives.

It is very simple, it compares the current month with the corresponding month from a year ago in order to see changes in the real estate market.

Well, the Year Over Year Home Sales Report has been putting a smile on my face for nine straight months now!

Current Year Over Year Home Sales Report

The following real estate graph shows the April 2013 Year Over Year Home Sales Report for the Tallahassee real estate market. It is important to note that all price ranges are lumped together, from starter homes to high end homes in Tallahassee.

Tallahassee home sales in April were 39% higher than they were in April of last year.

Moreover, every month for 9 months our market has moved higher than it had been in the prior year. In fact, 12 of the past 13 months have shown gains in year over year home sales in Tallahassee.

The strong run in the Year Over Year Home Sales Report began in August of 2012, and hopefully we will see it run on for many more months and years.

Importance Of Year Over Year Home Sales

Currently, there are still thousands of homes for sale in Tallahassee, as well as thousands more in the shadow inventory that need to be sold.

The Tallahassee real estate market has been looking to the demand side for signs of improvement, and we clearly see these signs in the Year Over Year Home Sales Report above.

This does not mean that we are “there,” but the Tallahassee real estate market is clearly moving in the right direction.

Increased buyer activity shows up on this report, so we will look to this report on a regular basis as a quick sign of the strengthening or weakening of the health of the housing market.

If you are thinking about whether or not to sell a home in Tallahassee, this report says it should be getting easier for many of the price ranges.

If you would like to know how the Year Over Year Home Sales Report affects you, for your particular home, just drop me a note and we can schedule a time to review your specific situation and goals.

In my recent article about home valuations, I discussed some of the benefits and pitfalls of using an online home valuation tool. But apparently my “dusting” of the subject caused a few people to want to know more.

Specifically, they asked about whether the  Zillow real estate value of their home was more or less than its current market value.

The Accuracy Of Your Zillow Real Estate Value

First of all, I am somebody who really appreciates the technology gains that have arrived for the real estate industry.

The ability to analyze the Tallahassee real estate market is so much easier today than it was 22 years ago when I first became a real estate agent in Tallahassee.

There is a (rather large) school of thought among my peers that says machines will never replace real estate agents when determining the fair market value of a home, but I am not of that mindset.

The value of a home is simply related to what a buyer would have to spend in order to get something very similar to the subject home. There are variables that must be considered, and the current state of supply and demand influences valuation (lots of buyers trying to buy few homes drive prices up, while few buyers and lots of homes on the market creates pricing pressure).

Ultimately, the majority of homes will eventually be accurately valued with an online tool, as all these variables are learned, stored, and programmed. Right now it appears as if the  Zillow Real Estate Value Tool is leading the way towards this solution.

Local Zillow Real Estate Value

Unfortunately, the Zillow real estate value is not yet accurate. They utilize far too few of the critical variables to determine the true market value of your home, so be sure to consult a top real estate professional before deciding upon your housing course of action.

I would not expect the Zillow Real Estate Value Tool to be accurate enough to rely on for at least 3 to 5 more years, as they have data collection issues which they have yet to solve.

Don’t be afraid to check your home’s value on the Zillow website, but if you want more than just a ballpark figure, you currently need to get an analysis from a human being.

I would like to be that human being for you , just drop me a note and we can schedule a time for a more thorough analysis than a simple Zillow real estate value of your home.

With the thousands of closings of short sales in Tallahassee over the past few years, there is a huge back-log of people who historically had great credit but now are dealing with below-average credit scores. The Tallahassee real estate market needs solutions, and I get a lot of questions these days about how to fix a poor credit score.

But the question that I most often hear when I recommend using a company that provides credit repair for homebuyers is … “do they work?”

Well, I’m not sure.

So I have decided to perform a real, live case study that will report on a client of mine (name hidden) who is attempting to repair credit that was destroyed through tough financial times and a short sale several years ago!

Is Credit Repair For Homebuyers A Myth?

It won’t take you long after Googling “Credit repair for homebuyers” to realize that there is far too much information to absorb. So how do you repair credit if you don’t have a trusted adviser in the business?

The first step is to find the right credit repair company to provide you with the guidance that you need. While I have read a good bit on the “do it yourself credit repair” sites, I know I don’t want to become a subject matter expert and learn all the paperwork for something that somebody else is willing to do fast, better, and for a relatively low price.

Validating Credit Repair For Homebuyers – A Live Case Study

I will use the John Smith (not his real name) when I refer to the subject of our case study. I will ensure that none of his private information is shown, but he has given me permission to publish as much of his progress as necessary to make this an effective case study in validating credit repair for homebuyers. After all, that is his goal, to buy a home in Tallahassee as soon as possible.

John pulled a credit report (all three credit bureaus) on April 1, 2013 and this is what it showed (note, just page 82 of 85).

So, at the onset, John had a 568 credit score, and he wants to buy a house with FHA or conventional credit. Over the several months, I will post updates and link back to this report so we can see if credit repair for homebuyers is truly possible.

John has signed an agreement with the US Consumer Credit Restoration Association in an attempt to bring his scores up to the mid 600s and then even higher. His current scores will get him denied for the loan product that he really wants to use to buy a house, but he has been cleaning up his finances diligently for the past two years.

So will this credit repair company be able to help him achieve higher scores faster? Time will tell.

If you bookmark this article and return from time to time, you can follow the updates to see the effectiveness of credit repair.

Short Sellers To Consider Credit Repair For Homebuyers

The scores of short sales in recent years means that there are a lot of people who previously had good credit who are now working to regain their old form. Will credit repair work to hasten their return to good graces so they can take advantage of these historically low interest rates? Or is credit repair just a myth? Hopefully, we will see John Smith transform into a ready to borrow homebuyer and be able to answer this question definitely in the near future.

If you have gone through a short sale in the past, and want to be put on the fast track to buying a home again in the near future, simply drop me a note and we can schedule a time for a free consultation to help you determine if you even need to seek credit repair for homebuyers.

I suspect that as the real estate market starts to move in an upwards direction, we will start to see some trapped homeowners anxious to enter the market.

They have been trapped with mortgages that outweigh the encumbered homes, so it’s only natural that they start asking “what is my home worth” as news of improvement is reported.

What Is My Home Worth? – How We Find Out

Before we get into the gyrations of appraising a home for its market value, I urge you to consider that it is what it is.

That’s right. A professional real estate agent will look at what has sold, what has failed to sell, and most importantly, what is available on the market that will compete with your home for a buyer.

In Tallahassee, sellers still outnumber buyers, so properly assessing the competition is often worth tens of thousands of dollars to the home seller. In the past, we have discussed the critical importance of choosing the best initial asking price for your home, so make sure you understand the strength and depth of your competition.

Choosing homes from the aforementioned categories that are most similar to yours is the key to forecasting its value when you list your home for sale. For homes with values near the median, there is ample liquidity in the market and you will know the answer to “what is my home worth” to a very tight margin of error (like 1 or 2 %).

Online Tools Help Answer – ‘What Is My Home Worth?’

There are numerous online valuation estimates, and I think the are a great place to start.

Unfortunately, they are mostly accurate for homes in large neighborhoods where most the properties are highly similar.

As soon as you throw variables at them (lakefront homes for sale versus ones on the other side of the street, homes with swimming pools versus not, etc.), the tools have a tendency to miss out on the features that add value. Thus, for homes in smaller neighborhoods or ones where the amenities differ greatly from one property to another, these online tools have a tendency to over-value the low end homes and under-value the higher end homes.

Nevertheless, many real estate agents will tell you they don’t mind jumping to one of these tools to get a general feel for value when they first begin to determine the oft asked client question … “what is my home worth?”

So if you are itching to move, and you are thinking “what is my home worth,” the simplest way to find out is to just drop me a note and let me know where the property is located.

I have been discussing the formation of a real estate hedge fund (or reit) with investors for the past few years, and we all finally agree that times are very favorable for growing positions in residential real estate holdings. This conclusion was not a “gut feel,” rather it was determined through the scrutiny of real estate supply and demand and the current phase of the housing market cycle.

Real Estate Market Cycles Are Local

Believe it or not, there are some housing markets around the world which sport real estate market cycles that are almost as accurate as a clock!

If you take the time to graph home sales and current real estate inventory over time, the cycles just jump off the page.

Now some markets are prone to boom and bust due to the nature of the local employment drivers (meaning demand is not as predictable), but there are some more-stable economies that make forecasting real estate market cycles a whole lot easier.

In the real estate graph above, we see a very consistent seasonal fluctuation in the supply of homes for sale in Tallahassee (red), and unit sales are finally starting to rise. This is a signal that we are in the real estate investing “sweet spot,” where values are still declining in most price ranges due to oversupply, but the number of sales is on the rise (indicating increased demand). Shortly, this will result with real estate appreciation returning to the market.

Video – Real Estate Market Cycles Explained

The following video shows how we use the study of real estate market cycles to determine when we should buy real estate investments, when we should hold real estate investments, and finally when we should sell real estate investments.

If you would to know more about using real estate market cycles to help with investing in the real estate market, just drop me a note and we can schedule a time to discuss your specific needs and wants.

The “attached” housing market is beginning to recover nicely, and since the market bottom is likely behind us for good, homebuyers should be scouring the market for some great deals.

Tallahassee Condos Sale Includes Townhomes

For the purpose of our Tallahassee condos sale, I have to include townhouses as well, even though there are differences between the ownership of these two types of properties.

For the sake of simplicity though, our Tallahassee condos sale is really focused on “attached” housing (eliminating “detached” housing).

Unit sales of condominiums and townhouses is finally on the rise, as we see in the real estate graph below. The red bars measuring existing condo sales on the left vertical axis, while the green bars show the amount of new Tallahassee condo sales.

The red and green lines show average prices on the right vertical axis in this Tallahassee condos sale, with green measuring “new” and red measuring “used.”

Condominium and townhouse prices have not yet begun to sky rocket back above the cost of replacement.

This means that a prudent shopper at our Tallahassee condos sale can find something for about 75 cents on the dollar for what it would cost to build. This is like buying a car below manufacturer’s cost, and in a sense it represents the buyer’s long-term safety margin against over-spending.

Taking Part In The Tallahassee Condos Sale

The reason I refer to this as a Tallahassee condos sale is because low interest rates, combined with severely depressed prices which are now beginning to show signs of strengthening, make this a sale to remember.

If you have ever heard an older person say something like “I remember when I could have bought that for ….,” then you should understand that we are now living in those times. People 20 years from now will look back at our Tallahassee condos sale and say “I could have bought a townhouse in downtown Tallahassee for less than $100,000, and now the cheapest around is over half a million!”

Mark this article, save it, and you will see that I am right. It’s as if Crazy Eddie from New York has set up shop and is running the Tallahassee condos sale. Will you get an investment for the future, or will you be the one remarking about what you could have done?

If you would like to take part in the great Tallahassee condos sale, just drop me a note and we can schedule a time to put you on the path to a very smart real estate investment.

Though there still exists a glut of high end homes for sale in the Tallahassee MLS, sales have actually grown fractionally over the same period from last year.

In fact, 2013 has seen more Tallahassee high end homes sold than any year since 2008.

Tallahassee High End Homes Market

If you read our recent blog post titled A Comprehensive Review Of Tallahassee Real Estate Supply And Demand then you know there is more than 35 months supply of homes priced over $750,000.

The real estate graph below shows Tallahassee high end homes sold every year from January through April, and 2013 reports in at #5 in a twelve year span.

The stacked bar graph records the total number of homes sold each year, broken down by price range.

Most of the “high end homes” that are selling are priced from $400,000 to $600,000 (blue bars), and most markets would not even call these luxury home prices. But in Tallahassee, you get a lot of home and location on that budget.

Top 5% Of The Tallahassee Real Estate Market

The reason that we track from $400,000 and higher for our report on Tallahassee high end homes is because this range typically reflects the top 5% of the housing market.

In the graph above, we see that homes priced above $400,000 only represented 1% of the market in 2002, when the market was not yet into the expansion cycle that lead to the housing bubble. But as the market went crazy, Tallahassee built and developed a lot of high end homes. At the peak, more than 8% of the market was buying these luxury homes, and we now have to step back and ask ourselves some important questions.

How The Luxury Homes Market Grew So Fast

Since 2002, the number of Tallahassee high end homes being built and sold skyrocketed. You have to ask yourself where this new demand came from, and can we bring it back? Certainly we expect “normal” demand to return to Tallahassee, but homes priced over $400,000 were far from normal, they were only 1% of the market.

No major change in the population occurred since 2002, and no major positive change occurred in the economy (employment base) during this time. So where were all these luxury home buyers coming from?

I believe they came from new loan products that proved to be a cancer on the housing market.

Low interest only adjustable mortgages allowed mid-level buyers to purchase “twice as much home” for the same monthly payment they were comfortable making. But these loan products had a suspense date, and many of these loans went into default when that date arrived.

Ultimately, the Tallahassee high end homes market was not built upon increased real demand, but rather on artificial demand created by the ability to borrow money easy and cheap.

The “easy” loans are gone, but the cheap ones remain. You can still buy high end homes with very low interest rates, but the loans are fully amortized (meaning borrowers begin paying down the balance right away). What will happen to our luxury home market in Tallahassee when “cheap” goes away?

Selling Tallahassee High End Homes

Supply and demand will drive the market for all homes in Tallahassee, luxury homes are not immune to this natural relationship.

Currently, supply grossly outweighs demand for Tallahassee high end homes, thus we are looking to the demand side to determine what can be (or will be) done to return the Tallahassee real estate market to balance. For people looking to sell a luxury home in Tallahassee, this is of the utmost importance.

Unfortunately, I see some serious issues for the long term outlook for the top 5% of our market.

The only reason high end home sales in Tallahassee are still robust is because historically low mortgage interest rates make it fairly easy to purchase (more than 70% of our luxury home buyers finance the purchase of the home).

When interest rates begin to rise in the coming years, moving back to the historical norm of 8.4%, the number of people who can afford these homes in Tallahassee is going to be reduced greatly. This means that if you are trying to sell a luxury home in Tallahassee, you better sell it now or prepare to slash your price greatly.

We warned all price ranges of falling values from 2007 through 2012 and advised “sell it fast, sell it now” in order to get top dollar. Some of the lower price ranges are now recovering, but Tallahassee high end homes are not.

If you own a luxury home in Tallahassee, you must heed this advice. The longer you wait, the likelier you are to see a declining pool of prospective homebuyers.

If you own a property in the Tallahassee high end homes market and are thinking about selling, just drop me a note and we can schedule a time for a comprehensive review of your personal situation and give you the best advice possible.