Perceptions More Important Than Facts?

I've been reading articles from leading minds in the real estate market who are attempting to forecast the beginning of a recovery. Here's an interesting one from the Wall Street Journal entitled, "The Housing Crisis Is Over". In it, the author, Cyril Moulle-Berteaux, says that we've hit bottom and "...that the trend is no longer getting worse, which is the critical factor."

Moulle-Berteax goes into the historical data and has a lot of good reasons for his statements, but will he be right?

I tend to be an optimistic type, but I also strive to know the truth and look at the facts of the situation. However, in this case, perceptions may be more important than the facts.

I took a minute to read over a few of the comments to the accompanying blog and the overall tone was that we have NOT hit bottom yet. Further, an NBC/WSJ poll on April 30th reported that 81% believed that the US was currently in a recession.

By the formal definition, we are not in a recession, however, with 81% of the public believing that we ARE in a recession, then for all intents and purposes, we are.

Gary Keller makes this exact case in a recent white paper released to Keller Williams associates:

Wisdom of the crowd, perception is reality, what you see is what you get. If it’s true for you, it’s true – any way you want to posture it. We’re saying that if it walks like one and talks like one, it is one, and we might need to face that reality.

What does all of this mean? Here are my two thoughts for the day:
1. It has become even more important to be an expert on the LOCAL market. Keller also says, "What’s happening within your local markets is all that’s relevant." Even within the broader Nashville market, different neighborhoods have different dynamics going on.

2. Buyers are super-cautions right now. I can't blame them for that. Buyers are looking at more homes and being picky. They want to know that they are making a sound investment and making good choices.

I guess we'll wait and see when we hit the bottom. Of course, we probably won't know it when it happens, but since we all need a place to live, it will happen.

-Peter
www.NashvilleCityHomes.com

Advice From the Mystery Man

I was having breakfast with a friend this morning at my favorite greasy breakfast spot, the Hermitage Cafe. We were talking about business and were probably too boisterous when another gentleman joined in with our conversations. I'll call him the 'Mystery Man' because he didn't introduce himself and he was dressed to hop on his motorcycle and speed away.

The Mystery Man wanted to comment on how important it was to form relationships with clients. He said that people wanted to do business with people who would take care of them. He spoke against emailing and said that people don't just have conversations anymore.

I took note of this stranger because even from behind his dark sunglasses I could feel his passion for business. He later said that he was retired from insurance sales and just loved doing business. I have no idea how successful he was, but I could tell he was living large.

This brief encounter was a timely event for me as I'm working on deepening my relationships. It affirms to me that people like to work with people who sincerely care for them. The Mystery Man reminded me how much fun it can be to do business and be a part of people's lives.

Let's live large,

Peter
www.NashvilleCityHomes.com

Myth-busting FHA Loans- A Success Story

With the tightening of loan qualifications with most lenders, the 100% financing of yesteryear is all but gone. However, there is a way with FHA. In fact, I had some clients close last week who bought a home with nothing to pay except a little earnest money.

FHA loans are quite mystifying until you worked with them a couple times. I’m not mortgage guy, but let me explain the basics from my experience, both on the buying and selling side of them. First, a couple myths to bust:

MYTH 1- FHA will require lots of repairs
Years ago this may be a concern, but the revisions made in January 2006 loosened many of the guidelines, requiring fewer items to be repaired. The inspection for these repairs is done by an FHA approved appraiser as part of the appraisal.

MYTH 2- Sellers will have extra hidden costs to pay
As with any contract, everything is negotiable. It is very common that the sellers will assist with the buyer’s closing costs or possibly contribute to a charity like Ameridream to give the buyers some down payment assistance, but this is all negotiated upfront. Before we have a binding contract, the seller will know their net proceeds from the sale without fear of surprise costs due to the FHA financing.

MYTH 3- Financing for FHA buyers is more likely to fall through
I doubt it’s any more likely than with any other financing. I’m not sure about the exact stats, but the strength of a buyer’s pre-approval is always suspect until the lender has actually collected the required paperwork to make sure that they qualify and that no surprises lurk beneath the surface. It’s always good to work closely with the lenders to make sure that the buyers really are qualified, but sellers who are worried about this should probably just be thankful to have a buyer, right? :)

To achieve a 100% loan through FHA, the seller or possibly a family member contributes to a charity such as Ameridream who will, in turn, contribute toward the buyer’s downpayment. Sellers are often uncomfortable with this at first, but I always try to explain it upfront so that they understand how it works. The funds are built into the sales price and negotiated upfront. It’s completely legal, but still a little complicated. I wrote more about these programs in this article from Jan. 2007.

Back to real life… My clients last week bought a historic home built in 1932. It hadn’t been renovated, but has been in the same family since the ‘60’s. It wasn’t in major disrepair, but still had some old knob & tube wiring, and all the plaster walls intact. Very low funk factor. The only FHA repair we had to do was to replace a portion of the roof that had an obvious leak that had come through the drywall in a back addition on the house. This was no problem, since the buyers were going to fix that anyway. (It helped that their Realtor [me] occasionally does some roofing and drywall, eh?)

The lending bank was a slow mover that I’ll avoid in the future, but otherwise, the process went smoothly. In the end, the buyers were thrilled and excited to finally own a home of their own. They’ve already started ripping up carpet to reveal some well-preserved hardwood floors.

After a few successful closings involving FHA financing, I’m a fan. They do require some extra work and sometimes a lot of patience, but a qualified buyer can still own a home without a down payment.

Just make sure you work with a great lender and Realtor who can get it done for you. Thinking about it? Give me a call.

-Peter
www.NashvilleCityHomes.com

My Best Investment

Last weekend I took off a couple days to go on a short vacation to Chattanooga. Every time I attempt such a crazy thing, I have loads of work to do before I leave and even more to catch up on when I get back. But it's worth it.

Relationships are worth the investment.

Something I'm learning is that whatever the market does and however business is going, the most important thing is to tend to my relationships. Some of this I'm learning the hard way because I'm not very good at it, but I AM learning.

It's part of having good balance, or being correctly 'counter-balanced' as my business coach would say. In many ways, Realtors are connectors within communities. I bring people together, from home buyers and sellers to roofers and whatever.

So, back to my vacation. Not only is it nice to spend time with my family away from home for a few days, but it's nice to catch that excitement for coming back home and getting back to work refreshed.

My advice... take a vacation!

-Peter
www.NashvilleCityHomes.com

Convention Center Debate Continues

The debate for and against the proposed Music City Center is heating up as plans begin to materialize for a new convention facility to be built downtown in SoBro (South of Broadway) and replace our current one.

The Nashville City Paper reports that it's one of the largest building programs in the U.S. right now with a projected cost of $635 million.

I'm actually excited about the prospect, mainly because it seems like it would spur more development in SoBro and maybe bring more life to this developing area, as well as the entire downtown.

I grew up in Indiana and always enjoyed going to the convention center in Indianapolis. They redeveloped it with the huge Circle Center Mall and did a great job of connecting the mall and convention center with parking and other attractions. You could easily walk to everything without even going outside if you wanted to.

Admittedly, I'm quite ignorant when it comes to how profitable these centers are and if it's worth the debt that will result. The comments in the blogosphere are quite fierce on this subject. It's a topic worth debating, but I'll leave the debate to others.

It doesn't sound like they're even at the design phase yet, but a couple local citizen groups have proposed some nice plans that are against the 'big box' type of convention center, but instead a incorporate lots of retail/restaurant/office space in such a way that will be an attraction for those of us locals not attending a convention.

The folks at http://www.mccproject.com/ propose a more pedestrian friendly design that would connect nicely with the other downtown tourist spots like the Country Music Hall of Fame and the Schermerhorn Symphony Center. Visit their website and check out all the conceptual pics.

The Music City Center Coalition is another group that is advocating the new development. On their website they make their case for the new Center and how to get it done, along with lots of news releases. Lots of interesting information.

If you ask me, it just seems like the logical next step for a growing city like Nashville, especially considering the amount of tourism we have here. It will be interesting to see what happens as downtown continues through these growing pains and becomes a bigger metropolitan area.

I'll try to stay on top of the news for you!

-Peter

www.NashvilleCityHomes.com

High End in the East End

I've noticed some remarkable new listings lately in East Nashville for over $800,000.

Yep, there are currently three East Nashville homes listed in the $800k's with one historic mansion nearing $1.4 million.

To illustrate the magnitude of these prices, I have to go even further and mention that there are currently 12 homes listed with a price point above half a million dollars. Here's the list:

1610 Russell $534,900
818 Woodland $542,500

1622 Forrest $549,900

1306 Woodland $554,800

1202 Woodland $599,900
813 Russell $650,000

719 Boscobel $669,615

1407 Stratton $699,900

720 Boscobel $824,615

900 Boscobel $849,500

809 Russell $898,500

504 Russell $1,375,000

The zinger is that Realtracs only records 5 homes ever selling for more than $500k with the highest sale to date at $550k.

Before we all shake are heads at these unprecedented prices, let me reiterate that these homes are quite remarkable, something I have a passion for.

A quality that I've seen in myself is that I really appreciate a great 'environment'. I love taking a space and making it better. Lately, this has been displayed through landscaping or renovating a home. I appreciate quality work and some of these showplaces in East Nashville have it all.

In fact, I toured one such home at 900 Boscobel before it was on the market. Touring the home was almost a 'spiritual experience' for me. I'm not trying to be sacrilegious, actually quite the opposite. The home was built from the ground up. Every material and detail of the home was thought out and assembled like a quality piece of art (note the artistic chandelier pic). I could see glimpses of the Artist throughout and it was incredible.

Anyway, as fantastic as it is, is it worth $849k??? Time will tell, I suppose. Most people that I've talked to about it seem to have huge doubts, but if there is a home that has 'the goods' that home was it.

East Nashville is setting new precedents all the time, from homes selling at $200 per square foot, to having a hot dog stand in an old Volkswagen van. So, hey, why not have some $800k homes in the neighborhood too?

Wanna buy an estate in East Nashville? Call me today. I'd love to help you set some new precedents!

-Peter

www.NashvilleCityHomes.com