3 Things You Need to Know About Home Improvement Projects

I work with both buyers and sellers and it is amazing how differently they look at a renovation project that has been done to a home.  The buyer usually under-values the upgrades while the seller over-values them.  It happens almost every time.

In earlier posts I have talked determining whether renovating a home is a good or bad idea.  This post is assuming that you are in a position where it is a good idea and that you care about market value (i.e. if you are living in a home that they are going to cart you out of, then by all means live it up!).  Speaking of market value…

1.  Market Value – Consult your Realtor for a list of recent comps (3-6 months old, maybe a year if you live in a slower market).  Look at the pictures of the comps and take note of the upgrades.  If you can contact the homeowner (knock on the door) then see if you can check out the house in person and take some mental notes.  Look at the square footage price as a guide.  Ask yourself this question, “What would my house be worth after my project?”  Be honest.

2.  Renovation Cost – My background in construction also has helped me encourage clients to consult a contractor when considering a renovation.  Usually homeowners tend to under value the cost of a renovation project – it’s just difficult to know what all is involved.  No mater how thorough you are, costly details are inevitably missed.  Make a complete budget.  You’ll be happy you did.

3.  Majority Appeal – Is what you are doing going to appeal to the majority?  If you are interested in eventually selling your home then don’t make your renovation be a vehicle for personal expression.  You may love that pink metallic flake paint in the hall bath, but the likelihood of it appealing to a slew of buyers is low.  Same goes for the Panamanian tile mosaic in the kitchen back splash.  Stay close to current styles and trends and it will be to your benefit in the end.

Just trying to help you avoid turning your palatial abode into a money pit.  Are you working on any home improvement projects right now?

How to Survive & Succeed in Buying a Short Sale – Part 3

Deal or No Deal?

Or better yet…Deal or Huge Waste of Time, Energy and Money?

This is the part of succeeding in buying a short sale that actually pertains to the purchase.  Now that you are well versed in all things short sale, it is time to train yourself how to recognize which short sales to pursue and which to steer clear of.  I think there are three main questions you need to ask yourself and your realtor (I am already assuming that you are linking arms with a qualified real estate agent that can assist you through the short sale process) as you view short sales as they come on the market.

1)  Has the short sale been approved by the lender(s)?  Huge opening question.  This is the tip-of-the-ice-berg type of question that inevitably leads to other follow-up questions like:  When do you expect the short sale to be approved?  What stage are you in the approval process?  What documents have you submitted to the lender(s)?  Have you been assigned an asset manager?  What is the next task that you have been assigned by the lender to complete?  How can I expedite the approval process? When is the BPO scheduled?  Etc., etc., etc.  This line of questioning will not only reveal a lot about the status of the short sale, but it will also reveal a lot about the listing agent.  By judging the response of the agent to theses questions you will be able to tell if this short sale is worth pursuing as a buyer.

2)  Is the listing agent experienced in short sales?   Ask your Realtor about the listing agent.  If the agent has experience listing, marketing and closing short sales then you can take comfort in the fact that the process will more than likely go smoothly…at least from an administrative perspective.  Of course you can never guarantee a smooth transaction, but having an experienced listing agent means at least they know how the short sale process works.  Also it means there is less of a chance that you will be strung along by an ignorant listing agent that is commission hungry and forgets how to uphold his/her fiduciary responsibilities to all parties of the transaction.  Trust me…experience, even a little, matters enormously.

3)  Is the list price reasonably close to fair market value?  The answer to this question will take some digging.  Your Realtor will pull some recent comps in the area and look at the tax records to determine a fair market value for similar homes.  Once this price range has been established then you can compare the short sale list price and days on market to see how it stacks up.  Ask your Realtor for his thoughts about the comps compared to the short sale.  Something you want to steer clear of is a short sale that is priced too low.

Sometimes agents who do not understand the short sale process will price a property extremely low in an effort to attract an offer.  Once the full price offer is inevitably received everyone rejoices!  The only problem is the lender will come back and request a higher purchase price.  Why would they do that?  Well, the listing agent listed the property too low compared to the comps and is essentially forcing the bank to counter with a higher price.  You do not want to be in the position where you offered full price only to have to be told by the lender that they need a little (or a lot) more.

I hope this has been helpful.  You should now feel confident about pursuing a short sale as a buyer.  A little understanding goes a long way and can turn the scary short sale beast into a productive cash cow.  Good luck and remember that you can always reach out to me with questions in any number of ways – including this contact form…

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How To Survive & Succeed in Buying a Short Sale – Part 2

Now that you have a good idea of what a short sale is and what it takes for a borrower to apply for one, it is a good time to address two of the major myths surrounding short sales that make them so scary.

Myth 1: Short Sales Take Too Long

Everyone has heard the story of their friend’s uncle’s brother that tried to buy a [insert large bank name here]’s short sale and after six months of waiting for the bank to respond, the deal ended up falling apart. Yikes! Who would want to go through that? Answer: no one. But the good news is you don’t have to.

The average given time for a short sale to close from the date the short sale is opened is 90 days. If the short sale has been approved by the bank and all the bank needs is a purchase agreement then the timeline is closer to 30 days. So worse case scenario you are looking at three months until you close on your big deal… Best case, you have to wait a standard amount of time in a real estate transaction, 30 days. Not bad!

Myth 2: Asset Managers Can’t Easily Be Reached

This myth, like the first one, has some basis, but not anymore. Banks have worked to streamline the short sale process to make the process seamless and no-nonsense for all parties involved. Gone are the days of 20 minute hold times and bouncing around from department to department only to be disconnected.

All big banks have a short sale department with a direct phone number. An average hold time is no longer than one minute and all information pertaining to the short sale is recorded on a universal database that any asset manager can access to obtain the most current status of the file. Expectations are clearly defined by the banks and real estate agents are given specific tasks to accomplish to move the file along.

The moral of the story is don’t be discouraged! Find a trustworthy and experienced short sale agent to walk you through the process.

In Part 3 I’ll tell you how to distinguish a good deal from a waste of time. This you don’t want to miss.

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How To Survive & Succeed in Buying a Short Sale – Part 1

Defining a Short Sale

Do short sales scare you? If so, you are not alone. But, take heart…if you have patience and understanding you can tame the short sale beast and make her work in your benefit, by getting you great deals on real estate! But before you can survive or succeed in the buying of a short sale you should know what a short sale is. Having a clear understanding of what you are dealing with is crucial to a successful purchase of a short sale.

A short sale can be defined as the sale of real estate where the proceeds from the sale are less than (or fall short of) the total debts and liens that are on the property. For example; if the total debt from the mortgages is $150K and the property sells for $130k then this would be classified as a short sale.

All short sales have to be approved by the third party creditor or creditors that have liens on the property. Short sales are often used as an alternative to foreclosure because they cost less to perform for both the creditor and the homeowner (borrower). Translation: short sales are a great way to get good deals on prime real estate.

Understanding The Application Process

The short sale process starts with the borrower applying for a short sale with the primary lender. Typically the lender will be a large bank like Wells Fargo, Bank of America or Chase. Once the borrower has requested a short sale, the lender will usually send a short sale packet to the borrower for the borrower to complete and return. This packet will require the submission of many financial documents:

• Previous 2 years tax returns
• Previous 2 pay stubs
• Previous 2 months of bank statements for all accounts (checking, savings, 401k, etc.)
• Hardship Letter

The realtor representing the borrower in the short sale process will typically collect these documents and work as the borrower’s representative to submit the paperwork to the bank and be a point of contact with any bank representative throughout the process. The bank will require a signed document that grants authority from the borrower to the realtor to act in their interest throughout the short sale.

By the time the property is marketed for sale the realtor and the borrower should be working with the bank to get the short sale approved. The bank will not be able to get full approval until a complete contract to purchase between the borrower and a buyer is submitted to the bank along with a settlement statement that reflects the agreement between the buyer and the borrower. Because the borrower stands to gain nothing from the sale of the property, the buyer will be waiting for the bank to approve the contract.

In Part 2 we’ll discuss the timelines of a short sale and expose some myths…stay tuned.

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Top 5 Reasons to Live in Nashville, TN – Reason #1

To this point in this series we have pointed out four good reasons to move to Nashville, TN: Education, Location, Culture and Real Estate Value. Today we reveal the #1 reason to live in this great city…drumroll please…

1. Economy
During this day and age I think this is far and away the number one reason to live in Nashville. Nashville is know as Music City USA, but the economy isn’t just based on the music industry (If it were, we would all be in major trouble!). In fact several care industries that have a strong presence in Nashville:

• Healthcare – Several major hospitals and surgery centers as well as many universities with specialized healthcare programs
• Education – Home to 27 private and public colleges and universities (and 8 professional colleges) including Belmont, Lipscomb, Vanderbilt, Fisk and neighboring MTSU and Austin Peay
• Music/Arts – Country Music Hall of Fame & Museum, Frist Center, Cons
• Automotive – Nissan National Headquarters, New GM Plant
• Sports – Professional sports teams including the Nashville Predators and Tennessee Titans

Having a city that isn’t heavily invested in one industry directly relates to the ability of that city to withstand downturns in the economy. Thankfully Nashville has favorable corporate tax structures that also appeals to major companies that are looking for creative ways to reduce expenses. This also means more opportunity for gainful employment and having a higher quality of life for you and your family!

Considering a move?

Top 5 Reasons to Live in Nashville, TN – Reason #2

So far we have laid out three great reasons to live in Nashville – Education, Location and Culture. One reason that we haven’t mentioned is Real Estate Value. And since this blog is about being a happy homeowner in the Nashville area, I thought I would share with you a few points about the Nashville real estate market that might make you an even happier homeowner.

2. Real Estate Value
When the recession was pummeling most of the country, Nashville was one of the beacons of light that was still glimmering in the distance – signifying a light at the end of the tunnel and hope for a national real estate market that would rebound sooner than later. The greater Nashville area was not unaffected by the economic downturn, but it is fair to say that Nashville and it’s surrounding communities were closer to stable than depressed. Here are some recent market stats taken from Trulia that echo the cry of a continuing trend of recovery in our area.

NASHVILLE

• The average price per square foot for Nashville was $149, an increase of 31.9% compared to the same period last year.
• The median sales price for homes in Nashville TN for Oct 11 to Dec 11 was $155,000 based on 996 home sales. Compared to the same period one year ago, the median home sales price increased 3.3%, or $5,000.
• There are currently 3,698 resale and new homes listed for sale in Nashville, including 485 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

FRANKLIN

• The median sales price for homes in Franklin TN for Oct 11 to Dec 11 was $380,000 based on 347 home sales. Compared to the same period one year ago, the median home sales price increased 23.7%, or $72,750.
• The number of home sales increased 0.9%.
• There are currently 1,317 resale and new homes listed for sale in Franklin, including 99 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

Although value has decreased overall since the bubble burst, Nashville is continuing its steady climb to return to the value of the early 2000’s. The brightest spot of the Nashville area real estate market is the simple truth that HOMES SELL HERE! Activity in the market is continuous because of how desirable it is to live in this city. The number of homes currently on the market keeps trending down as home values trend up. Find a good deal on a home in a desirable community in Nashville or the surrounding area and you are setting yourself up for real estate success.Be sure to email for help navigating the market and to find the deal that is right for you!

Top 5 Reasons to Live in Nashville, TN – Reason #3

In this series we have already established that the first two reasons to live in Nashville, TN are 5) Education and 4) Location. Let’s take a quick look at reason #3, the real reason why most people make their way to Music City…

3. Culture
It goes without saying that the music industry is a huge part of Nashville’s culture. Almost every night you can visit some location in Nashville and experience the most talented siger-songwriters in the country perform.Other nights you can venture to the Schermerhorn, Grand Old Opry, the Ryman or the Bridgestone Arena for major concert events or even get a ticket to the CMA’s. But beyond music Nashville’s culture is rounded out by other forms of artistic expression that can be found at the Frist Center, which hosts some of the worlds most popular traveling art displays, and TPAC where you can find most of the major broadway productions being performed. There are usually plenty of sporting events to attend with the presence of the Nashville Predators, Tennessee Titans, Nashville Sounds and Vanderbilt, Lipscomb, Belmont and Tennessee State Universities all having major division one athletic programs. Other events have recently found their way into the city, like Nashville Fashion Week which made its debut in 2010. Not only are there plenty of things to do, there are great places to eat. Nashville is an over performing culinary city and slowly becoming a place where your menu doesn’t have to include a barbeque sandwich (although there is nothing wrong with having that on the menu). Some of Nashville’s most famous and trendy spots include Puckett’s Gro. & Restaurant, the Catbird Seat, Virago, Holland House, the Pharmacy and Sperry’s just to name a few. If that wasn’t enough, the food truck craze has taken Nashville by storm. There is plenty to do if you have a free night.

Top 5 Reasons to Live in Nashville, TN – Reason #4

The age-old adage that everyone has heard when it comes to real estate is “Location, Location, Location.” It turns out that this is also a pretty important factor for determining a city’s desirability. In today’s world where people have more choice than ever, a city’s physical location can directly impact how desirable it is for someone to live or move there. Here’s why location is reason #4 to live in Nashville:

4. Location
Nashville is located in the southeast US and has three major interstates (65, 40, 24) and one major river (Cumberland) that run right through the heart of downtown, making the city a necessary intersecting point along many of the east coast trading lanes. Companies and their employees that do business in the midwest and on the east coast find Nashville’s location to be perfect place for living and for “setting up shop.”

As far as weather is concerned, Nashville’s location gives the city four distinct seasons without any major extremes in any season. Spring and Fall in Nashville are beautiful times of the year and the Nashville Winter and Summer are relatively mild. Also, Nashville is with 5 hours or less of Memphis, Louisville, Lexington, Knoxville, Chattanooga, Atlanta and St. Louis. If you can’t find it in Nashville then take a weekend to explore a neighboring metropolis!

Top 5 Reasons to Live in Nashville, TN – Reason #5

With the new year comes great plans, great changes and lots of optimism. Our American economy has been through the ringer over the last several years and people are desperately looking for something out there that signals we are on the road to recovery.  As a Nashville, TN resident and someone who loves the city I live, work and play in I can tell you that Nashville has been well insulated from what people are saying is going on out there. Here are the top reasons why I think Nashville has avoided the brunt of the recession and consequently why Nashville is one of the greatest places to live in the United States. This is a five part series and today we start with Reason #5.

5. Education

One of Nashville’s nicknames, “Athens of the South” was given in the 1850’s as Nashville was the first city to establish a public school system and other institutions of higher education. Not only is Nashville home to so many private and public colleges and universities, but they happen to be some of the best schools in the country.  The group is headed by the much acclaimed Vanderbilt University, the most renowned academic institution in the entire SEC and followed by the up and coming Belmont and Lipscomb Universities, two universities that have added major colleges over the last decade (including Belmont’s College of Law and Lipscomb’s College of Pharmacy and Health Sciences).  Students are moving into the city to be educated and then are finding places of employment in the city once they graduate. Also, Nashville and the surrounding counties have a surplus of private prep schools for parents to choose from that have incredible reputations in the city and the state (see Montgomery Bell Academy, Harpeth Hall, Ensworth). And if that wasn’t enough Williamson County has some of the top rated public schools in the State of Tennessee.

Nashville Named Top 10 City For Young People

CNBC has Nashville ranked as the 9th Best City to Live for Young People.  See below for an excerpt from this article:

What makes a city attractive to young people?  Well, first and foremost, it’s that there will be other young people there.  “You need other young people around to bounce ideas off of — to get excited with. That’s No. 1 most important,” said Bert Sperling of Sperling’s Best Places .  Among the 50 biggest metropolitan areas, Nashville ranks No. 2 for indie culture.

“You don’t think of Nashville as a cool, hip place, but its’ become one. It’s segueing from country music to more mainstream music,” Sperling said. “Because of all these great music studios available, and the fact that there is a whole lot of culture dealing with all aspects of music, allows young musicians to do things on the cheap.”

See the article and the full list here.