Have you ever stopped to consider the irony of it all? When the housing market was hot with escalading hosing prices, buyers couldn't wait to jump on board. With multiple offers coming in, buyers were willing to pay above asking price to get the home of their choice. When it's a buyer's market with deals galore out there, buyers go into hibernation. Go figure! In a seller's market, buyers fall all over themselves to make a deal. In a buyer's market, sellers just don't seem to be able to give their homes away.
Buyers, take a good look at what the market has done and is doing over the past five years in the Greater Florence Region of South Carolina. True, this year's housing market is the worst of the five but it isn't that far off from 2004 sales. What makes it look so much worse is the number of homes on the market. They have been going up steadily over the past five years and until 2007, sales were keeping up pretty well with the listings. In 2008, however, listings spiked by nearly 20% while sales decreased by 23% year over year. That has created a 9.8 month inventory in the local housing market, which should be a buyer's delight. So, where are the buyers?
To really understand what's happening in the Florence housing market, take a look at my last blog titled Lets Make Some Money! I have a chart there that illustrates the monthly ratio between listings and sales for 2008. Those figures point toward a possible bottoming out of the slumping housing market. Spring will let us know for sure. But here's the problem. The best deals for buyers are before the market turns, not after. If you're a serious home buyer but taking a "wait and see" attitude, you're going to be looking back at the bottom instead of buying into it. That'll cost you a lot of money!
"It's a buyer's market! It's a buyer's market! It's a buyer's market!" It doesn't seem to matter how loud or often we shout it out, there still aren't many buyers. But if you have been thinking about buying a new home in Florence South Carolina or the Greater Pee Dee Region of South Carolina, this is one of the best buying opportunities in the past 50 years. As you can tell from the 2008 market summary chart I prepared, there are some very interesting patterns beginning to develop that suggest it's time for buyers to get off the sidelines and take advantage of market conditions.
The first thing I want you to notice is that the widest gap between homes listed and homes sold in the Greater Florence market was last April. At that time there was well over a full year's inventory homes, which clearly shifted negotiation leverage to the buyer. For many reasons (the decrease in new construction inventory being one), we may not see that wide of an inventory gap during this downturn again.
Secondly, notice how the gap has narrowed and begun to stabilize, signaling a potential bottom in the housing market. Currently there is a 9.8 month inventory to choose from. If that figure holds through Spring (when most new sellers enter the market place), then I will be more optimistic about the beginning of a housing recovery in 2009. If that happens while you are sitting on the sidelines, you will watch the best buying opportunities pass you by.
There is an old saying in real estate that says, "You make money when you buy a house not when you sell it." The savviest of buyers are making money now! By the way, if you want to take advantage of current market dynamics to purchase a newly construction home, you better not wait too much longer. This inventory is steadily shrinking as fewer and fewer builders pull new housing permits. Your best opportunity to make money here will be over the next six months.
For more information about the Florence housing market, go to my blog titled Florence Market Looks Good for Buyers. In this blog you'll find a chart of month to month ratios between listings and sales in our area.
Don't fall for the old FSBO myth that you aren't legally obligated to provide disclosure of material facts or complete and provide buyers many of the same forms that are used by real estate agents. In fact, most of these laws apply to the homeowner, not the agent. As part of an agent's fiduciary responsibilities, he will make these forms available to his homeowner clients to complete, collect them for his office files, and then make them available to buyers and/or their agents for review. Most of the forms listed below are required by law to be completed and provided by homeowners to all prospective buyers. I've added a few more that you should find helpful.
1. Homeowners Property Disclosure. The law requires that the homeowner fill this out and make it available to a prospective buyer before a contract for sale of real estate is signed. You are required to reveal anything that you know is wrong with the home. My advice to all homeowners is that not use the response "No Representation" because it not only suggests to a buyer that you might be hiding something, it could actually get you in more trouble if a problem that you should have know about arises after the sale.
2. Residential Sales Agreement. I have included a sample agreement in this Tool Kit. That sample contract sets forth the terms and conditions, along with any contingencies, that apply to the sale. Those going FSBO should always consult an attorney before signing any real estate sales contract.
3. Sales Agreement Addendum. It's possible that you might need to write out in greater detail some special contingencies. This addendum can be used and attached to the sales agreement. Keep in mind, however, that an addendum will take precedence over anything that is written in the original contract.
4. Lead-Based Paint Disclosure Pamphlet. For any home built before 1978, the seller of residential property must provide potential buyers with a copy of the pamphlet. Buyers must sign that they have received the pamphlet.
5. Limited Agency Agreement. We've developed and included in our Tool Kit an agreement that creates a limited and temporary agency relationship between you and an agent. My opinion is that a FSBO should never talk with an agent about potentially listing their home or protecting them if they bring you a buyer without having first protected himself through some kind of temporary agency agreement.
6. Agent Protection Agreement. We've also included a sample agreement that can be used to work with Buyer Agents, agreeing to give them a percentage of the sales price for producing a buyer and sale that goes to closing.
7. Closing Attorney Checklist. Without an agent involved in the sale of your home, it'll be up to you to coordinate the closing and see that the attorney has all the information needed to close. You should find this simple form helpful.
8. Buyers Access to Premises Agreement. This agreement sets forth in writing the specific conditions for access to the property for things like inspections, measurements, and a final walk through.
In another article I made the statement that most people who go FSBO become frustrated [and eventually list with an agent] because they aren't prepared for the challenges and hard work that's involved (Five Steps to FSBO Success). That frustration is feed and intensified by many of the most common FSBO mistakes listed below, most of which are the result of that lack of preparation and hard work.
1. Over pricing. You have to know the fair market value of your home, and that's rarely what you think it's worth! Remember this rule: your home is only worth what a willing buyer will pay for it and no more. What have similar homes in your community sold for? How do the size and amenities of those homes compare to yours? What's your competition doing? How much competition is out there? What are the market trends? It'll take some hard work on your part to find out this information on your own, but you have to know it if you are going to price your home correctly. If you're not comfortable doing this, then pay for a professional appraisal. It'll be well worth the money.
2.Letting emotions run high. You must make the mental transition from thinking "our home" to talking "their house." Your emotional attachment will not only lead you to over price your home, it will make negotiations difficult. Most people will discount their offer because they know you're saving money as a FSBO. Don't become insulted by an offer lower than anticipated. Expect it and use it as a springboard to negotiation.
3.Not being prepared. Due diligence is required if you're going to be successful as a FSBO. Have a good marketing plan. Know how to write a contract. Learn the process from beginning to end so you can anticipate and resolve problems before they occur. Understand the whys and wherefores of home staging and holding an effective open house. Know what's expected of you, the seller. It's a whole lot more than you think.
4. Refusing to make repairs. My advice to all sellers, FSBO or otherwise, is to pay for a professional home inspection and then make whatever repairs are needed to get the home in top condition -- before putting it on the market. If you take an "as is" attitude in marketing and negotiation, you're simply not going to get what your home is really worth. Most buyers will, however, pay top dollar for a house that is "move in ready."
5. Refusing to work with real estate agents. If you don't "protect" agents who bring you a buyer, they're not going to bring you a buyer! That's your choice, but you need to know that over 85% of homes are sold by them. If you really want to sell your home quickly, offer buyers agents a 3% commission. Chances are that a non-represented buyer is going to knock that much or more off what he would be willing to pay anyway.
6. Not knowing the law. There is aFSBO myth that says those selling their own homes don't have to follow the same legal obligations as real estate agents. Be careful! Contract laws, home owner disclosure laws, lead based paint laws and laws that protect a buyer's right for various inspections all apply, no matter who sells the home. For those not using a licensed real estate agent, I always recommended that they consult a real estate attorney before putting their home on the market.
7.Inflexibility of viewing times. Other people work, too. They have a family. Many times they have to rearrange their eating times in order to shop for a house. Yes, there are frequent interruptions, often at some very inconvenient times. But that's part of the job you signed up for when choosing to go FSBO. If you're not flexible in arranging viewings, you'll have a difficult time selling your home.
This is the second of two articles on what it takes to write a good real estate contract. Here, I want to help FSBOs understand the twelve most basic elements of a legal and enforceable contract. They are:
1. Principle Parties: The persons entering into the agreement must be clearly written in the contract. If more than one person's name is one the deed, then those names must also appear on the contract to sell.
2. Property Description: A full legal description of the property may not be necessary but the address (including City, State, County and Zip) and tax map number should be written in.
3. Purchase Price: Although this is a personal decision, remember that your home is only worth what a buyer is willing to pay. Don't be offended or get upset by a lower offer than expected. Everyone wants a deal, especially from a FSBO. This is where good negotiation skills need to suppress emotions.
4. Conveyance: This will normally be the day of closing. It is not recommended that buyers be permitted to take possession of the home before then or that the sellers remain in the home after that date. Exceptions must be worked out in detail and in writing, including any financial considerations due one party by the other.
5. Earnest Money: The amount of earnest money needed is always negotiable. I just read today where someone recommended that this amount be between 2% and 5%. That's way too high in our area, where it generally runs from $500 to $5,000, depending on the value of the home and agreement between the parties. Demanding a high amount of earnest could cause you to lose a buyer. Don't make the mistake of assuming that you always keep the earnest if the contract falls through. This will depend on the reason and what is written into the contract. Also, the law requires a separate escrow account for these funds. They cannot be put in a personal account.
6. Financing: There are several items to be considered here. What kind of financing is the buyer getting? How much? By what date is final approval required? Will the seller pay any of the buyers' closing and prepaids? If so, how much? Write it in the contract!
7. Personal Property: Don't confuse personal property with real property. If a plasma TV is attached to the wall, it's become real property and must stay with the home unless specifically excluded in the sales contract. Any personal property that is to convey with the sale should be written into the contract, or preferably, handled separately with a bill of sale.
8. Closing Date: The closing date needs to take into consideration the time required for loan processing and title work. It is usually accompanied by a limited 10 to 15 day extension agreement in case there are unexpected delays.
9. Taxes: Most taxes are prorated at closing. This means that the seller will pay the buyer at closing for every day of the current year that he has owned the house. The buyer will then pay the total tax bill at the end of the year.
10. Inspections: Provision must be made in the contract for any inspections the buyer wants done on the home, as well as the deadline for any repair requests to be made. The contract should also address the specific items you agree to repair and what happens if the buyer decides there is too much work to be done on the home.
11. Contingencies: It's not unusual for there to be many different contingencies in a real estate sales contract; inspections, title and financing are all contingencies. Be careful, however, about agreeing to a contingency that links the buyers' purchase of your home upon the sale of his. If you agree to such a contingency, be sure to write in a 48 hour first right of refusal or you have in effect taken your home off the market.
12. Title Issues: Before a sale can be completed, the title needs to be clear! In South Carolina, the closing attorney (or title company, abstract company, etc) will do that for you, but what happens if a title problem occurs needs to be in the sales contact.
I have prepared a sample real estate contract that I believe will be helpful to someone who has made the choice to go FSBO. I will post that on my website after having a chance to review it with my team. If you have not seen Part 1 of this 2-part series on understanding contracts, just click HERE.
I remember when I began my real estate career how little confidence I had in my own ability to write a good sales contract. I'm still amazed at how many "seasoned" agents demonstrate so much carelessness in what is such a basic and crucial task. If that's the state of affairs within an industry that uses sales contracts on a regular basis, is it little wonder that the general public doesn't fully understand them? That's precisely the danger for FSBOs. If they are going to sell their house themselves, it's absolutely essential they know how to write them.
A good place to begin learning about contracts is with the appropriate State Statutes themselves. In South Carolina those statues have laid down several requirements for real estate sales contracts to be considered legal and enforceable. They are:
1. Written Agreement: The Statute of Fraud requires that all real estate sales contracts be in writing to be enforceable. Handshakes, verbal agreements and general understandings are not legally enforceable so make sure all the details of the agreement are in writing!
2. Offer and Acceptance: All contracts for sale must have an offer and acceptance between both parties. Counter offers (or, any changes to the original offer, no matter how small or seemingly insignificant) automatically void the original offer. Therefore, all counter-offers must be accepted (signed or initialed) by the other party and then all parties must be duly notified of that acceptance before the contract becomes enforceable. Silence cannot be considered as acceptance. Prior to notification of acceptance of an offer or counter-offer, the other party has the right of withdrawal without penalty.
3. Consideration: There must be an agreed upon legal consideration of value exchanged for the performance or promise of performance by the other party.
4. Competent Parties: The parties entering into the agreement must be competent (not insane or intoxicated) and of legal age (18).
5. Legal Purpose: Contracts must be for legal purposes and cannot involve the performance of illegal acts.
6. Signed Originals: The original contract must be duly signed and dated by all parties to the agreement. Don't forget that any and all changes or modifications must also be initialed and dated by all parties.
The two most common mistakes made in writing contracts, even by real estate agents are: 1) not getting everything in writing, and 2) not understanding the urgency of signature and notification of acceptance. Obviously, there are other issues and I'll address ot those in another article.
To read the follow-up article on understaning contracts, click HERE.
I trust that you had a Merry Christmas and a Happy New Year. Unfortunately, Uncle Sam doesn't let us enjoy our celebration too long before reminding us that tax time is just around the corner. Anyway, life goes on, But for the home owner, life can be sweeter as you cash in on some of the following tax benefits:
1. Loan origination fee -- these are deductions for the buyer (but not the seller) even if paid by the seller!.
2. Loan discount points (if any) - again, these are deductions for the buyer (but not the seller) even if paid by the seller.
3. Pre-paid interest (purchase) or pro-rated interest (sale).
4. Property tax prorates (buyers and sellers)
5. Mortgage interest paid in 2008.
6. Second mortgage interest paid in 2008.
7. Moving expenses (including storage, mileage, moving services, truck/trailer rental, hotels) if your move was more than 50 miles. Use IRS Form 3903 to claim these deductions.
Let me also say a word about seller capital gain taxes. Very simply, you probably don't have to concern yourself with this. If you have lived in the home for two out of the past five years and unless the net gain on the sale of that home was over $250,000 for single persons or $500,000 for married couples, you have no capital gain tax liability. Well that pretty much exempts all my clients!
Now, one more tip before I close. The laws on capital gains mean that you can buy a distressed home, a foreclosure, fixer-upper, or even build a new home every two years, live in it, and then sell it without tax liabilities! You can invest the money in your next home and eventually own a home without debt or you can just put the money in your pocket, tax free. Pretty neat deal, isn't it?
In this blog post I would like to spotligh some of the services at McLeod Regional Hospital in Florence, South Carolina. I think you'll find the article introductions interesting and will want to click on the links to see the full article. While on the McLeod site, feel frre to navigate and survey their many services. You'll soon learn why McLeod is so highly rated.
The Cutting Edge of Radiation Therapy Delivery -- McLeod continues to be a forerunner in South Carolina with the most technically advanced equipment in the state. For current cancer patients and future patients, McLeod Regional Medical Center announced in 2003 the availability of a new cancer treatment system, which delivers very precise radiation to cancerous tumors without harming healthy tissue or organs near the tumor. Treating cancer patients in the Pee Dee with this technology places McLeod in the forefront with a number of hospitals on the "cutting edge" of radiation therapy delivery.
Best Home Care You Will Have -- McLeod Home Health provides quality health care for patients outside a hospital setting who require extended care after being released from the hospital. McLeod Home Health has assembled a team of skilled health care professionals, such as nurses, physical and occupational therapists, and social workers, to address each patient's individualized care plan.
McLeodCenter for Advanced Surgery -- Technology and the people come together in the McLeod Center for Advanced Surgery and its OR of Tomorrow. These fully digital surgical suites are designed to create a virtual cockpit for the doctor, enabling control of all devices, access to images and information, and ?virtual' consultation using the Internet, with colleagues down the hall, or across the country. McLeod is partnering with two leaders in the surgical equipment industry -- Getinge and Storz. The first of these surgical suites will be open next spring. Additional suites will open in 2006. But what is "Advanced Surgery"? It generally encompasses one of four areas: Minimally Invasive Surgery, Interventional Radiology, Surgical Navigation and Robotics
Thinking about selling your home via FSBO? A lot of people have gone this route but over 80% eventually end up listing with an agent. Of those who are successful, most say they wouldn't do it again. The reason for this is simple: most people who go FSBO aren't prepared for the challenges and hard work that's involved. For those who are prepared, however, the experience can be very rewarding. So to that end, here is a summary of my Five Steps to FSBO Success:
1. RESEARCH -- Do Your Homework. What you do or don't do here will set the tone for your entire FSBO experience. Here are just a few things you need to know before going down the FSBO road: the pros and cons of doing it yourself, what's involved in the total process (from beginning to end), your home's true market value, your real costs of selling and your plan of action.
2. PREPARATION - Do Your Home Work. There's normally a lot of work to be done on a home, inside and out, before putting it on the market. This includes fixing it up (repairs), cleaning it up (appearance), taking it out (storage, garage sales and charity), and spacing it out (staging).
3. MARKETING - Let Your Home Work. Exposure is one of the crucial problems to overcome in selling your own home. Use every means available to get the word out: signs, brochures, advertising, the Internet, an open house, real estate agents, e-mails and post cards to family, friends, co-workers and neighbors. Don't leave any stone unturned.
4. SALESMANSHIP - Work to Sell Your Home. The difference between marketing and salesmanship is PEOPLE. The objective of marketing is to get potential buyers to consider your home. Once you get them there, don't blow a deal by taking things personal or being offended at an offer. Forget your emotions about your home and learn how to negotiate a contract for their house.
5. COORDINATION - Work to Close the Home Sale. This is when most deals fall apart so due diligence will be required on your part. Since you don't have an agent, it'll be up to you to coordinate the inspections and repairs, keep the buyer on track with his financing, and communicate all pertinent information with the closing attorney. These activities won't take place in a timely and smooth manner unless someone (YOU) stays on top of them.
Selling your own home will be a test of character, determination and patience. If you are diligent in following these five steps, however, you can do it; and, it won't have to be a nightmare. Though I have just briefly outlined these steps, tons of more detailed help can be found on the Internet. So, before you put your home on the market, do your homework!
Here are a few links to other articles that you might find helpful:
When starting out to sell your home the process usually seems a whole lot simpler than it really is. Rarely do we give much thought to the number of people that are potentially involved in a real estate transaction. Since most of the frustration in bringing a real estate transaction to a successful conclusion can be eliminated by planning ahead, here is a partial list of important service providers that could be involved in a FSBO transaction:
1. Real Estate Attorney. South Carolina requires that an attorney close all real estate transactions.
2. Appraiser. If your home doesn't appraise for the contract price you've negotiated, the buyer probably won't get the mortgage and you'll loose the deal.
3. Home Inspector. To avoid surprises and to help you get your home ready to sell, you would be well advised to consider paying for a home inspection prior to putting your home on the market.
4. Mortgage loan office. A mortgage lender can help you in pre-qualifying buyers and keep you up-to-date on interest rates and different types of mortgage programs available. Insist that prospective buyers are pre-qualification before negotiation.
5. Surveyor. If you do not have an up-to-date surveyor's map of your property or if your property lines are unusual or unclear, you may need to have the property surveyed.
6. Termite inspection. Make sure everything is up to date. You pest control company should do a quick inspection for a minimal fee to point out anything that might be a problem during the closing process.
7. Lead paint and radon gas inspections. You will need to make your home available for these tests should a buyer request it.
8. Well water and septic system certification. If applicable, certain types of mortgages require recertification of these systems by DHEC.
9. Insurance company. Not only will the buyer require insurance, you'll need to notify your insurance provider of any changes in coverage as soon as possible.
10. Tax advisor. Although for most sellers, there are minimal tax implications on the sale of a personal residence. Avoid surprises, however, and find out in advance of the sale.
11. Contractors and repair specialists. If your home is more than a couple years old, chances are you'll need a few repairs done (painting, flooring, roofing, etc.).
12. Home warranty company. Most buyers are now insisting that sellers provide a one year home warranty at closing.
13. Real estate agent. Yes, even if you're selling your home as a FSBO, the chances are good that you might end up working with an agent, particularly a buyer's agent. So don't forget that he/she is working for the buyer and his best interests, not you or yours!
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
The Cutting Edge of Radiation Therapy Delivery -- McLeod continues to be a forerunner in South Carolina with the most technically advanced equipment in the state. For current cancer patients and future patients, McLeod Regional Medical Center announced in 2003 the availability of a new cancer treatment system, which delivers very precise radiation to cancerous tumors without harming healthy tissue or organs near the tumor. Treating cancer patients in the Pee Dee with this technology places McLeod in the forefront with a number of hospitals on the "cutting edge" of radiation therapy delivery. 
McLeod Center for Advanced Surgery -- Technology and the people come together in the McLeod Center for Advanced Surgery and its OR of Tomorrow. These fully digital surgical suites are designed to create a virtual cockpit for the doctor, enabling control of all devices, access to images and information, and ?virtual' consultation using the Internet, with colleagues down the hall, or across the country. McLeod is partnering with two leaders in the surgical equipment industry -- Getinge and Storz. The first of these surgical suites will be open next spring. Additional suites will open in 2006. But what is "Advanced Surgery"? It generally encompasses one of four areas: Minimally Invasive Surgery, Interventional Radiology, Surgical Navigation and Robotics
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