Tallahassee Real Estate Blog

I have received numerous contacts over the past few weeks from real estate blog readers, customers, and friends asking me different forms of the same question…. What does it take to sell a home in today’s market? How much time does it take? Can you really quickly sell a home in Tallahassee?

These are questions that have their basis in the fear that has been generated and perpetuated by a media establishment caught up in the frenzy of the housing credit problems. While we are certainly in a buyers’ market, homes that are positioned correctly are selling every day. The key to getting a home sold in today’s real estate market is to first understand market liquidity (and thus absorption rates), secondly maximizing the distribution options (marketing), and finally choosing the correct market positioning (pricing the home to create immediate interest).

Understanding Liquidity In Real Estate (Absorption Rates)

As we can see from the graphic above, there are more people who can afford less expensive homes than there are buyers that can afford higher priced homes. The more homes that are selling in a given price range, the more “liquid” we say that the market is. More liquidity in real estate = more information and a more certain estimate of the value of the home. Less liquidity in real estate = less information and uncertainty in the market acceptance of the home. That is why we see homes priced at $200,000 selling for 99% of their asking price, while homes priced at $5,000,000 sometimes selling 20% off of the asking price.

Once the liquidity level is determined, one should determine the absorption rate for homes being sold that are similar to the subject property. This must be done with good information, not with limited data (many web sites contain samplings of home sales). Once determined, the absorption rate tells you how many homes similar to the subject property will sell each month.

Marketing A Home To Get It Sold

I am always amazed when some people will decide to sell their home and think that it will sell itself. Whether in a buyers’ market or a sellers’ market, it is critical to get as many people excited about the home as possible. This excitement will drive-up the final selling price. Marketing a home to get it sold requires a sound plan.

Real estate marketing is like an auction. The more people that are attracted to the home, the more excitement that will be injected into the bidding, and the higher the price will go. Conversely, the fewer the people that are excited about a home, the less interest and excitement are generated, the lower the bidding will go. That is why you see some sellers “dump” their homes, even though the homes could attract a higher price. When marketing a home to get it sold, it is about maximizing exposure about the sale-able features of the property across a large, diverse distribution channel.

Positioning A Home To Sell

The key to positioning a home to sell is to understand where the buyers are in their buying cycle. You see, most buyers (over 90%) are working with real estate professionals. When a new property hits the market, it is exposed to 100% of the buyers in the market (see green flag above). The buyers that are prepared to buy give it immediate attention. If it is not positioned correctly, the prepared buyer chooses another home and that buyer is lost. Over time, the only buyers that come to see the home are buyers just entering the market, and they are not ready to buy!

Here is how that process works. After the first week we will begin to see the traffic taper off. These buyers do not have that same sense of urgency the first wave of buyers had. They are not as excited, and these buyers are asking the question, “I wonder what this property is worth.” By the time we enter the third week of marketing, the showings will have dropped off dramatically. These are buyers just entering the market and not ready to make decisions – they are not educated, nor experienced in the process. They have just started their home search adventure.

The buyers visiting your home in the first few days on market were not attracted to your home by an advertisement. In fact it is highly possible that no ad will have appeared during the first week of exposure. These are the buyers who answered ads 60-90 days ago in order to be today’s seasoned purchaser. The buyers we see coming in after three weeks are buyers new to market and not typically prepared to buy for another 60-90 days. This is why advertisements do not sell houses, rather positioning a home to sell is what sells houses!

Summary

You can sell a home quickly in today’s real estate market by determining the market absorption rate for your size and type of home, positioning your home where it will most excite potential buyers that are prepared to buy, and then marketing the home through the best available distribution channels. If you have a sound follow-up plan, you will be able to create the excitement that is required to quickly sell a home in today’s real estate market.

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Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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I have been doing a lot of research and reading lately, as I feel this is the toughest real estate market cycle that I have been through in my 17 years of brokering in the Tallahassee real estate market. It seems that many people have an opinion on real estate, and many have speculated that the worst is behind us. While I’m excited to think that some of the stories in the media could actually turn positive soon, I feel that some simple concepts can reveal where we truly are in this current real estate market cycle.

Let us first define what a “good real estate market” is versus a “bad real estate market.” A good real estate market is where Sellers can put their homes on the market and can fairly quickly sell them, while a bad real estate market is where most sellers will fail to sell their home. Fair enough? In a good market, home prices appreciate, and in a bad market homes depreciate.

So how do we know which way the market is going? As simple as this question sounds, the answer is equally simple to tell. All you have to do is look at the flow of inventory over a period of time. Are more homes coming onto the market (creating inventory….creating glut)? Or, are more homes leaving the market (reducing inventory … leaving demand unfulfilled)? That is all we have to measure!

The Tallahassee Real Estate Inventory Report, which can be found updated several times per week, shows that the inventory is still growing. We need to see the “yellow” portion of the chart move below the zero line on a consistent basis to know that market has turned.

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Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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Last month we launched our first-ever Tallahassee Real Estate Market Inventory Report. The purpose was to provide useful information about supply and demand in the Tallahassee real estate market.

So here it is again. This month, we have improved the Tallahassee Real Estate Market Inventory Report by adding a column of data which shows how the inventory has changed since last months Tallahassee Real Estate Market Inventory Report.

We encourage you to download this report and take some time getting to understand it’s very useful information about supply and demand in the Tallahassee real estate market.

Tallahassee Real Estate Market Inventory Report - April 2008
Tallahassee Real Estate Market Inventory Report - March 2008

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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Well, if you read the newspaper this morning, a well-written article was prepared by TaMaryn Waters discussing the state of admissions with Florida’s public universities. Apparently, having a 4.0 GPA is not enough. Bear in mind, I was accepted to West Point in the mid-1980’s with a GPA in the low 3.’s, so I’m wondering why our state is so broken it cannot create opportunity for kids who have obviously demonstrated that they want to learn at a higher level.

I have been keeping an eye on the Florida Prepaid College Plan for years, thinking that the State of Florida was truly the leader nationwide for creating a system to ensure continued education for families of all financial means. There are now, according to some reports, over 1.2 million people who have or are participating in this opportunity. With all these “kids” enrolled, where will they be attending school if even the kids with 4.0’s are being rejected? If this were a simple business, I would look at the supply and demand curve and point out that demand has blown past supply and a great opportunity for the State of Florida is here!

Miss Waters’ article in today’s Tallahassee Democrat points out that while admissions in the State universities are flat or dropping, the burden of handling these students is moving to the community colleges. She reports thatTCC enrollment is up 7% since last April. Could this spell the “end” of the four-year college, where only the best of the brightest will go to a university for four years, while most everyone else will attend a community college for two years, and then enroll in a university as a junior to complete their degree?

Perhaps the greatest question is “why am I blogging about the Florida Prepaid College Plan in the Tallahassee Florida Real Estate Blog?” The answer is simple. We have well over 70,000 college students in Tallahassee and I think we are going to see quite a few more in the coming years. TCC is growing, FAMU appears to be well on its way to recovery through the great work of Dr. Ammons, and FSU is a highly desired school as well. This part of our community is a strong pillar of our local economy as well as the backbone of our real estate rental market. When enrollment at FAMU dropped 40%, it put a “big hurt” on many real estate investors in the south-side of Tallahassee. When investors get hurt, the whole market suffers, not just the investors. Homes in all prices ranges are affected, and so are local businesses as less money is available.

I would love to see the Tallahassee Democrat continue this excellent article on college admissions. I’d love to hear what the “experts” are saying about the divide between “no admission” and “prepaid.” Are the schools allowed to say no when the kids have already paid through the Florida Prepaid College Plan?

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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In today’s tough real estate market, where Sellers seem to far outnumber Buyers, it is important to have a complete “bag of tools” when you desire to sell a home in Florida.

Creative Financing - A Required Skill For Realtors

Today, I will focus on an instrument that is fairly common on Wall Street that we do not see very often on “Main Street,” and that is the Zero Coupon Bond. For those readers who do not invest their money in bonds, I will briefly define a zero coupon bond as an investment that generates no monthly payments, but rather accumulates interest and is repaid in full, plus interest, on a future maturity date. If you would like a much better definition of the zero coupon bond, just follow the link preceding this to the Wikipedia site.

So, how do we apply the zero coupon bond to selling a home in the Tallahassee real estate market?

The best way to explain this is with a real world situation in which two excellent Century 21 Realtors were able to creatively sell a home that had been on the market for a rather long-time.

We had a home on the market (names and dollar amounts have been changed to protect the sensitivity of the transaction) listed by our office which had been listed by a previous office for nearly one year. The Sellers (Mr. and Mrs. Seller) were in desperate need of a sale, as they had already committed to moving out of the Tallahassee real estate market. They owed $400,000 and felt they needed at least $50,000 to purchase their new home in the next market. While they had a $600,000 appraisal on their home, they had failed to get it sold while listed previously at $575,000.

We explained to Mr. and Mrs. Seller that they were seeking to sell their home to a very tiny portion of the home buyers in Tallahassee. With our median sales price being less than 1/2 of what they were seeking, we felt that the Sellers needed to do some creative marketing and offer creative financing in order to attract more buyers. We have learned that many more buyers exist for a home if we can satisfy one of two problems, cash issues and/or credit issues. A buyer with cash issues has good credit and can afford to make a home payment, he just does not have the required cash to close on the transaction. A buyer with credit issues might have plenty of cash, but might not have the credit to qualify for a loan or might lack the income required to make the entire mortgage payment.

Selling A Home With A Zero Coupon Bond

We offered the Seller’s home for sale at $560,000, but put the word out through our network that creative financing was available. In fact, a buyer could buy the house for $560,000, but have payments as if he had only paid $500,000 for the home! How is this possible….enter the zero coupon bond.

We found a buyer who very much loved the home, but fell short of qualifying for the home due to income restraints. This buyer had very good credit and had sufficient cash to close on the home, but not enough cash + borrowing ability to get it closed. So here is how we structured the transaction:

The Seller was able to walk away with nearly $56K from this sale, more than enough to close on their new home. Additionally, they were able to realize the top amount of money (full asking price) for their home.

The buyers were able to buy more home than they expected, while keeping their payments at a with which they were comfortable.

So what were the terms of the zero coupon bond? The Sellers and the Buyers agreed to $65,000 at 3.25% interest for ten years. That means that the Buyers will owe $89,500 in ten years. Should the Buyers refinance or sell the property prior to that, they will be required to repay the entire principal balance ($65K) plus the accumulated interest at the time of the refinance or sale.

This transaction worked out very well for both parties. We continuously seek to find “win/win” solutions so that we can help Sellers out of their homes by bringing more potential buyers to a market that is currently heavier on housing inventory than it is on active buyers.

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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I have been posting the Tallahassee real estate market charts on the Tallahassee real estate web site for the past week. In doing so, I and many readers were observing that the following chart is a bit baffling.

As we can see above, it appears that prices are rising…. yet we know inventory has risen and unit sales have fallen. What we expect to see is some downward movement on prices. I asked readers of this blog (and others) for opinions on why this was happening and really none of us had a good answer…..

UNTIL

Gooch recommended we look at price per square foot. He reasoned that maybe consumers were able to buy more expensive homes due to falling interest rates, but that maybe they were getting more house. So, this next chart is what  Gooch requested. It shows residential home sales in Leon County by price per square foot, across different price ranges.

Gooch, prices are indeed falling. While this is not the best news in the world, it certainly makes sense with unit sales being down.

So, how are the current asking prices for Tallahassee homes reflecting this?

As we can see from this, with few exceptions, there are many price ranges that have a majority of their homes over-priced. It appears that homes priced between $150K and $200K are priced very reasonably, while homes in higher price ranges seem to be off the mark quite a bit.

Just remember, in every market, their are unrealistic Sellers who ask more for their home than the market is willing to bear. They make the “average” asking price much higher than it would be if only serious sellers were in the market. Today, you can definitely find the serious sellers out there. They are the ones that have their homes priced well below their competition.

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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I received so much feedback on The Creative Cure For Selling Your Home article that I decided to follow it up with a “how and why” to consider a Purchase Money Mortgage when selling your home.

So what is a Purchase Money Mortgage?

Sometimes a buyer wants to buy a home and has good enough credit to purchase the home, but is short some of the cash that the lending institution will require to close the loan. In cases like this, the Seller can hold a note for some of the cash and secure it as a secondary lien on the home. When this is done, we refer to the Seller’s second a Purchase Money Mortgage. Let’s consider an example on how this could work.

Mr. and Mrs. Smith would like to buy a Tallahassee home. They find that Mr. and Mrs. Jones have the perfect home for sale in Tallahassee and it is priced at $250,000. The Smith’s go to the bank and discover that the bank will lend them $200,000 to purchase the home, all the Smiths need to do is invest $50,000 ($250,000 price - $200,000 loan = $50,000 down payment).

The Smiths look at all of their sources of money and discover that they can only raise $35,000, leaving them $15,000 short. So, working with an excellent and creative Realtor in Tallahassee, they make the following offer:

At closing, the Smiths get $235,000 as well as a note from the Joneses for $15,000.
This creative solution is simple and creates a large market for the Smith Home. Rather than have to lower their price to attract more buyers, the Smiths have attracted more buyers by making the house more affordable (not only to people with large cash reserves).

In today’s market, Tallahassee homeowners need to consider all the creative solutions possible to sell a Tallahassee home.

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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We are helping somebody sell a home in Tallahassee who is considering an offer from a Buyer that includes a lease-purchase provision. A lease-purchase in Tallahassee is an agreement where the Buyer and Seller agree to a sale on the home and then the Buyer rents the home from the Seller, prior to closing. The closing could happen as quickly as 1 day, or could be extended for a long period of time (even years in some cases).

So, why would a Buyer offer to do a Lease-Purchase? Why would a Seller consider accepting a Lease-Purchase?

A Lease-Purchase can be a very beneficial “win-win” opportunity for the right Seller and the right Buyer. Some of the reasons that they might conspire to do a lease-purchase contract include:

Typically, home buyers see the benefit of a lease-purchase right away, as they are in a position to need a creative solution to buy a home in Tallahassee. Often times though, I find that Tallahassee home owners are not so quick to see the benefits of a lease-purchase to help them out of their situation. I hope that some of this blog can help Tallahassee homeowners understand that they too have creative options.

As a Seller, most people would prefer to get cash for their home and then just go along their merry way. Unfortunately, in today’s real estate market, less than a third of homes listed for sale in Tallahassee this year will sell! That means 2/3rds of our homeowners will fail to sell their homes. So, in case that you are one of the not-so-fortunate ones, what are your options?

• Lower Your Price
• Take Your Home Off the Market
• Lease Your Home
• Give the home to the bank
• Sell Your Home With Creative Financing

Obviously, cash in hand is the favorite option. But when that fails, the other options must be considered. The lease-option will allow you to move from your home and reduce the cost of continued ownership. If you absolutely need to move, the benefits listed above will apply to you. You can lock-into a sales price, get higher than market rent, cash a non-refundable deposit, and eliminate maintenance costs. Additionally, when you let the market know that you will sell your home through a lease-purchase, you increase the size of the market for your home, thus making it more valuable (you will attract all the buyers you would have attracted before, plus buyers who need creative financing as well). And don’t forget, you can use the lease-purchase method of buying your next home as you wait for your tenant/buyer to close on the sale of your Tallahassee home!

But what about the additional risk?

There is definitely additional risk selling a home through a lease-purchase. A party could agree to buy your home, move in, and then never close on the property. They could even destroy the property while never paying you rent, forcing you to evict them from the property. While this scenario sounds horrific (and it most likely would be), there are many things that you can do to mitigate the risk of this occurring.

• Make the Buyer submit a full loan application (Download Free FNMA Uniform Residential Loan Application)
• Seller review the loan application and make own determination of credit risk
• Collect a non-refundable deposit large enough to motive the Buyer to close
• Make the monthly rent payment higher than market rate, with the excess to be credited to Buyer at closing
• Make sure separate purchase agreement and lease agreement (lease agreement drawn by attorney in accordance with Landlord-Tenant Act)

Ultimately, we are going to see a strong return of the lease-purchase agreement as creditors tighten borrowing standards and inventories remain high. Don’t be afraid to consider a creative solution if it partially solves your Tallahassee real estate problem!
FNMA Uniform Residential Loan Application Form 1003

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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