Since the beginning of this year, we have been working on a system to communicate with our clients what's happening in the market around their home.  In addition to the normal things like showing feedback, we compile website traffic for that listing, number of calls, number of showing requests, numbers of previews, along with a cma every week in a spreadsheet.  With sales down in our area 50%, I wanted to know what was selling, what was new, and the direction we needed to take with pricing, and so do my clients. 

The problem has been is that this means I am usually sending a lot of excel files and if you're a blackberry user (which most of my clients are), it's hard to view the document at the time you receive the email.  The type is very small, it takes up valuable space, and it usually arrives in an inconvenient time.  So we're utilizing Google Docs starting this week to improve this communication with our clients.

Until this week, I was totally unaware of this service's potental.  For about a year, I have been playing around with Google docs but never found much use for it.  However, something clicked on and now I understand just how incredible the concept is. 

Google Docs allows you to email or upload documents to the web in most common document formats (excel, powerpoint, word, pdf).  You can then edit the documents online much like you would offline using their compatible software.  Next, you send invitations to those who you want to view that specific document and they can just view the document or they can collaborate with you on the document.  This is handy for those working on a document from multiple locations.  My assistant doesn't work from the office so sometimes the documents I need to reference may be on the wrong computer.  With Google Docs, they're online all the time and I can even access them via my smart phone. 

With our weekly updates, we will create a folder just for updates and upload our client's excel spreadsheets.  After we're done adding in the relevant data, we will send out an invitation for them to come and view their weekly update.  I can post notes, highlight items, and see when they last visited thanks to Google Analytics.  Finally, when we update the document for next week, the program already knows what we're doing and will save a version of last weeks update on the server as well. 

Now, there's no need for repeated emails.  We can all work together in a much smarter way to sell their property.  Like anything new, I'm sure it will take some time to get used to but I'm sure that we'll have it seamless in no time.  I'll let you know how it goes. 

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

Real Estate Market Update for

Single Family Homes in Mecklenburg County North Carolina Area 4 including:

Charlotte, Matthews. Neighborhoods West of Hwy 74, Indepdendence Blvd. and East of Providence Road including, Grier Heights, Chantilly, Cotswold, Elizabeth, Eastover, Beverly Crest, Sardis Woods, High Timbers, Downtown Matthews, Lansdowne, Providence Plantation, and others.

Data gathered for July 1, 2008 - July 31, 2008

In July 2008, 227 new listings were added to the market.  This was a 5.09% increase of the number of new listings added in July of 2007  and an 8.61% increase over the month prior. 

The number of homes receiving a contract fell to 38.46% from the July the year prior from 130 to 80.  This was also a 21.57% decrease from the month prior.

Sales in area 4 were also down in July 2008 with only 82 homes closing.  This is a 50.3% drop from the year prior when 165 sold and a 27.43% decrease from the month prior.

Sellers received 96.36% of their asking price in July 2008.  This was a minor 1.33% decline in from the year prior and just slightly down over the month prior.

For the listings which went under contract in July 2008, they had been on the market an average of 70 days before receiving an acceptable offer.  This means that it took 37.25% longer to sell a home than the July prior, 1.45% longer than the previous month, 2.99% longer than it did in July 2006, and 12.90% longer than it did in July 2005. 

As has been the trend throughout the Charlotte area, the greater number of homes that are selling are lower priced, skewing this average sold amound.  In July 2008, the average sales price of a home in Area 4 was $352,069, falling 11.23% from the July prior and 1.86 from the month prior.  Averaged out since 2005, prices are still strong.  The average selling price this past July is still 23.12% greater than in July 2006 and 22.99% than it was in July 2005. 

Pressure

It was inevitable that prices would slide ever so slightly in area 4.  When less than 10% of the total number of homes in inventory are selling in a given month, it places pressure on sellers and home prices.  As a result, buyers are picking up excellent deals and sellers who have owned their home for more than three years are still coming out ahead. 

Unlike many of the areas in Charlotte, area 4 (which contains Matthews as well) continued to add record levels of inventory and that's not including the not listed to-be-built builder lots.  So does this mean tough times are ahead for Charlotte and Matthews area 4? 

It means that sellers are going to present their homes in the best possible light, offer buyer incentives, aggressively price their homes, and choose an agent that can market their home.  Also, sellers should expect that if they need to sell by a particular date, they should give themselves ample time to find a buyer and not always assume that their home is the best on the market. 

In the end, Charlotte and Matthews area 4 will continue to remain a very popular place to live and work and sales should recover as the existing inventories sell, withdraw, or expire. 

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

The real estate industry has a pretty good way of coming up with solutions posed by market problems.  When conventional financing was unstable, lenders and agents utilized 3rd party non-profits sell homes to buyers will little for a downpayment.  Now with many of the rules changing once again, lease purchases are becoming a lot more trendy. 

Not to be confused with Rent-to-Own, a lease purchase is done with the intention of the buyer making the purchase.  With lending standards tightening, there may be something that is standing in the way of the buyer making the purchase today.  The most common are a divorce in the litigation stages, a home to sell in another state, a mistake on the credit file or loss of job near closing.  While in the past, some of these were overlooked, today its a different story and as a result we are able to sell homes to fewer buyers every day.  Where you would have to turn away this buyer, now you don't have to. 

Instead of closing on the house in 30 days, you are extending our your closing date to the point at which is a win-win for both parties.  I wouldn't recommend more than a year but every situation is different.  The important part is that there needs to be an end date. 

In conjunction with the contract is a lease which starts at a date of your choosing and ends the day of closing.  I would recommend that if you do not have a great lease agreement already, see a real estate attorney and have one drafted.  Explain your plan so that if one is being modified, it will appropriate for this transaction. 

You need to work closely with the buyer and their lender to ensure that they can actually purchase the home.  You can ask for the lender to issue the stipulations needed to close the loan and the otherwise, the buyer is capable of a purchase.  As we are all aware, lending standards change all the time however if the buyer declares bankruptcy six months into the lease, you can be assured they aren't going to get a mortgage (unless there's a super secret bankruptcy program out there).  So sellers should plan to be mildly flexible if something minor arises before closing or near closing.  Additionally, buyers should be working closely with their lender to see if there are changes on the horizon which may negatively effect their plans.

Instead of holding earnest money like in a traditional sale, you are holding option money; which is non-refundable if the buyer does not close on the date in the sale agreement.  Again, seek council but I recommend sellers collect no less than $5,000.  Something to consider is that if the buyer defaults you need to put the house back up for sale, you need enough to cover any damage or wear. 

There are two ways of handling rent:

Option A: Rent based on the actual mortgage the buyer will receive. Include an amortization schedule in your agreement and base your rent off of that.  For example, if the sales price of the home was $350,000 and you collected $5,000 as an option, the sales price would reduce to $345,000.  If the buyer was to receive a 8% mortgage on $345,000, the principal and interest payment is $2531.49.  Therefore, charge $2531.49 and contribute $2882.03 (the amount that would have been paid in pricipal over the term) to the buyer's closing costs or further reduction in the price. 

Option B: Charge Market Rent.  If the market rent for your property is enought to cover the principal, interest, taxes, insurance, and mortgage insurance, you can charge market rent.  Under this scenario, no additional money from the seller would go towards the buyer's purchase.

Inspections?

One of the common refrains I hear from sellers is that the reason why buyers never fulfill the agreement of the lease purchase is that after a year, they know everything that's wrong with the home and want a better deal.  For some sellers, this may have been the case but the way to aleviate the issues is to have the buyer inspect the property up front.  Once the report is received and a repair list is agreed upon, the seller should remedy those repairs.  Any remaining repairs are not apart of the contract. 

The one last detail are commissions.  I'll be frank in saying that agents do not much care for lease purchases because it delays a closing for the duration of the lease.  For listing agents, this means a year to recoup the marketing expenses and buyers agents the same for their expenses.  Sellers need to know their agent's expections on this matter as well as the buyer's agent.  There is not a set standard and that agent's company policy may dictate what they're allowed to negotiate. 

So now the buyer that really likes your house but cannot do it today for a minor reason can now purchase that house.  Your home is no longer on the market, and you can move on.  This a great alternative for sellers with vacant homes since an extra mortgage can be a savings depleater.  However, a lease purchase isn't for everyone in every situation.  Pursued cautiously among parties with high character, it can be a win-win for all involved.

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

Charlotte North Carolina Market Update for:

Single Family Homes in Mecklenburg County North Carolina Area 2 including:

Charlotte Neighborhoods East of N. Tryon Street and North of Albermarle Road (24/27) including the neighborhoods of Plaza Midwood, NoDa (The Arts District), Belmont, McCarron, Old Stone Crossing, Buckleigh. 

Data gathered for July 1, 2008 - July 31, 2008

In July, 321 new single family listings were added to the market, which is down from the 386 home added the year prior.  As of the date of this blog, the total number of single family homes in area 2 is 1,139.

July saw a 27% decrease year over year in the number of homes placed under contract.  In July 2006, 233 homes were placed under contract and in July 2007, the number of pendings dropped slightly to 231.  In 2008, only 168 homes were placed under contract.

In July 2008, 123 homes were sold, down 37% from the year prior.

In July, sellers received 97.8% of their asking price.  The July prior, sellers received only slightly more: 97.89%. In July 2006, sellers received 98.04%.

The average days on market increased from 65 in July 2007 to 89 in July 2008.

The average sold price for homes in area 2 decreased .022% in July 2008 to $163,665. 

Holding Steady

A year after the first round of mortgage bank collapses and inspite of a large number of foreclosures in some east Charlotte neighborhoods, average prices are holding close to their 2007 highs.  In addition to prices holding steady, sellers are receiving close to what they were the year prior, which is another bright spot.  The concerns in area 2 are much the same as they are throughout the Charlotte area.  Higher inventories have placed pressure on prices, holding them steady year-over-year. 

A suprisingly good report for area 2 - not great but good.  In the coming months, I would expect the new inventory levels seasonally adjust, leaving fewer homes for buyers.  Unlike last fall where the mortgage markets were in a total mess, this fall should fare considerably better than last, inspite of the elimination of 3rd party down payment assistance programs.

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

I have to admit that paying for my son's college is a bit scary.  Sure, I may have some time before he's ready to start the college tours but thinking that the day will never come is a sure fire way to strattle him with student loans.  Being on that road ourselves with a Corvette's worth of loans still outstanding, there's no way that we're going to repeat this with him.  So our plan is to let Keller Williams Realty pay for our son's college. 

A few month's back, my wife and I were driving along and she tossed out the idea of re-directing our company's profit share money into our son's savings account.  For the past five years, our profit share funds have been funnelled into our normal checking account for use in our day-to-day lives.  It never was purposed for anything and we never tracked it until tax time.  Now, our profit share money has a purpose. 

In September, I'm back to paying company dollar and like always, my goal is to cap as quickly as possible.  Since my wife is my sponsor, she is the direct benefit of any profit share generated by me.  As for me, I've never been one to go out and actively bring people into the company but I have a feeling that's going to change.  After all, Harvard is pretty expensive.

Another cool thing about the Keller Williams Realty profit share program is that should we leave for any reason, Micah's college fund will not stop growing.  In fact, we have an agent who made $3,000 last year and he works at a competitor company.  I'm sure he's laughing his way to the bank every month that we're profitable and the people he brought into the company remain and are productive.

So I'll let you know how it goes and we continue to grow towards Micah's college fund.  I may have 17 years to go before he's heading out the door but when that time comes, we hope to be sending him without incurring any additional debt. 

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

Charlotte North Carolina Market Update for:

Single Family Homes in Mecklenburg County North Carolina Area 1 including:

Charlotte, Cornelius, Davidson, and Huntersville Neighborhoods East of  I-77, North of N. Tryon Street, West of Cabarrus County, and South of Iredell County including the neighborhoods of Highland Creek, Vermillion, Heritage Green, River Run, Skybrook, Northstone, Cambridge Grove, and others.

Data gathered for July 1, 2008 - July 31, 2008

In July, 417 new single family detached homes were added to the available for-sale inventory in North Mecklenburg Area 1.  This is a 11% decrease in new single family listings when compared to the same period a year ago.  Not July 2005 saw fewer new listings with 400. 

Only 203 single family detached listings were placed under contract in North Mecklenburg Area 1 during July.  This was a 31% decrease in the number of homes placed under contract in July 2007 and 13% fewer than in June 2008. 

In July, only 168 homes sold through the MLS in North Mecklenburg area 1.  This was a 40% decrease from the number of sales the year prior (282) and almost half the number sales from the high in 2008. 

Seller received 96.46% of the asking price in July.  This was down from 97.75% from the year prior and 97.41% the month prior. 

The average days on market increased to 97 in July, up 70% from the year prior when the average days on market were just 57.

The average sold price for a home in North Mecklenburg area 1 decreased to $205,061, down from 10% from the year prior but up from the month prior where the average sold price was $203,465. 

If you were hoping for large declines, sorry to disappoint you.

I've been expecting the numbers for July for quite some time because July 2007 is when everything started to fall apart.  Mortgage banks started failing, investors stopped funding, and essentially it was the earthquake.  Since then, we've had tremmors but overall, things have improved.  A year later and the markets have opened back to traditional buyers and with the FHA's guarantee of higher dollar mortgages has prevented a total disaster.  Still, this wasnt your typical July.

Last month, we saw a fewer number of homes on the market than in prior years and far fewer contracts and sales.  The result is that sellers who are highly motivated were taking less than ever before to move on.  Some of the decline in the Percentage of List Price Received number maybe as a result of the pre-foreclosures, short-sales, HUD's and REO's which are prevalent in some parts of that area.

The price range with the most activity in North Mecklenburg area 1 remains the homes below $200,000.  Of the homes which closed last month, 121 were priced below $200,000 and only 4 were above $500,000.  Of the active listings on the market, there are 137 homes for sale above $500,000.  Last June (BC - Before Collapse), 20 homes sold above $500,000.

Overall, the numbers are better than expected.  The number 1 issue in Charlotte remains buyer's confidence in the housing market above all else.  As a result, sellers should settle in for a considerably longer average days on market, show their home in the best possible light, and hope their home is the one buyers are looking for.  The second issue is the lack of affordable financing for self employed buyers.  Finally, buyers with homes to sell themselves are out of the market until their home sells. 

 Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

The idea of having a listing pre-inspected had been completely lost on me.  Often times, after a home inspection, buyers and sellers would compromise on a list of needed repair items that would be addressed by closing.  There were no reason to think that anyone would walk away after closing however times are changing.  Blame a tighening economy, fears of sinking home values, or just buyer's remorse but buyers are becoming a whole lot more pickey.  Where before an inspection would reveal 20 items, 3 major 17 minor and 10 would be repaired - now its 20 items and all 20 must be repaired or $10,000 off the price of the house or no sale. 

Until God get's back in the construction business, houses will be built by man and deteriote over time.  Therefore, it's a great idea to have a home inspector come out and pre-inspect your home just as you put it on the market.  For a few hundred dollars, you can have the same level of inspection that a buyer will perform to eliminate any unforseen issues down the road.  At the end, you'll receive a list of issues that should be addressed and that would pop up any other inspector's list.  You can choose to have them taken care of ahead of time or escrow the appriopriate amount at closing to be handled later on.

A secondary benefit is that you can market the home as being pre-inspected and provide a copy of the report to prospective buyers.  If you choose not to do the work ahead of time, at least you'll know the issues that exist and already have a plan of action as soon as a buyer puts pen to paper.  So often, buyers walk up to a brick house, see a crack in the fascade, and assume that the foundation is bad (because all buyers and agents are structural engineers).  That could be the case or it just to could be settling over time.  That buyer may have decided not to buy your home because of a personal misdiagnosis. 

Here's the downside that you should be aware of.  Property Disclosure laws in states like North and South Carolina and Maryland (where I practiced real estate for 3 years) place all the burden on the seller with regards to the discovery / disclosure of Material Facts.  A Material Fact, in general, is anything that could prevent a buyer from making a purchase.  A highway planned through the front door of the home would be a material fact.  Another would be that the roof is bad, the foundation has shifted, the home has an EFIS exterior, asbestos roof/siding, etc.  Once that inspector reveals to you the issues, they should be disclosed to the buyer if they aren't remedied. 

Check with your REALTOR to find a good home inspector in your area who can pre-inspect your home.  The lack of headaches, hassles, and sleepless nights makes it so worth while.

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate

In the last few months, I have received a bunch of phone calls, emails, and letters from folks I would describe as fake real estate agents.  They are unlicensed and unregulated people who are in the business of helping others buy, sell, and rent real estate.  Many builders sales reps are unlicensed but this isn't the group that most concerns me.  Take for example this call I received the other day.

I received a call from a guy who was looking to find out if a home I had for sale was available for a lease purchase.  I asked if it was for him and he told me that his side business was helping folks find other lease purchase homes and they were paying him 1% of the purchase price for the priviledge. 

Another sends letters to all of my clients saying that they will purchase their house for cash, no REALTOR fees whatsoever.  One of my clients turned the letter over to me and I contacted this individual who was taken back by my call.  I wasn't impolite but curious as to their operation.  When I offered to help them legitimately find property for sale, he hung up. 

You name it and they're out there.  Of course, they don't come out and say "we're practicing real estate without a license" but a quick trip over to the North or South Carolina Real Estate Commission website will tell you if they're legitimate or not. 

So buyers and sellers, here are some tips to find out if the person you're working with is for real or not.

1. Ask to see their real estate license pocket card or check them out on the real estate commission's website before your meeting
2. Check with the Better Business Bureau to see if these people are registered or have complaints against them
3. Work only through a REALTOR, a member of the National Association of REALTORS
4. If you're selling privately (For Sale By Owner), hire an attorney for you and DO NOT SIGN ANYTHING without them first reviewing everything.

Unfortunately, the toughest of times have brought out the worst in some people.  However, taking these steps should ensure that you don't end up with a horror story situation.

Jonathan Osman
Charlotte NC Homes, Charlotte Real Estate