Blog :: 2007

First Impressions Count when Selling your Home

You only get one chance to make a first impression."

I'm not sure who said it first, but, whoever gets the credit, the adage was never truer than when applied to selling a home.  When you have made the decision to sell your home, it is imperative that you take certain steps before you show the house for the first time if you want to ensure that it sells in a reasonable amount of time.

The first steps are very practical ones.  For example, determine if you want a Realtor and choose one you know you can work with.  Be completely honest with the disclosure form provided by a Realtor.  In addition, you may want to consider having a pre-sale inspection done so that you can make the suggested repairs yourself or at least let a potential buyer know you are aware of the issues.  There are also some simple steps that will let the potential buyer know you are a careful homeowner.  Collect all of the warranties on appliances that will be staying with the home.  All of these steps will let the buyer know you are conscientious about maintaining your home.

The second step is to price the home appropriately.  For example, know the range on comparable home sales for your area and set your price accordingly.  If you need a speedy sale, consider pricing the house at the lower end of the range.  Also, be prepared for counter offers.  Decide in advance what your limits are in terms of what price ultimately will be acceptable.

While these simple steps may seem very elementary, they are crucial in preparing for a successful sale.

The next phase of preparation is termed staging; that is getting the home ready to show.  While homeowners are very capable of doing this step on their own, some sellers are now turning to staging companies to help them prepare their homes.

Susan Leive of Susan Leive and Associates of Sarasota, FL and Black Mountain assists sellers in preparing their home, and she echoes the importance of that first look people have at a home.

"You want buyers to fall in love with the property, and first impressions count," she says.  "Most buyers will make an initial decision on a property within less than half a minute.  Staging is not how we live but the packaging and presenting of a property for selling."

From her perspective, there are three things sellers should do before putting the house on the market. 

  • Find a good Realtor 
  • Price the property correctly 
  • Stage the home

"If the first two steps aren't right," she warns, "then staging the property isn't going to help."

McKay Dean, partner of Maggie & McKay of Black Mountain, cites the number one mistake people make when showing their homes is failing to remove the clutter.  She suggests removing the clutter and taking out personal items such as family photos which make it difficult for potential buyers to see their own families in the homes.  And she notes that removing clutter does not mean putting it into a closet.  She suggests renting a place for the extra furniture and personal belongings. 

She offers very simple advice when it comes to preparing your home for selling it:  "Just clean it up."  In addition to making sure windows are clean, small repair jobs are completed, and cabinets are tidy, she emphasizes that you need to evaluate each room of the home.

"If you have your office in the dining room, remove it when you get ready to show the home," she says.  "It's really important that each room serve one purpose."

While some of this advice seems like common sense, it is often overlooked by sellers which can delay the sale of a property and mean more home showings ultimately.  For some people it may seem as if coming to the decision to sell their home is the final step, but in fact following up that decision with a little more work on their part can enhance the property's value and ultimately improve the experience for the seller.

Vacation Home Rentals

In the past several months, I have written articles on long-term rental properties and the vacation/second home trends, and this month, I would like to address a very special niche in the real estate market---vacation rental properties.

In Buncombe County we have a large number of vacation rental homes, although it is difficult to track specific numbers.  While concrete numbers are not available county-wide, as an example, there are 650 homes in Montreat, and I would guess there are about 150 vacation rentals in Montreat alone.  That makes the rental market, particularly short term rentals (i.e. vacation rentals), very important to our community as a whole.

Nationally, statistics indicate close to 46% of investment homes (homes bought for long and short term rentals) are purchased as a means to diversify an individual's investment portfolio while 12% of investment homes are purchased for use as a future primary residence.  Anecdotally, I find the percent of investors buying for their own future use to be higher in our area.

Buying a short term rental home requires more than just considering the numbers, however. Anyone considering an investment home purchase needs to consider the intangibles as well. For example, location can be a huge determinant in the success of an investment home as a vacation rental property.

There are numerous times I have faced clients who have come to me ready to put their newly purchased home into the rental pool, and I have to tell them that their home is not really a good candidate for a short term vacation rental in our area.  Vacationers have very specific needs they are trying to fill when they rent a vacation home.

"Only certain types of homes work well as vacation rentals in our market," explains Rachael Lee, rental manager for Greybeard Realty.  "Around here, they must feel like the mountains.  The best ones have long distance views." Other prime locations that draw vacationers include secluded properties, homes close to streams and lakes, and houses in close proximity to town. We have also found that our renters' expectations are high and they are expecting luxury and more upscale amenities. The best rental homes have cable, provide high speed internet, offer a hot tub and allow pets. We often joke that the best vacation rental house would be a pet-friendly, wi-fi log cabin with a stream and waterfall that is close to the town center, in a private setting, with a hot tub, on a flat lot and of course an incredible view.

Properties can be rented for short term or long term purposes, with varying factors within each type of rental market.  Lee notes that in terms of rental returns on property in our area, the rule of thumb is that a weekly rental rate is about 80% of the monthly rate of a long term rental.  For Greybeard Realty, a good short term rental rents approximately 15 weeks a year with the best rental unit in the company going for 31 weeks in 2006.

"There are more expenses associated with short term vacation rentals," Lee notes.  "There are cleaning costs, commissions if the property is managed, and utilities expenses which are different from long term rentals when the tenant pays the utilities."

As with making all investments, home buyers need to do their homework on the benefits for their own portfolios and know their market where they are investing.  In addition, they need to make sure there are no restrictive ordinances and zoning limitations on using the properties as short term rentals if that is their preference.  Also, they need to be prepared to be patient with their investment and realize that vacation rentals do not usually create a positive cash-flow but are more a long-term capital appreciation investment.

If a vacation rental property is carefully chosen in a beautiful location with the expected amenities such as the internet and perhaps some extras such as a hot tub, then property owners will have more success when renting their properties out and eliminate many of the disappointments.

Paula Heimowitz convinced her husband to purchase a short term rental home in BlackMountain rather than putting more money into the stock market.  For her, the pluses of making their first investment home purchase for use as a vacation rental have outweighed the minuses.

"The hardest part of renting is worrying about what might go wrong or get broken", she says.  "The biggest surprise has been how well it has been received and mostly how much we enjoy visiting the area and staying in our own house.  The bears visiting our yard have been a big surprise for us as well."

Renters and short term rental properties play a vital role in our community.  In addition to the obvious revenue generated by these rental properties through property taxes, use tax and the like, renters themselves contribute to our regional economy through their travels and their purchases.  Also, the support system for these rental properties, the cleaning services for example, benefit from the rental market.  It is important not to underestimate the importance of these rental properties to our area economy.

Bill Munn, Owner of Black Mountain Bakery states, "I would estimate that 30-40% of our business is from tourists so obviously vacation rentals play an important role in our local economy."

Quality rental properties owned by knowledgeable investors are an asset to the area that generate income for a wide variety of area businesses and enhance the economic picture for our area.

Black Mountain Housing Market Continues Solid and Steady Growth

As I indicated in my last article, my intent was to write a piece on vacation rental property in our area this time.  Folks have been stopping me on the street, however, to ask me about the impact of the national housing market on Black Mountain, so I have decided to postpone my planned article until next month and take a look at the numbers here to assess how our housing market is holding up.

I assume that everyone has been reading the national headlines.  Just this week, The New York Times has written "Pending Home Sales Sink in July" and "Stocks Fall in Home Sales Report".  Other newspapers echo that news with "Housing Market Worst Since Depression", "Five Months of Declining Value in Housing Market", and "Nine Month Inventory of Homes on Market."

So what is happening in Black Mountain?  As usual when asked that question I turn to the numbers for my answer.  Using our regional Multiple Listing Service (MLS) system, I have to say I am encouraged by what I see.

The total volume of house sales in terms of dollars in the Black Mountain area rose 35% year to date through August 2007.  Total number of houses sold is up 22% for the same period with an average price increase of 11%.  Historically, the average price has increased 15% over the past few years so appreciation in our market has slowed a bit but is still very healthy, especially relative to many places in the nation.

One area that does show some potential weakness in the market is the inventory of homes for sale. Last year, there were approximately 65 to 70 homes on the market.  At present, there are 126 on the market.  It is interesting that the number of units sold in 2007 is up 22% and yet total inventory on market is almost double. The increase in inventory is therefore a result of more people listing their homes for sale rather than a slow down in purchases.

Most of the increase in inventory is the result of the upper end of the market. Currently there are 54 homes on the market priced over $450,000 in Black Mountain and only 12 homes in this price range have sold this year through August 31 (12 sales over $450,000 is well above 2006 when only 5 sold through August). The increase of upper end inventory may be the result of the national housing slowdown. My feeling is that most of the people purchasing houses in this price range are moving into Black Mountain from elsewhere, and it may be that the depressed markets in the other areas of the nation may be preventing them from selling their existing homes to make this move.

As always when I use numbers to support my argument, I would like to point out that there are limitations to my interpretations. First of all, you really need to look at trends and not particular months to see how things are progressing. And you also need to remember that there is a delay in the numbers. This means that August sales are more of an indication of choices buyers made in June when they probably entered into the offer to purchase contract. With those caveats in place, however, I feel as if I can say that Black Mountain's market continues to have solid, steady growth despite the decline being felt nationally.

Black Mountain Second Home Market

This month, I want to highlight the second home market, specifically those houses purchased for vacation homes or for future retirement homes.  In the next article I will address homes bought for use as investment properties strictly for rental use, which involves an entirely different set of issues.

While second homes are not tracked specifically in the Black Mountain area, it is interesting to note that of the current 650 Montreat homes; only 150 of them are listed as full-time residences.  That statistic alone points to the importance of this month and next month's topics.

Nationally, 36% of all existing and new residential transactions in 2006 were for combined vacation and investment home sales.  All of the figures I am using here are provided by the National Association of Realtors (NAR).  This surprising figure actually represents a decline from the 40% market share reported in 2005.  And to break that down even more, 14% of all homes purchased in 2006 were vacation homes, up from 12% in 2005.

Vacation home sales rose 4.7% nationally to 1.07 million homes in 2006, up from 1.02 the previous year.  In contrast, primary residence sales fell 4.1% from 4.82 million in 2006 to 5.02 million in 2005. 

So who is buying these vacation homes?  According to a NAR national survey, the typical vacation home buyer is 44 years old with a median income of $102, 200.  And the vacation home price for 2006 declined 2% to $200,000.  In that same survey, roughly 80% of those responding indicated that they purchased their home primarily as a family retreat and vacation home as opposed to an investment or other reason.

It may come as no surprise, given our recent area growth, to find that 38% of vacation homes purchased nationally are located in the South.  And while as I mentioned there are no specific numbers tracked our region, at least one area observer confirms that he has noted a significant rise in second homes in our area as well.

Wendell Begley, president of the Black Mountain Savings and Loan, estimates that his company has seen a 20 to 25% increase in requests for second home mortgages over the last couple of years. And he notes that while the interest used to center on Montreat and other conference centers, he now sees Black Mountain and especially the area south on Highway 9 as seeing increased interest in this market.

Lenders often have a different set of criteria for second home mortgages, Begley observes, and it is not unusual for mortgage rates to be ½ to ¾% higher than they are for primary residences.  In addition, typical financing requirements for second homes call for 20% down payment and financing of 80%.  And that figure doesn't seem to be causing much difficulty with his customers.

"Now folks tend to put down more cash," Begley says. "Now our typical financing is more like 30 to 40% down."

Despite the slightly higher interest rates and the larger cash down requirements, the vacation market should continue to grow, and particularly in our area.  National experts such as David Lereah, NAR's chief economist, attribute the increase in vacation home purchases to demographics and lifestyle factors.  And with the increasing number of baby boomers reaching middle age and looking for a special vacation home for their families, I feel as if the Black Mountain area will continue to see more and more people coming to appreciate our area.

2007 First Quarter Real Estate Trends

These charts are based upon information gathered from the Asheville Area Multiple Listings Service (MLS) for the first quarter of 2007. A brief analysis revealed some interesting statistics.  Please note that the figures presented do not include sales outside of the MLS system such as "for sale by owner" properties and developments not listed through MLS (such as The Settings).

One of the most surprising figures is that 67% more homes were listed in Black Mountain during 2007 than in 2006.  In fact, there were 72 homes listed this year compared with 43 last year.  This increase appears to be dramatic, but in fact it may  be more telling about 2006 than 2007.  During 2006 there were many fewer homes on the market in Black Mountain than in past years. In other words, this statistic tells me that the Black Mountain market was particularly tight in 2006.  The change in number of homes listed wasn't as dramatic for Buncombe County or Swannanoa in 2006; these communities showed a lower increase of homes listed of 22% and 17 %, respectively, for 2007.

In Swannanoa, the total volume and number of units sold in the first quarter of 2007 were well below 2006 figures.  Again, however, this is indicative perhaps of the sales in 2006 in several new subdivisions including Cherry Blossom Cove, Fernstone Village and Craggy View Cottages.  The sales in 2006 may have skewed the numbers, making it look as if sales slowed in 2007 when in fact they are not far off of the average.

A look at the figures for Black Mountain home sales prices indicates a drop of 8 percent for the first quarter of 2007. In 2006, however, one of the most expensive homes in Black Mountain sold for $1,045,000, which elevated total sales volume and average sales price for that quarter of the year. Also, Black Mountain home sales for 2007 included 2 mobile homes, one for $10,000 and one for $29,000, bringing down the average sales price for the quarter. If you look at specific numbers and remove these homes, the market was basically flat during the first quarter compared to 2006, with the median price up slightly by 3%.

Another key statistic to track in evaluating strength of the real estate market is days on the market. Buncombe County had an increase in the first quarter of 2007 from 76 days to 93 days, an increase of 22 percent that may indicate a slight slow-down in county home sales.

On the other hand, days on the market actually decreased in Black Mountain, from 124 days to 114 days, showing that the Black Mountain market remains fairly strong. Homes sold in Black Mountain reflect that most of the real estate sales occurred in the under $300,000 price range, with a slight decrease in units sold over that price range.

In conclusion, the real estate market seems to be stable for now. The only softness in the Black Mountain sales market seems to be home sales over $300,000. What appears to be a dramatic increase or decrease may in fact just reflect a return to a normal pattern. It may well be last year's numbers that were extraordinary. In short, while numbers are interesting and do give good information when interpreted properly, using a small sample of figures over a short period of time to may lead to the wrong conclusions.

Investing in Long-term Rentals

People often look at the Black Mountain area for investing in vacation rental property, a topic I will discuss at length at another time, but another part of the real estate market is long term rentals. Investors often look for this property, but it can be very difficult to judge the quality of their investment.

The rule of thumb used to be that monthly rates should reflect 1% of the purchase price. In other words, if you purchased a home for $100,000 then you should be able to rent it for $1,000 a month. That just doesn't happen in Black Mountain.

In general, no matter what the home's value, the rents are in a range of $650 to $1,500 per month. So while a home valued at $200,000 may generate a monthly rate of $1,000, a $400,000 will not generate a rental rate of $2,000. Usually, when rent exceeds $1,500 a month, the "renter" is looking to purchase a home rather than rent.

The Black Mountain real estate market is very efficient. I hardly ever see a property that cash flows--where monthly rental income equals or exceed expenses, including the mortgage payment. For that reason, it is very important that potential investors do a careful analysis of the rental market and their own expenses before delving into the real estate market. And investors often find that good properties with solid cash flow potential are very elusive.

Clark Mackey, president of Asheville Property Group, began his small company three years ago and now manages several long-term rental properties. He cites his own experience as an example of the difficulty in locating properties.

"I went a year and a half and made 15 offers on properties, none of which were accepted," he says. "I probably looked at 100 properties, and I wrote the offers based on what the rent will pay."

For Mackey, cash flow is only one consideration when purchasing a long-term rental property. For him and other investors, appreciation is another big factor.

What's interesting about property appreciation is that you're not just gaining appreciation on your down payment, but you actually see appreciation on the total home value. Say, for example, if you purchase an $180,000 home and put $70,000 down (financing $110,000). Assuming that rent pays all of the expenses, which can be a risky assumption, then the appreciation is based on the total value of the home, not the amount of the down payment. If the home appreciates 7.5% over 10 years, then the initial investment of $70,000 is worth $277,000. Of course this quick analysis assumes certain mortgage rates, etc.

Another consideration for these types of investments is the tax advantages. Depending on how the investment is structured, it is possible that all expenses, all costs, incurred with the house can be written off.

Michael Rauchwarg, Tax Partner with Dixon Hughes PLLC, points out that for investors looking to diversify, real estate can be a good opportunity if they do their homework first.

"A lot of people have done well in real estate," he notes. "But you have to want to be a landlord. And you have to be fully aware of what you're getting into. For example, can you survive a long-term period without rents? How will the property appreciate?"

As an accountant, Rauchwarg suggests a good cash flow analysis that assumes the worse case scenario. "Real estate might be a great investment," he warns. "But at the end of the day it might be easier to put the money into the stock market. It also helps to be a good handyman."

Maintenance and rehabbing of properties can add another dimension to the expense of time involved with rental properties. For Mackey, he learned a valuable lesson himself when he attempted to do his own rehab on a property. Assuming he would save money, he undertook cosmetic and small repair work on a property himself. He estimates it would have taken a contractor about 2 months to complete the project. With his own time constraints, it took him 8 months to finish, and he lost the rental income on the property for that time. In retrospect, he would have hired the contractor.

Mackey has gained a lot of his knowledge through real life experience, reading relevant books on the topic, and his association with the Carolina Real Estate Investors Association ( And with his experience, he offers words of caution to anyone considering investing in the long-term rental market.

"Be very careful," he warns. "I tell everyone that there are a lot of 30-something year old men who quit their jobs to go into real estate. I don't want to be a 30-something year old man who quit his job to go into real estate and went bankrupt. It's very difficult to get a good deal."

Blending a House in with our Mountain Environment

Several folks that have read my previous articles on the real estate growth in Black Mountain have asked me if I am not concerned about the negative impact of that growth. This feedback has inspired me to write a few articles on the topic during 2007.

Controlling the impact of development, mitigating the impact of growth, controlling growth are all difficult topics without an easy solution. I decided to write this month's article on a topic that to me is easy to write as well as to implement: blending your house into the mountain.

As an avid trail runner and hiker, I am often disappointed by a new house that impacts my view. Instead of more mountain ridges I am seeing more and more homes, rather than trees and mountains. All of us that live in a house have impacted the mountain scenery, so we are all guilty of disturbing nature. But everyone can do a few easy things to try to blend our houses into the environment.

In this article, I've included a picture of a brochure that offers suggestions to blend your house into the woods. The brochure is available at the Chamber of Commerce, many real estate offices and several area banks. 

The brochure gives several simple steps toward making sure your home does not disturb the incredible beauty of our region.  It recommends fitting the home to the natural contours of the property, building below the ridgeline, curving the driveway if possible, and choosing building materials that enhance the existing natural elements.

It's amazing the impact that something as easy as choice of paint color can have on camouflaging a home.  The accompanying photo has six or seven homes that literally pop out at you because of the light color choice of the homeowners.  There are actually 16 homes within this photo, but those with darker colored exteriors actually blend right into the surrounding landscape.

One area I've been impressed with is Laurel Ridge. The development has extensive architectural restrictions aimed at blending homes into the mountains. It isn't perfect. What was a pristine mountain cove is now dotted with homes and roads. The architectural review process, however, has helped mitigate the negative impact of the development on our views. Especially once the leaves are on the trees, it is difficult to find the 50 plus homes in Laurel Ridge.

To ensure new homes meet the guidelines, the development has an Architectural Review Committee (ARC) that must approve all plans prior to construction.  Failure to be in compliance results in fines and possibly legal action. The process toward compliance includes three facets: design, landscape and construction guidelines.

Included in the design aspect are specifics such as set-backs, building style and materials, height restrictions and even exterior lighting.  Landscape guidelines include identification of existing vegetation and post-construction work.  For example, approval is required prior to the cutting of any tree over 2" in diameter.  Construction requirements include erosion control and litter containers on site.

For David Begley, president of the Laurel Ridge ARC for 14 years, the impact of his committee is positive.  "It has worked pretty well and in general been well-received," he says.  "We require a site survey, and the setback is the hardest part to comply with.  Also, the colors, making sure it blends in, can be a challenge.  Sometimes people use lighter colors than desired."

Often times, I think we lose sight of the beautiful countryside in which we live.  I think it is worth a little of our time to consider how our homes impact that land.  The next time you have a chance to look around your neighborhood, consider the color choices, the landscaping, and the building materials of the various homes.  It seems a small step to take to preserve the incredible majesty of the Black Mountain area.   

Looking back at Real Estate in 2006

January is a great time to reflect on the local figures from last year and assess what trends and surprises we can cull from those numbers. In making my analysis, I am using the numbers provided by the Western North Carolina Regional Multiple Listing Service (MLS).

Perhaps most surprising to me was the sheer volume of homes sold in Buncumbe County in 2006--an astonishing $1.1 billion in sales of 4,072 homes.  That represents a 12% increase over the 2005 figures.  Of the amount in sales, $35 million were sold in Black Mountain and $40 million were sold in Swannanoa, an increase of 10% and 9% respectively. 

Another surprising aspect of the statistics was the jump in median price for homes in Black Mountain.  While county-wide the median price increased a modest 10%, within Black Mountain, that number grew by 25%.

It's interesting to look at the Black Mountain home price range in the last year and draw some conclusions from those figures.  For homes under $100,000, only 7 sold in 2006 compared with 19 for the year before.  At the same time, for homes over $500,000, 4 sold in 2006 compared with 6 in 2005, not quite as dramatic a decrease.  The mid-range market stayed fairly steady.  One can attribute some of that tremendous increase in the median price range to the diminishing market of that lower-priced home.

One final group of numbers that I have studied indicates that interest in land in Black Mountain continues to be very high.  With volume over $14 million, land sales have increased more than 34%, but there has been only a modest price per acre increase of 4%.  Look at those same figures within Swannanoa, and one might think that there has been a surge in volume and dramatic decrease in price per acre.  A closer inspection, however, indicates that the majority of that 483% increase in volume and 46% decrease in price per acre can be attributed to a single sale of 700 acres for $6.5 million.  When considering statistics as I have done this month, it is important to consider large purchases such as the one in Swannanoa, which can skew the numbers and create a one time effect on the statistics.