Blog :: 2008

Home Inspections prior to Selling

People often ask what they can do to make their house sell faster once they decide to put it on the market.  Before a seller begins to think about pricing, etc., I strongly suggest they have a home inspection done.  That's right, the seller.  While buyers usually choose to have a home inspected prior to purchase, I feel that it's just as important to have the seller conduct an inspection.

Why have a home inspected that you're not going to stay in?  The answer is fairly simple.  First of all, it illustrates to potential buyers that you care about the house and the house's upkeep.  If you're willing to have the home inspected, you're obviously a careful and thorough homeowner who would have taken good care of your home from the start.

In addition, when the inspection is done, you can take care of any issues that come up yourself which saves time during the negotiating process. I can't tell you how many times a buyer will submit a bid, pending a home inspection, only to come back with the list of needed repairs detected through the home inspection, which means the buyer and seller have to  go back to the negotiating table for a price.

There's also the option of not doing the repairs but being honest with potential buyers.  For example, the sellers may need to repair the downspouts and gutters and may take some money off of the selling price, acknowledging that the work needs to be done by the buyer.

So, regardless of whether you are the buyer or the seller, what are the qualifications to look for when choosing a home inspector?  First of all, in North Carolina, they must be licensed by the N.C. Home Inspector Licensing Board.  Also, consider how long they have been in the business and if they have been in the construction business themselves.  You also want to be sure they are bonded and have liability insurance.

Now, you've chosen the inspector.  What can you expect?  Cost will vary according to home size.  In general, up to 1,000 square feet will be about $250 while a 4,000 square foot home will be at least $400.  Beware of anyone who gives you a rock bottom price.

A complete inspection will cover everything from structural defects and foundation problems to plumbing to roofs to porches and decks.  Generally, it is preferable for you to be present during the home inspection so that you can see first hand any issues that the inspector discovers.  Expect a thorough inspection to take two to three hours, again depending on the home size.

According to Dan O'Brien who works in Asheville and Black Mountain with Pillar to Post, a national home inspection franchise, the most common problem he sees during inspections is water damage.  This issue can be caused by not maintaining the gutters, not ensuring the home is properly painted, and improper landscaping so the ground does not slope away from the structure.

Another problem he sees frequently is GFI outlets, those electric outlets near water that are more sensitive, not working properly. 

"It's amazing how a few simple things could be done so there aren't any problems at all," he explains.

That's another reason I strongly suggest a seller's inspection.  Being able to offer a home clear of inspection problems goes a long way toward simplifying the selling process.  And a simple process equals a quicker sale.


Mortgage Market

The past few weeks have been full of dramatic shifts in the stock market and dire predictions about our economy. The financial industry in particular has been in the news, and in watching the national news one can come away with the impression that loans, home mortgages especially, are not available for most people at this time. In fact, a quick survey of local area bankers indicates that funds are still available."I watch television, and I would think it's hard to get a loan too," agrees Christy Bencivenga-Burns of First Citizens Bank. "At First Citizens we were never involved in the sub prime mortgages so we have not been affected by that. We are still doing mortgages. It's just that you have to be qualified...that's the important word...qualified."

So how does that affect the consumer? First of all, it means that potential homebuyers should be able to put something down on their homes prior to purchase, rather than obtaining 100% funding. 

Bencivenga-Burns points out that in the past, Fannie Mae would underwrite a loan with no proof of income and no verifiable assets. In addition, they were willing to finance 100% of the home value. Most of the banks I spoke with in the area, however, have not taken part in that practice, so they have not suffered the consequences that the larger national financial institutions are experiencing.

"We are evaluating and underwriting new loans every day and have not changed our lending standards," says Lee Ann Lewis of BB&T. "It is simply against our philosophy and values to put our clients at financial risk."

"Our bank has plenty of funds," agrees David Begley, of Black Mountain Savings Bank. "We are doing what we have always done, offering 80% of value to folks that have good credit."

"Black Mountain Savings has seen a large increase in deposits due to consumers fleeing to safety and local banks," Begley says. "Black Mountain Savings is one of the few banks nationally that doesn't borrow from other institutions to fund their loans so we haven't been impacted by the national credit crisis."

As a consumer seeking a mortgage, what should someone seeking a loan do to smooth out the process? According to Bencivenga-Burns, the first step is to check your own credit score. 

"Pull the report yourself first," she advises. "Clean up any issues that need to be resolved prior to making the loan application. A high credit score will get you the best rates and improve your chances of being approved."

Another area of concern is the applicant's debt to income ratio. While in the past consumers with rates as high as 65% were approved, area bankers agree that these days, that debt income ratio needs to be much lower.

In short, in speaking with our local bankers, it appears that the mortgage business has changed but primarily for those larger banks who were taking extraordinary risks nationally. For our local financial institutions, loan officers have funds available for their customers who have provable income, solid credit scores, and a down payment for their new home.

Black Mountain Market Summer Update

For the first time, looking at the latest real estate numbers provided by Multiple Listing Service (MLS) it is possible to see the national downturn in the market creeping into our area. 

In Buncombe County, for example, the number of homes sold has decreased 27% year to date from January to June 2008 (the most recent numbers available) compared with January to June 2007.  Similarly, in Black Mountain, the number of homes sold has decreased 28% over the same period versus last year. 

Despite those numbers, however, I can still see some positive signs within the market.  While the average price of homes sold nationally year to date through May (the latest numbers available) is down 6% when compared with the similar period from 2007 and Buncombe County numbers are down similarly, within Black Mountain, prices have actually increased a dramatic 31% in 2008 year to date as compared with similar dates from 2007. 

There are no statistics to support my theory specifically, but I feel as if that increase is due to the more expensive homes that have been built in our area in the last 10 years which are now coming onto the market.  In addition, we are seeing many out of town folks moving here, relocating or purchasing retirement homes for near future use.  For this reason, I feel as if we remain a solid real estate market.

Unfortunately, land sales are also down for the latest period, although again Black Mountain, down 28%, still shows more strength than the Buncombe County numbers, down 42%.

So why, given some of these downward turning numbers, do I remain positive about Black Mountain?  First of all, within our real estate firm we continue to see very positive traffic of buyers coming through. In addition, people who want to sell are beginning to offer some deals which should help the market increase as we move forward.  And lastly, we have held our own for quite a while as other markets across the country have been experiencing a downturn.  The markets such as ours that are the last to see the negative impacts are generally the first to recover.  I certainly expect that to be true for our solid Black Mountain real estate market.

Black Mountain Land Sales

Any time I start tracking land sales, I get sidetracked by all the variables in each sale.  For example, a remote, steep 20 acre tract of land in the outreaches of Black Mountain can sell for much less than a ¼ acre tract within the Black Mountain city limits.  The mix of size and location of property sales makes it very difficult to compare land sales from year to year and get a very meaningful trend.

As usual, I have used data from Asheville area multiple listing services (MLS).  The data doesn't include for sale by owners or some new developments.

Beginning in 2006 with a couple of lots and then in 2007, the development The Settings listed some of their lots in MLS for the first time.  The attached chart for 2007 includes eight Settings lots that sold last year which skews the numbers somewhat.

While the number of acres sold in 2007 seems to be a large increase over the previous year, it is actually just a little bit below the 5 year average of 530 acres sold. The price per acre rises dramatically from 2006 to 2007, but again it bodes mentioning that including The Settings' sales has impacted that figure for 2007.

Perhaps the best way of evaluating land values is to look at similar sales from year to year.  I know from my own experience selling lots in Montreat that I have seen a large increase in prices over the years.  I remember what I first started selling real estate in 1999 that buyers were complaining that someone was asking $75,000 for a lot.  In 2007, several lots sold for more that $170,000.  I have watched lots sell for $120,000 in 2005 to $175,000 in 2007.

I also asked some of my brokerage friends if they had recently sold the same lot twice which gives a very clear picture of where land sale values are. 

Corey Atherton, a broker at Creston, said that a lot at Creston that sold for $115,000 in January 2005 was resold for $205,000 in August of 2007, a 78% increase in approximately 2.5 years.  Another lot in Creston sold for $166,000 in February of 2006 and resold for $205,000 in September of 2007 for a 23% increase in approximately one and a half years. 

Sharon Came, a broker at Greybeard Realty who specializes in the Laurel Ridge development, said a lot there sold for $58,000 in March 2004 and then resold for $130,000 in November 2007, a 124% increase in three and a half years.

As Black Mountain gets more and more developed, I would assume that over time large tracts will become less numerous and represent a lower portion of total sales.  Similarly, property within close proximity of town is becoming a smaller portion of total sales as the area surrounding Black Mountain gets more developed.

My experience in Montreat as well as my colleagues' experiences at Creston and Laurel Ridge reflect the increase in land values occurring in the BlackMountain area.  This is not to say that all places have appreciated in a similar fashion, in fact some have decreased over time, but it is clear to me that the general trend in land prices indicates a tremendous appreciation of value.

The 2007 Real Estate Market in Review

I thought it would be interesting to study this year's ending numbers as I did last year's, if only to confirm my feeling that the Black Mountain housing market continues to do well, bucking the national downward trend.  What I found in my analysis was surprising from two standpoints.

First of all, it was astounding how well the Black Mountain real estate market is doing.  And secondly it was surprising to study that market in contrast with the county market and real estate activity in surrounding towns.  For my comparisons, I have always used the Multiple Listing Service (MLS) numbers which do not include for sale by owners or new construction.

Within Black Mountain, as the chart indicates, home sales increased on a per unit basis by 18%.  Total sales volume increased by 29% during 2007.  Compare that increase from 2007 to the smaller increase of 10% in 2006, and you will see that my hunch about the Black Mountain market is on target.  Black Mountain continues to show steady growth both in terms of units sold and total sales volume over the end of year 2006 numbers.

Now, compare those same numbers with the numbers from Swannanoa and Buncombe County overall and you will see the striking contrast between Black Mountain and the rest of the area.  In Swannanoa in 2007, homes sales on a unit basis decreased by 38% with total sales volume declining 36%.  In 2006, Swannanoa showed a modest growth of 9% in total sales volume.  County-wide, the numbers are similar though the decline is slightly less.  The number of homes sold across the county shrank by 16% in 2007 and the total sales volume went down 10%.  Compare that with a 12% increase in total sales volume for 2006, and you will see that the national housing slowdown is getting closer to Black Mountain.

So I asked myself the next logical question: why is Black Mountain continuing on its steady path while the real estate markets of surrounding communities and the county overall are slipping?  I had my own theories, but I went first to others with interests in the area and came up with some solid theories.

First of all I asked my Greybeard Realty sales brokers for their opinions, and several of them said that the folks they are working with just love Black Mountain.  They indicated that their clients love the quality of life, the small town feel and the close proximity to Asheville.

"Many people I show property to have driven all around Buncombe County," explains Rosie Johnson, a Greybeard broker.  "Black Mountain appeals to them most because of the quaint downtown, the friendly people, the great restaurants, and even the gym at Cheshire.  There's really nothing else like it in the rest of the county."

Another person I contacted was Greg Palombi with Accurate Appraisal Services and owner of Asheville Real Estate Network. 

"A few years ago there just wasn't much on the market so buyers couldn't find a house," he offers.  "Now there is more on the market so it is easier to match buyer and seller."

I agree with his explanation that the increase can be attributed in part to pent up demand.  Two years ago I remember there were only 55 homes on the market in Black Mountain.  Now there are 140.  I can remember being frustrated that I had buyers but couldn't find them the right property.

I have another theory that Black Mountain has been "found."  Several articles have appeared about Black Mountain in national publications such as The New York Times, and we have several new Black Mountain developments that are advertising nationally.  I talked with Bob McMurray, president of the Black Mountain Swannanoa Chamber of Commerce, and he notes that the Chamber has seen increased traffic during 2007.  The website alone has received 20% more visitors than it did in 2006.

Another idea that I do not have the numbers to support, is that I find the Black Mountain market to be more retirement and second home driven than other areas in the county. That may be another reason that Black Mountain is not following the downward trend that the national real estate market is.

Given the easing of interest rates and the rapt attention on the economy that the 2008 presidential race has generated, I believe that Black Mountain will continue to buck the national trend in the real estate market.  And I think in the year to come even more people will come to appreciate the special qualities Black Mountain has to offer.