We are getting a nice steady rain this week spinning off from Tropical Storm Fay.  Before today the Duke Power Lake Norman lake levels are down about 2 feet.  I’ll bet we will be well above normal by the end of this week which is great after all the drought problems from last year.

I have recently learned that buried in the recently passed housing economic stimulus bill was a provision that changes the number of government backed loans a single investor can have on his/her credit report.  In the past you could have a limit of 10 investment properties in  your portfolio.  Now that has been changed to a maximum of 4.  If you have read my previous post about one option to fix this housing slump you will know that I think our Senate and House leadership are missing the mark completely by forcing the investor out of this market.  What do I know?

So, how many showings should you be getting?  Our market (about 30 square miles around Mooresville, NC) average showings are shown in the graphics below.

Mooresville, NC Property Showing $100,000-$250,000 price range

Mooresville, NC Property Showing $250,000-$500,000 price range

I am please to announce that our own Chad Huck, Interactive Marketing Manager, has been asked to be a contributing author to Zillow’s blog geared toward real estate agents. 

Chad Huck

I know first hand from the wealth of knowledge and assistance he has provided to our Century 21 Hecht Realty agent population, that agents across America who follow this blog will be advanced by Chad’s input.  Chad is extremely dedicated to helping agents build a productive web presence, knowing that the future of Real Estate brokerage relies heavily on our ability to embrace the Internet.  His knowledge base on this subject has grown tremendously in a relatively short period of time through his tireless dedication to reading, discussing, testing, and developing internet strategies for our company and our agents. 

If you do not have first hand access to Chad by being an agent with our company, keep and eye on Chad’s posts.  You won’t be disappointed.  If you are a Century 21 agent/broker you can catch Chad at the Century 21 International Convention, March 2009, in San Antonio as he will be a break-out presenter on the topic of Blogging for Business.

CNBC Housing “Crisis” Report video

Here are some of the highlights.  There are 120 million homes in America.  1/3 of all homes are owned free and clear of a mortgage, so that leaves 80 million homes with a mortgage.  ½ of those homes were purchased before the year 2000.  If you purchased before 2000 there has been 53% appreciation since 2000.  So even with this recent pull back in price you are up 34% nationally.  Over all 95% of mortgage holders pay on time so that leave about 4 million homes nationally that are potentially in trouble.  California alone accounts for more foreclosures than 40 other states combined!  Florida, Las Vegas, Pheonix have their more than fair share as well.  Those markets that soared in price the most need to be brought back in line with reality.  This is the free market system at work.  I love this country!  Great job Dennis Kneale with CNBC!

As you probably know I track the market around Mooresville NC which covers Statesville down through Troutman to the South Iredell County line and across Lake Norman on Hwy 150.  We have seen more properties going under contract each week than were under contract the previous week.  We are also seeing the number of new listings coming on the market decline slightly.  By no means are we in a buyers market but we may be seeing a bottom here.

ABC has a show called Extreme Home Makeover.  They typically take a family in need of a new home, send them on a week long vacation and build them a new home during that week.  This past week they have been in Charlotte. 

I’m proud to say my father, Darrell Long, was one of the volunteers who took a leadership role on this project.  He has been leading Mission building teams of 20-30 individuals for years to places such as Puerto Rico, the Dominican Republic and most recently lead teams to Cuba and Nicaragua.  So he is very skilled at leading groups of fairly unskilled works on extreme building projects.  Oh, and he has been a general contractor for 30+ years.

Well he got placed on the 10pm-4am night shift for day one of this build but it evidently didn’t take the American Homes representatives on site to see he had skill because after going home for a 1 hour break he and his 3 person crew of skilled friend were called back for a 24 hour straight run of work.  He has told me he had a great experience.  Evidently when ever they ran into an issue such as the stairs to the second floor did not come correctly from the manufacture and needed major alteration, they came to him and said drop whatever your doing, “do you know how to fix this”.  He did and they had to be fixed to get everyone to the second floor to continue the build.  Then they got to the second floor and the master shower was incorrect.  Again, he could fix it. 

I know from experience that he thrives on this type of fast paced, solving problems type of activity.  He was absolutely worn out Saturday night when my wife and I visited the job site but he was grinning from ear to ear telling us all about his experience on this project.  The family who will get this house will enjoy it I am sure but I know there are a lot of volunteers that will remember this experience forever.  I know he and his 3 friends that volunteered where among a group invited to a cast party of sorts last night with the cast and crew of the show, as a sign of appreciation of his work.  I can’t wait to hear about that experience and of course my wife wants to know if he got his picture made with Ty! 

To see a picture of Darrell click on this link and he is in the third row of pictures.  His friend Drake, who has been on mission trips with him before is to the right on that row.

It’s funny that the family who had this home build for them went to Puerto Rico on vacation and the week before the build my father had been hosting a group of about 30 kids and adults from Puerto Rico here in NC. 

The owner of Century 21 Hecht Realty, Bob Hecht, has written a very genuine and poignant letter to our sellers recently to assure them that we are very serious about achieving their goal of selling their property.  He goes in to some depth about condition, price, marketing, and the market.  I don’t know if there is another owner of a major real estate company around Lake Norman that has taken the time to directly communicate to each seller about the changing market conditions we are facing, but I think it shows Bob is a very passionate Real Estate professional as well as a very intelligent individual.   It probably helps that he has been in the business for over 35 years and has seen many market cycles.

Following that letter of encouragement, many of our agents and their listing clients have made a push to get ahead of the market and reduce their price.   

You know, we really haven’t had to “get a head” of a market in a long time.  For years you could price your home at market price or a little above and the market would come to you because homes were appreciating in value.  Now the market is flat, if not down a bit.  So if you price your property at current market value or a little above and you don’t get an offer quickly you can fall into the trap of chasing the market down.  This means you can drop your price after say 30-45 days, a few thousand dollars and again be at market value or a little high only to be over looked by serious buyers.  This can happen again and again until the market finally reaches a bottom at which point you catch the market and sell.  Of course selling at the absolute bottom of a market is a very bad outcome.  Another choice is to make a significant reduction to get ahead of the market and attract the buyers that are in the market in your price range. 

Here is a perfect, real life example: an agent in our office conferred with her client over the weekend and decided a price reduction of 5% was in order to get this property properly positioned in the market.  The agent followed up by calling all previous agents and clients who had looked at the property.  Come to find out there was a buyer literally waiting on the price of that home to be reduced a little to come into their price range.  They had already seen the house and loved it but felt it was a little to high.  The deal has now been negotiated within $1300 of the reduced price and signed by both parties! 

If you are selling a home in this market it can be done and can be done achieving the highest possible price in the least amount of time.  You must be very shrewd about your market positioning and watch the market very carefully through out the selling process.  If you need some help I would be happy to give you the agent’s name discussed above or the name of any one of the many well trained and market savvy agents that I have the pleasure of managing.  I am confident these are the most highly trained and educated agents on Lake Norman and in the Mooresville area. 

Tonight the Mooresville Town Commissioners ruled on the proposed Gross Receipts Tax to fund a Traffic Task Force.  This tax would take effect April 30 2009.  It would include a .60c per thousand tax, capped at $5000, for some businesses. This mean small business will be taxed the same as big box stores however big boxes will have a higher income of gross receipts to pay the tax.  This doesn’t seem to be fair to me.
Downtown businesses, for some reason, are exempt.  By the way, Mayor Bill Thunberg is an owner of a downtown business.   Also exempt would be non profit organizations and a few others such as Real Estate Agents who already pay a NC state privilege license.  This tax doesn’t make any sense.  Why would you tax businesses that produce a high tax return to the city versus property tax revenue?  It forced to do so these businesses could and would move outside of the city limits to avoid such a task.  Also, business looking to locate in this area would be smart to locate outside of the city but their employees could live in the city limits and use the roads and other town resources.  Let’s say a company say the size of Lowes Corporate were to locate in the county of Iredell and the hundreds of employees buy home in the city limits of Mooresville.  The effect of the tax has been unequivocally nullified.  Now those residents use the roads without additional tax money to fund the Traffic Task Force for which such a tax was intended. 

I am glad to say the Mooresville Town Commissioners have made a smart decision to not move forward with the Gross Receipts Tax. 

Backup Mortgage Approval is something we haven’t needed in the past but has become ever more important in this changing Real Estate Market.  Leaders have had a knee jerk reaction to the lending crisis created by loaning money to individuals who probably shouldn’t have been approved for a loan in the first place. I know this is going to be hard to believe but some of those individuals defaulted on the loan.  If the market had continued to appreciate, the lender or the troubled borrower could have broken even selling the property.  Unfortunately home prices have come down over the past two years. 

Lenders have tightened up their lending standards back to a more reasonable level of credit worthiness and debt to income ratio, but with any knee jerk reaction they are now over reacting.  We have had several deals in our offices be a couple of days from the closing table only to have the lender present a couple of pages of conditions for the loan, or the lender has just disappeared and the phone is disconnected!  The newest wrinkle we have seen is the lender calling for the home inspection report and requesting everything on the report be repaired before they will fund the loan.  This included items such as the microwave oven light, which is an appliance and is not actually part of the real property. 

In the recent past the lender typically only required an appraisal and sometimes they would lend just based on tax value!  Lenders had stopped requiring a pest inspection to ensure the house wasn’t falling down from termites.  Again those were not safe and sound lending practices but now some lenders are over reacting with unreasonable request, in my opinion.

To diminish the chance that a lender will cause a home purchase to fall apart at the 11^thhour I suggest having a backup mortgage approval in place.  If you are a buyer and you apply to a lender and get approved, within 2 weeks go to lender B and also get approved.  It is my understanding that if you apply too a second lender within 2 weeks it will not be a second hit on your credit report.  Then you will have two pre-approval letters to present with your offer to a seller!  Your competition normally presents one pre-approval to the seller.  So you look even better to that seller of the house that you want to purchase than other buyers.  If you have a problem with the first lender closing your purchase then you have lender B standing by ready to assist you.  If you apply to lender A and then 45-60 days later they can not complete the loan, when you apply to lender B at this point you will have a second hit on your credit report. 

As a seller you should request a backup mortgage approval with any contract that is presented to you.  Unless you are 100% satisfied that lender A will get the loan to closing, why wouldn’t you want to have a second lender standing by if there is a problem?  Make it a condition of accepting the contract.

We can get through this lending crisis but we need to be smart as we proceed.