Real Estate myth busting #1

From time to time, I will address certain Real Estate myths that I uncover, and I will expose them here in the blog. As I discover new ones (and people are always creating new ones...these things are like computer viruses, folks), I'll be sure they are brought to light here.

Here's one that I am going to debunk right now. I was speaking with a prospective client a few days ago. This person was very savvy and knew quite a lot about Real Estate and what is involved in selling one's property. Towards the end of our conversation, she asked me, "Why does it take so much longer to close when REALTORS are involved?"

The short answer is, "It doesn't."

Working with a REALTOR will not, by itself, increase or decrease the time between getting "under contract" and closing. Now, a REALTOR might suggest that a client increase this duration due to contingencies on obtaining financing, selling one's current property, waiting for a lease to expire, or about a thousand other possibilities.

All of these things can and do happen with "For Sale by Owner" situations. The real difference is that, without a REALTOR, you may not know to ask for a longer time before closing. A REALTOR is trained to ask the questions that the client may not think to ask. Be sure to tell your REALTOR about your situation. Treat him or her like your closest friend. We have a fiduciary responsibility to our clients. If you don't think you can trust your REALTOR, dump them and get a new one.

The Market is great!

I've said it over and over lately. It is a great market!

Technically speaking, the market is always great. The only thing that changes is for whom the market is great. (Too many uses of 'great?'....sorry)

It all has to do with supply, demand, and months supply. Supply and demand are easy enough. Supply is what we have, and demand is what we want. When we have more than we want, prices go down. When we want more than we have, prices go up. Got it? OK. Months supply is a number that helps us understand whose market it is: buyers or sellers?

The following is a quote from the National Association of REALTORS:

Assessing months supply is an

important consideration when

describing market conditions. It

succinctly measures activity in the

housing market at a given point in

time.

Months supply is determined by

calculating the ratio of inventory

available for sale at the seasonal

sales pace in a given month. If

months supply increases, the

implication is housing demand

favors buyers; if it decreases it

suggests better opportunities for

sellers.

The current national months

supply of housing inventory is 9.4

months, down from 11 months

one year ago. This means that, at

the current rate of sales and

available inventory, it would take

about nine months to sell all the

homes currently available for sale.

However, for homes under

$250,000, months supply is six

months, which indicates greater

demand. In contrast, the market

for $1 million+ homes is virtually

frozen at 21 months.

So what does it all mean? The bottom line is that we have had a buyer's market for quite a while now. If you wanted to buy a house, you had plenty of inventory from which to choose and prices looked pretty good. The trend appears to be shifting now. With the exception of mega-homes, sellers are getting stronger. We can attribute this shift to things like the implementation of tax credits ($8000 for new home buyers) and the reduction in new construction.

Over 65? There's a property tax advantage to it.

If you have reached the magical age of 65 and you own your own home in Arkansas, you have an advantage over the rest of us: you can have the assessed value of your principal residence frozen. Amendment 79 caps the assessment of your principal residence if you were 65 or older on January 1 of the current year.

There are two things to note, the first being that you must be 65 on January 1. If you turn 65 during the year, you get the tax benefit in the following year. The second thing is that this does not have anything to do with your area's millage rate. Here in Conway, the millage rate is 47.60. If the people of this great city vote a millage increase, you get to participate in that higher rate, too.

There is one more thing that affects this advantage: additions. If you improve your property, that opens it up for a re-assessment. Check with the County Assessor with any questions you have (and don't forget to ask about the $350 Homestead credit while you're at it). Our Assessor is Jeff Stephens and his number is 450-4905.

Only 45 shopping days left....

Yep, only 45 shopping days left. At least, that's what I recommend. Let's not wait until the last minute.

Come November 30, the $8000 first-time home buyers tax credit goes bye-bye. "But, wait!" you say. "That's 91 days from today. Where did you learn to count?"

Ah, but you have to CLOSE by November 30. If you are a true first-time buyer (and most who qualify for this credit are), you may not know that it can take weeks to close on a house. To have a reasonable reliance upon getting your tax credit, you ought to be under contract by October 15. That gives you 45 days from today to shop for that home of your dreams.

If you are holding out for a better deal, keep in mind that it will literally take an act of Congress to make it happen. There are extensions and expansions in the pipeline right now. These bills are stuck in committees and haven't passed over all the hurdles to become law. Roll the dice and hope for the best? That is a question you will have to answer for yourself.

That does lead me to one point, though. Please don't rush out and buy a house just for the tax benefit. Purchasing a home is a big decision and one you shouldn't take lightly. A REALTOR can help you navigate the challenging process of searching, negotiation, and purchasing your home. We are trained to help you find houses in your price range and possibly spot potential pitfalls that may not be obvious.