One issue that often seems to be on a buyer's mind these days is the question of how much they should be able to negotiate off of an asking price for a house.  Let's take a look at closings from the past 30 days to provide some insight into what buyers are actually accomplishing right now in the market.

Examining all residential sales in Harrisonburg and Rockingham County (10/17/2008 - 11/16/2008) we find...

• 51 residential properties have sold
• The average sale price to list price ratio is 97.39%.
• The median sale price to list price ratio is 97.87%.

Buyers are still coming relatively close to the asking price --- within 3%.  Taking a closer look, of the 51 properties that sold:

• Only 1 buyer managed to negotiate more than 10% off the asking price (sales price of $100k, sale/list ratio of 77%)
• Only 8 other buyers managed to negotiate more than 5% off the asking price (sales prices of $101k, $113k, $167k, $170k, $210k, $249k, $318k, $441k)
  

If you're considering buying in the near future, you should realize that this is certainly a buyer's market, but you won't necessarily have the ability to negotiate more than 10% off the asking price.

Buying or selling real estate can be a complicated process at times, and questions often abound.  If you have questions about the process, or about the market, or about some other real estate related topic, feel free to leave a comment below, or e-mail me (scott@cbfunkhouser.com) or call me (540-578-0102).

Many of the topics covered on this blog are a result of questions that people like you have asked --- so feel free to step up to the mic to get your question(s) answered!

Have you eaten at Taste of Thai? 

The owners will soon be opening a new restaurant downtown.

Learn more about Taste of Thai, Prasert, and more at "the state" a local blog that plans to interview many restaurant owners to provide an inside look at dining in Harrisonburg.

As mentioned last week, Dave's Downtown Taverna was coming up on a huge milestone --- having served 1,000,000 customers! 

I had lunch at Dave's this past Friday, and wouldn't you know, the one millionth customer was sitting just a few tables away.  IF ONLY I had come 30 minutes earlier!

Ah well --- congratulations to Dave's for over 14 years of great food and service in downtown Harrisonburg!

Some investors wonder whether there are any good opportunities anymore in buying investment properties. 

You will find good investment opportunities if...

1. you are willing to put down a 10% - 20% down payment
2. you are willing to break even instead of expecting to have a significant amount of positive cash flow
3. you plan to keep the property for three or more years
4. you are willing to patiently wait for and thoroughly research available properties
5. you are willing to make exploratory offers to conclusively determine the amount of flexibility in a given asking price

Here are two good examples of potentially sound investment purchases...

• 870 Merlins Way, Harrisonburg, VA
• 880 Merlins Way, Harrisonburg, VA

If you're interested in seeing either of these properties, or having an investment analysis for these or other properties, feel free to call (540-578-0102) or e-mail me (scott@cbfunkhouser.com).

I sometimes have buyer clients who after seeing many homes, feel the need to re-visit one or some to further lock-in their priorities and decision. 

Sometimes these buyers tentatively ask if it would be o.k. to revisit such a home.  My answer?  Absolutely!

If we need to return to a home a second time (or a third time) to take room measurements, get a feel for the layout and flow, become comfortable with the size of the yard, that's fine!

Buying a home is a huge investment of your money, and your new home will hopefully be where you live for many years to come.  Let's make sure we're finding you the right house!

I received this question by e-mail a few days ago, and I had never really considered this before.  Are buyers less excited about well/cistern/septic, or are buyers indifferent?  This analysis won't conclusively answer that question, but it is an attempt to look at what statistical data suggests....

In 2008, there have been 382 single-family, non-Massanutten home sales in Rockingham County.  Of those, 244 of the home sales were on both public water and public sewer, and 130 did not have public water or public sewer.

The properties with public water and sewer, on average, took 177 days to sell.
The properties without public water or sewer, on average, took 155 days to sell.

This was a bit of a surprise to me --- I had suspected that homes with public water and sewer would sell more quickly.  Let's take a look at a few prior years to see if this trend has been persistent over time...

In 2007, homes with public water and sewer, on average, took 169 days to sell.
In 2007, homes without public water and sewer, on average, took 133 days to sell.

Again --- homes without public water and sewer sell more quickly!

In 2006, homes with public water and sewer, on average, took 131 days to sell.
In 2006, homes without public water and sewer, on average, took 111 days to sell.

So --- can anyone think of any possible confounding variables?

Amidst turbulent economic times across the country, Virginia is a bright spot!

Governor Kaine announced yesterday that all three credit rating agencies (Moody's, Fitch, and Standard & Poor's) have assigned their triple-Abond rating with a stable outlook to the Commonwealth's GeneralObligation Bonds.

"The triple-A ratings are a testament to Virginia's fiscal strengths,"Governor Kaine said. "They also underscore the timely efforts we havemade to address the impact on Virginia of the slowing national economy."

Read more here, and be glad you live in Virginia!

Have you ever heard of a blower door test? 

EnergyStar (and EarthCraft) homes are built to higher energy efficiency standards than your typical new construction home.  EnergyStar homes have to meet standards set by the EPA, and are typically between 15% and 30% more energy efficient than traditionally built new construction homes.

But how do you test the energy efficiency of a home?  A common test is a blower door test, where a calibrated fan blows air out of the house while the pressure of the air flow is monitored.  This test measures how "tight" a home has been built.  A "tighter" home will be more energy efficient, as heated or cooled air will not escape the home as quickly.

The home pictured above, 1270 Cottage Circle, is quite energy efficient (and green) with flash coat insulation, windows with a U-factor under 0.4, a 14-seer HVAC system, EnergyStar appliances, Toto Eco toilets, Lahara efficient faucets and shower heads, a fiber cement board exterior, Low VOC carpets and paints, and recycled hardwood floors.

Today, Benjamin Meredith with Building Knowledge conducted a preliminary blower door test on the home to test its efficiency.  Enjoy the brief interview with Laura Scripture, of Scripture Communities.

For the last several years, the City of Harrisonburg has been working on plans to connect Erickson Avenue and Stone Spring Road.  Doing so, however, involves acquiring additional land currently owned by residents of Harrisonburg. 

Yesterday, the City Council approved the use of eminent domain if needed.  Eminent domain is the power to take private property for public use with compensation being paid to the owner. 

Will the City have to "take" the land via eminent domain?  Not necessarily --- if the owners agree to sell it to the City.  City staff report that all but four or five property owners entered into agreements with the City to transfer the needed land. 

You may recall in (somewhat) recent news that JMU's acquisition of the Kyger property almost required the use of eminent domain.

1,507 homes sold in Harrisonburg and Rockingham County in 2004, compared to a projected 983 this year (2008).  That shows a decline of 35% when comparing 2004 and 2008.

In stark contrast, 411 lots (less than one acre) sold in Harrisonburg and Rockingham County in 2004, compared to a projected 79 this year (2008).  That shows a massive decline (as pictured above) of 80% when comparing 2004 and 2008.

If you're looking to sell a lot right now, you may need to prepare yourself for a long wait.  The current inventory of 363 lots may take a few years to sell.

If you like eating at Dave's Downtown Taverna, you'll want to eat there this week!  (or maybe next week)

Dave's is getting very close to serving their one millionth customer, and when they do, that customer will receive a $500 gift certificate to Dave's Downtown Taverna.  Wow!

So whether you're going for their gyro, souvlaki, pizza or pasta, make sure to eat at Dave's this week!

Dave's is located in downtown Harrisonburg -- directions and a map are here.

The October 2008 Harrisonburg & Rockingham County Real Estate Market Report is now available. Click here for a printable PDF of this report.



Sales continue to be slow compared to last year, but overall prices continue to slowly and steadily increase.  Both the median and average sales price increased when comparing January through October of last year versus this year.



After a strong September (compared to last September), October's sales figures are lower than expected.  October's sales (62) were 40% lower than last October's sales (103).  Perhaps last year's fall months (October & November) were an anomaly with their strong increase.



This graph shows a normalized trend of home sales by charting the ongoing sum of the preceding 12 months' sales.  Despite an increase in sales pace last month (October 2008), this month we again see a continued decrease in this long-term sales trend.



Inventory continues to decline in Harrisonburg and Rockingham County --- this month down to 866 active single family, townhome and condo listings.  This is a 9% decrease compared to June 2008's inventory level of 956 active properties.



As inventory continues to decline, likewise the number of months of housing that is on the market has also declined.  The top two price ranges ($300k-$400k, $400k+) both are headed back down towards (somewhat) healthier supply levels.

For almost all of my listings, I have flyer boxes in front of the home to provide interested buyers (or neighbors) with instant information on the home.

Sometimes I wonder....

• Do flyers help possible buyers realize that a home might be perfect for them, and thus incite them to look at the home? or...
  
• Do flyers make some possible buyers discount the home as an option for them whereby if they had seen inside the home they might have been more moved?

And the bigger question....

• If I removed all of my flyer boxes would more or less buyers schedule appointments to visit the home?

Consider joining the Virginia Homeowners Alliance...a web site focused on giving helpful information about issues affecting Virginia homeowners and homebuyers at the state and local levels.

When there are growth, development, education or zoning issues in our area, you will receive alerts and updates on these issues.  When there are legislative issues being discussed in Richmond that could affect you as a homeowner, you will receive alerts and updates.

Visit www.vahomeownersalliance.com to join the Virginia Homeowners Alliance.

It's anyone's guess what interest rates might do in the next 3, 6 or 12 months, but rates continue to be historically low.  Given these low rates, you may be considering whether it would be worthwhile to refinance.

Here's a sample analysis of whether "Bob" should refinance, that might be helpful as you analyze your own scenario.  Here's what you need to know about Bob....

• Home Value = $275,000
• Original Mortgage = $212,500 @ 7% for 30 years
• Current Balance = $200,000 (after five years, thus 25 years remaining)
• Current Payment = $1,414/month (principal & interest)
• Refinance Opportunity = 6.25% with a fee of $2,500

If Bob refinances for $202,500 (including the refinance fee estimate of $2,500), his new payment will be only $1,247/month.  This means that it will take only 15 months for the savings to have added up to the cost of the refinancing process.  ($2,500 divided by the difference in monthly payments)

One important note --- Bob lowered his payment by $167/month by refinancing not only because he lowered his rate, but also because he extended his remaining loan term from 25 years back up to 30 years. 

So, bottom line...

• Can refinancing your mortgage lower your monthly payment?  Absolutely!
• Can you recoup the cost of the refinancing process?  Absolutely!
• Should everyone refinance if the current rates are lower, or if it would lower their monthly payments?  Not necessarily! 
  

If an analysis of your current finance/refinance scenario would be helpful to you, please let me know.  I can either walk you through some of the basic calculations, or put you in touch with a qualified lender who can.

In local elections, Kai Deigner was elected to the City Council yesterday, along with Richard Baugh and Dave Wiens.  Kai won with the most (6,060) votes, followed by Richard (5,133) and Dave (4,663).

How did Kai do it?  What was his platform?

Of note, Kai is passionate about several real estate related issues, such as Smarth Growth, and Downtown Revitalization.

Kai on Smart Growth...
Harrisonburg is changing quickly, and Ibelieve we need to be proactive in making sure we preserve our openspace, control traffic, and build smartly. We should use the principlesof smart growth, "an urban planning and transportation theory that concentrates growth in the center of a city to avoid urban sprawl; and advocates compact, transit-oriented, walkable, bicycle-friendly land use, including neighborhood schools, streets that work for everyone, mixed-use development with a range of housing choices." (source)

Read more about smart growth...

• What is Smart Growth
• Coalition for Smarter Growth
• Urban Exchange in downtown Harrisonburg
  

Kai on Downtown Revitalization...
Downtown is the heart of Harrisonburg and I'm committed to continuingthe renaissance. Using the available retail, living, and office spacedowntown is a wonderful way to continue building on the momentum thatso many people, businesses, and organizations have contributed to inthe last decade. Harrisonburg Downtown Renaissance, with whom I workwith closely each week, is to be commended for their dedication.

Read more about Downtown Revitalization...

• 23 Guiding Values for the Revitalization of Downtown Harrisonburg
• Harrisonburg Downtown Renaissance
• Eugene Stolzfus Architects' "urban values & vision for downtown harrisonburg"
• Urban Exchange in downtown Harrisonburg
  

Kai's other issues (citizen education, open government, energy efficiency, city dog park) are also worth reading about.  Congrats to Kai --- I'm excited to see the things he will accomplish on City Council!

As I mentioned a few weeks ago, some sellers think, or assume that the date filled into the contract will be the actual closing date.

So, if a seller wants or needs to nail down a specific closing date, can it be done?  A common inclination is to insert "time is of the essence" into the contract.  This seemingly innocent phrase signifies that if the closing does not take place on or before the closing date stated in the contract, the deal is off!

This is a problem, because in almost all cases, the seller who wants the closing to happen on a particular date does not really want the deal to fall apart.

The fact of the matter is that it is, reasonably, very difficult to contractually mandate a specific closing date.  It isn't reasonable for a seller to demand a particular closing date because the buyer isn't always in total control of the timing of the closing.  If an appraiser, loan underwriter or settlement agent (for example) is behind in their part of the process, the closing can be delayed without the buyer having any control over the situation.

If, as a seller, you want to nail down a specific closing date, I would suggest that you:

1. Communicate this strong preference kindly but repetitively to the agent representing the buyer.
2. Consider putting a positive financial incentive into the contract for closing by a particular date.  Ex. If settlement on the subject property occurs on or before November 15, 2008, the Seller shall credit the Buyer $500 towards the Buyer's closing costs, points or pre-paids.
3. Follow up with every person or company that will touch the transaction to make sure they are aware of the importance of a timely closing.

One option you have when obtaining a mortgage is to pay a loan discount point to lower the interest rate on your mortgage.  In most cases, a loan discount point will cost 1% of the loan amount, and will lower the interest rate by 0.125% over the life of the loan.

For example, on a 30 year, $200,000 loan at 6.5%, with no discount points, your principal and interest payment would be $1,264.14.

If, however, you paid one point, the $200,000 loan at 6.375% would require a principal and interest payment of $1,247.74.

The cost of the loan discount point would be $2,000, and it would save you $16.40 each month.  Thus, it would take 122 months (10 years, 2 months) before you started to realize any savings.

However, to take it one step further, we should include the tax benefits of having bought the loan discount point.  The $2,000 is tax deductible, thus if you are in the 25% tax bracket, you would have a tax savings of $500, and only need to recoup $1,500 of savings.  By including this tax perspective, it would only take 92 months (7 years, 8 months) for you to start seeing savings for having bought the discount point.

Bottom line --- in the examples above, if you don't plan to own the house for more than 7-ish years (or 10-ish years), it is likely not worthwhile to buy the loan discount point.

I always encourage my buyer clients to talk with at least two lenders.  Different lenders offer different loan programs, closing costs, incentives, and more.  Often, however, this leads to comparing what can be two very confusing documents --- the good faith estimates from each lender.

The Good Faith Estimate is a document intended to outline all of your purchasing costs, and thus is a good document to use when deciding between your two favorite lenders.  But it can often be quite difficult to make the comparison because costs can have so many different names on the GFE, and because there are non-lender fees included in these estimates.

If you are deciding which lender to use based on closing costs, remember to subtract out all of these costs before you make the comparison:

• appraisal fee
• title search/exam
• title insurance
  
• attorney fees
• recordation fees
• city/state transfer taxes
• survey
• homeowners insurance premiums
• insurance and tax escrows
  

All of these costs are independent of your lender or loan program.  For example, you will pay a title company or attorney to handle the closing, but the cost of such will not be determined by your lender.  If one lender estimated that fee on your GFE as $400, and the second lender estimated the fee to be $250, you would assume the second lender was offering you a superior loan program, when in fact you would ultimately pay the same cost for your title company regardless of which lender you choose.

I hope I haven't complicated things further --- just remember that you should not just look at the bottom line of the Good Faith Estimate when you are comparing lenders.