Welcome! This blog tracks the real estate market in the Central Shenandoah Valley, featuring market data and analysis, an exploration of common buying and selling questions, and candid commentary on all things real estate.
If you are interested in discussing any of the topics on this blog, or the details of your specific real estate situation, call or e-mail me!
This certainly has some implications as to where we should and should not be focusing our marketing efforts!
My article below was published in the Shenandoah Valley Business Journal yesterday. Apparently, it was somewhat controversial, as I received some very passionate responses from a few people telling me that they disagreed with my perspective. I welcome your perspective as well, in the comment section below, or by email at scott@HarrisonburgHousingToday.com.
Sometimes home buyers in the Shenandoah Valley are too polite for their good. Don't get me wrong, I am grateful that we have such a congenial local culture where most people show others decency, respect and kindness. But when it comes to purchasing a home, buyers need to be willing to be bold with their offering price or they may find themselves sitting on the sidelines, missing the best opportunities. Ask yourself this, would you be willing to make a $175,000 offer on a house that is listed for $200,000? Most buyers in this area would not be willing to make such an offer.
Last year, homes in Harrisonburg and Rockingham County sold for an average of 5.2% below their last list price. This means that a home last listed for $200,000 would have sold for $189,600. As you think of what offer you might make as a potential buyer of this home, you should quickly realize that if you hope to be an average negotiator and get to that $189,600 price, you likely need to start with an offering price lower than where you hope to end up. Perhaps that means an initial offer of $180,000 in order to aim towards a final price of $189,600.
One other perspective that buyers often forget about is that if a buyer doesn't come along soon, the seller of any given home may very well adjust their list price downward to attract a new set of buyers. Thus, if someone does not buy this $200,000 house soon, it might then be reduced to $195,000 or $190,000. Combining these two ideas above, we should quickly realize that if the seller might soon reduce the price to $190,000 at which time an offer of $175,000 would be reasonable, then you might as well go ahead and make that lower offer now.
In explaining these concepts to first time home buyers earlier this month they asked why most buyers don't make these low offers, even just to find out whether they can buy a home for a particular price. One reason, it seems, is that some buyers do not want to become emotionally invested in hoping to buy a particular house if it is likely that the negotiations will not work out. Some buyers also hesitate to make low offers because they don't want to insult the sellers and miss out on the opportunity to buy the house at all. Finally, some buyers don't want to deal with the process of determining offer terms, reviewing an offer, and dealing with all of the paperwork required for making an offer. Whatever their reasons, many buyers won't make a low offer that they don't believe a seller will accept.
All of this general counsel aside, it is important to recognize that a seller's willingness to negotiate will likely vary based on if their current list price is realistic and/or based on how much they owe on their mortgage and/or how motivated they are to not own their home any longer. But regardless of how much a seller is willing to negotiate, nearly all sellers would rather have more offers rather than fewer, even if some are quite low. And as one final word of encouragement for you to make an offer as a buyer, even if it is low --- let the seller make their own decision about how much they are willing to negotiate, don't assume that you can accurately guess how they are going to respond to your low offer.
Back when SRI International opened a research facility in Harrisonburg (Rockingham County) in 2009 the hope was that this research facility would be a catalyst for new companies being launched in Harrisonburg and Rockingham County based on the research, discovery and innovations at SRI Shenandoah Valley. After all, that is what happened in the Silicon Valley at SRI International's primary research facility.
We may now be seeing the first spin-off company resulting from SRI International's presence in Harrisonburg.
The full details are in an SRI press release, but in summary, researchers at SRI Shenandoah Valley developed a proprietary bed bug detection technology that is being licensed to a new Harrisonburg-based company called Redcoat Solutions, Inc.
"Scientists at SRI developed a rapid, sensitive test that recognizes molecules specific to bed bugs. Redcoat intends to market the device under the brand name RAPID PURSUIT™. Based on preliminary testing, RAPID PURSUIT presents a number of advantages: unlike other detection devices, the test requires no sophisticated equipment and registers a response in minutes, and RAPID PURSUIT is designed to detect only bed bugs, avoiding confusion that could be caused by the presence of other pests."It certainly is exciting to see this first spin off company that will be based right here in Harrisonburg....
"Redcoat Solutions, Inc.'s Chief Executive Officer, John Hall, has drawn upon his knowledge of the bed bug detection and treatment industry in guiding the company toward the upcoming launch of RAPID PURSUIT. "We have assembled an excellent management team, and we have worked closely with SRI to develop a great product that will revolutionize bed bug detection in several industries," said Hall. "We look forward to taking RAPID PURSUIT to market very soon, and we already are at work on new products that we will introduce over the next several months. Redcoat has a great business opportunity, and one of the best things is that it will be based right here in the Shenandoah Valley.""Read more via SRI International's press release.
Comparing today to where we were two years ago in Harrisonburg and Rockingham County....
Some times, when I am working with a buyer, they or I will become aware of a "for sale by owner" property of interest to them. They almost always have the same question --- how would it work if we wanted to pursue that property? Here's how I see it . . .
In Virginia (and in most places) when a homeowner decides to sell, and work with a Realtor in doing so, they typically negotiate a percentage of the purchase price that will be paid as a "brokerage fee" at closing. This brokerage fee (call it 20% of the sales price, for the sake of absurdity, and because there is not a standard brokerage fee) is almost always split between the Realtor (and his/her company) representing the seller, and the Realtor (and his/her company) representing the buyer. So, in my absurd example, 10% to the seller's Realtor and realty company, and 10% to the buyer's Realtor and realty company.
An interesting byproduct of this typical business practice is that a buyer isn't counting on "paying their Realtor." As a buyer works with their Realtor to identify, view, evaluate, negotiate and close on a property --- they aren't necessarily thinking "and in addition to buying the house, I'll be paying my Realtor 10% of the sales price." Here, some people would interject to point out that the buyer pays both Realtors, as they are the ones bringing the money to the transaction --- the seller just brings the house.
And thus, the questions begin when a buyer client becomes interested in a "for sale by owner" property. As a buyer looks at the sales prices of homes listed by Realtors (for example, $200k), they don't think about having to pay a brokerage fee on top of the price --- since the seller will pay it out of the sales price. But many "for sale by owner" sellers don't plan on paying a brokerage fee to any Realtors, and thus the sales price they would negotiate doesn't accommodate for the buyer's Realtor being paid.
So . . . if I have been assisting someone in looking for a home, and they decide they want to buy a "for sale by owner" property, here are the options I make available:
On a related note, a Buyer Brokerage Agreement helps clear up these options and facilitate these discussions to determine how a buyer would want to proceed.
As shown above, we are currently experiencing the lowest inventory levels we have seen anytime in the past six years.
Let me know if you would like an analysis of competing inventory for your particular home.
I believe there are still a lower than normal number of people buying in our housing market. Take a look at the graph above which tracks population growth over the past 12 years as compared to the number of single family home buyers in any given year. If we assume that a normal percentage of all residents bought in 2000, we are still seeing a smaller than normal percentage of residents buying as of last year.
Some might even argue that we should mark the start of the normal trend line somewhere between the number of 2000 buyers and 2001 buyers. If so, then the current market has even further to grow before approaching a historically normal number of buyers per year, as shown below....
As shown in the graph above, the median sales price for homes in Harrisonburg and Rockingham County has been stable (between $173K and $177K) for 23 months now. Each of these data points shows the median sales price for a 12 month period, so they are solid, long-term trends.
Also shown above, our local market has seen a relatively steady increase in the pace of home sales for 20 months now. Each of these data points shows the total number of home sales during the most recent 12 month period, so again, these are solid long-term indicators.
Bottom line? While individual homes, neighborhoods or price ranges might still see some price adjustments, I do not believe we will see any further (overall) price declines in Harrisonburg and Rockingham County.
Read more in my most recent monthly housing market report.
My most recent Harrisonburg & Rockingham County Real Estate Market Report has just been published (download it as a PDF here), and there is plenty of good news to be excited about....
As shown above, home sales increased dramatically in February 2013 to 66 sales for the month. This marks a 43% increase over February 2012, and is the highest month of February home sales in several years.
As shown above, there are plenty of positive indicators in this month's market report....
This surge in home sales is not over yet --- with a 16% increase in February contracts (shown above) we are likely to continue to see increase in home sales in the coming months. ALSO -- buyers are in the market NOW -- if you want to sell your house this spring or summer, we need to start talking soon.
There is lots more inside -- click here to download this 28 page market report as a PDF to learn everything you need to know about the overall Harrisonburg and Rockingham County real estate market.
Even if you read every word of my market report, you may still have some questions about how your current home (or a home you'd like to purchase) fits into the overall market. Call (540-578-0102) or email me (scott@HarrisonburgHousingToday.com) if you'd like to chat about your real estate situation, needs, goals, hopes or dreams.
One last thing....here are a few articles I have written over the past month that might be of interest:
Downtown Harrisonburg has seen significant growth over the past eight years, and much of it has been a result of the enormous energy and contributions of Harrisonburg Downtown Renaissance.
Read their Annual Report or visit their web site to learn more -- or make a donation to support further growth in downtown Harrisonburg.
Lest I be accused of only talking about mortgage interest rates when they are falling....
As you'll see above, interest rates have generally been on the rise since the beginning of the year. After staying below 3.5% between September 2012 and January 2013, they have now edged back up.
These mortgage interest rates are, of course, still unbelievably low -- both over the long-term (the past year's rates are the lowest ever) --- as well as in the short term (rates are 0.5% lower than a year ago).
If you are considering a home purchase this spring or summer, now might be an excellent time to become pre-approved, find a house and lock in an ultra-low mortgage interest rate!
As published in the February 2013 Shenandoah Valley Business Journal....
When you arrive at the settlement table, ready to close onthe purchase of your next home, you will be asked whether you would like topurchase title insurance. Do you knowwhat your answer will be?
First off, "title" is a legal term for an owner'sinterest in a piece of property. When a property is sold, the seller conveys"title" to the buyer via a deed that is recorded at thecourthouse. Prior to settlement, theclosing attorney must conduct a "title search" to ensure the currentowner can convey ownership of the property to the Buyer. For example, if there are two owners of aproperty, both owners typically need to be participating in the sale of the propertyin order to be able to convey ownership to the purchaser.
If there are issues, or problems, with the title to theproperty that you are trying to purchase, you will not even make it to theclosing table. A title search, however,cannot reveal all of the potential title defects of a property. Some of the title defects that would not bediscoverable during a title search include forgery, impersonation, undisclosedor missing heirs, undisclosed (but recorded) prior mortgage or lien, fraud;erroneous or inadequate legal descriptions, lack of right of access, deed notproperly recorded, etc.
The possibility of these unknown and undiscoverable titledefects creates a need for title insurance, which is an insurance policyprotecting the holder from loss sustained by defects in the title to the property. For example, if you are purchasing a homefrom the heir of an estate, several years after your purchase took place, anundisclosed heir could appear at your front doorstep demanding that you moveout, since they inherited a portion of the estate before the property was soldto you.
As you consider the potential value of title insurance, youshould know that there are two main types of title insurance that may beinvolved in your transaction --- lender's title insurance and owner's titleinsurance. Your lender will require youto purchase a lenders title insurance policy on their behalf. This policy willbe based on their interest in the property (the loan amount) and will allowthem to recoup that money should the house be reclaimed by a prior owner due toan unknown title defect.
The decision you will need to make at the closing table iswhether to purchase an owner's title insurance policy. This policy wouldprotect you from sustaining any future financial loss due to the discovery of atitle defect. Title insurance involves a one-time payment at closing, and thepolicy lasts as long as you own the property.
While every situation is different, in almost allsituations, I recommend that you buy title insurance.
An impressive 93 properties in Harrisonburg and Rockingham County went under contract during February 2013. That marks a 16% improvement over February 2012 when 80 properties went under contract.
As shown above, many (72%) of these properties were priced under $200K, and most (89%) were priced under $300K.
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