Latest MLS Stats for Greenville, SC

We continue to see bright spots in the housing market, but overall conditions remain relatively weak.  Mortgage rates remain low and should remain there for several more months.  The holiday season and cold weather always slow the market down and this year will be no exception.  We are expecting the spring to bring increased activity when compared to the previous year.  Below are some key statistics taken from the Greater Greenville Association of Realtors MLS:

• 5,628 properties sold from Jan. 1 - Oct. 31st, 2010.  This represents a 0.3% decline from the same time period in 2009.
• The average price for this time period increased by 3.5% to $173,018 year over year.
• Average Days on the Market remained unchanged at 102.
• For more perspective, below are the year over year increases/decreases in number of homes sold:
• 2005 - 2006 = 7.4% increase
• 2006 - 2007 = 3.3% decrease
• 2007 - 2008 = 20.2% decrease
• 2008 - 2009 = 15.4% decrease
• 2009 - 2010 = to date it is 0.3% decrease

Property Tax Appeal: What you should know

It's that time of year again.  By now you have already received your latest property tax assessment and vented to anyone that will listen that your property taxes are too high!  While it is our duty to pay taxes, it is certainly not our duty to overpay.  What most people don't know is a property tax appeal is not a difficult process.  So if you feel like your taxes are too high, follow these simple steps and you may be pleasantly surprised:

1. Carefully review the "Tax Notice" form that was mailed to you.  Check for obvious errors first; ex. lot size, bedrooms, bathrooms, size, etc.  It is very common for this information to be incorrect and simply correcting the error could result in a quick tax reduction with no formal appeal.
2. If the home is your primary residence make sure you are only being taxed at 4% and not the 6% ratio used for investment or non-owner occupied real estate.  There are also additional credits that you receive for your primary residence, so this is a very important area to check.
3. Double check the calculations.  Your property tax is determined by multiplying your home's Taxable Value by the 4% or 6% ratio to get your Assessed Value.  The Assessed Value is then multiplied by the Millage Rate (the amount per $1,000 used to calculate property taxes) for your area to get your Property Tax.  For primary residences, the credits are then deducted from the property tax. 
4. To correct any simple or obvious mistake, you can usually call the Tax Assessor's office and take care of it over the phone.  
5. If all information about your home is accurate, but you feel the taxable value is too high, you will need to fill out an official appeal form.  This form can be obtained by calling the Real Property Services Division at the county offices and asking them to email or mail the form to you.  This form will ask you to submit 3 - 5 comparable sales that support your claim.  If you are friends with a Realtor, ask him/her to help you find the relevant comparable sales, as this is rarely an easy task.  If you don't mind spending $300 - $600, then an official appraisal is an excellent way to go and carries the most weight.  This type of appeal will typically take 1 - 3 months from start to finish.
6. If your review is not successful, then you have the right to appeal that decision to an independent board.  There will be a small appeal fee and the process could stretch out for several months.  If you feel like you have a good case, don't lose heart!  Statistics show that around 50% of appeals filed are successful.

The information above is specific to Greenville County, South Carolina, but the general guidelines are relevant in most states.  If you are a resident of Greenville County, you can go to the Greenville County FAQ page for more information and phone numbers.

Drew Parker is the owner of The Parker Company real estate in Greenville, SC and has successfully appealed his own real estate assessment.   

Commercial Mortgage Backed Securities: 101

As with many investments, the Commercial Mortgage Backed Security (CMBS) market has been scarred by the economic recession. Recent history provides us with figures of a record setting 2008, with 234 billion in loans. By 2009 the good times came to an abrupt halt and the market produced a dismal 3 billion in loans. I know you are sitting there asking yourself “why is this idiot wasting his time writing on a topic that is in the tank?” To answer your question, for the first time in 33 months the Commercial Mortgage Backed Security (CMBS) market has seen a decline in delinquencies. In fact, just in the past couple of weeks three new CMBS transactions have gone to market. We seem to have found the bottom in the CMBS market and there is significant investment opportunity on the horizon. With that being said, I find it important to give you the ABC’s on what may be a potentially profitable investment tool.

In its most basic form a CMBS is a bond. This bond consists of a group of commercial loans (possibly 30 or more) bundled together by an investment bank. These bundles could be made up of retail, office, industrial or multi-family loans of varying sizes and maturities. These securities are valued and sold as bonds to real estate investment trusts (REIT) or to private investors. The CMBS pays out a steady stream of cash over a number of years to the investor. You may have heard of mortgage backed securities (MBS) which are simply bundled residential mortgages. The advantages of CMBS over MBS are the structural features such as “lock outs” or “defeasance” that protect against the prepayment of the loans. Prepayment essentially ends the principle and interest payment that produce your steady return.

With the current market in limbo, investors interested in a secure investment with a fixed income should consider CMBS. CMBS are a great alternative to stocks and with the market at a bottom this may be a great time to capitalize the current situation.

Short Sales - Are they a good deal?

In a relatively short amount of time, thanks to the economy and our national media, the term "Short Sale" has gone from unknown to household vocabulary.  As a Realtor in the trenches I have been forced to deal with them, but in full disclosure do not claim to be a Short Sale expert.  Nor do I plan on becoming one.  It is my wish for the real estate market and our national economy as a whole, to rebound and put the term "Short Sale" back in the dark closet from which it escaped.

The purpose of this article is simply to share with you my hands on experience with short sales and hopefully arm you with knowledge you can use in the future.

So what is a short sale?  Technically speaking a short sale is a real estate transaction in which the lender agrees to accept less for the home than is currently owed by the borrower.  Depending on the lender, the difference is either forgiven or a new payment plan is worked out with the borrower.  In theory, a short sale is a good alternative to foreclosure for the borrower and lender.  The borrower will typically walk away without a critically damaged credit history and the lender will minimize its loss.

Is a short sale a good deal for a buyer?  The answer to this question seems like it should be a simple and straight-forward "YES".  However, it is surprisingly a very hard question to answer.  The common belief on the street is that short sales are trading for 20% - 40% below market value.  While that may be true in some cases, the reality is that most short sales do not sell at steep discounts.  In fact, many short sales today are selling at or just slightly below market price.  Unfortunately the media and shameless companies trying to sell access to foreclosure databases, continue to create unrealistic expectations in buyers.

Advice from the trenches.  When looking for a deal in real estate, don't limit yourself to foreclosures and short sales.  Many homeowners are feeling the crunch and simply want to unload a real estate asset before they become a short sale statistic.  If you do find a short sale to pursue, here are three key pieces of advice:

• Be patient.  Most short sale transactions take several months.  There is a movement to streamline the short sale process, but so far this hasn't helped too much. 
• Seek experience.  Work with an experienced short sale real estate agent.  Make them give you a resume of qualifying experience.  An experienced agent could save you some heartache and headache in the long run. 
• Be realistic.  Don't expect 50% off and you won't be disappointed.  Remember, you only read about the unbelievable deals because they are sensational.  The vast majority of average deals are just not as exciting.

Hopefully this article will give you some realistic insight into today's market.  If you have specific questions, please do not hesitate to post a comment and I will get back to you with an answer.

Real Estate: What's Next?

The Greenville housing market continues to muddle its way through this recession (or post recession depending on how you look at it), but leaves us all wondering what's next?  There is no doubt that the market seemed to bottom in 2009. However, after the expiration of the Great Stimulus of 2010 the local market has cooled dramatically.  Throwing numbers and stats out the window and talking strictly sentiment on the street, Realtors will tell you that the market feels like it is improving.  But slowly...so so slowly.  This is okay though.  The economy has sobered up, gone through a terrible hangover and is now getting back into shape.  As we all know, getting into shape takes time and effort.  The real estate market will continue to muddle on and improve without anyone really remembering when things got better.  Changing gears and getting more technical the latest MLS numbers support this conclusion.

• Year to date, more homes have sold compared to this time last year. 5,100 vs. 5,015
• The Average price has increased to $173,000.  Although this is still around a 2005 level, it is an improvement over 2009.
• Homes are staying on the market an average of 103 days.  At the bottom, homes were on the market an average of 112 days and at the peak the average DOM was 86 to give you perspective.

So what's selling?  The sweet spot remains in the below $200,000 price range.  In fact, homes over $500,000 are still taking a beating.  Of the 5,100 homes sold this year, only 122 have been over $500,000.
The really good news about this market is the buying opportunity that still remains.  Prices are depressed and mortgage rates are the lowest in history.  The cold weather months are always a slow time for real estate sales (translation = excellent time to get a great deal!) and the winter of 2010/2011 may create one of the best buying opportunities that we will see for many years to come!