Southern Indiana Real Estate Blog

Hello everyone and thanks for coming to check out my blog.  I'm going to try and post this once a week so that we can all keep up with what is going on in our local market.

While I will only post the Southern Indiana numbers directly on the blog itself, you can also see numbers for Greater Louisville as well as the Elizabethtown / Fort Knox area by clicking here.

The numbers for Southern Indiana for this week are as follows:

    Active Listings Stats

• 2,668 homes currently on the market
• $176,220 is the average list price of those homes
• There is currently 10.5 months of inventory*

    Last 30 Days Stats

• 255 homes sold
• The average sales price was $133,848
• The Sales Price vs. List Price was 96.3%+
• The average Days on Market was 104
• There were 626 new listings on the market
• There were 410 listings that were either canceled, withdrawn or expired

    Last 12 Months Stats

• 2,898 homes sold
• The average sales price was $132,545
• The Sales Price vs. List Price was 96.4%+
• The average Days on Market was 105

*Months of inventory is calculated by dividing the current inventory by the amount of homes sold the previous 30 days

+Sales Price vs. List price is determined by dividing the average sales price into the average list price of homes sold

Southern Indiana Area is primarily Clark, Floyd, Harrison and surrounding Indiana counties just north of the Ohio River.  Information is deemed reliable but not guaranteed. These statistics include single family homes and condos only.

Today I'd like to talk a little about common mistakes made by first-time (and sometimes second or third-time) buyers that could easily be avoided.  Below is a list taken from a really cool web site realestatechecklists.com called Common First-Time Home Buyer Mistakes.

1. They don't ask enough questions of their lender and end up missing out on the best deal.
2. They don't act quickly enough to make a decision and someone else buys the house.
3. They don't find the right agent who's willing to help them through the homebuying process.
4. They don't do enough to make their offer look appealing to the seller.
5. They don't think about the resale before they buy.  The average first-time buyer only stays in a home for four years.

This is a pretty good list, but I'd like to expand on it a little bit and explain further why these things can be bad and what you can do to avoid them.  Also, as I mentioned above, I don't think this list is exclusive to first-time buyers.  There are plenty of second or third-time buyers who can make the same mistakes.

Starting with number one, not asking enough questions of their lender.  Be sure that you understand everything your lender is telling you.  There is no shame in asking them to stop and go back to explain something.  Remember that these people do this every day and sometimes can forget that you may not know what a "buydown" is or whether you should go with "fixed" or "adjustable".  Just because they forget, doesn't mean they don't want you to understand.  The lenders that I work with really try to go the extra mile to ensure my clients know everything about their loan.  They work closely with them so that they feel comfortable and confident with the whole loan process.

Number two covers not acting quickly enough.  I know that everywhere you look right now it says we are in a Buyers' Market, meaning there are plenty of homes for buyers to choose.  While it is true to an extent, that doesn't mean this can't happen to you.  If you find a home that you like, someone else will like it too and if you can't make a decision, you could lose it.  The way to avoid this is to be sure you are completely ready before even stepping into your first home.  There isn't any reason you should look unless you know you can make a decision then and there.  If you do this, then you can shop with confidence knowing you can buy whatever you are looking at.

Number three talks about finding the right agent.  This is a very important step in the process.  You need to find someone who is not only willing to help, but able as well.  Different agents have different skills, abilities and even schedules.  You need to be sure you and your agent are on the same page with everything like when to view homes, how to contact you, exactly what you are looking for, etc.  When you find an agent that you mesh with, it will make the whole process much smoother and hopefully much more fun!  The way to do this is to talk to a few different agents, but then choose one to work with and let the others know you are working with someone else.  Some people think if they have more agents looking, they have a better chance at finding something, but it isn't true.  Just like any relationship, this one is built on trust, loyalty and respect.  If you commit to one agent, they will commit to you and work hard for you until you reach your goal.

Number four talks about your offer.  Everybody wants a deal!  This is unfortunately one of the most common mistakes buyers can make.  They want to try and "low-ball" a seller with there offer.  A lot of times it can upset the seller and make them unwilling to work with you.  You have to remember that this needs to be a win/win for everyone in order to make it work.  You are trying to get a good deal and the seller is trying to sell at a fair price.  You have to be realistic with your offer.  A lot of times, the listing agent has already gotten them to come down on their listing price to make it even more attractive to more people, so if you are unrealistic with your offer, your chances of getting an acceptance could be very slim.

Finally number five deals with thinking about the resale.  This is more important for first-timers than anyone else.  If you are buying your second or third home, you may be planning on staying forever, but even then plans change sometimes.  So you have to look at resale on any property you are buying.  You need to work with your agent to find something that will sell again in a few years if you need to.

I hope this blog will help you or someone you know avoid making these all too common mistakes.  If you have any questions or comments, please feel free to contact me anytime.

I received an email from my CEO the other day.  He likes to send out industry news or announcements etc.  Anyway, his message on Friday was filled with excitement and surprise.

The first part of his message was discussing an article he saw in the USA Today Newspaper.  The article was about foreclosures rising 65% in the month of April.  I know what you are thinking, how can that be good news?  Well the good news didn't come from there.

That same day, Louisville's Courier Journal reported that foreclosures were down 48% for the month of April  in Louisville and the surrounding counties compared to last year.  That is great news!

As my CEO said, we have to give credit where credit is due.  It is rare that the media report news that is good and not filled with doom and gloom.  I commend the CJ and would love to see them do some positive articles about our area because the fact of the matter is, we live in a pretty stable market, but people tend to believe everything they hear.

Some people may think I'm crazy, but I truly belive that if the media would do more focus pieces that were positive in nature, it would only help the whole economy.  It might sound a little far fetched, but I don't think it sounds completely unreasonable.

I'd like to talk to you today about some common misconceptions about home-buying and maybe answer questions you may have about the process.

Myths About Mortgages

Myth:  I had some debt when I was young and ruined my credit.  I'll never get a mortgage.

Reality:  You don't know what your credit history shows until you look.  And if you do have blemishes from the past - even a bankruptcy - many lenders will overlook problems if the past two years show good credit practice on your part.

Myth:  I heard you need to put 25% down to buy a house.  But my friend says that you can get a mortgage with no down payment at all.

Reality:  Both scenarios are uncommon.  Although there are a variety of financing programs available, most require you to put at least 3% to 10% down, but rarely would you need 25%.

Myths About Agents

Myth:  If I have several agents looking for homes on my behalf, I'll find a house more quickly.

Reality:  Like most relationships, this one thrives on communication, loyalty and trust.  By working exclusively with one agent you will improve both the process and the results.

Myth:  If I want an agent to represent me as a buyer, I'll have to pay them myself.

Reality:  Buyer representation means that the sales associate you select works with your best interests in mind.  In most cases, however, they receive a portion of the commission paid by the seller.

Myths About Buying

Myth:  I should find a new home first before I sell the one I now own.

Reality:  If you find a buyer for your home first, you'll have more negotiating power in both the sale of your current home and the purchase of a new one.

Myth:  I just made an offer on a house I love, but so did several other people.  I'm worried that someone else will outbid me and get it.

Reality:  Different sellers are motivated by different things.  In addition to price, a seller will look at the other terms of the offer - contingencies, closing date, required repairs.  Many times a "clean" offer from a pre-approved buyer will be more attractive, even if the price is slightly lower.

The first Saturday in May and it is time for "The Run for the Roses" at Churchill Downs in the 134th Kentucky Derby.  This is always a special time for the Louisville area and the state of Kentucky.  It is a chance to showcase the city and all the people and culture.

Each year the Kentucky Derby Festival begins two to three weeks prior with one of the best shows in the country.  Thunder Over Louisville is an air show during the day capped off by one heck of a fireworks display over the Ohio River just north of downtown.  It's the largest annual fireworks show in North America and is said to bring over $30 million to the area.  Well over 500,000 people go down to both sides of the river each year.  I'll tell you this, you have to see it to believe it.  Both the show and the crowds.  The show started in 1990 and I can honestly say it never gets old (well maybe the crowds).  But the show is always good.

After the dust from Thunder settles the next two weeks are something like one big party.  There are events every day leading up to the race like a mini-marathon, a high school basketball All-Star game, a steamboat race and more.  There are three different Chow Wagons set up around the city.  They are just a lot of vendors selling food and drinks.  There usually are a couple different bands playing at each venue.

Of course Churchill Downs, the most famous racetrack in the world, also opened the Spring Meet this week.  I went to the track on Thursday.  Unfortunately, I can't say I did very well.  I didn't win a single race.  Oh well, it wasn't too bad and it really is fun.  It is exciting to watch the race when you've got a little wager on it.  Of course the infield opens this week too.  We'll have more on it in a little bit.

So after most of the events are over it leads up to Derby Eve and the Kentucky Oaks.  The oaks is also in it's 134th year and was run yesterday and won by Proud Spell.  By the way, I don't know if it is official (but I think it might be), Oaks Day is a holiday in Louisville and the state of Kentucky.  You will be hard pressed to find anybody working.

After the race is over, it's time to start the parties.  Louisville becomes one of the hottest cities in the country for the next two nights.  Celebs from all over come to our fair city to watch the races and dance the nights away.  The most famous party in the city is the Barnstable Brown Gala.  It always attracts some big names.  This year there celebs like Hef and The Girls Next Door, actress Molly Sims,  professional golfer and U.S. Ryder Cup Captain Paul Azinger (it's in Louisville in September as well) and even chef Bobby Flay from Food Network.  Also in attendance was Larry Birkhead.  For those of you who don't know him, he is the father of the late Anna Nicole Smith's baby.  Larry is actually from Louisville and met Anna at this same party while working as a photographer.  Before that he actually sold real estate and worked for the same company that I do.  There were plenty of others there as well and too many to mention them all.

So now after all the build up, we are finally here, Derby Day.  Churchill Downs will be packed starting right around dawn.  Derby Hats and Mint Juleps will be everywhere.  Millionaires' Row will be a who's who of the rich and famous.  That might be where all the money is, but I'll give you one safe bet.  The people in the infield will have just as much, if not more.  ESPN did a great write-up on the experience and like Thunder Over Louisville, you truly have to see it to believe it.

Whether you've seen it before or not, turn on the tube today and witness what many people call The Greatest Two Minutes in Sports.  Not only will you get a chance to watch a great sporting event, but you'll get to know a little bit about us.

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The Day After Derby

Well it was a bittersweet end to the Derby yesterday.  The favorite, Big Brown, won the race from the 20th post position.  That hadn't been done since 1929.

People wondered weather Eight Bells could run with the boys or not.  Well I think she proved she was more than worthy by capturing 2nd place.  Unfortunately though, on the cool down she broke both her front ankles and had to be euthanized while still on the track.  It is never an easy decision, but they didn't have any choice as she could not stand up and the injury was said to be very painful.

A full day of emotions in this Derby.  My condolences go out to everyone associated with Eight Bells.  I know she will be missed.

I think the most common thing I ever hear at a listing appointment is "Well let's try at this price for a while and if it doesn't work, then we'll take it down a little bit".  More than likely, this listing is doomed before it even gets put into the MLS.  As a matter of fact, if you come across one of these sellers and you cannot convince them that their idea simply doesn't work, I would advice you to thank them for their time and walk away.

Let's first go over the role of a Realtor in "helping" to determine the price of your property.  There are some things I don't think most of the general public completely understands.

• There is no "exact price" for real estate.
• I don't tell you what your home is "worth".
• The market determines the value...together we determine the price.
• I will show you a range of prices being paid for homes in your area.
• You determine the price based on the factors you control: Maketing time, financial alternatives provided, condition and exposure methods

The ideal price for your property is one that will satisfy both your desire for the highest return as well the buyer's need for top value.  We can help you define that critical and narrow range.

One thing that has to be done is you have to understand the concept of market value.  The market value of your property is relative.  It is not based on what you paid for the property or what you have put into it through the years.  It isn't affected by your opinion of its worth, my opinion, or even that of a professional appraiser.  The value of your property is determined solely by what a buyer is willing to pay in today's market.

You have to consider the competition.  Buyers will decide whether your property is realistically priced by comparing it to others currently for sale.  Most people look at an average of twelve properties before buying.  Thus your property must be priced in line with the competition.

Going back to the beginning of this blog, I was talking about sellers who want to price it high and then lower it if it doesn't sell.  The biggest problem with this thinking is that your home receives the most attention during the first six weeks its on the market.  If your price is too high relative to the competition, the right buyers will not even look at an otherwise attractive property.

First of all let's go over what the title is. The title is a document filed at the courthouse that verifies your legal right to own your new home. Whenever you purchase your home, a title search is performed to make sure there are no errors or legal problems that would effect your ownership rights. Unfortunately, sometimes problems will show up days, weeks, months or even years later. That is when problems can occur.

There are two different types of title insurance. The first type covers your lender and is required. The second covers you as a buyer.

Lender's Policy:

• Mandatory for buyers to purchase (if you are financing the home of course)
  
• Protects the mortgage lender
  
• Covers title defects, easment problems, judgements or liens
  
• Remains in effect until the mortgage is paid off

Owner's Policy:

• Optional for buyers to purchase - but a small investment for peace of mind
  
• Protects you, the buyer, against title defects, easments, judgements or liens
  
• Pays for court costs and fees associated with claims, plus any other losses
  
• Covers you and your heirs forever - even after you sell the property

Potential Threats to Your Title:

• Sudden appearance of unknown heirs
  
• Discovery of forgery, fraud or impersonation
  
• Evidence of altered deeds
  
• Discovery of unfiled or defective legal documents
  
• Liens for unpaid taxes or assessments

Unfortunately, there are far too many buyers that underestimate the importance of this coverage and find out too late how nice it would have been to have it.

With Halloween drawing near, I'd like to talk a little bit about a scary situation, YOUR HOME IS STILL FOR SALE!  Why hasn't it sold yet?  What seems to be the problem?  Well as much as I wish there were, there are no spellbooks or magic potions that we Realtors can use to make it sell any faster.

There are many different factors that affect home sales.  Some of which we can control while others we can't.  More than likely, changing some of the things we can control will help sell your home and let you move on with your life.

Factors we cannot control:

• Competition - If there is a large number of comparable properties for sale, there is more competition for buyers.  In a supply and demand like real estate, a large inventory of similar properties makes our job more challenging.  You have to take this into consideration.
• Location - The location is another key factor in the sale of your property.  Like it or not, some of what buyers are going to base their decision on is your surrounding area.  If the neighbor's house looks bad, your house looks bad and visa versa.
• Interest Rates - The economy will also affect the sale of your property, particularly through interest rates and consumer confidence.  This one is tricky for our area.  Right now, interest rates are still great.  As far as the market is concerned, we are almost even with last year (even up in some areas).  One problem is that people listen and watch the national news when in fact, real estate trends are local.  What happens in Florida has no bearing on what happens in New Albany or Jeffersonville.

Factors we can control:

• Listing Price - Listing price is the single most important factor in the sale of your property.  The best way to ensure the timely sale of your property is to price it competitively.  The lower you are on the price scale with the homes that are comparable to yours, the better chance you have of A) getting showings and B) selling your home.
• Condition - The better the condition of your property, the higher price it should bring and the faster it should sell.  I can't tell you how many times I talk with buyers who think they want to buy a "fixer upper" until they go and look at a few.  Then they realize they would rather have something that is ready to go.  Get your property in good condition to appeal to the masses.
• Marketing Plan - By exposing your property to the broadest possible audience through a coordinated marketing plan, you'll have a better chance of attracting a qualified buyer.  Be sure to ask your agent how they plan on marketing your property.
• Terms - Your flexibility in negotiating the terms of your agreement (points, closing date, appliances, etc.) can also enhance your ability to sell your property.

How long is it going to take for your home to sell?  And at what price?  Don't let the ghouls and gobblins trick you into making mistakes that will only cost you time and money.