April, 2009
One of the common questions I am asked lately is what kind of activity is happening in the market. So, let’s spend the next couple of days answering that question here on the blog. I will address this by specific portions of the Fredericksburg real estate market, including the City of Fredericksburg, Spotsylvania, Stafford, King George, Caroline and Orange. Today we will start with the City of Fredericksburg real estate.
Again this is activity for the last 30 days:
New Listings Added – 46 (8 of those new listings are already under contract)
Average List Price – $282,956
Currently Under Contract – 47 properties
Average Contract Price – $260,287
Average Days on Market – 103 days
Sold Last 30 days – 13 properties
Average Sales Price Last 30 Days – $365,435
Homes for sale Fredericksburg – 153 active listings
Absorption rate: At the rate of sale based on the last 30 days, there is 15.3 months worth of inventory in the City of Fredericksburg real estate market. However, based on the number of homes currently under contract, the absorption rate may change substantially by next month.
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As Realtors in the Fredericksburg real estate market, we very often find potential home buyers who iare looking to purchase a foreclosed home. No problem with that, we have LOTS of them. But, occasionally we meet a buyer who is adamant they want to buy a home at a “foreclosure sale,” or in other words on the courthouse steps. For some reason they see that as the only true foreclosures in the market place. They have probably been told by some well meaning person, that this is the place to get the best deals.
Most foreclosed homes that are purchased in the Fredericksburg real estate market are what is known as bank owned properties. They have been foreclosed upon, and are usually listed with a real estate brokerage for sale, in much the same manner as a regular sale. In my opinion, this is usually (not always, but almost always) a much better scenario for a buyer, than buying at the courthouse steps.
In many cases the buyer will get a much better deal on a bank owned property. Follow this thought. If a bank forecloses on a property and is owed $300,000. The initial line of thinking of the bank is to try to get the money that is owed them. If they don’t get what they want at the courthouse steps, then the home is placed into the marketplace, and is evaluated based on it’s competition. If buyers are not seeing the value in the home and no one is making offers, the bank will lower the price until it reaches a point where a buyer sees it as a good value for the home. It wouldn’t be uncommon in today’s real estate climate, to find a home where the bank is owed $300,000, sell for say $175,000.
This is a situation where time on the market works to the buyer’s advantage. Most buyers are also much better prepared and educated by an agent, to buy a bank owned property, verses buying at the courthouse steps. So, just some food for thought for those who are thinking the place to get the best deal is on the courthouse steps.
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Fredericksburg real estate – Question and Answer Category
The question is “Do I have to have an 800 credit score to purchase a home? I have been told that if you don’t have an 800 credit score, you might as well not even try.”
Another great question, driven by lots of rumor, and media information… or misinformation. I posed this question to fellow blogger, and long time mortgage parnter, Kim Thagholm. Here is her response:
You absolutely DO NOT have to have a credit score of 800 to purchase a home!! It depends on your how you have your loan structured. I have had loans closed with a credit score of 600 with 100% financing on a purchase as recently as a few weeks ago.
Yes, the media is letting everyone know how difficult it is to get a loan due to the current market conditions, the same market conditions that we face in the Fredericksburg real estate market. A few years ago lenders came out with guidelines that made it very easy for someone to purchase a home. Changes in the market and economy have driven lenders in the other direction, making it more difficult to qualify.
However, more than “will I get approved,” the biggest goal to keep in mind is “will this loan make sense”. Credit scores often drive the interest rate, but not always whether or not the investor will take the loan. There are several loans available even today, such as VA, FHA, USDA and VHDA, that are flexible on score, down payment and reserve requirement.
I would recommend sitting down with your mortgage planner to go over all aspects of your situation and see if there is a loan program that will meet your needs. Fear of not getting qualified, may unnecessarily paralyze a buyer, preventing them from making a purchase they both qualify for, and can afford to make.
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I began running some statistics this morning to determine what percentage of home sales in the Fredericksburg real estate market are derived from distress property sales… foreclosures, short sales, etc. In the middle of running these numbers, I found that Bill Freehling, who writes the Business Browser blog had already run numbers for March. In a nutshell, his numbers show that in March, distress made up 56.3% of home sales in Fredericksburg, Caroline, King George, Spotsylvania and Stafford.
Read Bill’s post on Fredericksburg.com here.
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Fredericksburg Real Estate – Question and Answer Category
Question: I am looking for a home to purchase. I am looking on the Internet and finding homes, but when I call my agent, we find that most of the homes I found online are under contract. Why is that?
This is a great question, and it presents a situation we run into time and time again. Many home buyers spend a lot of time searching on their own, via real estate related websites, even though they have a buyer’s agent working for them. There is nothing wrong with that… however, some real estate websites are better than others.
First, let’s have a little lesson in how real estate listings get populated across websites on the Internet. When an agent lists a home and puts it into our local MLS system (MRIS,) the listing is automatically populated to Realtor.com as a standard listing. Many other real estate websites then pull information from Realtor.com. So far so good.
But, once the agent locates a buyer, and obtains a contract, he/she then changes the status in the MLS to some version of it being under contract. The websites that pulled the listing information originally from the MLS and Realtor.com, do not pull the status update, and update their own websites. So their information is no longer current.
Along comes a buyer, who finds this great house on XYZ website (fill in website name here.) They then call their agent and say, why haven’t you told me about this house. This is exactly what we were looking for, and you haven’t shown it to us, why? The agent looks it up and says, well, because it has been under contract for the last month and a half. This happened to one of my buyer agents yesterday. A buyer called her with a list of 12 homes, and 11 out of the 12 homes were already under contract.
If you are looking for homes yourself on the internet, please use a site that is directly linked for regular updates to the local MLS system. Like this one: HOME SEARCH. It will save you and your real estate agent looking for homes for sale in the Fredericksburg real estate market a lot of frustration.
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I have been inspired to begin a new category of posts on the blog…. a question and answer category. As Realtors, my team fields a lot of questions when working with clients. Both buyers, and sellers. We also field a lot of questions from our Internet presence as well.
So, this new category is designed to provide a forum for us to answer these questions. The parameters are that the answers will pertain primarily to the Fredericksburg real estate market, and that they must in some fashion be pertinent to real estate. That leaves a broad range of potential topics. When appropriate we will seek answers from others in various segments of the real estate industry, including real estate settlement attorneys, lenders, appraisers, etc.
So, ask away. And will be posting our answers here.
Feel free to ask via comments on the blog, or by email at jedmisten@gmail.com
The first question we will begin with was fielded during a phone call today… “What does Third Party Approval Mean?
Third party approval is a term that is associated with short sales. In a short sale, the owner/seller/borrower of a home is attempting to sell a home for a price that is less than what is owed on the lien for the property. In a short sale transaction, the seller agrees to a sales price, agrees to certain terms and conditions, and agrees to pay a certain commission to all real estate brokerages involved. However, all of these items, and others, even though agreed to in a contract, are subject to third party approval. The third party would be the primary and secondary mortgage lienholders.
So, for a buyer seeing this term, what it means is that the negotiating may not be finished, when the contractual issues are finalized. The lienholder(s) could come back asking for a higher price, they can reduce commission, they could not allow seller paid closing costs, and a host of other issues. Or, they could approve everything as presented in the contract, and it could be a relatively easy transaction.
So, in a nutshell, that is what the term “Third Party Approval” is all about.
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Fredericksburg Real Estate Market - STAFFORD COUNTY SEGMENT
Unsold properties currently on the market – 1115
Sold in the last 30 days – 134
Absorption rate - 8.3 months (time it would take to sell current housing inventory at current rate of sale.
Average Sales Price – $239,040
On average homes are dropping 9.3% from the original list price to the final sales price. An average of 2.7% of that drop occurs from the final list price to the final sales price.
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Fredericksburg Real Estate Market – FREDERICKSBURG CITY SEGMENT
Unsold properties currently on the market – 195
Sold in the last 30 days – 16
Absorption rate - 12.2 months (time it would take to sell current housing inventory at current rate of sale.
Average Sales Price – $226,691
On average homes are dropping 13% from the original list price to the final sales price. An average of 4.2% of that drop occurs from the final list price to the final sales price.
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Fredericksburg Real Estate Market – SPOTSYLVANIA COUNTY SEGMENT
Unsold properties currently on the market – 1275
Sold in the last 30 days – 139
Absorption rate – 9.2 months
Average Sales Price – $218,744
On average homes are dropping 13% from the original list price to the final sales price. An average of 3.5% of that drop occurs from the final list price to the final sales price.
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In great seller markets, sellers often don’t have to worry so much about staging, landscaping, painting, etc. But, in a normal market, or a buyer’s market, these issues become much more important. The Fredericksburg real estate market is such that curb appeal is very important. Buyer’s may not even get out of the car if the home’s potential curb appeal is not realized.
Here are some inexpensive and easy curb appeal ideas…
- Make it green. Balancing the pH level and feeding the lawn lots of nutrients will give it a lush and healthy look.
- Trim trees and shrubbery. Overgrown branches hide a home’s good looks.
- Mulch everything. Mulch gives flowerbeds visual appeal.
- Edge the beds. Edging makes everything look neat.
- Powerwash the siding, sidewalks and patios. Power washing gets rid of all the winter grunge.
- Plant annuals. Lots of geraniums, impatiens and petunias brighten up the look.
- Plant a garden.
- Hang a hammock. It suggests life is easy.
Source: Realtor.org
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