Rolling with the Punches

The weather here in Nashville has given us quite a ride lately. Heavy (for us, anyway) snowfall followed by nearly a week of sub-freezing weather upended normal life here, leading to cancellations, delayed outcomes, frozen pipes, short tempers, and occasional broken bones and dented fenders. What a mess!
 
It reminds me of the last 18 months in the real estate market. Upended and messy!
 
So, what do we do with that? We roll with it and keep moving – carefully if you’re on an icy sidewalk, of course – but always moving. 
 
How do we keep moving? By accepting what is, and dealing with things as they are. You don’t have to like it, but bitching about snow and ice won’t make it melt any faster. Likewise, moaning about interest rates won’t make them drop any sooner. And, complaining about lack of inventory won’t make the perfect listing magically appear.

Time to get real …
 
Sellers need to accept that the snatch-and-grab, multiple-offer rodeo is over for the time being. Yep, inventory is still tight, but asking a two-years-ago price for your property won’t get you a buyer. Accept that, and focus on your overall return. If you’ve been in the house more than a few years, you are still going to make money.
 
Buyers need to accept that 3% mortgage rates are over for the time being. Money is going to cost you more, but buying now is still the best overall approach. Remember – we marry the house, but we only date the rate. Things can move in your direction while you’re paying that mortgage, and you can make changes if they do. 

Time to get creative …
 
Good lenders – I work with several – have ways to help mitigate circumstances that might be standing in the way of a purchase. Various rate buy-down plans, down payment assistance, and buy-before-you-sell products are available and worth looking into. 
 
Good realtors – you’re reading one right now – have extraordinary and ever-expanding tools to find properties for buyers and market properties for sellers. It’s done with pixels and the web – and also with old fashioned hard work, shoe leather, and persistence. Those of us fortunate enough to be with PARKS have 1600 fellow agents to work with – finding and offering properties to the benefit of our clients. We do 30% of our sales in-house.  
 
So, let’s all decide to roll with the punches and get into the action. No time like the present to join the party!

Home for the Holidays

We hear those four words a lot at this season, but what do they really mean? There are layers.
 
In popular culture, it’s the title of a 1995 movie starring Holly Hunter and Robert Downy, Jr. about a highly dysfunctional family at Thanksgiving. It got mixed reviews. 
 
Going a bit deeper, it’s often about travel, to be with family and/or friends in a place where you grew up, but where you no longer live. And that can be a good thing. Or – depending on circumstances – not so much.
 
Deeper still, home is where the heart is. A cliché, I know. But most clichés, even the most threadbare, contain a kernel of truth. Where the heart is, is where we need to be.
 
And how does this relate to real estate? I’ve always got an angle …

A house is not a home.
 
These days, most realtors and most of our clients refer to a house as a home. Whether house, condo, farm, or trailer, it’s called a home. Buyers and sellers are called homeowners. Realtors talk about home sales, and helping buyers find their dream home.
 
I don’t. I talk about houses. 
 
A house is a container for life. A house does not become a home until people live there and life unfolds. Living life adds value to a property – house, or condo – but the value is intangible, and specific to the people living there. This is why I always try to disconnect the ideas of house and home. 
 
When buyers get too hung up on price, I try to counsel them to look at the intangible value that the house they are buying will accrue as they live there. It’s a financial investment to be sure, but it will also develop a great deal of value that cannot be measured in dollars and cents.  
 
Conversely, I counsel sellers to understand that buyers will not care about the intangible value that has built up over their years in the house. They don’t share your memories and attachments. They are looking at dollars and cents.
 
Home for the holidays
 
And this gets me back to the idea of home. You are at home where your heart is. So, I’m wishing all of you heartfelt joy wherever you find yourself. At your “home” address, or with family, or with friends. Here, there, or anywhere, may you find yourself "at home" this holiday season. 

Let’s hear it for life, family, friends!

The concept of gratitude is always appropriate – every day, all year – but since this is Thanksgiving month, it seems especially so these days. That said, the standard list – family, friends, health, etc. – can get a little repetitive. Dare I say, trite?
 
So, looking for a a different angle on this, a telling statistic emerged as I was doing my 2024 business plan last week.
 
In a planning session at the office, we were challenged to take a genealogical look at our business – trace the roots of every deal as far back in our lives as we could go. 
 
It was an enlightening exercise. 

I’ve had a few deals from chance encounters, but the roots of most go much, much deeper – like back to a friendship I made in graduate school, for example. Doing a little simple math revealed that 83% of my business over the past nine years has come from family, friends, referrals, and repeat clients. 

So, aside from being grateful for all the usual things friends and family bring to the table – love and support when the chips are down, good times and lots of laughs, good food, good drinks, good travels, all the things that make life a joy – there’s this: they bring me business!
 
Thirty-three deals with people who were already my friends before we workedtogether. Five deals with family members. Thirty-one with clients referred by family and friends. And fifteen with repeat clients.
 
I’ve always tried to be a good friend, brother, cousin, realtor – so I know I’ve had something to do with this. But it’s really a tribute to these people. No one has to be a good friend. No one has to work with me a second, third, or fourth time. No one has to be loyal, honest and true-blue. 
 
But these people are. They have been – for decades, some of them – and they always will be. 
 
So, here’s a great big shout out to this outstanding crowd. I could not be more grateful for all of you!!
 
What are you grateful for this Thanksgiving?

Spooky Stuff!

Today is Halloween. Conversation has been trending toward things that go BOO! for weeks now, and there does seem to be a good bit of fear and loathing out there these days. 
 
But I am drawn to the iconic line from Franklin D. Roosevelt’s 1933 inaugural address: 

 … let me assert my firm belief that the only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. 

 
In general, I totally agree with FDR! There’s really nothing to be afraid of. It’s always a great time to buy or sell a house, so buck up and jump right in. 
 
However … there are always specific things to be wary of, lest they jump out of the shadows and knock you off your pins – or worse.

A few things that could turn your real estate deal into a nightmare these days:
 
Overpricing
I can’t say it often enough: price it right and it will sell. But, if sellers are stuck in last year’s mindset, assuming they can pull a price out of the air and expect multiple offers, the house will be overpriced. And it will be on the market a for while until reality sets in.
 
Underbidding
The obverse of this situation occurs when buyers assume the market is dead in the water, and make a low-ball offer. Not smart. It’s still a sellers’ market. Unless the asking price is a couple of weeks old, the seller is going to hold there, and the low-ball offer will be rejected, or at the very least, countered. 
 
Interest Rate Panic
Yes, rates are currently almost 8%, and yes, no one knows when they will float back down. But if you let that scare you away from buying, you are succumbing to exactly what FDR warned about in the teeth of the great depression. You’ll allow fear to paralyze you – and you’ll still be scared.  
 
Shady Terms
Low earnest money, slow earnest money, crazy-high offers with long due diligence periods, sight-unseen offers, unverified cash to close, bogus wiring instructions, weird stuff in Special Stipulations … the list goes on. There are plenty of shady operators out there who will be happy to slip a few – or a lot of – bucks right out of your pocket.
 
Freelancing
And here we get to the fundamental truth: real estate is not for amateurs. If you are tempted to try a DIY deal, run, do not walk, into the arms of your licensed realtor. That’s the best protection from all the scary stuff. 

Death and Taxes

That’s true, of course, but unlike death, taxes are rarely fatal.
 
In fact, taxes can be a sign of good fortune.
 
Many years ago, I had a conversation with an aunt who was furious about a tax bill. While settling my uncle’s estate, she found she owed an additional tax that in today’s dollars would be almost $200,000. She was irate, but my only thought at that point – I was in my 20s – was that I wished I had enough money to be taxed at that level. 
 
She went on to live in luxurious circumstances in a beachfront condo for the rest of her days, so I don’t think the tax bill cramped her style. But her anger certainly spoiled the mood that afternoon. And it offered a life lesson for her nephew.
 
So, what does this have to do with residential real estate?

Given the huge runup in real estate values over the past decade, a great many homeowners are sitting on a big pile of equity. I’ve heard lots of people gripe bitterly about paying tax on capital gains if they sell. And, I’ve actually heard people talk about not selling – simply because they didn’t want to pay the tax. 
 
Well, if you find yourself holding a huge amount of equity in a piece of property, there are a couple of ways to approach this “problem”.
 
First and foremost: celebrate your good fortune! You bought low and now can sell high! Isn’t that the point? Sell if you want to, pay the tax, and enjoy the remainder. You haven’t lost anything. You’ve made a bundle.
 
Kick the tax can down the road. If you can and want to, hold the property until you die (that is going to happen regardless of your tax status) and let your heirs handle it. If your will is in proper order, they likely won’t be taxed much, if at all, when they sell after your demise.
 
Take action with a 1031 exchange. If you cannot or don’t want to stay where you are, sell and buy something else using a 1031 exchange. A 1031 will postpone (not eliminate) the tax liability. There are very specific rules that must be followed, so you will need expert counsel. But if done correctly, a 1031 will allow you to buy something new and can kick the tax can down the road, as above.
 
In any case, always remember that you are being taxed on a gain – not a loss! You’ve come out ahead. Rejoice in your good fortune, and don’t be like my aunt. 
 
Your glass is more than half full!