Charleston Market Update

Overall, the Charleston market, although it has seen an increase in available inventory and the average time it takes to sell a listing, remains relatively healthy. The median price has remained unchanged, but the level of activity still shows market resilience given all the industry turmoil at the national level and the sub-prime loan crisis.

Excepting for the time on market, Mt. Pleasant showed a stable (but soft) market. However, the decrease in inventory is an encouraging sign that may indicate bottoming out. If inventory continues to decrease in early Spring, Mt. Pleasant is poised to be one of the first sub-markets in the Charleston area to recover from the downturn (it was also one of the first submarkets to be hit). Some people believe that Mt Pleasant and Daniel Island are the "Californias" of the Charleston metro area (i.e. the trend-setters).

The Summerville market remains reasonably strong, although a little weaker. Problems with local traffic have led Dorchester County to enact a "new development freeze" for 6 months to let it catch up with infrastructure development.

The Goose Creek market continues to move forward, attracting new developments and new industry. However, the significant increase in available inventory may signal further price softening to come next year.

NEW SELLING STRATEGIES FOR THIS MARKET

With the dramatic increase in inventory in Mt Pleasant during the last 18 months, Sellers (and when I say "Sellers" I mean those people who ARE motivated to sell, not those who just want to "test" the market) must understand that they need to use different strategies to succeed.

No one can control the market. Sellers must accept that they can only control two things: Price and condition.

In a "Sellers' market" like we were living in 2005 (when we had very little available supply), Sellers could ignore any deferred maintenance issues and still receive multiple offers within days of listing the home. Sellers could price their home anywhere (within reason) and buyers would often agree to pay prices above their list price.

It is a "Buyers' market" now, and motivated Sellers must change their strategies if they wish to succeed:

1. Condition: Buyers are very picky and they have lots of homes to choose from! Sellers must take care of all deferred maintenance issues, replace tired-looking carpet, paint, landscape and stage their home to put "their best foot" forward from day one. Their home must be in perfect condition and present like a model home - otherwise it may take a long time to sell!

2. Price: Sellers cannot "test the market" any longer by pricing the home in the "middle of the pack". Nowadays it makes no sense to start higher and "be willing" to reduce the price over time gradually. This strategy will result in them "chasing the market from behind" unsuccessfully. They need to price their home aggressively to start with. Look at the competition, pick the 2-3 listings that are most similar to theirs, and price their home significantly below (3%-5%) from the beginning. They also need to make sure that their List Price is at or below recent comparable sales in the area. Otherwise they may get a nasty surprise when the Buyer's bank orders the appraisal, since these days, after the sub-prime meltdown, appraisers are very conservative!

In the end, Sellers who pick this strategy will sell first, and probably for a higher price (in a declining market, as time goes by, prices decrease). Sellers who decide not to choose an aggressive pricing strategy to start with end up getting caught in the "downward spiral" of a neighborhood, where all competitors start lowering their prices gradually, and everyone ends up in the same boat (worse off)!

CITY OF CHARLESTON RAISES PROPERTY TAXES

The Daily Journal reports:

Charleston raises property taxes

By Scott Miller , Staff Writer

Property tax bills in Charleston will rise about 4.5% next fall now that the City Council has approved the first tax increase since 1999.

Critics at Tuesday’s council meeting, when the increase was passed, said the city was taxing low-income property owners out of town. But Mayor Joseph P. Riley Jr. said additional money is needed to fund improvements to the fire department.

The fiscal 2008 budget includes $2.6 million in new taxes and $2.4 million in fire department upgrades, a direct response to the June 18 Sofa Super Store blaze that killed nine firefighters.

The budget creates positions for 18 additional firefighters, six new dispatchers, four training officers, four inspection employees, new vehicles and equipment, among other upgrades. The $143.9 million budget, a 9% increase from last year, raises the property tax rate by 3.3 mills, or 4.5%, to 77.1 mills. A mill is equivalent to one dollar for every $1,000 of assessed property value.

The owner of a home assessed at $175,000—a figure Riley used when discussing the tax increase—will pay an additional $23 annually. The owner of commercial property valued at $500,000 in Charleston will pay $99 more. Commercial property owners will pay more because their property is taxed at 6% of market value rather than at 4%.

No one spoke during a public hearing on the budget two weeks ago, but a handful of residents denounced the tax increase Tuesday. One was a Charleston real estate broker who led the successful statewide effort to replace property tax revenue with a sales tax increase to fund schools.

“Even now, with the relief we’ve gotten, taxes are still too high,” said Emerson Read, chairman of nohometax.org. “This is going to affect mostly low- and middle-income (residents), first-time home buyers and elderly retired people.”

Resident Jack Simmons agreed, saying the city was taxing people out of town.

“One of our basic freedoms is the ability to own a home,” he told the council.

Riley called the tax increase “a last resort” and again noted that the city has cut taxes 12 times since 1990.

Council members Henry Fishburne and Larry Shirley voted against the tax increase. Council members Deborah Morinelli, James Lewis Jr., Robert Mitchell, Jimmy Gallant, Wendell Gilliard, Louis Waring, Yvonne Evans, Paul Tinkler, Anne Francis Bleeker and Kathleen Wilson voted in favor.

Fishburne said the city could have trimmed fat in the budget, possibly by lowering the 2.5% salary increases given to city employees. He had previously argued that City Council does not receive enough time to evaluate the mayor’s budget proposals. Riley introduced his proposed budget about a month ago.

CHARLESTON MARKET IMPROVES SLIGHTLY

Here is a press release from the Charleston Trident Association of Realtors that has not made headlines (yet?)

Median Price Rises, Inventory Declines

Date: 11/12/2007

Charleston, S.C. (November 12, 2007) –– The median sales price of a home in the Charleston area rose for the second month in a row to $208,705, reports the Charleston Trident Association of REALTORS® (CTAR). The median price for October 2007 is 0.8 percent above that of October 2006 ($206,950), and the year-to-date median home sales price ($210,000) rose 1.8 percent over 2006 ($206,230).

The number of sales in the lowcountry declined by 22.7 percent in October 2007 compared to October of last year (792 to 1,024). Year-to-date sales for 2007 (10,902 through October) are down by 21.2 percent over the same period in 2006 (13,837). The average time it took to sell a home increased to 3 months (96 days).

“We’ve seen record numbers of homes put on the market this year which lends itself to slightly reduced sale prices in some areas and a longer selling period,” said CTAR President David Kent. “The flip side is, of course, that buyers should be really excited about the selection they have to choose from. And with interest rates and prices so competitive, this really is a great time to buy a home!"

Market Statistics

	October 2006	October 2007	Y-T-D 2006	Y-T-D 2007
Units sold	1024	792	13837	10902
Avg. Days-on-Market	77	96	65	94
Median Price	$206,950	$208,705	206,230	210,000

Inventory
Inventory declined for the fifth month in a row, resting at 10,398 homes available for purchase through the Multiple Listing Service (MLS) as of November 10. There are 1,941 condos for sale, the majority of which (366) fall in the $140,000 - $199,999 price range. Single-family homes account for 8,802 listings. The greatest number (1,789) of single family homes currently for sale are priced in the $140,000 - $199,999 range. As of today there are 1,184 properties under contract.

2007 Current Inventory (On the 10th)
June	10869
July	10865
August	10806
September	10717
October	10594

Berkeley, Charleston, and Dorchester Counties
In Berkeley County, 211 homes were sold in October 2007 with a median sales price of $176,500 and 91 days-on-market average. Of the 388 homes sold in Charleston County, the median sales price was $264,500. The average days-on-market for these homes was 114. In Dorchester County, 160 homes were sold at a median price of $178,000 with an average days-on-market of 85.

Median Sales Price Comparison
	Oct 2006	Oct 2007	Y-T-D 2006	Y-T-D 2007
Berkeley County	$169,470	$176,500	$171,753	$179,500
Charleston County	$241,000	$264,500	$239,900	$249,058
Dorchester County	$192,687	$178,000	$184,000	$193,606

HOW TO FSBO

For Sale by Owner

Some people try to sell their home on their own to try to save on commissions. This can get tricky if you don't have the experience, in fact, most For-Sale-By-Owner (FSBO) homes end up listed with a licensed Realtor, a person who knows the market and does this every day.

According to the National Association of Realtors although FSBO may work for some people, on average FSBO homes get a lower net return than those homes sold through the MLS.

Before you consider selling your house on your own, be sure to ask yourself if you are going to have the time, the knowledge and the resources needed to make it a worthwhile experience.

If you still decide to give it a try, here are a few tips that may help you:

The Home

Disclosures - A Seller’s Property Disclosure form is required by SC law. If your home was built prior to 1978, you will also need a Lead-Based Paint Disclosure.

Termites - A Termite inspection (called the CL-100 Certificate) that shows that your home has no termite infestation or damage due to termites or moisture (i.e. most lenders will insist that the CL-100 be clear before closing). If active termites exist, or damage is identified, it would be smart to have a licensed contractor repair all the damage, and a specialized pest control firm treat the home and issue a “termite bond” to guarantee no future infestation.

Repairs - fix all “deferred maintenance” items (all those items on your “to do” list that you never got around to doing). Including plumbing leaks, broken outlets, loose hose bibs, etc. If you don’t do it, there is a good chance that a) Most buyers will not be interested in your home; or b) Any interested buyer will ask for those repairs once they do their inspections.

Spruce It Up – With so many homes on the market, buyers are getting very picky! Only those homes that shine will be looked at! That includes interior and exterior paint, carpets, decoration, staging etc. If you really want to sell, get professional advice to stage your home. Staged homes sell quicker! Remember, this is now a “model home” not your living quarters anymore. No more dirty dishes in the sink, dirty clothes on the floor or dog poop in the yard!

Valuables & Personal Items – Hide all valuable items like jewelry and personal items that would be hard to replace. Lock all weapons away. Store most items that would be “too personal” in nature to prevent a buyer from picturing him/herself as the owner of the home.

The Market

You need to understand where the market is in your particular city, community and neighborhood before you price your home. This means getting access to up-to-date research about:

• Recent comparable sales in the last 6 months (the absorption or demand)
• The Competition (available inventory of comparable homes, their list prices and condition, their history on the market) (NOTE: For Belle Hall, you can look at MyBelleHall.com)
• The list of homes that were on the market but did not sell (expired and withdrawn)
• Interest rates & other economic indicators for your area that may tell a story about where the market is going.

Tip: You can do research on the Internet, starting with the county tax records to view the sales, Realtor’s websites to view the MLS listings, and driving around the neighborhood.

How Are You Going to Sell Your Home?

If you are really willing to put in the time and effort to sell your home, you can be smart about it: 80% of the potential buyers are researching their future purchases on the Internet. And more than 40% get the MLS listings through their Realtor. So you would be wise to focus on these two segments to maximize your efforts and get “bang for the buck”:

• Send information about your home to all active Realtors in the area (make sure you offer full commission to the Buyer’s Agent who brings you a buyer – remember that Realtors operate on commission only!
• Take advantage of popular times for Open Houses in your neighborhood and open your home at the same time – make sure you have adequate signage.
• Always keep up to date flyers in the flyer box on your yard. ALWAYS have a phone number where someone answers the questions a buyer may have. You do not want to lose opportunities by not being available.
• Place your house on a website and make sure it is easily accessible for everyone, including Realtors
• Be as flexible as you can with showing times. The more flexible you are, the better chances you have.
• Place pets in the garage, in cages or in the backyard. Some people do not like dogs/cats, even if they seem part of your family to you!

Tip: You need to be careful about letting unknown people into your home. When people come with a Realtor, at least the Realtor is a known entity (licensed, registered, with background check, etc.). Make sure you get their business card and ask which office they work for. You can also ask to see their Realtor license if you are not sure of their background. It is advisable to have someone with you at all times, and carry your cell phone with a police number on quick dial just in case. Always follow people, never go first. Try to keep multiple people parties together to avoid theft. Have escape plans ready in your mind. Alert neighbors when you are showing your home – so that they keep an eye out for you.

How Solid is The Buyer?

After the sub-prime loan meltdown, there are a lot of “wishful thinking” buyers around for whom it may be almost impossible to get a loan. Ask questions, just as a listing Realtor would:

• Are they buying the home cash – or do they need a loan? If they are buying cash – where do they have the money? Is it readily available?
• If they need a loan, are they pre-qualified, or pre-approved for a loan? What percentage of the value do they need to borrow?
• Do they need to sell their home elsewhere before they buy yours? If their purchase must be contingent on the sale of their own home, is the home on the market now? How long has it been on the market? What’s the market like where they are selling? Would the buyers consider a contract with a kick-out clause to eliminate this contingency if you find another buyer who does not need it?

Negotiations, and Contract-to-Closing

• Are you prepared to negotiate the terms of the contract?
• Do you know what the legal responsibilities of the seller are in SC?
• Who will write the contract? What form will you use? Which attorney will close the agreement? Who is going to pay for the closing costs? When are the Buyers doing their inspections?

Tip: It is best to think about these things before you start negotiating. Detemine what your ultimate “bottom line” must be, and have a friendly attorney ready to give you legal advice if needed.

NOTE: If you are planning to offer your home as a FSBO, I can place your information for free on my website http://www.mybellehall.com/. Please contact me on (843) 864-3777.