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Danny Freeman's Blog

By Danny Freeman | Agent in Memphis, TN
  • Have Values Bottomed Out In Memphis?

    Posted Under: Home Buying in Memphis, Home Selling in Memphis, Foreclosure in Memphis  |  October 22, 2011 9:16 AM  |  1,230 views  |  No comments
    I get asked all the time if prices in Memphis have bottomed out. I wish I could say yes, and while there are some indications that a few areas have improved, overall it's still tough and getting tougher. Days on the market are longer and showings are fewer and far between. I am constantly looking at the numbers, and they aren't pretty. If you are selling and buying, you should come out okay. If your just selling and going to rent its not great. I would not sell unless I really needed too. However, if you are just buying, you have the keys to the proverbial kingdom. You can have your pick of great deals. I would stay away from short sales if possible, as banks are still tough to deal with, and there are no hard and fast guidelines for working them. All agents and lenders do not work them the same way. Forclosures or normal sales are your best bet to get a really good deal. As always, work with an agent that is actually selling property in this market, and having a license in no way means you are actually a producing agent. Less than 20% are really selling now. For values on your home, or in area you might be considering, go to http://www.midsouthhomevalues.net  There you will find tons of valuable information.
  • Reasons To Buy You May Not Have Thought Of.

    Posted Under: Home Buying in Memphis, Home Selling in Memphis, Foreclosure in Memphis  |  November 12, 2010 9:48 AM  |  1,286 views  |  No comments
    I am sure you have heard alot of the reasons to buy a home now. Prices are down, rates are good etc. Yes, these are perfectly good reasons to buy, with mortgage rates as low as 3.5% on a 15 year mortgage.and home prices up to 50% off in some areas, but there are a few OTHER reasons as well. Lets say you are renting, not sure about buying.  You can buy a $150k home with a principle and interest payment of around $800, PITI of around $1100. Your rent will contingue to rise, while your house payment will remain the same, except for small adjustments for taxes and insurance. In a few years the payment will seem to shrink. The other, truly great reason, that few people think of, is that if you buy FHA, when you go to sell your home could sell with the buyer qualifying for the loan. What does this mean for you? Possibly a higher sales! If rates have climbed to 7%, then your 4% rate (or 3.5%), will make YOUR home much more attractive of a sale for the buyer. Make sense? When selling, there is more than just the price to consider. Thnk about it.
  • The Misconception Of Open Houses

    Posted Under: Home Selling in Memphis  |  April 26, 2010 12:42 PM  |  1,226 views  |  No comments
    I have been beating my head against a wall for far to long now.  There are misconceptions as to what benefit an open house is and who it actually benefits. Sellers are of the belief their home is just being "missed" by the qualified buyers, and an open house will solve the problem. After all, it works for builders right? Problem is, that thought process is skewed. Builers have several plans and several options. That is why open houses DO work for them, and do not work for normal sellers marketing one home. On top of that, marketing has changed and how buyers shop for homes has changed too. First, lets look at the possible benefit of an open house.

    Is it possible a buyer, who isn't working with an agent (after all, if the home fit the buyers needs wouldn't their agent have already pointed it out?) and hasn't seen it on the internet (after all, over 90% of buyers ARE looking on the internet) might come by the open house, and buy it? Well sure, anythings possible. Rare but possible. The true benifit of an open house is to the Realtor. They get walk in buyers that want to buy something, just almost always not the home the agent is sitting in. So much for looking at the plus side for the seller.  Now the negative...

    Its bad enough when your showing homes to just a couple of people, but at an open house you have little control. If 2 couples are there at the same time, you cannot follow them both. I have had many cases where I tried to watch everyone and maintain control, but its not always easy.

    My whole point being, having an open house does not produce POD people, people that haven't existed before but all of the sudden pop up wanting your perfect home. To sell a home in this market, quality pictures, a great virtual tour, a well staged home, and a great price, is what its all about. Its not rocket science, and its not that different from selling anything else. The montra used to be location location location, and while location is still important, price price price and condition rule the roost.
  • Is your credit score as high as you think?

    Posted Under: Credit Score in Memphis  |  February 18, 2010 9:08 AM  |  1,322 views  |  No comments

    Is Your Credit Score as High as You Think?

    It is common to assume that paying bills on time automatically means having a high credit score. Unfortunately, that's not always the case. There are many misperceptions about how scores are calculated -- and yours could be lower than you might expect.

    Credit scores are used by financial institutions to determine whether they should lend money to a potential borrower and, if so, what interest rate should be charged. A higher score means an applicant is statistically less likely to default on the loan so they get a lower interest rate.

    Ignoring your credit score could be a costly mistake. As an example, let's say you bought a $400,000 house with a 30-year fixed-rate mortgage at a 6-percent interest rate. Over the term of the loan, you would pay interest charges of $463,354. If, however, you had a lower score and your bank bumped your interest rate up to 8 percent, you would pay interest charges of $656,619. That's a hefty difference of $193,265.

    There are many credit scoring systems available to lenders, but FICO scores are by far the most commonly used. The system was developed by the Fair Isaac Corporation back in the 1960s. Technically, you have three different FICO scores -- one for each of the three major credit reporting agencies.

    Knowing how FICO scores are calculated can help you make better decisions about your credit. At a minimum, you should be aware of some of the most common misperceptions:

    I always pay my bills on time so I must have a high credit score.

    Paying your bills on time is clearly a critical factor, but it only accounts for 35 percent of your overall FICO score. It also looks at four other components: the amount of debt you owe (30 percent), the length of your credit history (15 percent), the number of credit accounts you've recently opened (10 percent), and the types of credit you use (10 percent).

    Consolidating multiple credit cards will increase my score.

    Consolidating credit cards could make it easier to pay down debt, but your FICO score could actually decrease if you consolidate to fewer accounts with balances that are closer to the maximum available credit. FICO considers you a lower risk if you have multiple credit accounts, keep the payments up-to-date, and maintain balances between 25 percent and 35 percent of the available credit.

    I don't have any credit cards or other major debt so I can't have a low score.

    Your FICO score doesn't take into account your net worth or your income level -- it only looks at your past borrowing history. Your FICO score will be lower if you haven't established a long-term borrowing history with multiple creditors.

    Closing a credit card is better for my score than keeping it open.

    Closing a credit card will not necessarily hurt your score in the short term, but you will eventually lose the positive effects of the long-term credit history that you've established with that lender.

    I shouldn't shop around for a mortgage or other large loan because credit inquiries hurt my score.

    A large number of credit inquiries will lower your score, but FICO is smart enough to know when you are rate shopping. Inquiries for similar types of credit are bundled if they're made within the same 14-day period.

    I shouldn't check my credit report more than once a year because credit inquiries hurt my score.

    Checking your own credit report does not affect your score, so feel free to check it as many times as you'd like.

    If you want to learn more about how FICO scores are calculated, visit Fair Isaac's web site at www.myfico.com. They offer a host of informational materials and credit score tips. And while you're at it, you can also order your three scores for a small fee.

    Becoming more knowledgeable about FICO scores could help you to keep those pesky interest rates at a minimum. With just a small investment of time, you will be able to make smarter credit decisions and take proactive steps to increase your score.

  • Avoiding 7 Costly Mistakes of Selling Your Home.

    Posted Under: Home Selling in Memphis  |  January 18, 2010 12:38 PM  |  1,336 views  |  No comments

    Avoiding 7 Costly Mistakes of Selling Your Home

    There are inappropriate steps sellers can take when it comes time to put their house on the market.

    For instance, the seller who thought the half bath the builder had located at the front of the house would really be better situated toward the back of the main level (though all the other similar models had the powder room in the same place for the previous 20 years). He got hung up on this detail so much, that he just had to move it -- and did -- for thousands of dollars, just so he could get it on the market the "right way." His hang-up may have settled some deep-seated emotional need for him, but it didn't draw any more buyers, and it drained his bottom line. You might say, that was a costly mistake.

    Real estate broker and author Sid Davis has identified in his book "A Survival Guide to Selling a Home," seven costly mistakes that many sellers make when it comes time to put their home on the market. In my business, I've seen each one of these mistakes played out and it just makes me shake my head as to why, sellers forge ahead with unwise strategies, instead of listening to the voice of an experienced professional.

    Mistake 1: Putting the home on the market before it's ready. Most times this happens because the seller gets impatient or is a procrastinator and has pushed himself up against a moving deadline without getting the pre-sale work done. So it comes on the market with the horrible carpet (that gets replaced during the marketing of the home); or they are painting it while it goes on the market. Presentation is everything -- so get the work done before marketing the property.

    Mistake 2: Over improving the home for the neighborhood. This happens with additions, bump outs, and upgrades that make the home stick out from among its competitors so much that it's an anomaly, instead of a nice addition to the community.

    Mistake 3: Pricing the home based on what the seller wants to net. This pricing strategy always ends in failure. Sellers can control the "asking" price, but they don't control the "sales" price. The market does. It doesn't matter what the seller wants, the price is determined by the black-and-white, matter-of-fact reality of the market.

    Mistake 4: Hiring an agent based on non-business factors. It might be nice to hand over your largest asset to your nephew who just got his license -- but make sure you understand the consequences if your deal starts going south.

    Mistake 5: Getting emotionally involved in the sale of the home. This is one of the biggest challenges home sellers face when putting their house on the market. Once you decide to sell your house, it's no longer a home, but a commodity. It needs to be prepared as a commodity, marketed as a commodity, and priced as a commodity. It doesn't matter what you "want," only what the market can bear on pricing. People are going to come in to kick the tires, so to speak, and you can't get emotional about how they may or may not appreciate the nuances of your home of seven years.

    Mistake 6: Trying to cover up problems, or not disclosing them. Most states have a property disclosure/disclaimer form -- use it wisely. Just because you disclaim doesn't mean you cannot be sued later for the leaky basement, or dilapidated heating/air system that's discovered 30 days after settlement.

    Mistake 7: Not getting your ducks lined up before trying to sell. This would involve financing, reading the fine print on your current mortgage to ensure no pre-payment penalties, not listening to the particulars of your local market, etc. If your local market is dictating lower home prices, then lower it early, not later -- it will cost you more. If the local market dictates selling your home first, then buying second, do it in that order, or vice versa.

    Avoiding these mistakes is not that difficult. Your REALTOR® is there to help you step over the pitfalls.

  • Move down buyers can get tax credit too!

    Posted Under: Home Selling in Memphis  |  January 4, 2010 10:12 AM  |  1,363 views  |  1 comment

    Move-Down Buyers Can Be Eligible For Tax Credit Too

    Move up, move down, move sideways; it just doesn't matter. Whichever direction you move, financially, you may still qualify for the new tax credit available to current homeowners. It is unfortunate that the credit has too often been characterized as a credit for "move-up" homeowners. The phrase carries the implication that the new home must cost more than the sale price of the former one. Indeed, even the November 6 White House Press Release said that the credit would be available to qualified homeowners who "wish to step up to a new home." Same implication.

    So, it is worth emphasizing that the credit is equally available to homeowners who are moving down, cost-wise.

    The move-down homebuyer is not an unusual phenomenon. For years retirees have been known to move from a larger home to one that is smaller and often less expensive. Moreover, it is reasonable to think that current economic conditions may lead to even more move-down buyers. Just as thousands of families have found it necessary or desirable to downsize with respect to their cars and their general lifestyle, so it may be when it comes to considering the costs of owning and maintaining a larger house than they really need.

    The same requirements apply to both move-down and move-up buyers.

    First of all, the previous home must have been occupied as the buyer's principal residence for at least five consecutive years out of the past eight years. Two examples: (1) Suppose that during the past eight years you occupied the property for three years, then rented it out for two years (perhaps because of a job transfer or temporary assignment), and then occupied it again for three years up until now. Even though you had occupied the property as your principal residence for six of the past eight years, you would not be eligible because you had not occupied it for five consecutive years. (I'm not saying this makes sense; I'm just reporting on the requirements.) (2) Suppose you bought a home eight (or more) years ago, you occupied it as a principal residence until two years ago when you sold it. Would you qualify? Yes, because you had occupied it as a principal residence for at least five consecutive years of the past eight.

    There are important issues of timing as well. You must have purchased (that is closed on) the replacement home sometime after 11/6/2009 and before 4/30/2010. With one exception: the new home will also qualify if you had entered into a binding contract no later than April 30, 2010 and you closed no later than June 30, 2010.

    The time the previous home sold doesn't matter. Indeed, it doesn't even have to be sold. You might, for example, keep it as a rental.

    The tax credit is for 10% of the purchase price up to a maximum credit of $6,500 for joint filers and $3,250 for those filing separately. There is a full credit for singles whose income does not exceed $125,000 and for couples whose income is no more than $225,000. A phase-out applies to higher incomes up to $145,000 and $245,000 respectively.

    The cost of the new home may not exceed $800,000.

    The new home must be used as a principal residence for a three year period subsequent to closing, or else the credit must be repaid.

    This program won't help everyone, of course; but it's pretty nice for those to whom it applies.

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