Michelle Fradella

Are you one of those buyers that keeps waiting for interest rates to drop and housing prices to plumbit? Do you keep listening to the media's "gloom and doom" about the real estate market, and think that this is the truth in ALL markets?

I'm sorry to tell you that you may have already missed the boat. In reality, interest rates, for our area, hit their lowest back in January, and have been climbing progressively every since. If you take a look at the chart to the left (provided by Bankrate.com), you can see the progress rates have made in the past year.

Last week, it was announced that FreddieMac and FannieMae (the two largest lenders in the U.S. secondary mortgage market, which help to replenish the supply money for mortgages and enable money to be available for housing purchases) are in financial trouble. What does this mean for the average home buyer? It means that in order to balance out the weight of the sub-prime lending fiasco and years of historicly low interest rates, the rates are going to have to go up.

To show you a good example, on Monday (July 14th) the interest rate for a local lender here in Picayune, MS, on a $200,000 loan was 6.00%. On Tuesday it went up to 6.125%, and by Friday (July 18th) it was 6.375%. That may not sound like much, but the difference of these rates means almost $50 more per month in a mortgage payment.

Now how does that affect our market? Buyers are going to be more active because of the fear of higher rates, and will make a move on the houses that meet their needs and fit their budget. More houses will be sold, and the available inventory will start to dwindle.

There are many buyers in the market that have been slow to make decisions because they felt they could get a better deal, or wait for house prices to drop further. If you are one of those buyers, you might want to reconsider this stance and look for the right home in your price range now, before that home is either gone or the price increases because of demand.

Pearl River County has seen a huge market correction over the past few months with 87 homes dropping in price since September 15th, 2007. This market correction is well overdue since Hurricane Katrina sparked a high demand in real estate, and created a false sense of property values with sellers.

As I stated on my blog back in March, sellers had become unrealistic in the expectations of the value of their properties, and the average days on the market for most properties has lagged on over the summer, proving this assumption.

Other factors do play a part in our lagging market. Home owner's insurance at the beginning of this year was so high that many people, despite being able to afford the monthly house note, were dropped from qualifying because they could not afford the added expense of the high insurance rates. The excruciatingly slow recovery of the New Orleans area has also affected Pearl River County, because many businesses that were a supply of employees living and commuting from our area have not returned.

The good news is that home owner's insurance has now become more affordable here, and Pearl River County offers a lower insurance rate than the Coastal MS Counties and St. Tammany Parish, Louisiana. Comparatively speaking, Pearl River County is about 1/3 the insurance cost of Louisiana properties, and roughly ½ of the costs in Hancock County, MS. These figures are based on my experience while working with buyers and with closing properties over the past few months. This definitely offers buyers a more affordable home.

More good news for home buyers is the overabundance of properties to choose from. As of today, there are currently 488 houses for sale in Pearl River County alone, with over 1,000 properties total for sale, according to the Pearl River Board MLS system. A buyer has a better negotiating stance in this market than ever before, with many buyers asking sellers to pay closing costs, and other concessions.

Ad to this the fact that interest rates are now lingering in the low 6%'s, and you will see that now truly is the best time to buy a home in Pearl River County, MS.

"Why should I use a Realtor?" I know this is a question that many sellers ask themselves. After all, can't you just do it yourself and "save the commission"?

You could. But let me ask you something . . . How much training do you have in negotiations? You have to put yourself in a buyer's shoes. A buyer who calls on a For Sale By Owner (FSBO) is expecting to save some money, so they take the commission off the asking price - I mean of course you as a buyer don't want the seller to keep that fee if there isn't an agent involved! Now the buyer feels that there is some room for negotiating off of the discounted price, so they make an "offer" on that - Usually another 3-5% off the net price.

Now subtract the cost of all the advertising you will need to do in order to get the word out about your property. You will need to put classified ads in the newspaper (not a cheap venture), and run ads on the internet on "FSBO" websites that make you pay $1500 or more UP FRONT, even if the property doesn't sell. You'll need to buy signs for your yard, and try to find as many other ways as possible to let people know your property is for sale.

We are currently in a buyer's market, which means that buyers now have a huge amount of homes to look at and consider when making a purchase. What makes yours stand out more than all those listed? How is your home going to be in front of all of those people who are working with a realtor, looking for a property like yours? The only way you are going to get it to stand out is to ask for less than market value, so your property is a "better deal" to the buyer.

Now take into consideration all of the relocation buyers, and first-time homebuyers that are either not going to even know your property exists, or are not wanting to deal directly with the seller without having someone there to help them make the right decisions and help them get financing? A relocation buyer doesn't get the local newspaper, and they certainly don't have much time when they are here to drive all over creation and happen upon your sign. If you are looking to purchase property in a new area, where would you start to look? . . . http://www.realtor.com/. Then their relocation coordinator sets them up with a broker in the area they are moving to, and they are off to see properties.

If you have a mortgage on your property, every month that it doesn't sell takes the money you are paying in interest payments away from your profit. Say your interest each month is $600 (and that is usually on the low side). When you wait 8 months, you have lost another $4,800.

So, if you started out asking $200,000 for your property (hoping that it is priced at market value so you can sell it at least attracts some attention), you then subtract the commission, advertising expenses, and interest payments, not to mention the amount the buyer haggles out of you negotiating the price. How much profit do you have left? And who is there to consult you if something goes wrong with the sale, or the buyer can't get financing? Do you know what financing opportunities there are for a property like yours? Do you have a plan B for the buyers if they can't get the loan?

Selling your property on your own might save you paying a commission, but it will also keep you from walking away with as much as you would have if you'd had an experienced, licensed, full-time professional do it for you.

Hurricane Katrina brought about a huge change in the Pearl River County area. This sleepy little community practically doubled in population overnight, and the area is definitely feeling the growing pains.

After the storm, the market values for properties went up tremendously because there was such a demand for housing. Many people in the New Orleans Metropolitan and Gulf Coast Regions lost their properties and were in need of a place to call home. We went from a buyer's market to a seller's market almost instantly.

Now, however, the market has switched back to a buyer's market. There is an over-abundance of inventory, with many new and older homes sitting on the market. Part of the problem is that many sellers became unrealistic in what they felt they could get for their properties, and inflated their prices. Many of those sellers either will not listen to the truth of the market, or are not being advised by Real Estate Agents as to the market condition.

In order to sell a home in the Pearl River County market, a seller MUST price their home competitively. Ultimately, price is King. Condition and curb appeal take a close second. With inflated insurance rates, buyers just cannot afford to over-pay for a home. Unfortunately many Realtors in this area do not educate their sellers on the market trend, and what the home should be priced at in order to get it sold in the shortest time possible.

If you a considering selling your property, please give me a call and we can discuss what the market is doing in your particular price point