Ken Gramley

Changes are about to hit us in North Carolina. The North Carolina Association of REALTORS and the North Carolina Bar Association review and make changes to the North Carolina Agreement to Purchase and Contract every year. In 2011, however, the changes are significant. Very significant.

If you've purchased a home in North Carolina before, you are used to the concept of signing a contract, then having the inspection done and then "renegotiating" with the sellers for repairs on items that are not "performing the function intended" or are "in need of immediate repair". There were also contingencies for financing, etc., all of which usually allowed the buyer an out if he tried hard enough. This process sometimes led to earnest money disputes. Well, forget that process.

There's a new sheriff in town, and he's trying to throw out earnest money disputes!

1.) Due Diligence Period

Buyers now have a "due diligence period" in which to do their research on the home they want to purchase. When the contract is signed the due diligence period starts. During this period the buyer needs to do inspections, appraisals, insurance review, surveys, review HOA documents, and perhaps most importantly, loan qualification and approval. Before the due diligence period is over, the buyer may opt to terminate the contract "for any reason or no reason", and receive ALL their earnest money back. However, their due diligence fee is forfeited.

During this due diligence period the buyer and seller are under contract, so the house is effectively off the market, although the seller can still pursue backup offers.

2.) Due Diligence Fee

The above due diligence period comes with a cost to the buyer. The buyer must now provide a "due diligence fee", written directly to the seller, which is a non-refundable fee. The seller is allowed to cash the check immediately. So, the buyer is essentially purchasing time to evaluate the property, and paying for the time the house is off the market with the due diligence fee.

The only time the seller is required to return the due diligence fee is when the seller is in material breach of the contract, most likely due to the seller changing their mind about selling or being unable to provide clear title to the property.

The new due diligence fee does apply to the purchase price of the house at closing.

3.) Earnest Money

The buyer still also provides earnest money. Prior to the end of the due diligence period this money is returned to the buyer if the contract is terminated. After the due diligence period is completed the seller gets to keep the earnest money as liquidated damages if the buyer does not close on the home. The big difference to the buyer is that if the buyer's mortgage company decides not to give the buyer the mortgage, the buyer now forfeits the earnest money if the mortgage company makes this decision after the due diligence period.

4.) Repairs

In the old NC contract, the seller was required to deliver the home where all the systems in the home were "providing the function intended, and not in need of immediate repair". This caused many disagreements, because what is in need of "immediate repair" is not always clear cut.

In the new contract the seller makes no agreement to the working condition of anything in the house. However, if the buyer isn't happy about items that come up during the inspection, the buyer can easily walk, so it's not necessarily a free ride for the sellers.

We will still have a renegotiation before the end of the due diligence period. The difference is that there is no longer any expectation of what should or should not be covered. The buyer and seller will make this determination from scratch on every deal.

Results

The goal of all these changes is to provide a contract that will be clearer to follow, have fewer dates to keep track of, and hopefully have fewer disputes. Time will tell if the NCAR and the NCBA have achieved these goals.

If you are looking to buy or sell a home, please give me a call and I would be happy to discuss these changes and how they may affect your specific information.

Did you know that 47.2% of all statistics are made up on the spot? So with that in mind, proceed with caution, you have been duly warned!

Constantine Isslamow wrote a post titled Average Prices, not a true measurement which made me think about average prices and some of the other interesting statistics that I have learned aren't always what they seem to be.

As a former engineer I'm pretty big on statistics, and I use them frequently. Look at my website, or talk to my clients and you'll quickly learn that I like numbers. However, one thing I've found is that you have to interpret the statistics you see or read about very carefully. As the cartoon implies, numbers can often be manipulated to say whatever the speaker/author intends. With that in mind, here's some things to keep in mind when someone throws out a number.

Average Sale Price

The difficulty with this number is, on a small scale like comparing homes in a subdivision, that it doesn't take into account the size of the homes, and larger homes sell for more than smaller homes, all else being equal. There's another problem when applying this statistic to compare, for example, last years average sales price compared to this years average price. If, for example, there were a number of $1M+ homes that sold last year, and none sold this year, the average of all homes is likely to go down. However, the value of lower priced or mid range homes may be stable, or even increasing. Don't assume that because the average in your city went from $250,000 to $245,000 that your home lost $5,000 in value. It may have, but it just might have gained value.

Average SP per Sq Ft

In order to avoid some of the above problems I like to use Average Sale Price per Square Foot. This is a pretty good mechanism to compare properties within a subdivision, but it isn't foolproof either. The value of a finished basements or attic is not as great as the value of first and second floor finished space. So, a 2800 square foot home where the finished space is on two levels is worth more than a 2800 square foot home with a finished attic. If they are priced at the same SP/Sq Ft then the second is overpriced. If the second home is priced right, taking into account the somewhat lesser value of the finished attic, then it will have a lower Avg SP/Sq Ft, making it look like more of a deal than it really is.

Average List Price

One of the interesting things about the Triangle area of North Carolina is that houses are generally priced right, and we have a average SP/LP ratio of 97%. You read that right. For the approximately 2000 closings we have had in Cary over the last year, we have an average SP/LP ratio of 97%. This means that it is IMPERATIVE for sellers to price their house right, or it simply won't sell. Buyers need to realize that the sellers will get very close to their asking price, assuming it isn't overpriced. This isn't an area where offers that are 20% below list are going to get much traction.

So, if you are interested in what homes are selling for in your neighborhood, or in a neighborhood you are interested in buying in, give me a call and we can discuss what the market is REALLY saying!

Quick Bits

Price Range: $120,000 to $300,000
Home Types: Single Family and Townhomes
Size: 665 homes
Location: Cary
Age Range: 1985 to 1995

List of Current Oxxford Hunt Homes for Sale

Map of Current Oxxford Hunt Homes for Sale

 

 

About Oxxford Hunt

Oxxford Hunt is a great entry level subdivision of mostly single family homes located in the western central part of Cary.  Built from the mid 1980s to the mid 1990s, Oxxford Hunt has enjoyed consistent popularity and strong sales over the years.  The subdivision has trails that connect to the Cary greenway system which leads directly into Bond Park, making it a great neighborhood to live in and enjoy the outdoors.

Oxxford Hunt has a clubhouse, swimming pool, a newly constructed play area, tennis courts, and a large pavilion for outdoor entertaining.  Lake Hoffman is a 9 acre man made lake with a picturesque fountain adjacent to the subdivisions walking trails.

In the last year single family homes have ranged from $190,000 to just over $300,000.  There has only been one townhome sold in the last year, for $120,000.

 

 

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Location

Oxxford Hunt is located along Chatham Road between Old Apex Road and Cary Parkway.  There are plenty of grocery stores nearby, and it is convenient to downtown Cary, Crossroads, Cary Towne Center, Cornerstone, and Beaver Creek shopping centers.

 

 

 

Things to do

There's a wealth of things to do near Oxxford Hunt, starting with Cary's Bond Park located off High House Road. Bond Park has a small lake where you can rent paddleboats, canoes, and sunfish sailboats.  They also have softball fields, a ropes course, an amphitheater, and picnic shelters.

Nearby is Thomas Brooks Park which has 4 lighted baseball diamonds, 2 basketball slabs, 2 soccer fields, a playground and picnic areas.  Thomas Brooks Park is also home to the USA Baseball National Training Complex. 

On the south side of Cary is the Koka Booth Amphitheater which runs events ranging from Shakespearean plays to classic rock concerts to hosting the Raleigh Symphony for a summer pops series. The Amphitheater is located in Regency Park and also hosts a huge 4th of July celebration every summer.

Within 5 to 10 minutes you can also go to the movies, go ice skating, roller skating, bowling, and visit numerous Cary Parks. If you open your drive up a bit you can spend an afternoon boating on Jordan Lake, enjoy the museums in downtown Raleigh, expand your education at one of the eight local colleges and universities, or attend a major sporting event at one of our three local ACC schools. And for hockey fans Raleigh is home to the Carolina Hurricanes.

 

Trends

Sales in Oxxford Hunt were slow last quarter, matching much of what is happening in Cary.  The good news is that the sale price per square foot is around $115 per square foot, which is fairly typical for an entry level subdivision. While it would be nice to see a higher sales volume it is encouraging to see that the average sale price and sale price per square foot have remained strong.

 

 

 

 

Quick Bits

Price Range: $175,000 to $300,000
Home Types: Single Family
Size: ~600 homes
Location: West Cary
Age Range: 1994 to 1998

List of Current Park Village Homes for Sale

Map of Current Park Village Homes for Sale

 

 

About Park Village

Park Village is a great entry level subdivision on the west side of Cary.  Built in the mid 1990s by Solaris Development Corp., Park Village has always been a popular neighborhood due to it's great location, quality of homes, fantastic amenities, and superior schools. 

 

Park Village's amenities include a swimming pool with a very active swim team called the Park Village Porpoises.  The pool is adjacent to a clubhouse which overlooks a beautiful pond with a fountain in the center.  The Clubhouse has a deck with a portico which makes for a great area to relax and enjoy the view.

In the last year single family homes have ranged from $175,000 to just over $300,000. 

 

 

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Location

Park Village is located at Davis Drive and Park Village Drive, right across the street from Davis Drive Park. It is just to the south of Davis Drive Elementary and Davis Drive Middle Schools, both of which are extremely popular.  There are plenty of grocery stores nearby, and it is convenient to both Cornerstone and Beaver Creek shopping centers.

 

 

Things to do

Nearby is Thomas Brooks Park which has 4 lighted baseball diamonds, 2 basketball slabs, 2 soccer fields, a playground and picnic areas.  Thomas Brooks Park is also home to the USA Baseball National Training Complex.  There is plenty of shoping and restaurants at The Streets at Southpoint, a new mall on the south side of Durham that is only minutes away.  Also, Beaver Creek Commons shopping center is to the south at the intersection of NC-55 and US-64.

On the south side of Cary is the Koka Booth Amphitheater which runs events ranging from Shakespearian plays to classic rock concerts to hosting the Raleigh Symphony for a summer pops series. The Amphitheater is located in Regency Park and also hosts a huge 4th of July celebration every summer.

Within 10 to 15 minutes you can also go to the movies, go ice skating, roller skating, bowling, and visit numerous Cary Parks. If you open your drive up a bit you can spend an afternoon boating on Jordan Lake, enjoy the museums in downtown Raleigh, expand your education at one of the eight local colleges and universities, or attend a major sporting event at one of our three local ACC schools. And for hockey fans Raleigh is home to the Carolina Hurricanes.

 

Trends

Sales in this subdivision have followed the economy, slowing to a low of 2 sales last quarter.  The good news is that the sale price per square foot has remained farly strong around $130 per square foot, which is quite good for an entry level subdivision. This number clearly dipped in the last quarter, but with only two homes sold it is impossible to determine if this is a trend or simply a reflection of those 2 particular home sales.

 

 

 

 

                                                                                                                                                                       

Quick Bits

Price Range: $270,000 to $550,000
Home Types: Single Family
Size: 300 homes
Location: West Cary
Age Range: 2007 to 2010

List of Current Harmony Homes for Sale

Map of Current Harmony Homes for Sale

 

 

About Harmony

Harmony is a new construction Pulte subdivision being built in the western part of Cary. The subdivision has three sections, Harmony Pointe, Harmony Glenn, and Harmony Reserve.  Amenities in Harmony include a junior olympic size swimming pool as well as a kiddie pool, a 3000 sq ft clubhouse, a tennis court, and playground. 

In the last year single family homes have ranged from $270,000 to just under $550,000. 

 

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Location

Harmony is located to the west of NC-55 off Turner Creek Road.  It will be convenient to the Green Level Rd exit on NC-540 once that road is constructed, so it will be easy to commute to anywhere in the Triangle. However, the back side of the subdivision is relatively close to the new toll road, so make sure you explore that before you make any decisions on the neighborhood.

Things to do

Nearby is Thomas Brooks Park which has 4 lighted baseball diamonds, 2 basketball slabs, 2 soccer fields, a playground and picnic areas.  Thomas Brooks Park is also home to the USA Baseball National Training Complex.  There is plenty of shoping and restaurants at The Streets at Southpoint, a new mall on the south side of Durham that is only minutes away.  Also, Beaver Creek Commons shopping center is to the south at the intersection of NC-55 and US-64.

On the south side of Cary is the Koka Booth Amphitheater which runs events ranging from Shakespearian plays to classic rock concerts to hosting the Raleigh Symphony for a summer pops series. The Amphitheater is located in Regency Park and also hosts a huge 4th of July celebration every summer.

Within 10 to 15 minutes you can also go to the movies, go ice skating, roller skating, bowling, and visit numerous Cary Parks. If you open your drive up a bit you can spend an afternoon boating on Jordan Lake, enjoy the museums in downtown Raleigh, expand your education at one of the eight local colleges and universities, or attend a major sporting event at one of our three local ACC schools. And for hockey fans Raleigh is home to the Carolina Hurricanes.

 

Trends

The average price per square foot has trended down since they started the subdivision, which is not a surprice in this economy. The real surprise is how well their prices have held up in spite of the last 3 years. The volume of sales has been healthy enough for this subdivision to make it into the top ten sellers in the last 12 months. Actual volume of sales is higher because Pulte, like many builders, did not list all of their sales in MLS.  The average price has remained fairly stable over the last year, which speaks well of the subdivision and it's popularity.