About Montgomery County, VA

Understanding Economic Issues to Eliminate Fear:

Do we have alternatives to promote sales?

Is our response to news of an economic crisis rational or irrational? There are so many terrific bargains out there so why aren't consumers buying homes or anything for that matter? I know, you know, we all know that clinging to our money is perpetuating our financial crisis but we are not spending money. I am not talking about wasteful spending. We are holding on to every dollar that we have. All of us have heard that we need a good retail season to help our economy. We know that houses in our market are bargains compared to 5 years ago when buyers often offered more than the sales price in order to out bid other buyers making offers for the same house. Were those buyers who paid more than the asking price "smart buyers?" What is happening?

This week, I attended a wonderful seminar. The economic strategist, Tuck Reed, for Sun Trust Corporation, a major bank and mortgage company talked about "Loss Theory." I took economics a long time ago so I had not heard about "Loss Theory." According to the strategist who put everything in simple terms, Daniel Kahneman won the Nobel Prize in Economics in 2002 for advancing this theory which says that if I find a $100 bill on the street, I will be happy. But if I lose a $100 bill, I will be totally devastated. In other words, losses affect us more. We allow negatives to outweigh greater positives if they are losses.

After doing a little more research for posting on my blog, I learned that in Prospect Theory, loss aversion refers to the tendency for people to strongly prefer avoiding losses than acquiring gains. Some studies suggest that losses are emotionally twice as powerful as gains. The real estate application for this scenario is, "Consumers don't seem to mind paying thousands of dollars more than the asking price for a house; however, if their house loses any value, the situation is a crisis."

Can we convince our sellers that they need to take a rational look at savings when they purchase a new home instead of dwelling on the loss when they sell? Until learning about Loss Theory, I could not understand why sellers weren't happy to sell their homes for a little less money when they were buying a more expensive home that was also declining in value. The bottom line for a seller buying a more expensive home in the post 2005 market is that the buyers can buy more for less money. When I did the math, sellers who bought more expensive home were far better off. Let's see if my home is worth $200,000 and depreciating at 5% but I am buying a new home at $300,000 which has depreciated at the same rate, the savings are favorable...especially in a market like our market in the New River Valley of Virginia which has been healthy. In Blacksburg, VA, the foreclosures for most of the year were in single digits. Most of our home owners have equity in their homes and fixed rate mortgages. A major mortgage broker in our area told me that when he did a 13 year survey of his loans, sub prime loans made up less than 1% of his portfolio. Homeowners in Blacksburg, Christiansburg, Radford, Giles County and Pulaski County have nothing in common with the highly leveraged homeowners in speculative markets that were at the root of the housing crunch but they now share the same fears thanks in part to our national media.

I hate to blame to media again but aren't they chiefly responsible for broadcasting fear which has paralyzed our country. Not only are our clients waiting but our agents are hesitating too. On more than one occasion recently, I have heard agents hesitant about marketing for 2009. Evaluating spending to insure that we achieve maximum results for our money spent is crucial; however, many agents are tightening their budgets as an excuse for not marketing. We all know that when agents say that they have no marketing plans, it translates to even less business which leads to a downward business cycle for all of us.

We need to remove barriers instead of setting up barricades. The speaker that I talked about said that there are $100 bills lying on the ground but no one is picking them up. Good buys are everywhere in our market. We have better inventory, superb and plentiful mortgages at an unheard of 4.75% interest rate and MOTIVATED SELLERS.

How can we utilize our relationships to market our listings in expensive ways that have big impact? Remember that according to NAR statistics, real estate agents are still responsible for 34% of the sales that lead buyers to a property that they didn't know about (From NAR 2007 Profile of Home Buyers and Sellers as part of the Prudential Homeselling Proposal) as opposed to the 1% statistic for sales attributed to Home Magazines. Good marketing isn't always expensive. In 2009, we need to build stronger relationships to better market our properties.

Understanding what has happened and developing a strategy to avoid the same traps while pointing out the positives in our market is crucial. Fear tends to cripple its victims with inaction; hence, the phrase "frozen with fear." In order to focus on promoting our product, I am proposing a local networking session each month open to all area Realtors®. Let's call it "30 Minute Networking for Home Sales in the New River Valley."

We all know that a dialogue about our clients housing needs and new listings that may be coming on the market stimulates sales. Let's expand our networking sessions to all agents in our New River Valley MLS. The rules for the meeting should be simple:

• Everyone is invited! We need to knock down walls of communication blocking networking among firms. Our goals are to sell real estate. No recruiting at the meetings.
• Buyers' Agents will talk first about their clients' wish lists. Agents with a listing or potential listing will respond to the Buyer's Agents request; then, Listing Agents will take the floor.
• Attendees must speak in positive terms during the networking session. "Naysayers" should stay home. Also, this meeting is a fast track networking session so no personal anecdotes.
• The meeting will be concluded in an hour or less. All speakers should prepare in advance by bringing information such as handouts about listings, or prospects needs. We need to stay on point and move forward.

We will host the first meeting at our Blacksburg office at 318 North Main Street. We have plenty of parking in our parking lot behind our building. If you are ready to take action, please RSVP in advance by noon on January 5^th to enable me to advise you about assigned parking for the meeting. Let's schedule the 1^st meeting for Thursday, January 7^th, 2009 at 10 am which will end no later than 11 am. A good turnout means that we will have a monthly networking vehicle to help agents working with buyers and sellers that is free and positive. If you have a positive idea to reduce agent costs, please share them.

Up until this fall, agents throughout the New River Valley enjoyed a good real estate market that thrived amid news of other declining markets. This year, we have still experienced multiple offers on some properties. As the managing broker of Prudential Radford & Associates, Realtors, I have lately watched our market slow down as a result of consumer fear. It is time to focus on promoting our business by overcoming fear in the market place.

Looking to buy a house in Southwest Virginia? Perhaps you've been looking at homes in Christiansburg, or in Radford, and you just don't think you can afford it. I'd remind you that the opportunities are there for buyers right now for two reasons - (1) the inventory available, and (2) the rates that local lenders are willing to lend at. Let's look at the numbers ...

Assuming a house is priced at $150000, and the interest rate is 5.00% (the current USDA rate), here's how your monthly payments would break down on a home in Christiansburg purchased for $150000 with NO MONEY
DOWN:

Principal & interest: $805.24
Prop Taxes (estimate): 114.83
PMI (None with USDA): 0

Total Payment: $920.07

Imagine - a $150000 mortgage for less than $1000 a month. And it's important to note that this is a USDA loan, with a secure 30-year fixed rate and NO prepayment penalty. STILL think you can't get a loan? I promise you that it's still easier than you think. Contact me, I'll help you search for your best option with local lenders who have money to lend.

This can work well for many buyer profiles, but what one buyer often has a job, credit and no money? Recent college graduates. Virginia Tech and Radford alum, let's see how we can make this work for you!

I've been meaning to put this post out there for quite some time, then a month or two ago another agent did something similar and so I figured it was probably time to move it up the To-Do list.

A lot of people ask me "when's that house down the street going to sell?", or "how much did that two-story on Main Street sell for?" While I'm glad to tell you, there's a way you can find out even faster. If you'll email me your name, email address and the neighborhood you live in, I'll set up a search in the MLS that'll email you every time a property in your neighborhood comes on and off the market. You'll be the first to know when it this the market, the first to know if the price changes ... be the envy of all your friends! Don't worry - by providing your email address I won't be spamming you, or sending you cutesy recipe cards in the hope that you'll remember my name. If it helps, I won't even save your address.

I've just found that if you're interested in following the values in your area, this is a good, real-time way to do that. I've set it up for myself to track my own neighborhood, and those of some of my former clients, and can do the same for you. Just email me and I'll set it up; I hope you find it useful.

Out of the Absolutely-Positively-100%-Without-A-Doubt-Shameless-Promotion-And-I-Don't-Care Department comes this post ...

Last week Jay Thompson in Phoenix talked about how he was paying models across the country to show off his "Phoenix Real Estate Guy" t-shirts. Jay is known far and wide as THE Phoenix real estate dude in, well, Phoenix, and now he has the models to prove it.

Which got me thinking ...

I haven't mentioned in a very long time that NRVLiving Real Estate has things for sale. We have for a long time, actually. Shirts ... and mugs ... and stuff for kids ... and it's Christmas, don't you need to pick up some last-minute gifts for the special pet in your life?

It's true, the NRVLiving Real Estate Group has it's own store, and you can buy all kinds of things there that are emblazoned with our very own NRVLiving logo. I mean, look at that smile on WDBJ7's very own Natasha Ryan as she shows off her new t-shirt (and ignore the doofus behind the bubble)! Don't you want that same sense of excitement?!

Seriously though, we do have a store. And it's not to put money in our pockets, either - we're an entrepreneurial bunch here, but not quite like that. See, we don't talk about the ways we're involved in the community very much, but one of the things I AM proud to talk about is our involvement with a local child care center, the Valley Interfaith Child Care Center. The folks involved with this center are very dedicated to their mission ... taking care of children from low-income, working families throughout the New River Valley, so that Mom and Dad can get back into the workforce. One of the many ways we support this group is through the NRVLiving Store - 100% of all profits we make go directly back to the center. It's not much, I promise you, but every little bit counts.

All kidding aside, if you'd consider supporting the Valley Interfaith Child Care Center through our store we'd greatly appreciate it. And if you'd like to discuss other ways you might be able to support, either through volunteering your time and talents, dedicated giving, etc., let me know - I'd be glad to tell you more about what we're doing. The needs are great, for sure - thanks for considering how you might give back.

NOW GO GET YOUR SHIRTS! :)

It's the winter time - duh, it's cold outside - and many folks are looking for inexpensive ways to save dollars AND energy in their homes. I came across this list from GreenCville.com and thought I'd repost it (italics are mine):

1. Seal duct work - this is the number one way to conserve energy during the winter. Duct work can leak heated air into the attic or crawl space if all the joints and intersections are not sealed with foil-backed tape or silicone caulking. (which is another reason Mt. Tabor Meadows is so unique)
2. Seal air leaks to attic - seal all holes from pipes and wires that run in and out of the living space. This includes light fixtures, pipes, wires, attic stair openings.
3. Seal fireplaces - never use a fireplace as a heat source for your home. Even as a supplemental heat source, the cold air introduced to a warm home through an open flue isn't as efficient as sealing off a fireplace and using the primary heat source. For natural gas fireplaces, turn off the pilot light when not in use.
4. Lower thermostat - in the winter, set the thermostat between 65 and 70 degrees during the day and to 58 degrees at night or when away from home for several hours. Keeping the temperature at 70 degrees is recommended for homes where there are elderly or infants. (this can be hard to maintain in homes that take a long time to heat - a programmable thermostat might help as it allows the home to begin heating at a prespecified time of day)
5. Lower water heater to 120-125 degrees - many water heaters are automatically set at 140 degrees. Lowering the temperature on your water heater will reduce the amount of fuel needed to heat the water.
6. Change furnace filters every month - This is the number one reason for furnace breakdowns. Inspect heating and cooling equipment annually. Have a professional check and clean furnaces once a year.
7. Weatherstrip doors and windows - inspect doors and windows for air leaks. If you can see daylight around a door or window frame, then it needs sealing. Air leaks can be sealed with caulking or weather stripping.
8. Insulate water pipes coming from the water heater - insulate the first three to six feet of cold and hot water pipes near the water heater. Insulating all hot water pipes is not necessary if pipes are lo cated in an attic or crawlspace.
9. Add an insulation blanket to your water heater - wrapping the water heater with an insulation blanket can save heating money by slowing the drop in temperature from the hot water tank as it sits unused. Inexpensive insulation kits are available at most home improvement stores.
10. Add insulation to attic - when adding insulation, start at the top and word down only after eliminating air infiltration. (I've had clients do this and it drastically reduced their heating and cooling bills)

What are YOU doing to save money on energy costs this winter?