Tennessee Real Estate

How do I evalute potential properties?

When it’s time to evaluate Tennessee real estate there are many methods used to derive a value which can seem confusing for the first time home buyer. Here to help is a quick review of commonly used terms and methods.

Construction Cost. The actual cost required to build the home including supplies, permits and labor.

Replacement Cost. The amount required to replace the structure in the current market. Variations in building supplies, building codes and inflation may have considerable impact on the cost to rebuild a home in the event of a loss.

Income Yield. How much income the property would generate if it were leased or rented.

Comparison Cost. The selling price of other homes of similar construction in the same general area.

Forced Sale Value. The value of the house or property in the event of liquidation or at auction.

When evaluating Tennessee homes for sale it is useful to analyze a property using several of these methods in order to determine "best" and "worst" case scenarios. Tennessee real estate listings with a selling price that rates well in each of the above methods would be a strong buy with potential for significant equity, income opportunity or other unrealized potential.

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How can I negotiate price?

According to data recently released by HUD and the National Association of Realtors, real estate in Tennessee and elsewhere throughout the country has continued to drop in price, creating a buyer’s market. If you are in the market for Tennessee new homes or even pre-existing homes, then sellers may be eager to bargain. Below are some of the more popular methods buyers can use to help purchase a new home.

1. Lowering the Asking Price. With Tennessee property listing reaching new heights, it never hurts to make a lower offer. Simply tell your real estate agent what you are willing to pay for the property and request the offer be submitted to the seller. The seller will either accept outright, accept with other terms, make a counter-offer or reject the offer.

2. Improve the Property. Some sellers simply cannot lower the asking price but they may be willing to make other improvements to the property instead. Common examples include appliances, hot tubs or other desirable items.

3. Carry a Note. Some Tennessee homes have substantial equity that allows the sellers to hold or carry a note for a portion of the down payment or purchase price. The exact contract will need to be carefully negotiated but it is an option worthy of consideration.

4. Closing Costs. Another popular bargaining tool concerns negotiation of closing costs including title, appraisals and other fees. Although many closing costs are traditionally assumed by the buyer and seller respectively, they are in fact negotiable if both parties agree.

Take time to find an experienced Tennessee real estate professional that can assist in the bargaining and negotiation stage to find your new Tennessee home.

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How do I plan to rehab a home?

Project homes are an affordable way to purchase Tennessee real estate but they require proper project planning. Make sure you don't break the bank by using our Project Planning Checklist below:

1. Inspection. Even if you are an experienced do-it-yourself type, obtaining an independent home inspection is good advice. Not only will it help to have an objective evaluation during the negotiation stage of purchasing a Tennessee home for sale but a second opinion never hurt when it comes to spotting potential problems.

2. Budget. Establish a budget based upon all known elements and then add 10-15 percent to cover the cost of unexpected issues. Common problems encountered include building code changes, increased cost of supplies and invisible problems found after work begins.

3. Schedule. Time and money are always a trade-off when it comes to working on a property. Be sure to schedule more time than you think the job will take to counter the effects of fatigue, injuries and other mishap's.

4. Document. Take before and after photographs, save receipts and keep a log related to all work performed on the property. Not only will it help keep you organized during the project but it also provides helpful tax information and useful overview when it comes time to sell the property.

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How can I avoid buyers remorse?

Putting a contract on your first piece of Tennessee real estate is exciting but don't be surprised to find yourself suffering from a case of buyer’s remorse and cold feet within the week. Like all major life changing events, purchasing a new home is stressful so it is only natural to have second thoughts or doubts. Here is how to avoid buyer’s remorse so you can fully enjoy the process of buying your new home.

1. Take your time. Professional real estate agents are helpful not pushy. Before visiting Tennessee real estate listings, communicate your needs to the agent.

2. Make a list. In order of importance write down those items you consider essential and then those that are optional or desired to help stay on track. It is easy to fall in love with the look or location of a home only to later realize it doesn't fit your lifestyle at all. Stay focused by sharing your list with your Realtor while shopping for Tennessee new homes.

3. Stay in Budget. Between the down-payment, closing costs, repairs, new furniture and other changes you intend to make on the property it is easy to go over budget. Nothing turns pleasure into pain faster than facing money problems so make a list then check it twice before making un-scheduled expenditures.

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What should I know about escrow?

Whether you are shopping for Tennessee new homes or existing properties for sale, chances are you will eventually be asked to put funds into an escrow account when making an offer on a property. Escrow is a third party service that holds and services funds while the negotiation and other contractual obligations are undertaken.

In most cases, escrow moves smoothly but occasionally problems arise. Here is how to avoid common escrow errors:

1. Make sure all names are spelled correctly. If you notice a spelling error, report it immediately. Don't assume it doesn't matter.

2. Double check the property address or parcel number.

3. Verify the sales price.

4. Review the HUD statement. Ask questions about anything you do not understand. Make sure all areas are completed and correct any errors.

5. Confirm the closing date.

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What are mortgage points?

Whether you are searching for Memphis homes for sale or a condo in Nashville, chances are your Tennessee real estate will be financed using a mortgage. One of the most common questions surrounding a mortgage is how many points (if any) you should pay upfront. Although the price of many homes has been dropping and interest rates remain low, closing costs still represent a significant hurdle to purchasing real estate. In fact, many banks are requiring even larger down payments in order to obtain favorable terms so the question of closing cost versus cash on hand is more important than ever.

Discount points refer to a fee paid up front in order to obtain a more favorable interest rate. In most cases, the fee is included in the closing costs but it is possible to finance all or part of the discount points. One discount point is equal to 1 percentage point of the loan so if you are purchasing a $250,000 home a discount point would equal $2,500.

Discount points change periodically depending upon the banking climate, economic conditions and which bank you are doing business with but in each case the decision to purchase discount points depends upon your individual situation. To determine if you would benefit and how much use the following questions:

1. How long will you remain in the home? Calculate the total cost of the points then average over the anticipated number of years you will remain in the home then compare against the anticipated savings due to lower interest rate.

2. Do you have a large down payment available but will require lower monthly payments for an extended period of time? Common examples might include having saved for a down payment but starting a family where only one person will be working. In this situation lower monthly payments might be a good safety net.

3. Do you have a minimal down payment but solid steady income to afford higher monthly payments? Common examples might include a newlywed couple still in college. In this situation the anticipated combined earning potential may be more than sufficient to offset a lower initial savings rate.

Mortgage discount points can be a very smart investment particularly if you intend to purchase Tennessee real estate to hold for at least five to seven years but do the math before making a decision.

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What mistakes should I know to avoid when buying a home?

Purchasing Tennessee real estate can be a lot of fun but there are potential mistakes many people make along the way that could easily be avoided with just a little know-how. Here are the top mistakes to avoid when buying your new Tennessee home.

1. Failure to use a knowledgeable and experienced real estate agent. Many buyers and sellers think they can save money or reduce the price of a house by not using a real estate agent but that is rarely the case. Real estate agents bring more to the negotiation process than meets the eye. Not only do they save significant time for buyers and sellers but also reduce the risk of other difficulties by making sure the entire process moves smoothly.

2. Shopping for homes outside your price range. Before scheduling appointments to visit Tennessee real estate listings in person, make sure you know how much mortgage you will be able to afford.

3. Borrow a bank account. This is a fairly new scam that has been promoted by unscrupulous and predatory practitioners that charge a fee to make it appear you have more money or assets than you actually own. Not only is this fraudulent but it is also a very bad idea because you will not have the money or reserves necessary to carry the mortgage and other payments when an emergency takes place.

4. Failure to exercise a rate-lock. Rate locks are important tools for making sure you obtain the best possible mortgage interest rate. Always verify in writing that the rate lock has been implemented and pay the necessary fees to extend the time period if required.

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