My Hattiesburg

Hattiesburg’s Real Estate Bubble

I have decided to detour from my series for a few days and discuss some things more prevalent to the Hattiesburg area. So here it goes. Hattiesburg is really a unique market in the area of real estate. It just doesn’t seem to slow down but will it? I was just thinking the other day there has to be a point at which the market has to start to decline some. However, with the recent disaster of Catrina and thousands of new people flooding into Hattiesburg I challenge you to predict where that point is. With all this growth and the rate at which it is growing do you think it could lead to a real estate market crash? I guess the question is how big do you think Hattiesburg’s real estate bubble is and how long before it pops or you may not think Hattiesburg will be affected. Feel free to discuss all the possibilities.

9 Steps in Selling Your Home: Steps 1-4

Step 1: Get Pre-Approved
The first thing you need to do is to make sure you will be able to get financing for your new home after you sell your current home. You may want to refer back to the posts on buying a home.

Step 2: Check Mortgage Payoff
You can call your lender to get the payoff amount. Usually a teller can look it up on their computers but you may want to see the loan officer just to make sure you get correct information.

Step 3: How Much is Your Home Worth?
So how do you determine the market value of your home? If you have a real estate agent he or she can do a fair market analysis to determine your home’s value. However, if you don’t have a real estate agent you will need to go to your county court house and try to look up your neighborhood and see what the houses in the area that are similar to yours sold for. Based off that information you can determine about what your house is worth. It is way easier to let a agent do it.

Step 4: Estimate Your Cost in Selling
Here is a list of some of the bigger things you will need to account for when estimating the costs in selling your home:

• Real estate commission if you use a agency
• Attorney’s closing fee and other professional closing fees
• Advertising costs, signs, newspaper ads, and fliers if you sell by owner
• Any fees paid by the seller in you general area (example: surveys, inspections)
• Tax on the sale
• Your annual expenses, such as property taxes, home owner association fees, and fuel
  tank rentals.

Real estate agents deal with transactions on a daily basis and can offer a pretty close estimate on what your closing costs may be.

9 Steps in Selling Your Home: Steps 5-6

Step 5: Determine the Cost to Acquire a New Home
Total your costs to acquire a new home may include but not limited to: down payment, loan costs, moving expenses, home inspections, title work and new hazard insurance policy premium. When you applied for pre-approval your lender should have given you a disclosure of estimated costs.

Step 6: Calculate Your Estimated Earnings
This is basically estimating the money you will have left over after you sell you home.
First, deduct the mortgage payoff from the fair market value of your home. Then, deduct the cost to sell from the remaining balance and this will give you your total proceeds made from selling you home.

For example, my mortgage payoff is $70,000, fair market value is $100,000, and the cost of selling my house (includes agents commission, repairs, advertising, ect…) is $7500.

This is how you would work it: 100,000 - 70,000 = 30, 000 then 30,000 - 7500 = 22,500. So the total proceeds that will be made off this example would be $22,500.

9 Steps in Selling Your Home: Steps 7-9

Step 7: Make Needed Repairs
Be sure to fix the thing about your home that is broken and in need of repair. Failing to do so may result in a buyer submitting a lower bid.

Step 8: Get Your Home Ready to Show
Most homes need a little cleaning up before they are ready to be shown to potential buyers. Some improvements may include: fresh paint indoors, a cleaned yard, well organized closets, clutter free rooms, and clean floors, windows, and appliances. I think you get what I am talking about.

Step 9: Stay Excited About Showing
If you use a real estate agent then they will more than likely ask you to leave while they show the house to a potential buyer. Why do agents do this? Well, so that no undue pressure is on the buyers. Sellers that lurk around the house while a buyer is looking often makes the buyer uncomfortable and you should want the buyer to be as comfortable as they can possibly be. However, leaving your house 3 or 4 times a week for a agent to show your home will become taxing on your emotions. Just keep your attitude in check and get through it because the more times a agent shows your house the more likely you are to sell it.

3 Steps in Deciding to Buy or Rent

Step 1: How long do you plan on staying in a particular area?
If you have a job in your home town then you probably would do good by owning your home. However, if you are in town for a limited number of years then you probably shouldn’t buy a home. It is really self explanatory.

Step 2: Your Financial Situation
Several factors come into play here such as your income, credit card debt, current living expenses (car, groceries, medical bills, ect..) and savings. A general rule of thumb is that the monthly cost of maintaining your home (mortgage payment, insurance payment, and tax payment) should not exceed 28% of you gross monthly income. If the maintaining cost exceeds 28% of your monthly income then you would be better off renting until you can get your monthly income up some.

Step 3: Tax Benefits
The federal government allows homeowners certain income tax advantages. Homeowners may deduct from their income some or all of the mortgage interest paid, as well as real estate taxes and certain other expenses that were involved with purchasing the house. Also married taxpayers who file jointly can exclude up to $500,000 from capital gains tax for profits on the sale of a principal residence and taxpayers who file singly are entitled to a $250,000 exclusion. Renting a home does not provide any tax benifits that I am aware of. However, you should always consult a certified tax professional when dealing with such matters.

Factors of the Market

Before someone decides to buy or sale a home it would be advantageous to have knowledge on how the housing market works. In this post I will be discussing the economical characteristics of real estate. So lets begin.

Economical Characteristic #1: Scarcity
We may not often think that land itself is a rare commodity, but only 25% of the earth’s surface is dry land. The supply of land is not limitless; so the amount of land in a certain area is considered to be finite. Generally, the more scarce land is in a region the more valuable it is. So you see how scarcity plays a factor in how people set prices for real estate.

Economical Characteristic #2: Improvements
Improvement in real estate terms is defined as any artificial thing attached to the land. Building improvements on one parcel of land may effect the price of the land around that parcel. For example, building a new shopping center in a area may cause the price of the real estate in that area to go up but on the other hand building a nuclear power plant in the same area may make the price of real estate to decline.

Economical Characteristic #3: Permanence of Investment
The capital and labor used to build an improvement represents some degree of fixed investment. Whether the improvements are building a new structure or adding drainage, electricity, water, and sewer these improvements are considered long term investments and maybe reflected the price of the real estate.

Economical Characteristic #4: Location
You may think of location in terms of only geography. However, the type of location we are interested in is sometimes refered to as Area of Preference. Area of preference refers to the preferences for one area over another. This preference may be based on such factors as history, reputation, convenience, scenic beauty, and simple geography. It is the unique qualities in preference that make some similar properties retain very different prices. Location is the most important of the 4 Economical Characteristics of real estate.

So before you buy or sale a home you may want to analyze the area you live in using these four Economical Characteristics.

Getting Started

In the next couple of days I will be doing a series of posts on buying a house, selling a house, and real estate investment. However, for today I just want to give you a glimpse on how I will be posting. For this upcoming series I will basically act like you know nothing about real estate and give you what I hope is a wealth of knowledge about real estate. The posts that follow this series will be more freely written with topics ranging from home appreciation to Mississippi State Real Estate Tax Law. Hope to see you tomorrow