What to do if you don’t HAVE to sell your home

April 15, 2019 By Ilona

So, what does all of this mean? Most property owners we speak to all say the same thing. “We
don’t HAVE to sell.” Which is very true, especially when a seller is not physically moving from
the home. The main reason they say that is because the pricing strategy presented in
alignment with the current market statistics is typically lower than they had hoped for.

It’s no secret, the Northern Outer Banks market is still in the midst of recovery, now with a
rising inventory. We’ve tracked these cycles for many decades and the results are always the
same. It’s a 20 year cycle. If the major down happened in 2009, we are merely half way
through before the next possible boom, based on recorded history.

Now, if you find yourself in the very common situation of having a home here on the OBX that
you aren’t using as much anymore, don’t like the current market price, and feel like you don’t
have to sell it, here’s what you need to know.

What exactly are my options if I don’t have to sell?

  1. 1. Recognize the big picture. Just because you don’t HAVE to sell, does not automatically
    mean that keeping the home is the best financial decision. Talk to your financial planner
    and tax advisor and get their opinion of the big picture financially.
  2. Consider the amount you personally use the home. If you’ve gotten to the point of
    only visiting the home once a year, it could actually end up costing you more in the long
    run to keep it. We have very extreme weather on the Outer Banks. Homes left alone
    with deferred maintenance can often times develop big ticket repair items the longer
    they sit.
  3. Place the home in a trust. If you have children who are available and willing to step in
    and take over the management of the home, there could be some tax advantages in
    your estate by leaving the home to them in a trust. Check with a tax advisor for more
    detailed information. I found this article helpful as a starter.
  4. Consider making improvements. Outside of the economic market conditions of supply
    and demand, one of the other reasons some homes are experiencing a challenge on
    pricing is due to being in the original state. Buyers today have very different
    expectations of homes than they did when I started in 1997. If you are planning to keep
    the home for a few more years, do the improvements, enjoy them, then sell when you
    are ready. One word of caution, consult a real estate professional first so they can help
    you maximize where to spend your money so it makes the most impact to a future
    buyer.
  5. Place the home as a year round rental. Yes, that means less income overall. It also
    means less expense. Tenants in a year round situation generally pay their own utilities,
    do the cleaning, change the filters and more. There is a huge shortage of affordable
    year round rental homes in the area. This is also something you can manage yourself,
    with very little time and energy. Hire a maintenance guy to check on the place and
    handle the minor issues that come up. If you’re already not using the house, why not
    have just one family enjoying it year round.
  6. Consider short term retirement in the home. So many buyers I’ve worked with over
    the years actually bought the home for future retirement. It’s unclear why more don’t
    actually do it. However, if you decided to just retire here for 5 years, enjoy the beach,
    do some improvements, the home could have a much different value then.
  7. Take a closer look at what the home is costing each year to own. This is probably the
    best advice I can give. More often than not, the amount needed to price strategically
    compared to the amount it will cost to own the home for another 3 to 5 years is usually the same. I know it can be challenging to drop that price another $25,000 in order to
    sell, but what will it cost you to own it annually for the next 5 years? That’s not
    including any major deferred maintenance that will come up along the way.

The truth is, timing is everything. If you’re ready to sell, take a serious look at these options
and decide the best course of action. First of all answer the most important question I
presented in the beginning….

Just because I don’t HAVE to sell, does that mean keeping this home is in my best financial
interests?

When you commit to looking at the big picture, as well as all other possible options and
calculate the best move for your situation. If you need help discussing these or any other
strategy, please feel free to reach out!

Filed Under: Home Sellers' Tips & Advice, OBX Real Estate News & Data

January 2019 OBX Market Report

January 14, 2019 By Ilona

The final numbers are in and as predicted, sales on the Outer Banks went a little flat. I wasn’t
expecting the rise in inventory to come along with it.

Reprinted with permission from OBAR is the following Director’s Report:
MLS Director Report – 2018 was a good year; however, they are some trends that bear
watching. Sales are flat (less than a 1% change) while listings in an Under Contract
status have declined sharply (9%). Inventory, on the other hand, is up (5%). Median
sale price, depending on area, is also flat.

Also worth noting is that specifically Residential Inventory (not including commercial properties
or vacant land) was actually up by 6% for the year.

If you didn’t read last month’s article, you can read it here. It’s a reminder that these real estate
cycles typically take 20 years to complete, at least according to 100 years of recorded history.
Since the cycle started in 2008/2009, we are only half way through. Holding on to a home in
this market, expecting it to improve in 12 to 24 months is probably not realistic. Looking for
change in 7 to 10 years is much more realistic.

If you are considering a long term investment here, prices are still low and rents are doing very
well! Interest rates are still around 5% and very reasonable. The outlook for 10 to 15 year
investors is strong.

As far as what we can expect for 2019? I would say more of the same. With rising insurance
costs, rising interest rates, stock market fluctuations, we will likely see the same amount of
activity for this year. Let’s just hope the inventory stays where it is.

If you’d like to see what the market value of your home is, contact me for a free evaluation.

Filed Under: Home Buyers' Tips & Advice, Home Sellers' Tips & Advice, OBX Real Estate News & Data

December 2018 Outer Banks Market Snapshot

December 20, 2018 By Ilona

The big story for the Outer Banks Market as we inch closer to the end of the year is the decline in the number of homes selling, and the slight rise in inventory.  Here’s what we have:

  • Year over year November sales are down 25%
  • Annual sales are down 5%
  • Year over year November under contract is down 12%
  • Inventory is up by 5%
  • Sales in Corolla are down 12% overall this year

This is a dangerous combination.  With sales going down and inventory rising, it could certainly lead to another pricing correction for the market overall.

I get a lot of people asking why the Outer Banks market, specifically Duck and Corolla, has not recovered.  The primary reason is inventory.  Prices simply cannot rise when the market is carrying nearly 2 years of inventory.

I also want to offer a quick reminder of what typically happens in these cycles.  When we look at recorded history, it shows that these kinds of market cycles take 20 years from start to finish.  If we consider the main effects of the 2005 market crash started here in 2008.  That puts us only half way through.  There is nothing abnormal about this when nearly 100 years of history shows the same time frame through each experience.

I’ll tell you a quick story.  In 1988, a client bought a home in Sanderling for $345,000.  This was the top of the market for that time.  There had been a correction in 1986, yet didn’t affect the Outer Banks until 1988.  Shortly after his purchase, the market sharply corrected.  Ten years later, in 1998, I sold his home for the exact same price he paid.  Minus his selling expenses and various repairs, he did not come out ahead.  Fast forward to 2004, and that same home was offered nearly $600,000.  That’s how quickly things changed.

The point is, we are only half way through this cycle.  We are not experiencing the comeback of prices just yet.  It will happen again, as it always does, but it’s not likely to take place in less than 5 to 7 years from now.  That’s just how long these cycles take, and this one is particularly challenging due to the continued high inventory levels.

If you are thinking of selling, either have patience for another decade to pass, or go ahead and sell it now for what the market will allow.  Just remember, in another 10 years the home will be that much older and that much more maintenance required.

Nearly every day I speak to a seller who says, “We don’t HAVE to sell it.”  And yes, that’s true.  99% of the clients I work with are not in financial distress and truly don’t HAVE to sell it.  I encourage you to also ask this next question.  Just because you don’t HAVE to sell it, doesn’t mean that IT ISN’T the best financial move for you.  Really consider the big picture of keeping the home another 10 years, versus the disappointment of the price the market mandates at this time.  In the end, if you don’t HAVE to sell and don’t want to participate in today’s pricing, the truly best thing you can do is take the home OFF the market, which will help inventory levels go down.  That will help everyone in the long term.

As always, if I can be of further assistance to you, please reach out!

Filed Under: Home Buyers' Tips & Advice, Home Sellers' Tips & Advice, OBX Real Estate News & Data

November 2018 Outer Banks Market Snapshot

November 14, 2018 By Ilona

What’s interesting about this time of year, is that we can really see the major trends going on in
the marketplace for the calendar year. I’m highlighting 3 specific points for this analysis.

Inventory
Inventory levels on the Outer Banks, specifically northern beaches, have been particularly
challenging for our market. The fact is, in Duck and Corolla, there are little to no primary sales
taking place. That is, no one is physically moving into or out of that area. Those kinds of sales
are crucial to market health because those people “HAVE” to buy and sell. The truth is, 100% of
the sales that take place in those areas are discretionary.

Nearly every seller we meet says the same thing…”We don’t have to sell.” Which is very true.
You don’t have to sell because you’re not making a physical move, nor are you in financial
distress. It’s important to recognize that 99.9% of sellers we work with, don’t HAVE to sell.
There’s a common misconception that pricing your home to sell in today’s market is the same
as discounting it to force it to sell. That’s simply not true. Today’s market in Duck and Corolla
simply has an oversupply of inventory and an under-supply of buyers. That’s the bottom line.
It’s a resort market where all sales are discretionary. Period. I encourage you to ask the
following question. Just because I don’t have to sell, does that mean keeping the home is in
the best financial interests of myself/family/long term plan? That’s what it really boils down
to. I know it’s difficult to swallow the prices today’s market requires, but consider the whole
picture before making a final decision.

The price in these kinds of markets are 100% dependent on the principle of supply and demand, because buyers don’t HAVE to buy until they find the home that ticks all the boxes for them.
Consider this in Corolla:
– Corolla has 294 homes currently for sale.
– 189 homes have sold so far this year; that’s 19 sales a month
– 19 buyers will buy each month and they have 294 to choose from
– 26 Oceanfront homes sold this year in Corolla
– That’s 2.6 buyers a month
– There are currently 53 oceanfront homes for sale in Corolla

Consider this in Duck:
– Duck has 128 homes currently for sale
– 104 homes have sold so far this year; that’s 10 sales a month
– 10 buyers will buy each month and they have 128 to choose from
– From $400,000 to $800,000 there are 52 homes currently for sale
– 47 have sold this year in that range; 4.7 buyers a month
– 4.7 buyers will buy each month and they have 52 to choose from

This is why inventory is the biggest indicator of value in the market right now. We have seen
major improvement in inventory levels over the last few years. This year, we are seeing that
inventory move back up, even just slightly. What does this mean? It means that appreciation is
not happening any time soon, and, that depreciation is still a very real possibility. I don’t report
this to be negative, just to be realistic. Waiting out the market is not a short term endeavor.
Bottom line…inventory is the single biggest challenge in the northern Outer Banks market.
Until that changes, your price won’t either.

Days on Market
The shining point of our market has been the amount of time it takes to get a home that is
priced right, sold. Priced right mostly means priced for its condition. Condition has become the
single greatest factor in a buyer’s decision. They will bypass location for an updated home
almost every time. For more information on the impacts of condition, click here.

The days on market number has gone DOWN again this year by another 20%. This is the third
year in a row this number has dropped by 20% or more.
What does this mean?
– Buyers are watching and waiting for the best value. They study the market for 18
months or more before making a decision to buy. When they see a home that is a good
value, they act quickly and with near full price.
– If your home is on the market for more than 118 days, buyers don’t consider it to be a
good value.

The real estate market is fluid. Pricing your home on one day based on the competition is only
as good as that competition stays the same. As homes sell and adjust their price, you have to
flow with it. In this kind of market, you can either lead with an aggressive price and sell, or,
follow the price others set for you as they sell. Why leave your pricing up to someone else’s
motivation?

Total Sales
Not only did the number of homes going under contract drop by 19% for October, the total
number of sales year over year is down by 10%. Blame the hurricane, the election, whatever
you like. It doesn’t change the facts.

Here’s the deal…interest rates are up, inventory is slightly up, sales are down by double digits.
I’m not telling you this to create panic. My job is to sell homes regardless of the market
conditions, which I have done for over 22 years. My job is also to keep you informed on the
trends, as they are happening. We don’t have a crystal ball, so statistics are the next best thing.

Filed Under: Home Buyers' Tips & Advice, Home Sellers' Tips & Advice, OBX Real Estate News & Data, Uncategorized

The Discretionary Nature of the OBX Market

November 14, 2018 By Ilona

NEEDS vs WANTS

  • Needs – UpDATES; maintenanceBalance Beam of Needs vs Wants
    items that increase attractiveness,
    peace of mind, and cause home to sell
    faster
  • Wants – UpGRADES that may
    increase VALUE AND make a home
    sell faster; appeal

 

Stop Sign

Remember, not all Upgrades make sense! Let’s talk before you spend –
sometimes money is better spent adjusting price vs. investing more in the
home.

Filed Under: Home Buyers' Tips & Advice, Home Sellers' Tips & Advice, OBX Real Estate News & Data, Uncategorized

July 2018 OBX Market Update

July 11, 2018 By Ilona

We are fully into our summer season here on the Outer Banks.  As expected, the summer months typically bring in a decline in sales as well as inventory.  While we still have a fairly active market over the summer, some property owners just elect to wait out the season and sell in the fall.

Here are the most important market points:

  • Sales for the year so far are down 5% over last year
  • Inventory is also down 5% from last year
  • Land sales are down 11% from last year
  • Land inventory is down 8% from last year
  • Number of homes going under contract is also in a steady decline since April
  • This is largely due to the rise in interest rates

Taking a look at the chart below, you’ll see the cycles we’ve experienced in market activity.  It’s not uncommon after a year with double digit increases to have a flat year following it.  What is most exciting is the inventory level change since 2012.

The other notable difference in our market is the way buyers are buying.  We are seeing much more emphasis being put on price and condition rather than location and rental income.  I wrote about this a few months back, click here to read that article again.

As always, if you have any questions about buying or selling please contact me for an analysis.

 

Filed Under: Uncategorized

Insurance Rate Hike Report

July 11, 2018 By Ilona
Reprinted with permission from the Outer Banks Association of Realtors.

Settlement Reached on Dwelling Rates

The NC Rate Bureau and the NC Department of Insurance (NCDOI) reached a settlement agreement this week on a Dwelling Rate Filing that was submitted in February of this year. The Rate Bureau was proposing an overall statewide average increase in dwelling policy rate of 18.9%.

NC Insurance Commissioner Mike Causey was able to negotiate a much lower average overall statewide increase in dwelling policy rates to 4.8%. The settlement also realigns some territories to be consistent with the boundary lines on the homeowners insurance rate map.

Dwelling policies differ from homeowner policies. Dwelling policies typically cover non owner- occupied second homes, vacation rental homes or year-round rental homes and do not include liability coverage.
By reaching an agreement with the NC Rate Bureau, Insurance Commissioner Mike Causey has avoided a public hearing on the filing which was scheduled to begin August 20th. Below is a chart of the proposed rate changes by percentage, the current rate and the approved percentage changes.

In the eastern NC coastal area, the fire coverage rate is going down but the wind and hail (extended coverage) rate is going up. Fortunately, the wind rate is not going up to the extent that was proposed. Wind rates are three to eight times higher than fire rates so a double-digit increase in wind rate is going to have significant impact on policyholders. The Fire and Wind portion of the rate is based on $15,000 Coverage, Base Class is Form DP-001. The new rates become effective February 1, 2019 and also impact those with dwelling policy coverage under the NCIUA (Coastal Property Insurance Pool). Changes to contents coverage are also included in the settlement agreement.

The press release and associated maps and charts from NCDOI can be found here.

Filed Under: Uncategorized

Summer Pritchard’s Bio

April 27, 2018 By Ilona
Summer grew up in a military family and moved to Virginia Beach, Virginia in 1994.  As a teenager and young adult, she spent most of her Summers on the Outer Banks, knowing that one day she would call it home.  In 2016, she made that move and fulfilled her long awaited dream.  Summer has a great love for the beach and couldn’t imagine any life without it.
As a licensed Real Estate Broker in North Carolina, Summer comes to Beach Realty with a high level of customer service skills.  She has served 17 years in the Medical industry, working with a vast array of people from all walks of life.  This gives her great ability and flexibility to work well with anyone.  As a Senior Leader in her previous job, she also knows when to take charge and get things done, accurately and effectively.  One of Summer’s highest qualities is her exceptional communication skills.  She also takes great pride in her commitment to her clients.

Contact Information:

Summer Pritchard, Realtor (R)

Beach Realty NC

1450 Duck Road

Duck, NC 27949

Cell: 757-619-2342

Filed Under: Uncategorized

Flood Maps Update – Dare County

April 27, 2018 By Ilona

Reprinted with permission from the Outer Banks Association of Realtors

Flood Maps – Know Your Zone/New Informative Web Site

HIGHER LOCAL ELEVATION STANDARDS BEING DEVELOPED

Dare County’s Program for Public Information/Flood Insurance Community Rating System (CRS) Committee met last week and discussed a flood map education and awareness campaign and local flood elevation standards/freeboard regulations. Dare Planning Director Donna Creef led the discussion and shared that Dare County should soon receive their revised preliminary flood maps for Review and Comment and by this time next year, Dare County should be in the 6-month adoption period. This puts the effective date of the maps approximately sometime early summer of 2019. The timeframe for Currituck’s preliminary maps to become effective is similar.

PLEASE TAKE NOTE: The preliminary maps show many properties in Dare County being removed from the special flood hazard area (AE or VE zone) and being shown in an X zone. For the past year, there has been a county-wide effort that has focused on historical and future flooding hazards that were not addressed in the development of the preliminary maps. Instead of appealing the maps and holding up their adoption even further, local leaders came together to tackle this issue with forward thinking and a proactive approach. The outcome of “taking ownership of our own problems” will result in a more resilient community and lower flood insurance costs when maps change in the future.

Leadership of the Outer Banks Home Builders Association in collaboration with Dare County Planner Donna Creef, Town Planners, Engineers/Surveyors, OBAR reps and others have been hard at work to develop local elevation standards that are above what is shown on the preliminary maps. The standards will more accurately reflect local flooding hazards. The higher local elevation standards will be used for new development and re-development projects; the maps will be used for insurance rating purposes only thus allowing property owners to take advantage of much lower flood insurance premiums. The new elevation standards will apply to all X-zone and Shaded X-zone properties. Properties mapped to VE or AE zones will have a freeboard requirement of possibly 4 feet or more. Local governments will adopt the elevation standards prior to the preliminary flood maps becoming effective.

To summarize, those involved in the building or real estate industry should not use the preliminary mapped base flood elevations for future planning purposes or for marketing the potential re-development of a property. The preliminary maps may show that a property owner can now enclose a first floor or build slab on grade on the oceanfront. This will likely not be permitted when local standards are adopted!

Know Your Zone – “Low Risk” is Not “No Risk”: Check out www.obxFloodMaps.com for more information. While property owners in an X-zone are not mandated to carry flood insurance, a local campaign is underway to encourage ALL property owners to have coverage. The flood maps do not address flooding from heavy rain events and other storm scenarios which have caused major flooding and property damage on the Outer Banks. After all, the Outer Banks is surrounded by water – a property owner would be “flood foolish” to not have coverage!

Filed Under: Uncategorized

April 2018 Outer Banks Market Report

April 27, 2018 By Ilona

What to expect when you’re expecting…to buy a home on the Outer Banks!

Navigating the home buying process can be a complex process.  Knowing in advance what to expect regarding the condition of the home can make it a lot smoother.  Here are the main things to consider regarding this process.

  1. Create realistic expectations on condition. In most cases these homes are anywhere from 20 to 40 years old.  The main reasons the condition might not be where a buyer is expecting it are:
  • We live in an environment that has harsh weather and it is tough on these homes
  • Most homes are rented anywhere from 15 to 25 weeks a year with multiple families occupying them. Wear and tear is going to happen
  • Since this isn’t the primary home, owners aren’t seeing it every day and often aren’t aware of what needs to be done
  • No one else is telling them about things that need to be addressed
  • Most homes are owned for several decades and owners get to an age where it’s more difficult to do the work themselves
  • Finding and managing good contractors from a distance is a challenge, especially as owners age
  • Sellers have disengaged from the property – this happens for many, many reasons.
  1. It is standard language in our Offer To Purchase contract for North Carolina that buyers are purchasing the home “AS-IS”.  Yet many buyers are never told this.  When you make an offer to purchase a home you need to factor in the condition/maintenance items that you can already visibly see into the offer price.  Once you settle on a price and go under contract, it’s important to remember those items have already been accounted for.

So many times we see great deals go awry because the buyer is never educated on how to handle the home inspection results.  This can create some unnecessary difficulties and even result in the buyer terminating the contract on a great home, simply because they didn’t understand the process.

Here’s the actual language from the contract:

Paragraph 4(c) Buyer acknowledges and understands that unless the parties agree otherwise, THE PROPERTY IS BEING SOLD IN ITS CURRENT CONDITION.  Buyer and Seller acknowledge that they may, but are not required to, engage in negotiations for repairs/improvements to the Property.

As you can see, it is not mandatory, nor really expected for the seller to agree to repairs after the initial agreement is signed.  It is imperative that a thorough, on-site review of the property is conducted prior to making the initial offer so that all visible maintenance items are considered in the pricing strategy.  The goal when listing a home is to have it priced in relation to those items to begin with.  However, it is important to understand value is relative from person to person.

  1. What exactly is the purpose/scope of a home inspection? There are several things to consider about the home inspection process.  The primary function of a home inspection is the following:
  • Find hidden defects
  • Building code check – for information purposes. It is not realistic to require a seller to bring every outdated code up to par
  • Professional opinion of the functionality of the main systems of the home
  • Expanded review of the home (attics, roof, crawl space, etc)
  • Inspectors are paid to find problems. No home is perfect and items will be found commensurate with the age of the home.  It’s important to have that expectation up front.
  1. Because of the nature of the in depth inspection, it is not uncommon for unexpected issues to be revealed. How do we then handle the unexpected?
  • First, quickly remember Paragraph 4(c), the seller is not under any obligation to do anything at all.
  • We need to quickly organize some quotes so we know exactly what we are dealing with, even if the buyer is going to take on the repairs.
  • We have to decide whether we want the seller to actually fix the issues or if we want to receive a credit at closing instead. There are pros and cons to both of these.
  • We need to share the report with the seller so they can be educated on the condition of things
  • Recognize once these items are discovered they become a material defect that will have to be disclosed to any future buyers, should the buyer decide to walk away.
  • Prioritize the list of repairs that are important, rather than just asking for the entire list to be addressed. Especially since we already factored into our pricing strategy the items we could already see.
  • Understand that perfect condition will be reflected in the price. Chances are the home is already priced commensurate to the condition and age.

Main walkaway points:

  • Be realistic – you’re not buying a brand new home
  • Be flexible and willing to compromise – no house is going to be perfect
  • Weigh out the options – don’t lose a great house over a few needed repairs
Filed Under: Uncategorized