note on property values in East TN

[daniellefort]

Apple Annie...
I understand what your saying. we are planning a trip in March to look again for some property. we've been searching since last October and our plan is to buy the land now and just sit on it until we're ready to move before the prices go up. we're in no hurry to move right away anyways. I just want to make sure that when we move it will be the right place for us to build our dream home that's why we don't want to build our dream home first. I guess we could just buy a home to live in that but my husband is so anxious to build a home and that's what he really wants to do so we can just build a smaller home, live in it and if it's the right place to build our dream home, we'll go from there.

[mbmouse]

Also a note about Log homes and comparisons on an appraisal. First, only a few lenders in the country will lend on them and several large banks will lend on them on a portfolio basis, but ONLY if there are good comps within a short mileage distance.
I think I know the Log Home Sunny was speaking of in Kingsport. It went through several buyers but always fell through at financing because there were no good comps for the log home in the area.
So be careful what you build for cash, make sure it is mortgageable for a potential buyer.

[hiknapster]

MB: What does good comps mean?

I've got about a gazillion house buying questions, but I'm getting ready for work. I'll try to post them later!

Thanks!

[JMT]

I think I understand what mbmouse is saying, and it makes perfect sense to me.

When a house is put on the market, the realtor determines the asking price basked on "comps" (comparable homes) in the area. In other words, if I have a 1,000 square foot home with aluminum siding, the realtor will find a few other aluminum-siding homes 800-1200 square feet that have sold recently within a few miles of my house or in my neighborhood. The realtor takes those homes' sales prices per square foot and uses that figure to determine how much I should ask for my home. If my home has a few amenities that some of the comps don't have (covered parking, for example) then my home would be in the higher end of the comps. If my home has fewer amenities, it would be in the lower end of the comps.

That's also how every appraiser has determined the appraised value of my homes, and their reports were very detailed: color photos of the comps were always included in the appraisal report of my homes.

I've bought and sold homes throughout Tennessee, and I don't recall a realtor ever telling me that my neighbors' homes influenced the asking price of my home. I suppose in an extreme situation (million dollar McMansion next to a sewage treatment plant) it could.

[mbmouse]

Originally Posted by hiknapster

MB: What does good comps mean?

I've got about a gazillion house buying questions, but I'm getting ready for work. I'll try to post them later!

Thanks!

It means comparable. This is the houses that have sold in your area in the past 12 to 24 months that are like yours. It is what the appraisers use to value your house.

[Joss]

"When a house is put on the market, the realtor determines the asking price based on "comps" (comparable homes) in the area."

JMT, this is hair-splitting again, but the owner determines the asking price - not the Realtor. The Realtor only advises, usually based on the comps.

In fact, the scenario is all too often that the comps may say a particular home is only worth $XXXXX. Yet, when the Realtor provides this information, the owners goes into angry denial and will run that Realtor off. Then they end up shopping for one that will just list it at whatever they say, but coming back down to the original value months later. That's if it sells at all.


Daniellefort,

You are getting some pretty good advice here from Mouse and Annie. If I might summaraize, you and your husband need to be exceedingly careful about "speculating" in a real estate market you are unfamiliar with. It is one thing to buy a home when you need one and you plan to be there a while. Time will often mitigate unfortunate choices because of real estate's normally steady growth.

The short term is completely different, however, and one should no more go into a real estate area unprepared, than just buy stocks because someone on an internet forum said they were hot. If you are investing in real estate to grow money, you need to know ALLLLL about the process and ALLLLL about the area.

[remikes]

Just reading through the posts and it boils down to doing the diligence. The east TN market is about to go into a dramatic absorption phase, there has been national attention from forbes, golf digest, and US Airways did a 20 page profile on Kingsport TN. That being said while you don't see huge appreciation here it is almost always steadily increasing, we haven't experienced the major downturns on market because the prices have never drastically overinflated. Mouse is exactly correct in that you can't take just one variable, such as square footage, or just location. If you buy a home with intent to sell later look for the potential upsides down the road. Whatever improvements you make to the home, just be sure that the majority of the $$ spent go into the visual appeal, that's what sells the house, while having updated plumbing helps, having those beautiful corian countertops really makes me want it. This way you get more bang for your buck.

[Jerry2037]

I find this posting very interesting because we live in Wisconsin now and plan a relocation to the Tri Cities within the next year.

We were in town last week and looked at several new, and one older home. The older home needed work, which would be an expense, but almost every new home had design quirks that made them undesireable from our view point.

For instance: all had "trey" ceilings in the dining room and most in the master bedroom also. I'd much rather have wood doors instead of the $30 Home Depot pressed board doors they had. I'm not sure, but didn't catherdral ceilings go out of fashion back in the 90s? I'd rather have double hung windows than a Jaccuzzi. I'd like something other than the cheapest HVAC system and the smallest water supply piping the code will allow.

That's why I posted a request on the forum yesterday for a referal to an architect.

I'm not especially concerned about resale because hopefully this will be our last move and resale will be our kids problem after we're gone. Meanwhile, I have a local realtor who understands what we want and what we don't want and will find us the right place if it exists.

[mbmouse]

Jerry,
I have to say I think you are very smart! Sometimes, like in your situation, as is the same with my folks that moved here, you want to buy what you WANT not what will be an investment. Take the time to find what is going to make you happy in your day to day life. After all a house IS a home. My folks bought a MUCH older home (1840, that is Pre civil war!) and are spending their retirement restoring and turning the house into the house of there dreams.That is their idea of retirement. They are having a blast. They picked it up for a song, but have put a lot of money into it they know they will never get back out but they are HAPPY. That is the most important factor I think in your situation as is theirs.
Now, you might not be of the same mind and want to work on your house at all. If this is the case, build what you want. Or you can find something similar to what you want cheap, purchase it with a mortgage(assuming here that you are intending to purchase with cash now) then use the cash to do your changes and updates all up front to get it just they way you want it. Then you can refinance it at a much higher value and get some of the cash back out, leaving just a small mortgage that can be paid off in a short time frame. It might take a few years, but this way you will have the house YOU want and will enjoy with little or no mortgage. Then again, sometimes for tax purposes, a little mortgage kept on the house is more advantageous in retirement, no more little deductions running around the house.
Glad you have a good Realtor you can trust, but you might also want to talk to both your CPA and financial planner.
Ok, now I am rambling, sorry.
In short, I hope you find EXACTLY what will make you happy. I know you picked the right town, that is for sure, but I am a bit biased LOL!!!