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The real estate market has already hit the bottom in 2023.  My prediction along with many other bankers and now also the (National Association of Realtors) NAR Chief Economist is that we have already reached the peak in terms of interest rates. Every banker that I speak to says that interest rates will go down next year.  UBS says, “the Federal Reserve will shock markets with aggressive interest rate cuts next year.”  I think “shock the market” may be a bit strong, but I do think rates will go down.  UBS also claims that unemployment will rise in 2024, economic growth will keep slowing in 2024, and disinflation will continue in 2024.  All of those factors will push the Federal Reserve to react and lower interest rates.  The NAR Chief Economist says existing home sales will rise by 15% in 2024 due to pent up buyer demand and falling interest rates.  He also predicts that interest rates will be between 6% and 7% by the spring. 

This does not mean that you can go house shopping and ask for deep discounts from the listing price.  The inventory of homes for sale is still very tight, and sellers are getting the prices they are asking for.  Right now, your competition will be less and you will be buying at a lower price compared to when interest rates go down and lots of people are again bidding on few homes.

Call Nathan Walldorf to help you with you next move 423-544-7700.

A past clients asked me about the National Association of Realtors (NAR) loosing a lawsuit over conspiring to keep commission costs artificially high.  The case said that NAR rules and corporate practices lead to set pricing.  The crazy thing is that NAR internally in their conferences and meetings never talks about a set commission amount.  That would be a violation of anti-trust, so Realtors, as a policy, don’t talk about that in their conferences and classes.  
When you list a home for sale, the documentation gives a total commission to be paid, and then says that 1/2 of that commission will go to a buyer’s agent if a buyer comes along with their own agent.  If a seller were to decide to not pay a buyer’s agent’s commission, you would have less buyer’s agents promoting your property to their buyers.  Then you would have fewer people bidding on your property meaning a lower price for your home.  
Home buyers who do not have an agent will typically make offers that are not competitive with the current market, so they become a lost opportunity for your home.
NAR is appealing the ruling, so we’ll see what happens.

Home buyers frighten easily in today's real estate market, a tale of three contracts.

As a home seller, you need to understand the environment that home buyers are in.  Home buyers are watching the Federal Reserve continually raise interest rates, and they are watching Israel and Ukraine at war.  They are a bit uneasy, so you need to think first before you make aggressive counter offers to potential buyers of your property.  It is not 2021 any more.  Here is what happened to my last 2 contracts I wrote and to a friend's contract recently.  

Contract 1: After I gave my out of town clients a Face Time tour of a house, they made a good offer on the house with acreage that was within $10,000 of the asking price.  The seller had been burned by another out of town buyer, so they decided to counter my client's offer at full price and give them less time to inspect the property. That did not give the buyers a good taste in their mouths and made them rethink their decision to buy the house.  They decided that 1) they did not want to rushed and 2) the property (that they were previously ready to buy) needed too many updates.  The seller came back and was willing to agree to the original terms, but the buyers had already moved on.

Contract 2: A different land buyer made a good offer (within $10,000 of the asking price) on a property, but the seller countered them at full price.  Again, the buyer had time to pause with this counter offer, and they talked themselves out of buying the property.  They thought of more expenses during that time of considering their response to the counter offer, and that was the end of that contract.

Contract 3: Another Realtor friend of mine had a buyer back out in the middle of a contract and refused to purchase a property because of the political environment.

All of this happened within weeks of each other at the end of October.  Know that if you counter a good offer, you may loose those buyers all together.  You may be buying the property back from them after having not taken their original offer.  If you have a good offer that is close to the price you want, be sure to think twice and decided if the risk of loosing the buyer for your property is worth sending them a counter offer.

Call Nathan and Charlie Walldorf to sell your home at 423-544-7700.

What’s Happening with Interest Rates?

I have good news concerning future interest rates.  After the last federal reserve meeting, the Fed announced that they would probably do one more rate hike before the end of the year.  The residential mortgage interest rates responded by raising right after that announcement.  Reuters reported on Monday that, “top ranking Federal Reserve officials indicated..that rising yield on long-term US Treasury bonds..could steer the Fed from further increases.”  That means that the mortgage market raised interest rates on its own, so they do not have to increase interest rates again.  The Fed vice chair, Philip Jefferson, said they they are balancing the risk of not tightening enough and being too restrictive.  The Fed says they do not want to do unnecessary harm to the economy.  
The National Association of Realtors, The Home Builder’s Association, and the Mortgage Banker’s Association penned a letter to the Fed chairman telling him that the interest rate increases are, “exacerbated housing affordability and created additional disruptions for a real estate market that is already straining to adjust to a dramatic pullback in both mortgage origination and home sale volume.”  They went on to say that further rate increases pose a wide spread risk to economic growth and increase the likelihood of a recession.  Real estate makes up 16% of the US economy so further rate increases would create a hard landing rather than the soft landing that the Fed has been hoping for. NAR Chief Economist Lawrence Yun said, “The fast-rising interest rates are breaking several sectors of the economy. The remaining sectors will also likely crack if the rate hikes continue. Given that the inflation rate is already cooling, the Fed needs to stop raising rates and strongly consider cutting interest rates next year. That would be the ‘soft landing’ without the net job cuts to the economy.”  Basically, there is a decent chance that we may have seen our last interest rate hike.  
The other bit of good news is that late fall is a great time to buy a home for a little less.  Even though the interest rate is high now, when rates go down next year, the pent up home buyer demand from this year will hit the market making people have to pay more for a home in order to get to an accepted contract.  When rates go down, you can refinance after having paid a lower price for the house than if you wait for rates to go down again.  Call Nathan Walldorf to find your Chattanooga home today. 423-544-7700.

Is knob and tube wiring dangerous?

Knob and tube wiring is an older electrical wiring system that was commonly used in homes in the United States and Canada from the late 19th century through the early 20th century. While it can still be found in some older homes, it is generally considered outdated and less safe compared to modern wiring systems like Romex.
Here are some key considerations regarding knob and tube wiring:
    1    Aging and Deterioration: Knob and tube wiring is quite old, and the insulation on these wires can deteriorate over time. This can lead to exposed wires and an increased risk of electrical fires.
    2    Lack of Grounding: Knob and tube wiring typically lacks a grounding conductor, which is an important safety feature in modern wiring systems. This means that it may not provide the same level of protection against electrical shocks as modern wiring.
    3    Not Designed for Modern Electrical Loads: Knob and tube wiring was designed for a different era with lower electrical demands. Many modern homes have far more electrical devices and appliances than homes from the early 20th century. Overloading a knob and tube system can pose significant safety risks.
    4    Insufficient Insulation: The insulation used in knob and tube wiring may not meet current safety standards. Modern wiring systems use insulation materials that are more fire-resistant and durable.
    5    Not Up to Code: In many areas, knob and tube wiring is not up to current electrical codes, and using it for new installations or significant renovations is not allowed.
In summary, even if not overloaded, knob and tube wiring can still present safety concerns due to its age, lack of grounding, and the potential for deterioration of insulation. If you have knob and tube wiring in your home, it is advisable to consult with a licensed electrician to assess its condition and discuss options for updating your electrical system to meet current safety standards. In many cases, it is recommended to replace knob and tube wiring with a modern wiring system to ensure the safety of your home and its occupants.

One thing to consider when you are buying a home is that some insurance companies (not all) will not insure a home if it has knob and tube wiring.

If you need help buying a Chattanooga home or selling a home in Chattanooga feel free to reach out to Nathan Walldorf at 423-544-7700.

5 Real Estate Transactions Impacted by a Government Shutdown

1. FHA will not make commit to new loans in the Multi-family Program during the shutdown. There may be some delays with FHA processing.  
2. Fannie Mae and Freddie Mac are not reliant on appropriated federal fund and should operate normally.  BUT…Fannie Mae and Freddie Mac may have a hard time getting social security numbers verified and getting a tax return transcripts.  Both are needed to process a loan.
3. Rural housing loans will not be issued during the government shutdown.  That is a 100% rural development loan.
4. SBA loans would most likely be delayed (mainly impacting some commercial property financing but not most)
5. VA loans should still close but there will be fewer processors meaning longer wait times (potentially).

-Only 11% of home buyers were negatively impacted by the last government shutdown.
-25% of home buyers decided to delay buying during the last government shutdown.

In the end all, the impact of a government shutdown will be minimal.  Some real estate transactions will be impacted or slowed down though.

Call Nathan Walldorf for all of your real estate needs. 423-544-7700.

Incentives when buying a new home are at a 2 year high.  
The problem for most new construction home buyers over the past 2 years is that they have not had any leverage to negotiate.  New construction home buyers would love to be able to get a little more for their money, like anyone would.  Watch this video and I’ll tell you 4 different kinds of incentives that you can get out of builders right now.
Builders did not have to offer any incentives to sell a home over the past few years.  Many new homes were selling when they were still literally on the drawing board in the last few years.  The Federal Reserve’s conversations about raising interest rates again this year and the country’s credit rating being downgraded, have both made interest rates rise and have slowed down home buyers.  With that happening, home builders are now giving more incentives in order to keep homes selling.  Here are 4 incentives that you may be able to get out a builder right now:
    1)    The most popular incentive right now is an interest rate buy down that could make your interest rate be 1%-2% lower. 
    2)    Builders are giving upgrade credit to buyers.  One builder was giving 50% off of upgrades up to $30,000 (meaning $15,000 of those upgrades would be free) a month ago or so.  If you want things like quarts countertops, a nicer tile, more decorative ceilings, or even engineered hardwood instead of luxury vinyl plank, you may be able to get those upgrades for free or at a largely discounted rate.
    3)    You could get upgrades appliances or an appliance that the builder does not usually provide like a refrigerator.
    4)     When I asked a builder about other incentives for home buyers to buy new construction, he said that most builders will do incentives up to 1% of the purchase price in cost to them.

One thing builders will not do is take a lower sales price, because that sales price will bring down all of the sale prices on the remaining homes in the neighborhood.  A builder will give incentives though.  
If you want to buy a new construction home, give me a call.  I would be happy to guide you through the process.

Here are the common questions that home buyers ask in 2023:

When it comes to home renovations, the goal is often to enhance your living space while also increasing the value of your property. While personal preferences play a significant role in choosing renovation projects, it's wise to consider those that offer the greatest return on your investment. Here are some home renovations that have consistently proven to yield substantial returns:

1. Kitchen Remodeling: The kitchen is often considered the heart of the home, and renovations in this area can provide a substantial return. Upgrading appliances, replacing outdated countertops with modern materials like granite or quartz, and installing new cabinetry can significantly increase your home's value. Additionally, open floor plans that integrate the kitchen with the living space are highly appealing to potential buyers.

2. Bathroom Upgrades: Bathrooms are another crucial area that can greatly impact a home's value. Updated bathrooms with modern fixtures, quality tile work, and energy-efficient features tend to attract buyers and add value. Consider investing in fixtures like rainfall showerheads, dual vanities, and eco-friendly toilets.

3. Curb Appeal Enhancements: First impressions matter, and the exterior of your home is the first thing potential buyers will see. Landscaping, fresh coats of paint, a well-maintained lawn, and an inviting entryway can significantly boost your home's curb appeal. This impression can lead to a higher selling price and a quicker sale.

4. Energy-Efficient Improvements: In today's environmentally conscious world, energy-efficient homes are highly desirable. Upgrading to energy-efficient windows, adding insulation, installing a programmable thermostat, and using energy-efficient lighting can not only lower your utility bills but also make your home more attractive to buyers.

5. Adding a Deck or Patio: Outdoor living spaces have become increasingly important to homeowners. Adding a deck, patio, or even a well-designed outdoor kitchen can extend your living space and provide a strong return on investment. These spaces are especially appealing in regions with pleasant climates.

6. Minor Kitchen Upgrades: Not all kitchen renovations need to be extensive. Simple, cost-effective upgrades like replacing cabinet hardware, updating light fixtures, or adding a fresh coat of paint can breathe new life into your kitchen without breaking the bank.

7. Fresh Paint and New Flooring: A fresh coat of paint and new flooring can make a home feel newer and more appealing. Neutral colors are recommended, as they allow potential buyers to visualize their own furnishings in the space. Quality flooring materials like hardwood or engineered wood can be particularly attractive.

Remember, the potential return on investment can vary based on factors such as your location, market trends, and the quality of the renovations. It's also essential to strike a balance between investing in improvements and overpricing your home for the neighborhood. Consulting with a real estate professional can provide valuable insights into which renovations would be most beneficial for your specific situation.

Chattanooga Realtor Nathan Walldorf 423-544-7700.

Finding a home in a low-inventory real estate market can be challenging, but with some strategic planning and persistence, you can increase your chances of success. Here are some tips to help you navigate this situation:
    1    Work with a Real Estate Agent: An experienced real estate agent who knows the local market well can be an invaluable asset. They often have access to off-market listings, are well-connected, and can help you identify potential opportunities that might not be widely advertised.
    2    Set Clear Priorities: Define your must-haves and nice-to-haves in a home. This will help you quickly narrow down your search and make decisions when a suitable property becomes available.
    3    Be Flexible: In a low-inventory market, you may need to adjust your expectations. Consider being open to different neighborhoods, property types, or features that you may not have initially considered.
    4    Monitor Listings Regularly: Stay on top of new listings by setting up alerts on real estate websites, apps, or through your agent. Being one of the first to know about a new property can give you a competitive edge.
    5    Act Quickly: When you find a property that meets your criteria, be prepared to move swiftly. Delaying could lead to missing out on a great opportunity, especially in a competitive market.
    6    Be Prepared Financially: Get pre-approved for a mortgage before you start searching. This shows sellers that you are a serious buyer and can help you move quickly when you find the right property.
    7    Write a Strong Offer: If you're interested in a property, consider making a strong, well-structured offer that stands out. This might include a competitive price, reasonable contingencies, and a personal letter to the seller explaining why you love the home.
    8    Consider Off-Market Options: Ask your Realtor to network within your community or use social media to let people know you're looking for a home. Sometimes, sellers who aren't actively listing their property might be willing to sell if the right offer comes along.
    9    Stay Persistent: Finding a home in a low-inventory market can take time. Don't get discouraged if your initial offers are not accepted or if you face competition. Keep searching and stay patient.
    10    Be Ready for Bidding Wars: In a tight market, multiple buyers may be interested in the same property, leading to bidding wars. Have a clear budget in mind and be prepared to make competitive offers if necessary.
    11    Research Stale Listings: Some properties might have been on the market for a while and could be overlooked by other buyers. Investigate these listings to see if there's a hidden gem that meets your needs.
    12    Consider New Construction: If existing homes are scarce, explore the possibility of buying a new construction property from a developer.
Remember that persistence and patience are key when searching for a home in a low-inventory market. Working closely with a real estate professional and staying proactive in your search will increase your chances of finding the right home for you.

Call Chattanooga Realtor, Nathan Walldorf to find your next home at 423-544-7700.