Optimism for the 2013 Real Estate Market!

We all have heard so much bad news and we are sick and tired. The real estate market has been tough to say the least. Many are upside down on their mortgages and all of us have seen our total asset value decline as a result. Well there seems to be a little good news going around. I love real estate and enjoy being in the know. I like to read what the Economist are saying and many think we are on the road to recovery. I guess time will tell. From a personal standpoint, I can tell you that the activity has picked up in my area, west central Georgia. If I close the 2 properties ‘under contract’, I will have sold more property in 3 1/2 months than I did all last year. So yes, I am excited.

Here are some reasons why things seem to be getting better:

1)    American families now have capacity to buy again. The percentages of income to pay back loans has decreased from 14 down to 10.5%.   Many families have postponed purchases for a long time, increasingly families now can make those purchases.

2)    In most cases the real estate sector helps drive and move our economy along. As your house increases in value, you fell  wealthier. As a result, we like to buy and spend. Since 2007 the real estate market has provided strong headwinds against economic growth. Well, the winds seem to be shifting. Home sales are picking up and in some areas prices are increasing also.

Look at the graph above. Home starts are improving and home construction has a trickle down impact helping contractors, building suppliers, appliance sales and the list goes on and on.

3)    I refer to Americans as the ‘microwave society’. We want stuff now. We don’t tolerate delayed gratification. Many families have postponed big purchasing decisions for 5 years now, for example, families are driving their cars longer.  There is a lot of pinned up demand and I believe we will see folks making these big purchases.

4)    Stock Market at record levels. As I mentioned before with increases in real estate values, we are now experiencing increases in our 401Ks and IRAs. We fell wealthy and as a result we will make purchases.

No one knows for sure, but I certainly hope things are getting better. Hind sight is 20-20, we will look back one day and know for sure if 2013 was the turning point!

For Information on Buying or Selling Land contact G. Kent Morris, ALC, RF            at      (706) 457-0090

Real Estate News from the Beltway!

One great thing about a member of the Realtors Land Institute, I get lots of information including emails and trade magazines about the latest developments and regulations related to real estate, regulation, tax law and more.

Here are some of the latest news that may affect you and your real estate:

Mortgage Cancellation Relief - is extended for one year to January 1, 2014

Deduction for Mortgage Insurance Premiums - for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012

Energy Efficiency Tax Credit - The 10% tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012

Capital Gains Tax -  Capital Gains rate stays at 15% for those up to the top rate of $400,000 individual and $450,000 joint return. After that, any gains above those amounts will be taxed at 20%. The $250/$500K exclusion for the sale of a principal residence  remains in effect.

Estate Tax - The first $5 million in the individual estate and $10 million for family estates are now exempt from estate taxes. After that, the rate will be 40%, up from 35%. The exemption will be indexed for inflation.

Waters of the U.S. -  The Environmental Protection Agency (EPA) and the Army Corps of Engineers (ACE) have sought for years to expand their jurisdiction of the Clean Water Act beyond what is defined as 'navigable' and waters 'adjacent' to navigable waters. If the CWA jurisdiction is expanded, it would result in more regulation, permits and onerous requirements on developments. These efforts remain bottled up at the Office of Management and Budget. The EPA recently submitted a 'guidance' document that increases federal authority over more kinds of water. Officials acknowledge that the document was still under review between the EPA and ACE. Let's hope this goes no where!

For Information on Buying or Selling Land.... Contact G. Kent Morris, RF, ALC
at  (706) 457.0090

Four Tips for a Land Buyer. This will save you TIME!

Many recreational, timberland or investment land buyers want to find a property that seems to be just right!  Finding that right tract can take a lot of time, including driving time and computer time. This article is designed is help you with that search and provide a list to minimize your search including time and money. It is important to make every trip count. Do your homework and most importantly find the right broker. Here is a list to help you get started.

1. As a Forester and Land Manager we were always taught “to determine the landowners objectives”.  Therefore determine what you will use the property for including a list of features.

• Will you hunt on the property? If so, quality wildlife, habitat, water, cover  are important.

• Is the property a timber investment? You will need a timber cruise to quantify the type timber, acres and volume. This is needed for cost allocation after the purchase is made.

• Are you looking for  land that has future subdivision potential? If so you need to look for what is considered transitional property. This is usually located along growth corridors, maybe along transportation corridors or around metropolitan areas.

2. Decide on what size tract (minimum and maximum acres) and the price you are willing to pay.

• Pricing for recreational property in many parts of the country has bottomed out and is actually increasing in some areas.

• Be creative……if the property already has all the features you are looking for, they will cost you. You might save large amounts of money by purchasing an ugly tract and adding features later. These might include a pond, four-board horse fence, food plots etc.

3. Technology can save you a lot of time and “time is money”

• If the property is listed with a land broker, many tools will already be available such as topographic maps, aerial photography, Google maps etc. You can start the search from the comfort of your living room!

• Check out the surrounding area and make sure it is a good fit. Maybe you will build on the property later so you want to protect your investment. Is the property a good fit for your family and lifestyle.

4.  What are my financing options?

• I am always amazed, people find that perfect property then go to the bank…WRONG. As I mentioned before, the price will dictate what property you look at. You are wasting valuable time looking at a $500,000 tract of land when you will only qualify for a $200,000 loan!

• 70% of my transactions are financed through Farm Credit banks. They require a down payment usually in the magnitude of 15 – 25%. They have some great loan programs and offer fixed rate, long term land financing.

Well, that’s all for now…headed to a closing!

For Information on Buying or Selling Land contact G. Kent Morris, ALC, RF            at      (706) 457-0090

What is an Accredited Land Consultant?

This topic is near and dear to me! Several years ago I was steering a large real estate project in northwest Alabama. I interviewed several realtors and chose a realtor who was an Accredited Land Consultant. I was so impressed with their knowledge and land expertise. Therefore when I decided to pursue a real estate career, I decided to pursue this designation. I checked with the Georgia Real Estate Commission a couple of years ago and was told there are 60,000 people in Georgia licensed to sell real estate. At the time of this posting, there are only 29 with this highly esteemed designation. So what is it..........

The REALTORS^® Land Institute confers the esteemed Accredited Land Consultant (ALC) designation to only those individuals who have achieved the highest level of education, experience, and professionalism.

MEMBERSHIP REQUIREMENTS ALC candidates must be Institute members in good standing for at least 6 months prior to filing an ALC designation application.    EDUCATION REQUIREMENTS Successful completion of a total of six Land University courses (3 required and 3 electives).  Courses may be completed in a live classroom, online, through the hybrid (independent study) program, and other delivery systems that may be made available. (All courses must have been taken within 5 years of applying for the designation.)       Required courses (3 total):       -Land 101:  Fundamentals of Land Brokerage       -Land Investment Analysis       -Tax Deferred 1031 Exchanges (International candidates may take another elective instead of this course)        Electives (3 of 6):         -Tax Implications of Real Estate       -Agricultural Land Brokerage and Marketing       -Creative Land Planning       -Land Development       -Timberland       -Site Selection            -Practical Navigation for Land Brokers       -other electives as developed by the REALTORS® Land Institute          EXPERIENCE RESUME Applicants must submit a resume that demonstrates a minimum of 3 years of experience in land sales or brokerage or a minimum of three years of comparable real estate experience in auction, appraisal*, leasing, development, farm management, consulting, brokerage management**, or related services in land. VOLUME REQUIREMENTS Applicants must submit a portfolio that substantiates specific levels of volume achieved in land sales or in providing real estate services related to land. The portfolio must substantiate the applicant's participation and material involvement as a broker, agent, consultant, or employee in at least 5 closed land transactions totaling $10,000,000*, or a minimum of 25 separate land transactions of which no more than 80 percent involve residential lot sales, or a comparable level of volume dependent upon the land specialty and type(s) of real estate services provided.  The value of the land must account for at least 51% of the total sale of the transaction in order for the transaction to be eligible.  EXAM All ALC designation applicants must successfully complete a comprehensive online exam that covers the core components of the Land University curriculum. All candidates will be able to take the exam 3 times within a year from the first exam date.  If, after the third attempt, the candidate does not successfully pass the course, he/she will be able to retake the exam after completing the Review Course for the ALC Accreditation exam.  An additional fee will be required. An additional fee will be required to take the course.  If you decide to sell or buy real estate, why not choose someone who specializes in the type real estate you have an interest in and go with the best!! For Information on Buying or Selling Land contact G. Kent Morris, ALC, RF at      (706) 457-0090

What are Land Prices doing?

I cannot tell you how much I have enjoyed writing this blog. I enjoy sharing knowledge and experiences and it causes me to read and research different topics.

I am often asked about land prices… are they getting better?  It is getting more difficult to track prices due to amount of transactions. I have had this discussion with other land brokers and appraisers. There are fewer and fewer sales to look at some, so the analysis becomes more difficult.  Intuitively, I thought prices had bottomed out about 1 -2 years ago and had remained sort of flat since then, my research proved otherwise. I have included a chart as a visual aid to this article. To begin with, the land prices are average prices for a 3 county area located between Columbus and Lagrange (Meriwether, Harris and Talbot). Columbus is the third largest city in the state of Georgia. Therefore these prices may be much different than the area you live in. The numbers are interesting,  but trends are what we are focusing on. The graphs covers Price Per Acre from 2007 to 2012.

 Many areas are experiencing improved activity in their housing market (this is a localized phenomena). Many areas maybe most areas are experiencing flat prices. Some have predicted we are at the bottom, let’s hope so.  Housing will lead the way and land will follow later. Everyone needs a roof over their head and a bed to sleep in, you do not have to own land. Land is an investment and the buyer has a very different profile from the home buyer.

What does all this mean, I’ll tell you!

For Sellers…. If you are planning to sell, you have to be properly positioned in the market place. No one knows when these prices will recover or how long it will take. Your property has to be priced based on the market not some emotional, pie in the sky number. Sometimes a bird in the hand is worth 2 in the bush and you miss out on opportunity cost. The money from the sell of your property may be better off paying off debt or buying other assets. You can use a 1031 exchange and prevent a tax event,  if buying other like kind assets.

For Buyers…. It is a great time to buy!  Why wait, prices are low and so are interest rates. Land is a great way to diversify your portfolio, I own land as well. If you buy the right tract, it will generate some cash flow along the way, maybe from thinning some timber, leasing the hunting rights, farm rents and other techniques. That tract of land can offer lasting memories with the kids and grand kids, riding ATVs, fishing, hunting, hiking etc.

For Information on Buying or Selling Land contact G. Kent Morris, ALC, RF at      (706) 457-0090