Stable and unpredictable? Sales trends defy reason

Friday, May 17, 2019, Vol. 43, No. 20

The Nashville real estate market is nothing if it is not baffling.

At the end of last month, there were 3,158 sales that fell into the “pending” category, meaning the properties were under contract, not being shown and the listing agent was confident that the sale would close.

Normally, those sales close the following month. It is rare for a property to go under contract, for the buyers and sellers to negotiate repairs, for the appraisal to be completed, for the loan to go through the underwriting process, the title company to prepare all of the various documents and searches and for the property to finally close within a 30-day period.

With contracts being terminated right and left – yes, contracts are being terminated, voided, pitched, dropped, breached – perhaps the listing agents are continuing to show the properties all the way to closing for fear of the terminations.

Whatever the reason, the month of April yielded 3,833 closings on the 3,158 pending at the end of the month.

With the magical 675 sales that appeared out of nowhere, the Greater Nashville Realtors reported that sales increased 1.8% compare to the same month last year and 7% compared to March. There were 3,833 pending sales at the end of April, compared with the 3,430 at this time last year.

Those 3,430 pending sales spawned 3,767 transfers last year, but who knows what it will spell for next month’s sales after the 675 unit jump last month?

Inventory numbers are considerably higher, with 11,627, compared with 8,876 last year. That trend has been rolling along for several months, as the March inventory was reported at 11,276.

The area grew by 242 sales, and inventory expanded by 351 properties.

In short, the market is at once stable and unpredictable.

A major development over the past three years is that buyers are not bashful when it comes to walking on a deal, especially when sellers refuse to make repairs or in cases when the appraisals come in lower than the sale price.

Understandably, buyers feel inspectors and appraisers are experts in their respective fields, and they heed their advice. The cost of selling a house twice usually exceeds the cost of the repairs.

Area homes are commanding higher prices in many areas, and buyers are expecting darn-near perfect homes to go along with the price tags.

Tis the season of the handy man. The not-so-small print in the real estate contract requires the plumbing, HVAC, structural and electrical work to be performed by licensed contractors.

Sellers should not be confused. Even if the task is flipping a switch, the flipper must have a license to flip that switch.

Sale of the Week

Most real estate sales occur during the last several days of the month, following practices that buyers, sellers and Realtors learned in their early home purchases. With interest on mortgage loans paid in arrears, there is an advantage to closing at the end of the month, as there is less prepaid interest collected at closing.

For example, if a house has an interest payment of $3,000 per month and closes in a 30-day month, there would be $100 per day owed on interest. If the house closed in April, the first payment would be made June 1, and that payment would pay the May interest, leaving the buyer to pay the April interest at closing.

If a person closed April 5, the interest collected at closing would be for the remainder of the month or 25 days, resulting in $2,500 owed at closing, compared to the $100 owed if the buyer closed on the last day of the month.

In many cases, that $2,500 is important, as it is added to the down payment, attorney’s closing fees, the prepayment of the insurance policy, state and local taxes, and any lender fees would be paid at closing, as well.

That’s why many Realtors have followed the lead of Christy Wilson, who prefers mid-month closings since the title companies and lenders are not as busy, and the transactions receive more attention.

With that practice in place, it was surprising to see that 13 properties closed last week for more than $1 million. Annually, Davidson County is averaging 350 sales, and most of them are at month’s end.

Leading the way was 2303 Hampton Avenue at $2,495,000 or $410 per square foot. With 6,080 square feet, five bedrooms, four full baths and two half-baths, the house sold off-market.

Realtor whiz Amanda Bates of Keller Williams, the listing agent, got the word to Mary Brooke Bonadies, now leading the way at her new firm, Village. That’s it, Village. Like Parks.

Recognized as a wordsmith, Amanda Bates showed her prowess in stating “The home, built in 1930, has been preserved and reimagined.”

Realizing that many of the higher-priced homes are purchased by those not familiar with the area, she added the property had “easy access to premier properties.”

Bonadies, with her ears to the Hampton ground, beat the other agents clamoring to the area and placed her buyers in the home.

Richard Courtney is a licensed real estate broker with Fridrich and Clark Realty LLC and can be reached at richard@richardcourtney.com.