Brian R Kelly

Category: For Sellers

  • Chattanooga Home Sales Market

    The Chattanooga homes sales market is very good.  There are roughly 500 homes sales a month in Hamilton County, TN for 2017.  There are 1,500 homes currently listed in Chattanooga MLS for sale.  Three months of inventory is a very low historical number.

    Million dollar homes are selling at a record pace.  27 properties sold for $1,000,000 or more in the first seven months of 2017 in Hamilton County.  Only 15 sold in the same time period in 2016.  So the inventory of upper price properties has fallen from 4 years of inventory just a few years ago to 14 months in 2017.

    The average price per square foot has increased 10% ($112 to $123) from 2016 to 2017 when looking at homes selling in the $200,000 – $299,999.  New construction homes in the same price range are selling at $150/sqft and are around 1,800 sqft.  New home sales in this price range made up only 14% of overall sales.  Prior to 2008, new home sales made up roughly 20% of the Chattanooga market.

    So, if the market is so hot, then why is my house sitting on the market for months?  628 houses of the 1,509 houses for sale in Hamilton County, TN have been for sale over 90 days (41% !).  When most houses sell in less than 2 months, why do so many homes sit around?  My personal experience with buyers is they are wanting renovated or new properties.  If your home is dated and shows wear and tear with a premium price, then it will be over looked.  Buyers tend to charge much more in their mind for renovations when they see a property that does not capture their immediate “move in” mindset.  This is a gross blanket statement and so many variables are at stake.  Each property is unique and the reasons that make a home appealing to one person may be offensive to another.

    I showed homes to a family from California recently and they were escaping an urban environment east of LA desert.  Privacy and the peaceful lush green landscape was calling their name.  They wanted a few acres in a rural setting, which is not typical of many buyers.  The point being that shoppers want different lifestyle amenities and “feelings” based on their story.

    So, in conclusion, the Chattanooga home sales market is very stout.  You have to get to the $500,000 price range before you see double digit inventory levels.  The worst price category is only 14 months of inventory, which has been close to 48 months in the not so distant past.  We need more home sellers and builders to soak up the demand that we are currently generating.

    Liberty Homes Chattanooga has helped over 40 families in the last year, it will be an honor to serve you in selling your house or buying your new home !

  • Discovering Your Chattanooga Home, Work, School, Commute and Community Balance

    Discovering your Chattanooga home, work, school, commute and community balance. Juggling life in 2013 is a challenge. We live in a busy and loud culture. We long for a quiet and peaceful refuge for home. Home represents security, nurture and relationship. At breakfast this morning the conversation turned to finding the “right’ area to live.Brian and Ray with Snow

    Chattanooga is a unique patchwork of communities. I wrote about that in this blog for new comers. People who are new to town have a challenge as they consider different geographic areas and townships.

    I attended a men’s conference at church this weekend. Men were discussing where they lived. One young man commented on his commute time. He lived less than a mile from work. He commented on the fact that he filled up his car every 2 months. He was truly saving a lot of money in his budget because of his short drive.

    Another guy commented that he moved because he cut 45 minutes from his daily drive time and he was thankful to have additional time at home.

    The counter opinion was offered by a friend of mine who decided to move to the country. He has a farm and a 40 minute drive each way to work. He plans time to return phone calls on his blue tooth and listen to certain audio tracks for teaching and encouragement. He commented that he really wants to separate his work from the peace and quiet of his slower lifestyle on the farm away from the office.

    Men are concerned about protecting their family. School and community play an important role.

    The neighborhood that sold the most new homes in 2013 was Prairie Pass in Apison. That is East of Colledgedale, TN. Apison Elementary, East Hamilton Middle and East Hamilton High School are the schools that are zoned for this community. All the schools are very new and young. The “community” is a subdivision. 24 homes sold in the first 9 months of 2013 in Prairie Pass. The sales prices range from $189,000 to $295,000.

    Most of the men agreed that new construction was more desirable than “old” charm. The men were saying their wives liked the charm of older houses. So it is not surprising to me to see new homes being built with an old craftsman style, open eave look. The trade off for this newer home and younger school building is a lengthy commute.

    What is your choice of lifestyle? Discovering your Chattanooga home, work, school, commute and community balance can prove challenging on your journey in life.

  • What Would You Tell Your Younger Self?

    What would you tell your younger self? This is a frequently asked question of Entre Leadership podcasts from Dave Ramsey. It is a super question. I sometimes think if I could go back in time and have coffee with young Brian. What would I tell him? Here are a few topics:

    1. Turn to God frequently and for little things. Early in my adulthood, I thought my Maker wanted me to handle as much as I could on my own and rely on Him for the big important stuff. Wow… was I wrong on that one. God is into the details.Young Ross Man

    2. Embrace asking others for help. Learn to receive it. Slow down and ask for help.

    3. Invest in counseling early. You think you are only sporting a carry on. There are a few trunks of crap you ain’t seeing yet.

    4. Take more time with your beautiful wife. Shut up, face her, look her in the eyes and listen.

    5. Keep a journal daily and don’t give excuses about why you couldn’t do it. You need to find your heart.

    6. Be intentional about spending time with a few guys. Maybe take up golf earlier or play in a band, or camp/hike.

    7. Spend more time with your children when they are little and do not think that your work is so important. It isn’t.

    That is a good start to the coffee conversation… Oh, and one more thing Brian… wait one year before you sell your house in Franklin, TN. The value will nearly double. Oh… and yet just one more thing… buy some Apple stock. The brand will be stronger than Coca-Cola by 2013.

    What would you tell your younger self?

  • What is a Broker's Price Opinion?

    What is a Broker’s Price Opinion? Simply stated it is the opinion of a licensed real estate agent of the most likely sales price (value) of real property. The National Association of Realtors states a Broker’s Price Opinion (BPO) should contain 7 things in writing. They are as follows:

    1. The identity of a subject property
    2. The date of the opinion
    3. A defined price or value
    4. Limiting conditions (Statement of Purpose and Intended Users)
    5. Any interest of the agent including Agency Relationship to Owner
    6. Basis for Opinion and sources of Information
    7. If not an Appraisal by licensed Appraiser then state the fact

    On a practical level, number 3 is the most important. So, what determines a good value?

    Ever watch Antiques Road Show? People are so surprised or sad when the “expert” tells them the value of their heirloom. One common theme I hear from the evaluator is “in recent auctions, similar items sold for $3,500”. They are referencing what someone else was willing to pay for a like item.

    The same concept applies to homes. Recently sold properties (last 3 months) of nearby comparable properties provide best indicator of value. Value is so deceptive relative to square footage, floor plans, construction, and land. A good agent will make many adjustments for differences.

    Another factor I consider are the comparable homes that did not sell. Failures can bring out features the market is rejecting.

    I was with a seller today who knew what the adjacent homes sold for. She was curious why I did not give the same value to her home. Her home did not have re-finished hardwood throughout, or tile in bathroom, etc. Her home was roughly the same overall size but on 2 floors instead of one. All of these factors must be considered in the equation.

    Is a Broker’s Price Opinion (BPO) the same as an appraisal? No, it is not. An appraisal is made by a licensed professional Appraiser. Although they also look at recently sold properties, they are also looking at replacement construction value and perhaps income as well if investment property. Appraisals have specific formats generally for the benefit of lenders. Appraisals are great tools. BPO’s are great tools as well, because they will pick up on many subtle details that pertain to the current “buying public”. As an example… appraisers generally do not affect value based on aesthetics like colors, etc. Realtors are sensitive to those things because we listen to buyers constantly giving feedback. Realtors know that a seller’s specially decorated walls may only reach a small amount of buyers’s tastes.

    The best way to determine the most accurate value of a property is to hold a well advertised absolute auction. That will bring out the competition to level the marketing playing field. Most people are not comfortable with that approach, because the buyers may not think so highly of your place as you do. So the next best thing is to ask a Realtor for a BPO or broker’s price opinion. What is a Broker’s Price Opinion? The best professional determination of what your house is worth.

  • Real Estate Investor's Chattanooga House Disappears Suddenly

    Real estate investor’s Chattanooga house disappears suddenly. The house was lost forever but the land remained. Let me tell the story from the beginning.

    An investor came into my office (circa 2004) rather exited and said “the house I bought is gone!” This statement is not the usual way a broker starts his day. I invited him in to discuss the case of the missing dwelling. He started his story from the top…

    I went into this house which was in rough shape close to downtown Chattanooga. There was bad damage to parts of the structure,but it was not too much for my construction crew. I planned to repair the place within weeks and rent it out. The electricity was on, I made assumptions that it had been lived in recently.

    “A reasonable plan, although thorough inspections are best”, I said. “Continue”

    The investor said, “A carpenter I was planning on hiring lived down the road. He called me and said “I thought you were hiring me to work on the house down the street?” …”I am ” he told the carpenter. “Then why is a bulldozer and loader taking the place down?” “%#$%(12***”,,,I don’t know! .. was the owner’s reply.

    Confronting the workers, the owner found out the City of Chattanooga had condemned the property. The tear down had been scheduled for months. Even prior to his purchasing the property.

    Not only did the City tear down the building, they sent him a bill for the cleanup and disposal.

    After digging into the details, we found out several facts. The seller lived in another state. He had a received the notice of condemnation and hatched a plan of deception. He took down any of the condemnation notices, spruced up the property a bit and put it up for sale with a Realtor. His master act of cover up was bribing someone to get electricity to a property that had been condemned.

    How did the property transfer with a title search and insurance? Turns out that condemnation, at the time this happened, is not recorded at the courthouse. There are no recorded liens or encumbrances placed on the property for a condemnation action. The seller acted fraudently. The seller had not lived in the property; therefore, was exempt from filling out the long form of the Tennessee Property Disclosure.

    The investor could have sued the seller and the agency representing him. He chose not to pursue that action because of the expense and time to win.

    Moral of the story? Always dig to find out as much as you can about a property. A “great” visible deal may turn out to be like this real estate investor’s Chattanooga house suddenly disappearing.

  • Real Estate Brokerage Model Will Change To Accommodate Trust and Service

    Real Estate Brokerage Model Will Change To Accommodate Trust and Service
    Real Estate Brokerage Must Deliver Service and Trust
    Real estate brokerage model will change to accommodate trust and service. Serving home buyers and sellers with trustworthy service will be a generous business for years to come. How Realtors and brokerage firms get paid will most likely change. Change is being driven by the human need for honest communication and is being facilitated by technology. Here are four observations to make the point.

    One: Ebay and AirBnB. Models that are built on trust. They work because of stamps or stars of trust conveyed by stories of other people.

    Two: Google took inventory of all real property and Zillow Make Me Move is a system that is begging for trust. Ebay and AirBnB proved their models. I hear grown Realtors calling Zillow and Trulia the porn sites of real estate. What? Give me a break – what that tells me is that they are gaining traction and weak agents are becoming fearful. Do not even come back with poor data integrity, etc. (Granted…buyers miss some deals because Zillow updates run slower than MLS) The services still provide value.

    Three: Real estate brokerages can charge much less money if everything they did was compensated. 40-50% of all listings, energy , advertising is wasted on properties where the seller does not have sufficient motivation or ability to sell for the market demand. Sellers would sell “if” they get their price (to buy the next place or simply pay off the lender) Home shoppers not buyers: real estate agents may spend lots of time and gas showing houses to someone that does not “have to” buy a home. There is room for creative agreements with sellers and buyers and their brokerage firms if motivation and non-payment risks are reduced.

    Four: Social Media will push Brokerages to adapt “systems” because buyers and sellers will “connect” more frequently. (Pushing on the door of reducing the costs of finding the “Willing” party) Which will demand a service of transaction liability coordinator. Some title companies may niche and grow what some will see as a growing FSBO (For Sale By Owners) market. On the brokerage side, I can see a DIY brick and mortar model where the seller and buyer pay for a menu of services complementing Zillow. (Similar to local Ebay stores that handle the sale of an item for you for a fee). Agency law, fiduciary responsibility, and liability insurance will need to cover the scope of services rendered.

    [** Learning moment for agent compensation: The local Chattanooga MLS reports that there has been 5,144 homes sold year to date with total volume of $872,600,261. Multiply that number by 5% or 6% and you get roughly $34-$53 Million dollars of commissions. Divide that by 1,500 real estate agents and they average $35,000 each. Multiply $35,000 by 70% split that is nearly $25,000 a piece gross before gas, taxes, advertising , healthcare, etc. Agents are paid 1099 not W-2. You can see the model is pretty efficient, especially when a high percentage of activity is NEVER compensated. Imagine your boss walking in on payroll day and saying let’s roll the dice to see if you are worthy of being paid today!]

    The bottom line is that technology is changing how we serve people in real estate. I used my smart phone to check the level of a door jam, shine a light into a crawl space, check a HUD for closing, and text a message to another customer (All during one home showing). My buyers are calling me with information from Zillow, and Trulia on their phones. They are demanding a response. Please understand, that I am NOT predicting that smart phones will replace real estate agents. Nor, I am predicting a sharp reduction in the “cost” of sale of your home. Ebay does not seem to be making large dents in retail malls, and AirBnb has not toppled Marriott.

    Home buyers and sellers will pay for great service and trust. People will demand it. They may actually pay more than a “typical” commission to sort out all the “noise”. Tech is changing real estate; therefore, the real estate brokerage model will change to accommodate trust and service.

  • What Are Home Buyers In Chattanooga TN Looking For?

    What Are Home Buyers In Chattanooga TN Looking For?
    Chattanooga TN Home Buyers
    What are home buyers in Chattanooga TN looking for? Home shoppers I am serving have unique stories. There are similar themes across the board. The buyer clients are looking for the following:

    1. Saving time – less commute, more family time
    2. Preserve capital – Conservative purchase, not “house poor”
    3. Newer and updated – (One exception category)

    Saving Time – Several clients bought to cut the drive time. The primary motivation is not to cut the car gas bill. It was to have more time at home. Patterns of school and work shift with age. Time is the most precious commodity to many. Amenities and square footage are starting to diminish. Location to work, and community amenities is gaining momentum. One North Shore is a perfect example of this.

    Preserving Capital – Chattanooga real estate from 1990-2006 (for the most part) performed a steady 3%-4% value increase year to year. The last 7 years proved that is not always the case. Real estate buyers want a “good deal”. Even young buyers are being careful not to max out their loan capability. My experience is that Chattanooga home buyers are thinking about paying loans quicker and paying more cash down. Several buyers paid all cash for smaller homes to be debt free.

    Newer and Updated – Strong buyers want to purchase new or already updated decors. The one exception to this is younger purchasers. I served three first time home buyers that purchased distressed properties and spent significant sweat equity and remodel money. All three bought to live as owners. All three bought well under retail value and made wise purchases.

    My experience and market analysis shows that if you are a patient Chattanooga, TN home buyer, then you can do well, especially if you are looking at $325,000 and above.

    If you are a Chattanooga, TN house seller, in a property older than 6-8 years old, please consider paint, carpet and a few cosmetic upgrades. You will be much better positioned for today’s buyer.

    What are home buyers in Chattanooga TN looking for? My buyers are looking to save time, money and weekends free of home makeovers.

  • People Connection Drives Real Estate Technology Change

    People Connection Drives Real Estate Technology Change
    Palm Pilot Wind Chime
    People connection drives real estate technology change. The devices are faster, brighter, and upgrades rain down faster than a summer shower. All the rain is washing into creeks of social media, tablets, smartphones, and laptops. The river of technology is wide and moving pretty quickly. All of the waters of tech flow straight into the open mouths of people insatiable in their thirst to connect. The demand to tell their story, connect with their tribe, family, loved ones, and express themselves in visual art, music, words, and dance.

    The picture of the Palm Pilot reminded me of a cool tool that I used to own. A creative artist is using an old Palm Pilot as a wind chime. I took the picture for the benefit of a friend that actually has a working Palm Pilot. In her defense she uses it as a device to open Supra Lock Boxes for her real estate business. Real estate is all about people and properties. The Palm Pilot held an amazing amount of people and could sync your email contacts with your database. A portable private phone book. I loved my ability to carry thousands of people with me. (metaphorically of course)

    Fast forward to 2013. I showed a home this afternoon. Parents are walking around holding an iPhone and Face Time showing their daughter the view. Giving a limited experience to their loved one who was 2 states away. Connection..

    Last night we were eating dinner and someone remembered the cartoon dog character named Smedley. Some could not recall the character. My daughter had no frame of reference. Smartphone to the rescue. A few seconds later we were all watching a clip from Chilly Willy on Youtube. ( I would not necessarily recommend taking the time to watch it. Muttley has a better dog laugh)… We connected a memory and brought a story from the past into the present connecting generational stories.

    If you are on Facebook, how many “friends” have you connected with that you have not seen in years. Perhaps decades! Connection… We crave it, we need it. We simply need to encourage, reach out, tell stories, laugh, cry and inspire.

    Real estate needs connection. It demands it. We can share the experience of looking at a new home. We watch videos, listen to stories and read the words.

    Real property has a place. The axiom is Location, Location, Location. So true. People have connection. The real estate business is about connection, connection, connection.

    People connection drives real estate technology change.

  • Smart Phones Are Changing What Real Estate Agents Do

    Smart Phones Are Changing What Real Estate Agents Do
    Smart Phones Changing Real Estate Business
    Smart phones are changing what real estate agents do. What do real estate agents do? I hear and read about the comparisons of how technology will change real estate like it did with travel industry. I cannot see the future, but I do know that what I do as a Realtor in 2013 is different than what I did in 1995. Last decade, real estate agents, doctors and other “important” people had pagers. Remember those? Large belt buckled black with text and you could send messages to each other at lightning speed. Prior to pagers it was cell phones. Before cell phones it was car radio phones. I remember my parents installing a thermal paper printer with electronic message capability. We could print out the days “hot sheet” with the device.

    Does that mean that real estate is an early adopter of technology? Yes. Does it change what agents do? Yes… to a degree. Let me tell you a story.

    Early in my real estate career, my Dad taught me the phrase “See the people”. People are the real estate business. Real property and technology are merely along for the ride.

    The relationships we have with others and the trust we build is the real estate business… period. My observation about people in 2013 is that we “trust” our smart phone more than humans. After I finish this blog post I will go to my bedroom and place my iPhone on my bed stand. (Where is your phone now?) Sometimes I check to make sure that Dee is charging hers overnight. Why? Because I want to connect with my wife during the day tomorrow. I check the weather, the ball game score, use my flash light to see in crawl spaces, bubble level on crooked floors, … on and on it goes. Regardless of all the apps we use. I have a relationship with this tool and it is a constant companion. If I want to talk with my daughter most of the time I am connecting through her device. When she asks me about going on a walk or traveling, I ask her to take her phone. Life360 will at the minimum give me the device location.

    We have a relationship with our technology and it can tell stories with sound, and video that far surpasses the ability of fax and pager. The literal “gatekeeper” to a person is this device. Real estate agents will learn how to connect with customers through this personal technology, because the real estate brokerage business is All about relationships. The relationship with our smartphone forces us to change how we relate to others.

    Smart Phones Are Changing What Real Estate Agents Do.

  • Chattanooga TN Home Sales Require Full Seller Disclosure

    Chattanooga TN Home Sales Require Full Seller Disclosure
    Picture of First Page of TN Home Disclosure
    Chattanooga TN home sales require full seller disclosure. Full disclosure of defects and known problems is Tennessee law and applies to anyone selling residential property. This became law April 8, 1998. An outline provided by the state is located at this link. Most laws have exceptions. One of the most commonly used exceptions to this law is a absentee owner or builder. The spirit of the law is that you must have been living in the dwelling recently to be able to disclose “known” issues.

    This law helps keep sellers more honest in their dealings, but there are gray areas that cause pain. One of the gray areas pertains to repairs of problems. Technically, you do not need to list a defect if you repaired the issue. The problem becomes when the “repaired” problem not listed on the disclosure becomes a problem after the sale. Common issues in Chattanooga area are wet basements, and faulty septic systems. Owners may have the problems supposedly repaired in good faith. The new buyer finds out a year later that the issue has returned. Tempers may flare over perceived deception and cover up.

    The best way to avoid problems is to disclose the repairs and provide receipts of the work done to correct problems. That way the seller is not only fully disclosing the issue but also providing contact information about the contractor providing services. This advice was given to me from an attorney who represents clients regarding waste water problems.

    Ask your Realtor about exceptions to the disclosure. If you are exempt it is best to sign a document explaining how and why you are exempt from providing full disclosure. The spirit of the law is to protect consumers purchasing and selling a home.

    The form is several pages in length and covers many areas of your property. Every residential property in Tennessee is covered. Chattanooga TN Home Sales Require Full Seller Disclosure.