I am constantly amazed at how few people know how Realtors operate. Even people who have been around the home buying and selling block quite a few times are unclear on what roles we play in a real estate transaction, what we can and can’t do by law, and even how we get paid.

One of things that always blows my mind is how many people buy a home directly from the listing agent. Now, this isn’t necessarily a bad thing for you, and, trust me, there is nothing we love better than selling our own listings.

But know this: you are absolutely 100% entitled to have your own agent represent you in your home buying transaction. And as much as I love getting the much bigger commission check that selling my own listing gets me, I will go on the record and highly advise you to use what we in the business call a buyer’s agent. A buyer’s agent is a real estate agent who is trained to work with buyers and when representing a buyer, represents only the buyer’s interests in a transaction.

Why use a buyer’s agent?

Well, let’s say you’re looking for a new house in the Knoxville area. You’re really excited and so you start religiously gathering and scouring home magazines, spending countless hours on Realtor.com looking for homes that have (hallelujah!) more than one picture, and going to a gazillion open houses and being harrassed by tons of real agents who want to sell you their listings or make you their client. Annoying, right?

Next, you email and call the listing agents, trying to get more info on listings that catch your eye and either a) don’t hear back from them, b) find out the house has sold/exploded/fallen into a sink hole, or c) you luck out and make some appointments to see some properties. Separate appointments. That you have to drive to in your own car. Using your own gas. $2.99 a gallon gas.

OK, so you get to these properties and find yourself thinking a) what on earth do the pictures on Realtor.com and this house have in common b) I wonder what time the train comes through the backyard, c) I wish this listing agent would stop trying to convince me that grasscloth is so out it’s almost back in, or d) wow, I really like this house.
Whew! Finally! That was a lot of work, but you did it.

Congratulations! Now, all you have to do is put in an offer! The listing agent will write and present the offer on your behalf, and depending on the agent, will either default to facillitator status (try to be completely neutral to both sides) or will continue to represent the seller –either way leaving you unrepresented in one of largest and most expensive financial transactions of your life. Yikes.

Now let’s look at the same scenario with you using a buyer’s agent. First, you meet with your carefully selected agent (more on this later) and discuss everything you’re looking for in your dream home. Your agent will start searching the MLS for you, sending all listings that meet your criteria.

After you look at all these juicy listings landing in your email inbox, you choose your favorites and tell your agent when you’d like to see them. He or she will schedule the showing appointments and prepare some information on each home, including a current listing brief and tax record.

Then you go look at houses. In your agent’s car. Using your agent’s $2.99 gas. Going with your agent, you are able to see 5, 6, or even 7 homes in just a few hours.

Still want to go to open houses? No problem. Just tell the host agent at each home that you are already working with an agent, and they should (by Tennessee state law) stay far away from you, leaving you to view the house in peace. Ah!

After going through the home viewing process with your agent for a few days or weeks, you find your house, the one you want to make an offer on. Your agent will help you determine an asking price by looking at recent comparable sales in the neighborhood. He or she will also help you with elements of the offer such as asking for closing costs or repair costs. Your agent then writes up the offer, submits it to the seller’s agent, and negotiates the offer on your behalf, with only your best interests in mind. You get the house you want, and feel like you got the best deal possible because you were well represented by a knowledgable professional.

Much better, right?

And here’s the best part: because buyer’s agents in our area get paid from a percentage of the seller’s listing commission, their services are absolutely free to you, the buyer. Rock!

So, now you’re probably wondering how you can find yourself a really good buyer’s agent, right? That’s coming up in a future post. Stay tuned!

Crappy credit means a crappy credit score. And a crappy credit score means either a) a higher interest rate on your conventional home loan, or b) no conventional home loan. In fact, a credit score of 620 or better is now required for all conventional financing, FHA not included. That’s up from 580 just a short time ago. It may not sound like much, but those 40 points have squeezed a lot of folks out of the home buying market.

If you’re one of them, cleaning up your credit report is the only way to get back in the game, and that means not only getting rid of debt, but also not accumulating any more of the nasty stuff. Luckily for you the nice folks over at Dumb Little Man have put together a list of 20+ Ways to Get Rid of Your Debt For Good. While it’s not a step by step guide, it does contain a lot of great advice. And before you go getting all “Duh!” over ideas like-

1. Stop Adding More Debt
2. Get Rid of Your Credit Cards

stop and ask yourself this: if all these suggestions are so durn easy, why aren’t you doing any of them?

The NAHB/Wells Fargo Housing Opportunity Index’s 4th Quarter report is out . The index ranks housing affordability by percentage of homes in a metro area that are affordable for a median income family in that area. Knoxville ranked 63rd nationally, with 68.4% of homes being affordable for median income families. Regionally, Knoxville ranked 16th, coming in just behind Chattanooga in 8th place, and Memphis in the 11th spot.

Well, it depends on where you are, accorinding to Forbes.com. In Dallas or Houston, you’ll get a nice 5,000 sq ft home with 5 or 6 bedrooms. If you’re buying in Manhattan, you’ll have to downsize a little, as your 7 figures will only get you a 600 sq ft, one bedroom apartment. Ouch.

• A 98 year-old 5570 sq ft completely renovated historic home on 5+ acres in Fountain City
• A 6400 sq ft estate home with 4 BR, 3 1/2 BA on 2+ acres in Halls
• A secluded 3400 sq ft compound on 17 acres in South Doyle
• A 5 BR, 4 1/2, 5500 sq ft custom home in Westmoreland Heights
• A 7,000 sq ft lakefront home in River Club
• A 7,300 sq ft, 5 BR, 4 1/2 BA estate home in Fox Den — minus the chandelier over the breakfast table, which does not convey (hey if you can afford 1,000,000 big ones, you can afford your own breakfast table chandelier, am I right?)

Get ready to get confused.

I was just over at Property Scope and saw this alarming headline-

“Knox Home Prices Fall In January”

Yes, the Knoxville Area Association of Realtors sales data for Jan. ‘08 is out - let the number crunching begin! Let’s read what else Property Scope had to say-

“The median sale price of Knoxville-area homes fell in January.
According to the Knoxville Area Association of Realtors, the median sale price of a two-bedroom home was $66,000 last month, a drop of more than 12 percent compared to the January, 2007, median of $75,700.
Larger homes were off less dramatically. The median price for a three-bedroom was $144,000, down $1,000 compared to a year ago, while the median price for a home with four or more bedrooms was $218,000, also down $1,000.”

That all sounds terrible, especially the 12 % in 2 BR homes. What makes me want to tear my hair out is that this article, especially the headline, makes it sound like home values have dropped, when the author is actually talking about a drop in median home prices.

So what’s the difference?

A median home price is the halfway point between the most and least expensive homes sold in an area in a given period of time. It is not an average of home sales prices and it is not an indicator of home value, per se. If more people are buying more expensive homes in an area, the median home price rises, just as if more people are buying less expensive homes, the median home price drops. This does not necessarily mean the value of the homes they bought increased or decreased.

What the KAAR median home sales data tells us, is that more less expensive homes sold in Jan. ‘07 than in Jan. ‘08.

But the KAAR data also includes average or mean homes sales data. Average home price is calculated by adding all of the sales prices for a type of home together and dividing them by the number of properties sold.

OK, now, let’s take a look at average or mean. home sales price in the KAAR data, just for laughs & giggles-

• Average sales price of a 2 BR home was down 7%
• Average sales price of a 3 BR home was down about .03%
• Average sales price of a 4+BR home was up about .05%

So, according to the mean or average sales data, one of these categories actually rose. This could be because property values went up. It could also be for the same reason that some folks don’t trust mean sales figures - the most expensive homes tend to skew the data upward (the same can be said for foreclosure or distressed property sales, which skew data downward).

I told you it was going to be confusing.

What is clear is that the Knoxville house market has slowed, at least compared to Jan ‘07. Days on market is up and there is more inventory. However, as I wrote about last week, the condo market is chugging right along, doing extremely well in spite of all this.

As for your own home, don’t lose hope yet. Real estate pricing is a tricky business. Your home’s market value depends on many factors — desirability of your neighborhood, recent neighborhhood sales, updates, general condition, whether or not train tracks were laid in your back yard since you bought it, and, of course, location - not just on KAAR sales data.

We live in a nifty little tri-level that we bought from the original owner, who, if the wagon wheel light fixtures were any indication, was not very much into the home renovating. Needless to say, we have put in a good bit of sweat equity in the last couple of years, including all new interior paint, new toilets and sinks, new light fixtures, and a 1/2 new kitchen - the other half is awaiting a nice, big closing. So, I was intrigued when I found this quiz on the Sweat Equity website over at diynetwork.com. It’s only 10 questions, but the answers are very interesting.

Knoxville has always had a great condo market, thanks to an abundance of empty nesters, relocating retirees, and UT students. Now, the latest quarterly survey by the National Association of Realtors (R) shows that our condo market is still going strong:

“The strongest condo price increases were in Bismarck, N.D., where the fourth quarter price of $125,000 rose 20.8 percent from a year earlier,followed by the New Orleans-Metairie-Kenner area of Louisiana, at $173,300,up 17.8 percent, and Knoxville, Tenn., where the median condo price of$160,800 rose 10.6 percent from the fourth quarter of 2006. “

Chalk that up on the “What bubble?” side of the real estate market debate.

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