The advantages of selling your home through our off-market program.

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Did you know that you can sell your home off of the MLS? My team has an off-market program that lets you do just that, and today I wanted to go over what this program offers.

Most of these off-market buyers are looking for luxury homes over $1 million in Isle of Palms, Sullivan’s Island, Mount Pleasant, and Daniel Island. We also do a lot of tear-down homes, where we’ll buy an older home, tear it down, and build a new spec home on that lot.

The majority of these off-market offers will be very clean with few contingencies. We’ll have flexible terms like lease-back agreements, where you sell the home and lease it back from the buyer. That can give you more time to look for a new home. Keep in mind that all of these buyers have signed a 3% buyer-agency commission, so a 3% commission will be included in your sales price. 

"Our off-market program is a great way to take advantage of this market."

If this sounds like a good deal, there are three things we need from you if you want to sell to these buyers:

1. You need to be serious. These buyers are all top-level executives, high-producing attorneys, etc. Their time is very valuable, our time is valuable, and your time is valuable too. We don’t want to hurt any relationships with these high-level buyers.

2. We need great pictures. Maybe your home is on a vacation property rental site, or you might have the photos online on Zillow. That’s great, but maybe the pictures are outdated or ugly. If that’s the case, we can stop by and take some pictures that can create an emotional response in the buyers.

3. The buyers will have to see the home. When we have a buyer who’s interested, we’ll reach out to you and tour the buyer through the home. Hopefully, we’ll get an offer that everyone can agree to.

If now is not the right time to sell, I totally understand. Every situation is different. However, if you want to take advantage of this seller’s market, our off-market program is a great way to do so. If you have questions about the program or real estate in general, call or email me or my team. We would love to help you.

Here’s what rising inflation and an inverted yield curve mean for the market.

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Are we headed toward a recession? In many economic circles, experts look toward the inversion of the yield curve as an indicator of a recession during the next 12 to 18 months.

What’s an inverted yield curve? Simply put, this occurs when long-term interest rate projections from the 10-year bond are higher than short-term interest rate projections from the two-year bond. An inverted yield curve is when the short-term rate becomes higher than the long-term one. 

In the last few months, we've seen the spread between the two narrow. If we continue to follow that trajectory, the yield curve will invert, signaling a recession in the next 12 to 18 months. If you look at the graph in the video above at 1:08, an inverted yield curve has predicted the past seven recessions.

How did we get here? Back in 2018, the yield curve temporarily inverted, but all of a sudden, COVID hit, and the government started pumping tons of money into the economy while artificially lowering interest rates. Now the problem is inflation; it’s getting out of hand. How does the Federal Reserve handle inflation? They increase short-term interest rates. 

I believe that the inverted curve is not as much of an indicator but the cause of recessions. We give our Fed members way too much credit. In the lens of history, they’ve made some of the worst financial decisions ever, regardless of which party is in charge.

"The Federal Reserve handles inflation by increasing short-term rates."

I look at the U.S. economy as steering the largest ocean vessel in the world. If you’ve ever seen Titanic, you know it takes forever to make a turn. It’s not like you’re driving a jon boat that you can turn on a dime. The Fed keeps raising rates without realizing that those results will only be seen later down the road, and it will eventually shock the economy into a one-to-three-year recession.

What does this have to do with the housing market? Sometime in the next year, we’ll see things start to cool. I don’t think we’ll see prices go down because inflation is too high, but we may see home values start to stagnate. This presents a great opportunity for home sellers to cash in on their equity and get out of the market. It’s also a great entry point for buyers because, during inflationary cycles, real estate historically keeps pace with rampant inflation just like gold and other commodities do.

In the long-term, I think we’ll see a significant increase in prices over the next few years. If you have any questions for me about inflation, the inverted yield curve, or anything else I discussed in today’s blog, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.

More inventory is starting to come onto the market, and here’s why.

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Is home inventory going up? In short, yes! I’ve seen a significant increase in the number of listed homes in Mount Pleasant and Isle of Palms. However, it’s a bit more complicated than that.

In January and February, we hit record-low inventory. A home would come on the market and sell within a day. We listed $2 million homes that would get 15 offers. There was nowhere to go but up from such low inventory.

On top of that, we had a lot of off-market luxury home sales. About 50% of our luxury homes were sold off the market, so some of those statistics are skewed. Homes were moving, but they might not have been on the multiple listing service.

What's causing this inventory rise? The economic outlook for the U.S. has taken a turn for the worse. It’s not all bad, but oil prices are rising, inflation is high, and interest rates are rising. 

COVID lockdowns and restrictions are also ending across the country. We saw people come down here because they were so locked down in their home states, but that has gone away. However, we still see many people moving here and telecommuting to work. They can work from home, so they’re choosing to live in warmer climates or where there are lower tax rates.

"We are definitely at a tipping point."

The biggest issue is the war in Ukraine. I don’t want to sound alarmist, but we are getting feedback from sellers about it. People are worried that it might spill over into NATO, the U.S. may get dragged in, or China could take advantage of the situation. I’m not saying any of these things will happen, but sellers are worried about these possibilities, and it could cause them to delay their sales.

So, have we hit the top of the market? No one can really say, even myself, but it is a possibility. For many, this looks a lot like the post-Vietnam era, where we had sky-high inflation, high interest rates, and a stagnant economy. 

One of the things to look out for is that many companies are buying oil without using the U.S. dollar. The international oil market has traditionally used dollars, but now Saudi Arabia is selling to China in the yuan, and India is buying from Russia in rupees. If the U.S. loses control of the oil market, it could hurt the dollar and our economy.

We’re definitely at a tipping point. We can’t tell what will happen yet, but that doubt is causing people to list their homes. If you have any questions or just want to talk about buying and selling, feel free to call or email me or one of my agents. If you have a topic suggestion for a future video, send that my way as well. I’d love to hear from you.

Here are three different ways to save on your tax bill as a homeowner.

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In 1789, Benjamin Franklin said, “In this world, there is nothing certain except death and taxes.” He said this at a time when there was no income, payroll, or corporate taxes. Go figure! Here are three strategies that our clients use to avoid (not evade) paying taxes when buying and selling real estate:

1. Primary residence exemption. If you’ve lived in your home for two of the last five years, the IRS will allow you to exempt the first $250,000 in capital gains taxes when you sell it. That number goes up to $500,000 if you’re married. I’ve had clients build a small fortune by buying and selling homes every two to four years and avoiding those taxes. You can get creative with this. For example, you could move into your beach property for a few years and sell it using the exemption.

2. 1031 exchange. This is a bit more complicated, and I really advise you to speak with a tax professional before getting too excited. This allows you to take an investment property, sell it, then keep the proceeds with an intermediary. Then within 45 days, you have to identify up to three properties you might buy with the proceeds. Within 180 days of the sale of your investment home, you need to close on one of those properties.. Then you won’t be taxed on the proceeds of the sale, and you can use the full amount to buy your next property.

"Talk with your tax professional before committing to anything."

3. Depreciation. By using depreciation and 1031 exchanges, you can hold an investment property, make money on it, show a loss, then defer the taxes when you sell. The IRS will allow you to depreciate the building portion of your property, but not the land. Let’s say the building portion of a property is $1 million. You’re allowed to depreciate that over seven-and-a-half years. If you’re making $30,000 in cash flow from the property, you can still show a $6,000 loss. Then, you can use a 1031 exchange to kick those tax consequences down the road, rinse, and repeat.

Disclaimer: I will review these strategies with my clients in general terms, but I always tell them to review this with a tax professional because the rules are complicated, they change, and the IRS penalties are severe.

If you have any questions or would like me to refer you to a good tax professional, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.

Off-market properties expand the options that buyers have for homes.

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With every month that goes by, we keep hitting new record lows for inventory in our core market. This creates challenges for both buyers and sellers, who have trouble finding new properties and must compete with others when they do. That’s why today I wanted to discuss what buyers and sellers should know about off-market properties, or homes that aren’t currently listed for sale on the MLS.

How do we find off-market properties for buyers? Technology and a whole lot of hard work. We have two full-time, dedicated inside sales agents who use direct mail, phone calls, and interpersonal conversations with leads to find people. However we can, we’ll meet with people and find out where they are in the arc of their homeownership. By doing that, we can identify hundreds of people who would consider selling their homes here in Mount Pleasant and Isle of Palms. 

"There are more options out there than what is shown on the MLS."

When we’re working with buyers, we mail and contact the homeowners in their target neighborhoods to see if those owners are willing to sell. If the homes aren’t what the buyers are looking for, we’ll add them to our database, which is searchable by other agents. That list can be an excellent resource for our buyers.

So what are the benefits of searching for off-market properties? Well, given that we’re facing record shortages of inventory, it’s great to know that there are more options out there than what is shown on the MLS. Additionally, buying an off-market property spares you some of the stress of buying on the traditional market.

On the other hand, there are some downsides to buying off-market. The sales can be trickier, as sellers don’t have to follow the rules of the MLS, which structure the way that homes should be presented.

If you’re looking to sell your home sometime in the future, I encourage you to contact us so we can put your home in our off-market database. That said, I do think that selling on the MLS is by far the best way to sell and market a home; when there’s competition for a home, that generates multiple offers from buyers, which in turn leads to sellers getting the highest price.

If you’re looking to buy a home and aren’t satisfied with what you’re seeing on the market, contact us. We can get you access to the homes that aren’t listed in the MLS—we currently have around 150 homes in the area that may or may not work for you. Don’t hesitate to give us a call or send an email. We’d love to help you and answer any questions you have.

Inflation is going crazy and it’s affecting the real estate market.

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In December 2021, the consumer price index came in at 7%. However, it may be as high as 10%. It hasn't been that high since 1982. Inflation is the loss of purchasing power of a currency and is usually the result of a government continuously printing larger and larger quantities of bills. Since 1973, the US dollar has been a fiat currency, meaning it’s not backed by gold or any hard assets. Nearly all currencies now are fiat currencies.

What does this have to do with real estate? All markets go up and down, but this market looks very different through the lens of inflation. For example, if your home appreciated 18% last year, it might only be a true 8% net increase in value because the dollar keeps losing value.

Some of my clients are taking advantage of low interest rates to buy more hard assets because they expect those assets to grow faster than the 4% mortgage. Conversely, I have other clients who find that now is a great time to cash in on their investments. 

If you have any questions, don’t hesitate to reach out to me. I look forward to hearing from you.

We want to wish all of you, our amazing clients, happy holidays.

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We’ve just gone through Hanukkah, Christmas is just around the corner, and so is New Year’s. It’s a wonderful time of year in Charleston and for many different people of faith. However, we know that for some, especially if you’ve lost a loved one, the holidays can be hard. Wherever you are in your life, we want to wish you happy holidays!

In real estate, there’s a saying that December has 31 days, but it’s the shortest month of the year. There are a ton of holiday parties, and some people and businesses just check out after December 16.

For St. Germain Properties, December and January are actually some of our busiest months of the year. Clients come down on Thanksgiving and Christmas looking for vacation homes, and that keeps us busy. 

"There’s a saying that December has 31 days, but it’s the shortest month of the year."

December is also a great time in Charleston. It is still fairly warm, and there are a lot of activities. It can be tricky to see homes because more people are renting during this time of year. Families can be a bit restrictive about showings during the holidays, so it’s very important to give us advance notice during December if you’re coming to see homes.

Wherever you are in your holiday preparations, we wish you a happy Hanukkah, merry Christmas, and a happy New Year. We look forward to helping you in 2022. If you have any questions in the meantime, feel free to call, email, or text us. We would love to help.

Here’s how you can find the right place in Charleston for you.

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A lot of my relocation clients ask me, “What’s the best place to live in Charleston?” The answer is very simple: If you have $5 million to $10 million, we’ll just build you the perfect home wherever you’d like! Unfortunately, this isn’t possible for everyone, and that’s why today, I want to talk about the importance of knowing your priorities. 

Let’s talk about the big one first—your budget. Everyone has a budget; however, the question for luxury buyers is usually more like, “How much am I willing to spend?” instead of “How much can I spend?” This should be the first thing you decide. 

Afterward, consider what your primary use for the home will be. Is it a primary residence, a second home, or a hybrid second home that you occasionally rent out? Depending on your answer, what type of home you want will be very different. 

"No matter how much money you have, your budget should be your first priority."

Next, think about what stage of your life you're in right now. For example, I’m really in the thick of it. I have three boys; one is getting ready for college, and the other two are in middle school. If you are a recent “empty nester,” it might be time to downsize. On the other hand, if you’ve recently married and are planning on having children, you might want a home that can accommodate a bigger family. 

Speaking of families, let’s talk about schools. The South Carolina School Report Card is a great online resource you can use to check different schools. You also have options with private schools and charter schools, so do your research before making a move. 

Finally, let’s go over some common areas in Charleston and what they might be good for. Isle of Palms is expensive, but homes rent for a lot there. If you want a second home you occasionally rent out, this is a good area if it’s within your budget. If you don’t want the tourist traffic and aren’t planning on renting your home out, Sullivan’s Island is a nice alternative to Isle of Palms. If you are looking for great schools, golf courses, and a family-friendly environment, Daniel Island and Mount Pleasant are both fantastic places to live. 

Hopefully, this gave you an idea of what type of area you’d like to move to in Charleston. If you have any questions, please reach out to me via phone or email. I am always willing to help!

Here are a few things to know about this Thanksgiving market.

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As some of you may know, I was born in Argentina, and I immigrated to this country quite a long time ago. I love my birth country—I love the food, the culture, and being able to visit from time to time. However, I’m truly proud to be an American citizen. I’m proud of the fact that we stand on the shoulders of people who came before us to form a more perfect union. The Fourth of July and Thanksgiving are my two favorite holidays because they both give us time to stop and reflect on the blessings we receive in this nation and what we’re thankful for.

After Thanksgiving, I used to send an email called “Charleston’s Dirty Little Secret” out to all the buyers in my local market. The secret was that the best time to buy a home in Charleston was between December and February. During that time, sellers are much more serious, even desperate; some of them have to sell because they’ve been relocated for work, and others are looking to sell to take advantage of the year-end tax benefits. Many people were able to pick up some great deals during those three months.

"We might see a slightly lower number of transactions, but with higher prices."

However, in 2020, all that went out the window. I didn’t have time to send out the email because I was just so busy with listing homes, new construction, and working with our buyers. This year, I expect to see something similar. We might see a slightly lower number of transactions, but with higher prices. Inventory is just that low—the number of buyers vastly outweighs the number of sellers.

So what does this all mean? Well, the low inventory will keep driving prices higher and higher. Conversely, The Federal Reserve has been tapering quantitative easing, meaning that they’ve been buying bonds and artificially suppressing interest rates. They tried to taper in 2018 and 2019, and that sent interest rates into the high fours, which brought about a slowdown. I see the possibility of that happening again sometime next year, though I think that will be a transitory period before they work out the right level of tapering.

In the long term, I expect to see housing appreciation, so if you’re thinking of buying or selling, give me a call or send me an email. I’d love to give you my advice about how to find success in this market given your current situation.

Here’s how you can write a competitive offer to win your dream home.

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If a nice home goes on sale in a good area, chances are it will end in a multiple-offer situation. That’s why I want to talk about how you can come out on top in a competitive market.

"To know what to include in your offer, you need to understand the other side."

First off, it’s a myth that the highest price always wins. From personal experience, I can confirm that there are creative ways to make an offer stand out. It’s not that price is irrelevant; instead, you should just remember that there are other ways to make an offer appealing. 

To know what to include in your offer, you need to understand the other side. Does the seller need to sell by a certain date? Do they need a certain price? Are they already under contract with another home? These factors all play into your offer, so make sure you know what’s going on. 

You also have to be aware of what you can offer. Is it practical for you to make a cash offer? If not, can you make an offer that’s close to cash? This means you would waive as many contingencies as feasible so your seller can move forward with confidence. Finally, you have to know when to say no. If you don’t have a walk-away price, you need to get one. 

At this point, the process falls on your agent to get the job done. Call it game theory or whatever you want; your agent should know all the tricks to get you the best deal possible. 

If you have any questions about today’s topic, please reach out to me via phone or email. I am always willing to help.