When I meet with a homeowner that is considering selling, what real estate agents call a listing appointment, it is important to understand any challenges that there may be to selling their home. Some you can plan for, Inherited and some you have to react to, Developed.
The Inherited challenges are like what has been so common lately, falling behind in payments and headed for foreclosure as well as needing to sell as the result of a divorce. This situation is brought about by job loss, illness or other negative event in their life. They didn’t choose the situation but are affected by the events.
Everyday I speak to a homeowner that needs to sell because they are behind in payments and they owe more that the home will sell for. These folks are ideal candidates for a short sale, and preparing them for the process is something I am trained for and can do quite effectively.
Developed challenges are like what happened just recently where the appraisal came in slightly below the offer price. In this case you react by getting the parties to agree on the lower sale price. Sometimes easier said than done, but with preplanning and writing the proper contract upfront I develop a scenario to deal with the chance of that happening.
Proper planning helps eliminate or lessen the impact of the types of challenges that develop as the sales transaction is in process. I see numerous questions posted on the public real estate sites where a buyer or seller has had an issue develop and don’t know how to deal with it.
That is where hiring a great agent would have eliminated a lot of the questions and the grief that come along with it. Proper contracts, negotiating and planning out of the transaction came make the sale or purchase a dream, not the nightmare some folks encounter. If I can help guide you through the confusion of selling a home please contact me at mark@AtlantaHousingSource.com
Peachtree Forest subdivision, located in the Peachtree Corners area of Norcross in Gwinnett county, Ga.
Peachtree Forest subdivision, Norcross, GA. is conveniently located in Gwinnett County near Jaybird Alley and Spalding Road. The neighborhood is only minutes away from fine shopping and dining at the Forum.
Peachtree Forest is very close to outstanding amenities like activity/soccer field, playgrounds, tennis courts, Peachtree World of Tennis, and one of the newest of Gwinnett County’s Water Recreational Park. Peachtree Forest is one of Norcross’ most established and desirable neighborhoods.
The outstanding local schools that serve Peachtree Forest are Peachtree Elementary, Pinckneyville Middle, and Norcross High. The school buses make stops throughout the neighborhood.
Homes in Peachtree Forest are typically priced from the mid $200′s to $400′s, so there really are homes in a choice of price ranges for any Norcross or Gwinnett County home buyer.
“We just won’t sell my home for that amount; it would be giving it away.”
That is what the sellers says when the appraisal come in lower than the agreed upon contract selling price. We have a willing buyer and willing seller but the appraiser holds down home values and won’t let the transaction go forward at the contract price. How are we ever going to get out of this economic mess if this continues to occur? How can home building start back with this narrow minded thinking?
As an example, a half completed development was selling in the low $200s. The builder can’t pay his loan payment and looses all the remaining 12 homes to foreclosure. The bank takes over and does a fire sale to dump them quickly. The same home, same builder is selling 2 miles away in the $180s in the depressed market.
So what does the bank do, they unload them in the $140s to sell quickly, and quickly they sell- all under contract in a matter of days. It makes sense, a lot of supply lowers price. Then comes my seller and he is the only one for sale in the same complex as the bank sales were in.
Now the supply is down to one home and a buyer writes an offer in the $150s. So what does the appraiser do, well he continues to hold down prices by appraising our listing at the average price of the fire sale that took place. He forgets the supply is now limited and demand is up.
If it were cars in demand and short supply the dealer marks them up over the manufacturers recommended price. Collectables go up in value when the supply is small and down when the supply is large. It’s basic Economics 101.
So we have a chance to start to have home values increase when the willing buyer and willing seller agreed on a price, but the appraiser holds values down. If this trend continues we will never have a rising market and home values will never change unless someone wants another fire sale and they go down.
How can we get the government to stop the regulation that is stifling the home market recovery? Here is the coming dilemma we are going to have to deal with. At some point there will be a shortage of homes for sale, in the next few years.
When we suddenly find that we haven’t built enough homes to meet demand and a builder goes into that community to build new homes he will have second thoughts. The cost to acquire the land and build the same home as there now is in the $180s to $190s, but an appraiser will tell him he can’t sell for more than the $140s. Who will build with a planned $40,000 to $50,000 loss?
The builder will just walk away and not build. So then when demand is screaming for more homes inventory to buy, will the values go up to the $190s over night.
The future is very bright for Georgia after we get through the next couple of years. Read the ABC article and lets start planning for a great tomorrow.
GA to lag national recovery through 2011
Dec 1, 2009 – The Atlanta Business Chronicle
Georgia’s economic recovery will lag behind the rest of the nation in 2010-2011, but the slow start will give way to more robust growth that will outpace the nation in the years ahead, according to Albert Niemi, dean of the Cox School of Business at Southern Methodist University.
Niemi, speaking Tuesday at the 17th annual Bank of North Georgia Economic Forecast 2010 at the Cobb Energy & Performing Arts Centre, said unemployment will not peak nationwide until April 2010, when it will crest at 10.5 percent, and remain above 10 percent until late fourth quarter next year.
The United States’ economy will grow by only 2.5 percent to 2.7 percent in 2010, he said.
“It is a jobless recovery,” Niemi said in an interview following the presentation.
Unfortunately for Georgia, the state will lag behind the recovery experienced by the rest of the nation. Georgia will underperform in jobs and economic growth through 2011.
Niemi, 67, the former dean of the Terry College of Business at the University of Georgia, said it is unprecedented in his lifetime for the Peach State to fall behind the nation in terms of economic growth.
“This is foreign territory,” he said.
Georgia maintains the fundamentals necessary for job and population growth, including relatively low costs of labor and land, a high quality of life and a global transportation hub in Hartsfield-Jackson Atlanta International Airport.
But the state’s manufacturing base is tied to construction, and both housing and commercial real estate development have fallen off a cliff and the state is choked with a glut of supply.
Housing starts in metro Atlanta that once exceeded 110,000 per year at their peak, have been cut by 80 percent.
Oversupply of housing, retail space and commercial office space will continue to weigh on Georgia until the excess supply has been filled. Cheap real estate will eventually become a plus for the region in attracting investment, but in the short term, it will continue to dog the region.
Long-term, Niemi said Georgia will add 1 million people through 2015, and overtake Michigan as the nation’s eighth-most populous state.
Niemi forecasts strong growth after 2012, and Georgia will become on of the nation’s Top Five or Six states in terms of economic growth through 2030.
Georgia is also favorably positioned for a return of a manufacturing base; one that is more diverse, as shown by the opening of the Kia Motors plant in West Point and the position of a manufacturing plant by NCR Corp.
Atlanta and Dallas, Tex., will be among the nation’s rising stars for the next two decades. Georgia, North Carolina, Texas and Utah will be among the fastest-growing states post-recession and through 2030.
Niemi’s visit to Atlanta is part of a series of lectures, which will continue Dec. 2 at the Atlanta Athletic Club and Dec. 3 at Eagles Landing in Stockbridge.
We received the latest list of advertised foreclosures in the Barrow, Forsyth, Fulton, Gwinnett, Hall & Walton counties only. There were over 6,100 advertised foreclosures and that did not include the other 5 metro counties like Cobb, Paulding, Cherokee, Douglas, & Dekalb. We reported back in August what we thought was a record which was close to 5,000, so this month’s numbers are very shocking.
What we found when we look at the list this month was a lot more commercial properties which is also unusual. Even properties that are highly desirable and have tenants are being foreclosed. We read about the new shopping center in Norcross – The Forum, narrowly escaping foreclosure last month. In that article, it forecasted that there would be additional commercial up for foreclosure, but I had no idea that the amount of foreclosures would be this high.
So what is going to happen with this additional inventory coming onto the market? You probably remember your economics 101 class – more supply, less demand equals lower prices. Just when you think it can’t get even lower, we find that there is a near 20% increase into an already bulging market.
While this is a great opportunity for some, it is creating additional challenges for those who need to sell. Someone recently shared with me the concept that sellers are under “house arrest” because there is nothing that they can do to liquidate their home without taking a large loss in equity. Most homeowners are counting on their homes’ equity for retirement and with prices falling at an alarming rate, it is going to take a long time to recover from this loss.
So what is the upside in this? The only thing we can share is that if you are in the market to purchase, there is no better time to buy. If you can put up with the challenges of working with banks, there is great money to be made. Banks are realizing that there are not enough qualified buyers for their homes, so relatively reasonable offers are being considered and whether you are purchasing to occupy or put into rental service, the discounts are amazing.
If you want to take advantage of this great market, make sure that you are working with an expert real estate agent that understands how to work with the banks to get your deal accepted. Also, because the market is shifting, you want to make sure that you are getting the best information possible about a home and area to make sure that you are able to make the best buying decision.
As Real Estate Agents, we tend to be more on the cutting edge of new technologies. Someone shared this video with me and I found the numbers staggering and the statistics interesting.
Thanks for interacting. We believe that art of real estate will continue to evolve and grow more and more via internet technologies, but will never replace the human element. So often people forget that we are social in nature and that while technology is great for interim communication and information, it does not replace the value of being able to get together in person.
We will be adding additional content and information about how real estate can be better integrated into today’s communication style in later posts, but this was too fun to pass up!
The number of advertised foreclosures this month is 4957 for Hall County, Barrow County, Forsyth County, Fulton County, Gwinnett County, Hall County, and Walton County. This number does not even include Cobb County, Dekalb County, Paulding County, Cherokee County and Douglas County.
In July there were 4415 advertised foreclosures in those same counties that were scheduled for sale on August 4, 2009. Just how many actually foreclosed is yet to be determined. This month, however, we see that there is a 10% increase.
We have been tracking the foreclosure rates for those counties for years and never have we seen these kinds of numbers. Georgia is a non-judicial foreclosure state which basically means that after 4 weeks of advertising, the lender can foreclose on the property through a sale on the courthouse steps.
So what is going to happen with all of these homes that are now owned by the bank? They are going to try and sell them at greatly reduced prices. This can be good news or bad news depending on your situation. If you are a buyer, there has never been a better time to purchase a home. The incentives for first time homebuyers are really phenomenal. Have you heard about the $8,000 Federal and up to $1,800 State credits available? Learn more details.
However, if you are an existing home owner, you are seeing your property values drop like never before. Most people who bought in the past 10 years purchased houses with a first and a second mortgage. When the bank forecloses all junior liens are wiped out. Therefore the bank that performed the foreclosure has a house that already costs significantly less that other homes in the neighborhood that were bought around the same time.
For example a house that normally would cost $100,000 has a first mortgage of $80,000 and a second mortgage of $15,000. Typically the owner would have paid $5,000 for the down payment. So let’s say the owner has lived in the property for 3 years and now can’t make the payment. The first mortgage would foreclose and purchase the property at the steps for roughly $78,000. Let’s say it costs them $4,000 to actually foreclose. They then list the home for sale at $85,000. So the other homeowners in the neighborhood who need to sell are competing with the banks selling what would normally be a $100,000 house for $85,000. So they have lost $15,000 in equity.
In addition banks are now competing with each other since there are so many of them on the market these days, that they are lowering their prices even further just to move the house off their books and to take the loss.
As a real estate agent serving Gwinnett, North Fulton, Forsyth and Cobb counties, I have a wide area of expertise. While everyone knows we have to conserve energy, the challenge is how to get started and what is the value in “going green” with your home?
Let me being by speaking of the value. In the Atlanta area, while a few people may pay more for a more efficient home, most will use that as a swaying feature between 2 comparable homes and the green home will sell faster. I wanted to share with you some ideas that we recommend if you wanted to go green and discuss the resale value of each option.
HVAC: Replace A/C systems with a 13 SEER (Seasonal Energy Efficiency Rating) or greater unit. Update furnaces to high AFUE (Annual Fuel Utilization Efficiency) system of 80 or greater. These will have a tremendous impact on your utility bills while you own the property, and is a great selling point. Also, when the prospective buyer looks at the property, knowing it is a relatively new system will be a big plus.
Install programmable thermostat(s). Not only will this help you be more comfortable when you arrive home, it will save energy as well.
Replace kitchen appliances with ENERGY STAR rated appliances. Everyone loves newer appliances. We all know that kitchens help sell homes, so make yours more attractive with this feature.
Replace plumbing fixtures & toilets with water conserving fixtures & low flow toilets. In Georgia, as well as many other areas of the country, we are experiencing major issues with water shortages. In some metro counties, this is actually a requirement before a seller can sell. We expect that more and more counties will enact similar legislation, so this might be a way to get your house prepared in advance.
Improve insulation. We find that the home’s insulation gets packed down over the years, so refreshing insulation in the attic or adding insulation in the walls will certainly reduce your energy cost as well as provide a great selling feature. It will make the house much more comfortable.
Replace old single-pane windows with Low-emissivity (Low-E) rated windows. A Low-E coating is a microscopically thin, virtually invisible, metal or metallic oxide layer deposited directly on the surface of one or more of the panes of glass. Old windows are drafty, but the new windows are great for keeping the outside temperatures from affecting the interior temperature of the home. This is an expensive but very effective alteration. When we priced out new windows for our home, we were amazed at the pricing, but feel that it will allow us to be more comfortable and save us money in the long run.
While there are other options to consider, we don’t feel that they are as practical, but we thought we would list them for you to think about:
Solar technologies for heating, and active systems for power generation to supplement the grid.
Grey-water recycling system.
Rainwater retention systems.
Ventilation systems that replace indoor air with fresh outdoor air.
A whole-house and reverse osmosis water filtering systems. Provides better tasting water and also reduces the waste of bottled water.
Even if you do only a couple of these items, you will find that you have increased the comfort and value of your home for years to come. If you have any further questions about going green, feel free to contact us – www.AtlantaHousingSource.com or call 404.886.8789.
I just sold the same house for the second time. This home is a great home in a nice neighborhood in Gwinnett County. It is not a foreclosure, not a short sale, not a fixer-upper – it is a great home.
The first sale fell through partially because of the appraisal, but mostly because of the Buyers’ failure to follow the basic guidelines during the contract to close period.
First, the appraisal came in way too low for this great home with a lot of square footage. The appraiser used a low square footage number for the size of the home for sale and a large square foot number for the size of one of the comparables. The comparables that were used were bank owned which had deferred maintenance and therefore resulted in a low comparable value to the immaculately kept property I had listed and was under contract on.
The real reason this contact fell apart was the buyer’s agent and the buyer’s lender did not accurately communicate what was involved with buying a house. Evidently the Buyer, when initially applying for the loan listed their high hourly rate by their employer. At the time of pre-qualification, they failed to mention they only work on a limited part time basis and not full time as was assumed in the initial qualification.
In addition, neither the buyer’s lender nor their agent provided any guidance to them about what you can and cannot do during the loan process. From the time you apply for the loan until you close on the loan you should not go and change your spending habits. You should not buy anything that would change your credit score or debt to income ratios. We advise all our buyers of this so that we can have a better chance of closing on the property. Unfortunately, this Buyer chose to go out and buy something on credit terms to the tune of some $300 per month payments.
With more monthly debt from the recent purchase and less income from the part time employment the buyer no longer qualified for the loan. This was all found out 2 days before closing, after they had once extended the closing for 7 days to work out financing. Unfortunately, our Seller had packed and was ready to load the truck and go when these items came to light. The Buyer’s lender kept telling us that everything was still a go up until the very last minute.
The remedy in this situation is, the Seller gets to keep the earnest money. Not much of a concession, but at least it is a little something for their trouble. The challenge however, is the Buyer won’t acknowledge them being the party at fault for the failure to close. So the Broker holding the earnest money has to send a certified letter stating how the earnest money will be distributed. In this instance, they were clearly in default, but we have seen other instances where that is not the case. All in all, the seller would prefer to have the property sold.
As a buyer in today’s market, you are most likely looking for opportunities where you can purchase a home with substantial equity. In recent years, short sales have emerged as an attractive option for savvy buyers. However, you should be aware of both the rewards and risks of purchasing a short sale.
The main advantage of a short sale is that you can purchase a property for quite a bit less than market value. Home owners who are behind on their mortgage payments will often consider a short sale as an alternative to property foreclosure. This means that you have the opportunity to negotiate a low purchase price with the lender, so you can benefit from the reduced price when you resale the home in the future.
One of the main difficulties with a short sale is that you may experience resistance from the lender when making a purchase offer. By definition, you will offer less than the home owner owes on the mortgage, so the lender will incur a loss on the short sale. However, many times, a short sale represents a smaller financial loss than a foreclosure, so the lender may be willing to entertain your offer with a bit of persuasion.
The other big disadvantage to a short sale is the amount of time it takes for the lender to agree to a short sale. Therefore, if you are in a hurry to purchase, you are on a strict timeframe, you should really consider this before you move forward. We have seen short sales take 2-3 months to close. There are also other considerations like inspections, repairs, and seller contributions that would need to be discussed with your real estate agent for clarification if this is a good strategy for you.
Overall, a short sale poses fewer risks than other types of foreclosure or pre foreclosure sales. If you have the time and patience to devote to contacting sellers and lenders to arrange short sales, this can be a valuable and profitable investment.
As a real estate agent, we help both buyers and sellers navigate the short sale process.
