3 questions to the Listing Agent that will generate valuable answers and make you look outstanding.

1) What is the replacement cost of this home and/or are there any appraisals that you can share with me?

The agent probably does not know but they can get the information if it exists. If they attempt or are successful at getting the information you have established 1.) a relationship and 2.) the level of expectation from the sellers price perspective.
Question Really Implies: “I am looking for value and I am serious. No need to do COMPS.”

2) What Terms, Conditions, or Special Incentives is the seller willing to discuss to generate an “Impressive Offer”?

After all, a buyer may pay full price if the seller will finance at a great rate, with a small amount down, or take a second mortgage. Price is but one (admittedly large) component of a real estate transaction.
Question Really Implies: “I am not a cheapskate, I am knowledgeable, and I just may be the creative buyer you are really looking for.”

3) As a listing agent, can your company effectively and ethically represent me and the seller via designated agency?

Many brokerages will not allow Dual Agency but can perform Designated Agency. This route can allow a bit more direct path to a seller with a higher degree of influence in the negotiation process.
Question Really Implies: “I know you agents work on commission and I am delivering you an opportunity to double your income if you treat me right.”  (some of us in the business call this an attention getter)

Roger Tutterow Ph.D. and Dean of Economics at Mercer University gave his opinion to Sally’s Roundtable on the Recession of 08’ as it relates to Atlanta Real Estate.

Credit Markets

As far back as July 2007, Wall Street began to question the true value of Mortgage Backed Securities. Interesting how it really became a household word in recent months. Either way, banks are continuing to search for ways to loan money to the masses. The original bailout for Fannie Mae and Freddie Mac was probably the smartest move that Washington could have made. In essence, it allows lenders the ability to continue to bundle loans together and sell them to a company that is backed by the full faith and credit of the US government.

Banks, mortgage brokers, etc are in the business to originate loans. Most do not have a true mechanism to keep them in house and actually hold for 30 years. Therefore, without the ability to bundle and sell, loans would not be written.

Good News!

We are at or past the bottom of the Real Estate curve in GA. Home prices have stabilized and inventories are flattening. With the ability to actually borrow money at still all time low rates, the expectation is that the best deals will sell first which would include Pristine foreclosures, New deeply discounted homes from builders, and resales where the owner can take a loss to get a better deal on a more expensive home.

As an aside, I was working with a retired buyer couple from Florida and during the conversation we were comparing markets between Orlando and Woodstock. Since they are so similar (right!) they had the expectation that they would be able to move here, buy a home for about 60 cents on the dollar, and retire, again. The reality was that it was not going to happen unless they wanted a real fixer upper. In Woodstock, a $300,000 home is still affordable to many individuals and this price point recognizes the high end of activity in the area. In this case, I suggested we look at foreclosed builder homes or homes between $500k and $800k if they truly wanted to get a 30% discount. In the end, some people will let expectations driven by their local market or worse, driven by the national news, get in the way of truly a great buy. So what do we have to look forward to?

In 6 months or so, those with little to no equity will see a more stabilized and active market. Today, there is no place to go but up and do not let the Evening News Talking Heads tell you differently. Our problems are nothing like so many others. Real Estate is Local and it is not as bad as others would think.

Image by Getty Images via Daylife

Even though it is raining outside (and we need it in North Georgia), it is a great day. Bloomberg is reporting that September homesales increased both month over month and year over year for the second month in a row.  This is important as the numbers show that foreclosures and REOs are continuing to drive price declines. The reason it is important is because it shows that market forces are correcting the imbalance in the number of available resale homes. The supply of resale homes dropped to 9.9 months from 10.6 months in August. Alan Greenspan (who agrees with me on this) is of the opinion that we will see more “normal” market conditions in real estate by the second half of next year.

This makes sense since the peak in the real estate market was in 2005. That means we have been in this “bear market” since then. Once resales stabilize and the number of REOs and foreclosures as a percentage of the total resales falls, we will begin to see new construction number recover. That is probably a year to eighteen months away.

My point is that what we hear in the media is always based on trailing indicators. Indeed, the September numbers are now almost two months old. The media also has reasons to hype bad news (depending on your preferred conspiracy theory – to either sell commercial air time or to support a candidate for political office) and ignore good news. They also poorly analyze various trends. When you connect the dots, you will see that the market – not the government – is driving a recovery.

Brian M. Dubuc
Attorney at Law
Dubuc and Associates, LLC
bd@dubuclaw.com

Facing foreclosure is not only a financial crisis for Atlanta homeowners, it is can also be an emotional crisis.   So this is a time to take stock and examine your options with your Atlanta home.

Read Also:  A Deeper Understanding of Short Sales

Why Foreclosures happen

There are several reasons why Atlanta homes go into foreclosure.  Perhaps the Atlanta area home was purchased at the peak of market and just before prices started to fall.  Another scenario might be that the mortgage was interest only, so no equity was built up.  Or perhaps the mortgage was an ARM and now the interest rates have risen, making it difficult for the owner to handle the mortgage along with daily expenses.  The reason is part of the past, and owners must now deal with the future.  The first item on the agenda should be to avoid foreclosure in Atlanta.

If you can still pay your Atlanta mortgage for the foreseeable future and don’t need to sell your home, then your best bet might be to wait out the market until the Atlanta Real Estate market is more favorable for sellers.

If you are unable to pay your current Atlanta mortgage but could if refinancing was in the picture, you should negotiate with your Atlanta lender.  If they decline to refinance then you should contact one of the government agencies offering assistance to homeowners who find themselves in your situation.  This solution might include the agency working with your lender to strongly encourage them to refinance your home rather than foreclose.

The National Association of REALTORS® has created a useful document for homeowners in “How to Avoid Foreclosure and Keep Your House” if you are in trouble it is an excellent place to start. Some of the resources cited in this document include:

For immediate advice, call 888-995-HOPE To speak to a counselor on how to avoid foreclosure. Available in English and Spanish, 24/7. Or visit their website for more information.

The reasons your Atlanta lender might not want foreclosure is because it really represents a no-win situation for both parties.  A foreclosure is expensive and takes a great deal of time, and the lender ends up with a house they really don’t want, and if it goes to auction it likely will sell for far less than it should. 

Why a short sale is in your best interest. 

This is a step above foreclosure.  Both show up on your credit report, but the short sale is less of a black mark than a foreclosure.  While foreclosure is a legal settlement where lawyers and possibly their fees are involved, a short is between you and your lender, and you will be more able to buy another Atlanta home, obtain credit cards at a better rate or even renting an Atlanta home sooner than if you had gone through foreclosure.  There is also a a new tax provision that waives income tax took effect 12/20/07. The provisions excludes forgiven mortgage debt on a principal residence for the period of January 1, 2007 through January 1, 2010.  Previously forgiven mortgage debt was considered the same as taxable income.  Ask your CPA for further information.

Read Also:  Five Tips to purchasing a Foreclosure

An Atlanta short sale is an involved process, but in a nutshell the seller needs to establish a selling price with the help of an Atlanta Realtor, find a buyer and with an offer, in hand present the offer to the mortgage holder.  Along with the offer you must disclose your finances as well as a hardship letter that details why payments can no longer be made.  Check with your Atlanta lending institution to see if there is other information that is required.  If the offer is ultimately accepted then you have taken the first step in your financial recovery.

Read Also:  What everyone should know about the housing bubble

In the past year alone, the number of Atlanta GA homes that have been foreclosed upon has increased. If you previously have been toying with the idea of getting into the Atlanta Real Estate Investment market, now is a good time to do so with the foreclosures that are happening in the area.

You may be thinking of taking advantage of the deals that can be had with the Atlanta Foreclosures. Keep in mind, though, that a lot of people have also been jumping into the fray, so you need a plan of action and ready to act when you decide to work the Atlanta Foreclosure market.

The success of your Atlanta GA real estate foreclosure business mainly hinges on the rate at which you purchase Atlanta homes at bargain prices and then turn them over for a profit. The old saying “Buy low, sell high” has never been truer.

Finding those Atlanta Real Estate Deals

To help you make good deals in the Atlanta real estate foreclosure market, below are a few tips:

• Be ready to offer a solution to the Atlanta homeowner in crisis. Atlanta houses are about to be foreclosed are facing a tough financial crisis. They are looking for solutions.
• Consider the Atlanta homeowner’s situation. There are cases when a Atlanta property may be in a less than standard condition and the homeowner’s foreclosing date is fast approaching.
• Obtain pre-approval from your Atlanta Mortgage Professional. This way you are ready to close quickly, which will be desirable to the troubled Atlanta homeowner.
• Do your homework. Ensure a good and profitable purchase of a Atlanta property by first doing your homework. Research the market, know what is and is not selling and understand successful selling strategies. Remember your goal is to ultimately turn over the Atlanta home for profit.
• Think like an Investor – Be ready to act when a deal appears, because you are not the only one looking.

Although many competitors and 1^st time home buyers are entering in the Atlanta real estate foreclosure market, making a profit in the business will depend on your ability to think of this as a business and not get emotionally attached to the Atlanta homes. Your success is dependent on your ability to look at the numbers and base your decisions on the potential profit. Don’t forget that there could be repairs or other expenses that may affect your profitability. It is important to approach the Atlanta Foreclosure market well researched to be successful.

 
1) Get Pre-Qualified for a loan

When you write an offer on a foreclosed property the receiving broker will forward your offer to the lender who holds the property.  The lender will in many cases have multiple offers on the same property so your offer needs to shine.  If you have cash, send a bank statement – If you need financing, please be pre-qualified not just pre-approved.  Many times the best price does not win but the best chance of a successful closing will!

 
2) Hire an Agent Who Can Really Help You

As foreclosures continue to rise, the backlog of REO files at the lender continues to grow.  As a result, the process of buying a foreclosure can take weeks if not months to advance to a stage where the potential buyer and seller have something that symbolizes an agreement.  Unresponsiveness from the bank will try the patience of a buyer and will try the patience of the agent responsible for writing the offer.  Understand that the Selling Agent earns a living from successful offers and in order for the process to work in your favor, don’t get greedy with trying to save the commission for yourself.  As a matter of fact, I know I work harder and longer for a guaranteed thing.  Hint:  Sign a Buyer Brokerage agreement with your broker.  They will hang in there longer and go the extra mile for you if they know they will get paid at the end of the journey.

 
3) Understand the NEW Real Estate Contract

In Georgia, the GAR (Georgia Association of Realtors) has completed new revisions to many of the contracts and addendums for 2008.  There are a variety of changes and items missing from the standard sales contract.  In order to cover your assets, make sure the AGENT YOU HIRED has addendums and exhibits to cover financing, appraisal, and inspection contingencies.  A basic GAR sales contract says that you can complete the sale for cash.

 
4) Be Able To Buy Without Having to Sell

If you have to sell your home, buying a foreclosed property may remain a dream for the near future.  Contingencies to sell property are almost never accepted.  If your home is currently under contract with a firm closing date, be prepared for short term housing as a predictable negotiation and closing on an REO is — well — unpredictable.

 
5) Make Your Best Offer and Stick with It

After you make your offer you will most likely receive a notice that the lender may have multiple offers on the property.  While it may or not be true but if you raise your offer price now, the chance of getting a DEAL slowly dwindles.  When buying a foreclosure, make your best offer up front considering after repaired value, cost of repairs, etc.  Now is the time for a poker face.  Your desire to purchase this property must be less than the banks desire to sell it.  Do not allow the listing agent or the bank to know how much you really want the home.

Mike Pennington is a full-time licensed Realtor with Maxsell Real Estate in Woodstock, GA

I stumbled across this research study today and although it is a bit dated (2004-2005), I think the findings are still relevant in today’s market and should encourage everyone to believe in Atlanta’s housing market.

Home Price Analysis for Atlanta-Sandy Springs-Marietta
By the Research Division of the National Association of REALTORS®

Executive Summary
With home prices rising strongly in most parts of the country, there has been widespread media coverage on the possibility of a housing market bust. A thorough analysis of the Atlanta-Sandy Springs-Marietta metro market, as detailed below, reveals that there is very little danger of this. In fact, the local housing market is in good shape with a potential for significant housing equity gains, particularly for homebuyers who plan to remain in their house for the long run.

The Atlanta market has very favorable home price-to-income ratio and even better mortgage servicing cost-to-income ratio. The latter ratio is currently below the local historical average. It implies no widespread financial overstretching to purchase a home in the region. Any respectable gains in the local job market will translate into substantial home price gains.

Price Activity
• The current price of $166,500 is 20% below the national average.
• The median home price rose 3% in 2004 and 14% in the past three years – one of slower appreciating areas in the country.
• Among the large populated centers, Atlanta is one of the most affordable places to live.

Additional Discussion Points
• Home price declines are very rare. In fact, the national median home price has not declined since the Great Depression of the 1930s. Stock market collapses, the OPEC oil crunch, economic recessions, and even wars have not negatively impacted national home prices since the 1930s.

• There have been few times when local prices declined. In nearly all these cases, the price declines were accompanied by sharp prolonged job losses. It is difficult to foresee a price decline in a job creating economy.

• Homes trade far less frequently than financial assets (about one home sale every 7 to 10 years for most homeowners). There are also larger transaction costs associated with selling a home due to the lengthy careful examination demanded by home buyers and sellers. Therefore, home prices are not prone to fluctuations as in the stock market. There are neither panic sells nor margin calls associated with homes.

• Many non-quantifiable factors could be important for this metro market in determining home prices. Access to cultural life, the quality of museums, nearby local and national parks, water views, exclusive neighborhoods, weather, the international airport, city vibrancy, restaurants, and a host of other non-quantifiable factors could have an important influence on the overall pricing.

• There are immense tax benefits to owning a home. These tax considerations were not considered in the analysis. For example, the 1998 law permitting primary owner occupants to trade down without having tax consequences. Also most home sales results in no capital gains tax. In addition, long-term capital gains tax rates were reduced in 2003, thereby providing higher return for home investors. These positive benefits, if accounted for in the analysis, would have shown an even stronger case for housing fundamentals in supporting home prices.

• Georgia has been the 4th fastest-growing state in the country in the last 10 years – growing twice as fast as the national average.
• At the same time, metro Atlanta has been the 4th fastest-growing metropolitan area in the country- growing at over 2.5 times the national average rate.
• Metro Atlanta adds 100,000 people per year (over 273 people per day) – 60% of whom move here (164 people move to metro Atlanta every day).
• In 2005 Atlanta saw more than 70,000 new housing starts.
• Last year Atlanta gained more than 69,000 new jobs.
• Personal income growth continues to be higher than the national average.
• Of the nearly 4,000 companies that located in Atlanta in 2005, roughly two-thirds were small and mid-size businesses.

These facts make it hard to read the “Letters to the Editor” segment of local newspapers, because every week there is someone new complaining about High Density Growth. I have stated my opinions on density growth several times in the past few months and just to remind everyone again… studies show density to be more desirable than sprawl. I think we can all agree that the people are coming, at a rate of 164 per day, we should be prepared to make better decisions on where to put them.

I encourage everyone to read this study published by the Urban Land Institute that was conducted by the National Multi Housing Council, the American Institute of Architects and the Sierra Club (America’s oldest, largest, and most influential grass-roots environmental organization). If you are a community leader or a concerned citizen, you should download the power point presentations posted here and share them with your community.