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Author Archives: Lane Bailey

Wayback Wednesday… Title Insurance…

Abraham Lincoln, the sixteenth President of th...

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A couple of years ago I wrote a quick little primer on Title Insurance.  (Check out the link for more details…)  Title Insurance is one of the subjects I am questioned about regularly… even by buyers that have previously purchased 3 or 4 homes.

It can be confusing… there are two distinct flavors of Title Insurance, Owner’s and Lender’s.  And while sitting at the closing table, buyers are usually paying for a pant-load of other items.  Sometimes they draw a line and decide that skipping the Owner’s policy is a way to avoid spending another few hundred dollars.  Other times, they just give in and spend the money without knowing what they are buying.

Neither of those situations are good for the buyer.  Some buyers ABSOLUTELY need to have Owner’s Title Insurance.  For others, it is a luxury, or even a waste.  (Sorry, but if you have a loan, you WILL be paying for Lender’s Title Insurance… they will require it, and despite the fact that you won’t benefit, you get to pay for it).

Of course, I would be remiss if I didn’t remind you that I am not a lawyer, and I don’t even play one on TV.  You should always ask your attorney about the legal ramifications of a decision like this.  But keep in mind, the closing attorney is selling the insurance product, and they DO make money from it.  Some of the closing attorneys I have worked with have flat out told buyers that they would NOT answer questions about the suitability of the insurance product because of their conflict of interest.

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Lilburn, GA Market Report, August 2011

This map shows the incorporated and unincorpor...

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Market stats for Lilburn, GA, August, 2011, indicates that there were 431 properties on the market (as of August 31st). Overall, there was about an 7.7 month supply of properties and 48 properties that closed (sold) in August.  It was an decrease from last year’s sales (51) and July, 2011 (56 sales).  The Absorption Rate notched up slightly.  Unfortunately, Lilburn is among the weakest of Gwinnett County, GA, cities I track.  But, at 7.74 months of inventory, it isn’t nearly as bad as it had been just a few months ago.
In the sub-$200k arena, there were 306 listings, with about an 6.9 month supply with 37 sales.  This represents most of the sales in the market area.  Sales decreased markedly from last month (48), and were slightly below last year (38).  This is the strongest that Lilburn has been for quite a while.  This is easily the strongest market condition for sellers in the last 2+ years (I only have full data back 2 years right now).

Between $200k and $400k, there are 114 listings for sale, and about 11.o months of supply.  This segment had been quite weak for months, and has stalled a little.  There were 11 sales compared to 9 last year.  But, the last time we had an absorption rate under 11 months was in December of 2009.  This segment really needs to get back into single digits… but Lilburn has never been seen as a luxury market.

From $400k to $600k, there are just 5 homes on the market. The absorption rate is 5.0 months. There were no sales in this segment from December through February, but there were 2 in March, which really turned the segment around, followed by 1 sale for April.  May posted 2 sales, 1 sale in June, 2 in July and none in August.

From $600k to $800k, $800k to $1M and Above $1M, there are 6 listings (combined), but too few sales to have any sort of reliable number of months of inventory.  March posted the first sale since August, 2010.  It was in the $600-$800k range. One of the listings is above $1M and one between $800k and $1M, and there is no market activity in the last 12 months for those ranges…

Lilburn is in Gwinnett County, GA, just outside of Atlanta. As of the 2000 Census, there were 11,307 people in Lilburn, but that is only including people in the city limits, and there has been a lot of growth since 2000 in Gwinnett County. It was incorporated in 1910. Lilburn is home to Parkview High School, and also has students that the Brookwood, Berkmar and Meadowcreek clusters. It is also home to Killian Hill Christian School, Providence Chrisian Academy, St. John Neumann Catholic School and Parkview Christian School. Possibly the most famous resident of Lilburn is General Beauregard Lee, a groundhog with a better winter prediction record that Puxatawnee Phil up in PA. Dominique Wilkins, formerly of the Atlanta Hawks also lives in Lilburn.

Atlanta Metro Zillow Home Value Index

I have a page dedicated to Lilburn Market Data.

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It’s About the Jobs…

selfmade image of U.S. Unemployment rate from ...

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Every time I say this, I annoy a lot of my real estate friends…  Real estate is NOT the solution to the economy.  It is a symptom.  Nothing more.

To put it simply, People without jobs are NOT buying homes.  People that are worried about their jobs are NOT buying homes.  and as long as those people aren’t buying homes, people that DO want to “move up” can’t… they need to sell their current homes.  As I write this, the unemployment rate is around 9%.  But, the BLS also says that the “real” unemployment rate (including people that are not filing for unemployment anymore) is closer to 17%.

And while I tend not to get too political on this blog, I will make a couple of statements…

  • Attacking job producers, like Gibson Guitars, is NOT going ot make entrepreneurs take the risks that they need to take in order to start or expand their businesses.  (If you didn’t know, they are not allowed by the government to import raw Indian Rosewood, but they ARE allowed to import the manufactured fretboards made from Indian Rosewood.  In effect, the government is telling them to set up manufacturing for those parts outside of the US rather than doing it in Nashville, TN).
  • Attacking companies like Boeing Aerospace for expanding in ways that the union (big money contributors to the Obama campaign) doesn’t like.  (If you didn’t know, the NLRB is trying to stop Boeing from opening an additional production facility in South Carolina.  They have continually been hit by union strikes in Washington state, and want to have a second facility in a “Right to Work” state… one which doesn’t force union membership).
  • Supporting companies like GE, rewarding the CEO with a Chair on President Obama’s “Jobs Council”… as the company inks a deal on expansion and job creation… in China, but not the US.  All the while, GE is holding money off-shore to avoid taxes.

The private sector WANTS to create jobs.  But, with the incredible growth of deficit spending (which squeezes private lending), and the incredible growth of regulation ($1.74T in regulatory costs to businesses), and the desire to increase taxes on those same business, and the increasing costs on the horizon from ObamaCare, businesses are not willing to take the risks.

The government doesn’t create permanent jobs, except for the people that they directly hire… and the government is already too big.  But they certainly have the ability to kill jobs in the private sector.  And until the government stops trying to kill jobs, there won’t be a recovery in real estate… 

No matter what Nancy Pelosi says about how Unemployment is a GREAT stimulus, people aren’t buying homes or cars or much else while they sit on unemployment… 

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Wayback Wednesday… An Oldy, but a Moldy

mold on bread

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Poor mold.  People are trying to save the whales and bring back the Dodo Bird, but most everyone would be happy is mold were extinct.  But it isn’t…  Mold is alive and kicking, and more of a problem than ever.  And it usually hangs out with some other unsavory characters, Rot and Termites (that are all followers of Moisture).

A couple of years ago I was involved with a moldy property and I learned a few things.  I posted up some good information about Mold, where to find it and how big of an issue it can be.  And it can be a REALLY BIG problem.

Of course, it wasn’t my first run in with the stuff.  Back when I was a reasonably new real estate agent in Gwinnett County, GA, I worked with one of my investor clients on a property that had some pretty significant mold issues.

Real estate prices were crashing around it.  The previous owner had custom built the house, and it was pretty obvious that either they really didn’t have “builder” experience (as opposed to “building” experience), or they ran out of money partway through the project.  The whole “builder v building” experience thing is another post someday, though.

The homes was large and had wonderful high ceilings, a large garage, nice flow patterns and was well sited on the lot.  But, in this luxury home in a subdivision that had homes worth as much as a million dollars, there were no crown mouldings, no granite counters and cabinets that looked like stockers from Home Depot (not knocking HD, but the house deserved at least semi-custom cabinetry).

But the basement was where our story was…  It was nasty.  The home had been unoccupied for at least 9 months and was loaded with mold.  We knew that the HVAC was going to have to be changed… it would be cheaper than cleaning it out.  But the basement was almost beyond salvation.  The solution was to gut it and leave it unfinished.  It had been finished, and was pretty well finished, but was going to have to be “unfinished” in order to remediate the mold problems.  All of the drywall was junk… and we also knew that some of the structural wood would need to be replaced.  Most importantly, we knew that it would need to spend a good long time with proper airflow.

The bank that repossessed the house had DESTROYED their collateral by turning off the power.  Because the HVAC wasn’t running for those 9 months, the bank likely saved about $3000.  But in saving that $3000, the value of the home likely dropped by $200,000.  Not a good trade…  The house should have been able to sell for $500,000, but instead barely managed to bring $300,000.  Of course, the bank wasn’t real bright anyway… they turned down our offer at one point, and then lowered the price to our offer less than two weeks later.

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Change to Local Market Reports

Image representing Zillow as depicted in Crunc...

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As a real estate agent, I run across a lot of cool tools.  Some of them are great for me to better read the markets and help buyers and sellers to accomplish their goals.  Other tools are great for consumers to use while making decisions about buying or selling a home.

I always recommend that both buyers and sellers look at the local market where they are buying or selling.  It has a tremendous bearing on whether prices are on the rise or falling, as well as what the competitive environment might be.  Looking at a solid CMA (Comparative Market Analysis) for the home (that they are selling or looking at buying) is a great start… but it doesn’t give the wide picture.

 

Map of Georgia highlighting Gwinnett County

Image via Wikipedia

Many buyers and sellers turn to AVMs (Automated Valuation Models) to get an idea of the value of a home.  Probably the most well known of these would be the Zillow Zestimate.  I have written about Zillow and their Zestimates a few times.  Zestimates are amazing tools… within the bounds of their limitations.

 

While I would quickly point out that Zestimates are a very limited tool in regards to pegging the value of a particular property, one thing I will point out just as quickly is that the Zestimates have given Zillow an amazing database of historical and current home values.  And while individual Zestimates are seldom right, I feel that their compiled data is quite accurate (1 house is too small a sample size to be accurate, but 10,000 houses can make them very accurate in pegging the market in general).

I will be incorporating Zillow’s Local Area Indexes into my Market Reports moving forward.  I think that they are a valuable tool for you, the consumer, to better assess the market value of homes that you might be considering.  Look for charts like this one for various areas within Gwinnett as part of market reports.

Atlanta Metro Zillow Home Value Index

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