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Author Archives: Lane Bailey

A Short Round-Up… Articles of Interest.

Real Estate = Big Money

Image by thinkpanama via Flickr

There are a lot of blog posts and articles over the course of an average week… and you can’t get to them all.  So, here are some home-related links that might be of interest.

Pruning Your Landscaping Costs

Cash Buyers Getting the Sweetest Deals?

“Shadow Inventory” Fading

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76 Groovy Cars on eBay… Part 3, Alfa-Romeo

DSCN8300

Image by lane.bailey via Flickr

I have a soft spot in my head for Alfas.  I love the way they look… except the Spider, oddly enough.  For most people, when they think of an Alfa Romeo, the car that comes to mind is the Spider.  For me, it is the GTV series.

When I hit eBay to find an Alfa (Always Looking For Another), the car that popped right off the screen for me was this little 1966 Alfa Romeo 2600 Sprint Coupe.  The engine and transmission are out, but the interior has been redone and the body appears pretty solid.

The best part is that you probably won’t pull up next to another at a traffic light, unless you happen to be at an Alfa Owner’s Convention.

Aside from styling, it seems that the Italians are also pretty good at making engines with a great sound… and I suspect that with a little tuning and the right exhaust that the pipes on this little car could sound like ripping burlap.  Combine that with crisp shifting, tight handling and a nimble car and it would be a fun little toy to toss around in the mountains.

 

Alfa Romeo 2600 Sprint

This isn't it either... but pretty similar. Image via Wikipedia

I am going to say one thing, though… a VW GTi could probably whack in on a track… in fact, a Ford Taurus might be able to give it a good smack-down.  That isn’t to put the car down, it is just to say that technology has moved on… and the VW (not to mention the Taurus) will never be as pretty or have the same kind of sound as this little Alfa.

 

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Photo Friday… Hop’s Place…

Hop's has been around since the 1940s...

There is a fair chance that when you run into me, I’ll be wearing a “Hop’s Place” T-shirt.  I have a BUNCH of them.  My Step-Father has worked there for a long time, and gets me a shirt or two each year.  They have really cool street rods on the back, advertising their paint products.

Obviously, I’m not advocating everyone in Gwinnett County, GA run up to Hampton, VA to get some car parts…

But, Hop’s is a symbol of a dying breed, the independent auto parts store.  There just aren’t many left.  They are being pushed out by the chains even faster than the “Mom & Pop” retailers are being killed off by WalMart.

Hop died a few years ago.  He was well into his 80s.  When I was in high school… which is NOT recent… I used to buy parts from him for my cars.  He was “Old Man Hop” back then.  One of my Car Guy mentors knew him pretty well… and he was “Old Man Hop” to him, too.

There is nothing wrong with Pep Buy, AutoZone, Advance and the like.  I have done business with all of them.  But, I still like dropping into a place like Hop’s.  The guys on the counter have been there for 20 years… and might still be there 20 years from now.  Assuming that the shop is still there.

And I wouldn’t be shocked if there were some vintage speed parts lost in the backroom somewhere…

Lawrenceville, GA Market Report, May 2011

This map shows the incorporated and unincorpor...

Image via Wikipedia

Market stats for Lawrenceville, May, 2011, indicate that there are 1573 properties on the market. Overall, there is about a 6.5 month supply of properties. In 2010, sales for May were at 215, so 262 sales is a pretty good increase, year over year.  Coupled with the slight decrease in inventory, things are looking up.  Normally at this time of year we should be seeing healthy increases in month to month sales.

For Lawrenceville, GA, Homes Under $200k, there are 1340 listings, with about an 6 month supply of homes.  Sales were way up from May 2010 (246 v 194).  This segment is easily the lion’s share of sales for the area.  Last month this was just a mid-pack price/area segment in Gwinnett County, but this month it is one of the strongest.  The big drop in Absorption Rate (AR) is due to strong sales, coupled with slightly lower inventories.

Between $200k and $400k, there are 198 listings for sale, and about 11.4 months of supply.  Oddly, this was one of the weakest segments in the county.  The 16 sales for May, 2011 were down from the 20 from May last year.  Sales should have been closer to 30 units for May, and I’d like to see over 30 for June.

From $400k to $600k, there are 28 homes on the market. The absorption rate is around 42 months.  However, with the level of sales in this segment, a couple of sales added or subtracted can have a HUGE impact.  Case in point is that we went from a 12 month AR to a 42 month AR because of a lack of sales for the last 2 months.  Just 5 months ago there was 87 months of inventory, though…

In the $600k to $800k arena, there are 4 listings, with about 12 months of supply. As with the next lower priced segment, a couple of sales makes a big difference and there was only 1 sale in the last three months.  I was looking for 2 sales in May… and there were none.  It has been quite a while since sales were strong here… the only saving grace is low inventory.

Between $800k and $1M, and Above $1M there are 3 homes listed (combined) and not enough sales data to give an accurate absorption rate. There has only been one sale in this range in the last 2 years (Aug, 2010), according to FMLS.

Lawrenceville is in Gwinnett County, GA, just outside of Atlanta. As of the 2000 Census, there were 22,937 people in Lawrenceville, but that is only including people in the city limits, and there has been a lot of growth since 2000 in Gwinnett County (2008 estimates from the Census Bureau peg population around 29,000). It was incorporated in 1821. Lawrenceville is home to Central Gwinnett High School, and also has students that the Mountain View and Archer clusters. It is also home to Gwinnett Technical College and Georgia Gwinnett College. Another recent addition to Lawrenceville is that it is home to the Gwinnett Braves, playing at the Gwinnett Stadium on GA20 between I-85 and GA316. Possibly the most famous resident of Lawrenceville was Oliver Hardy. As a small boy he lived in Lawrenceville with his parents for a short time. Lawrenceville was also home to Junior Samples. Some of its other residents included Jeff Francouer, Brian McCann and Jennifer Ferrin.

I have a page dedicated to Lawrenceville Market Data.

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Wayback Wednesday… How Much Earnest Money?

Blog entry

Image via Wikipedia

Two years ago I thought it would be good to post a little about Earnest Money… how much is enough, and what is it for?  It is actually a pretty common question, especially among first time home buyers.  But, even those that have been through the process a few times still often have a few questions, both buyers and sellers.

What is Earnest Money…

Basically, it is like a little insurance policy that the buyers are serious.  Buyers offer Earnest Money (EM) in order to show that they are serious (earnest) about the offer they are submitting.  In offering the EM, they are saying “we intend to follow through on this offer”.  The EM is credited to the buyer at the closing table, either toward their down payment or their closing costs.  If the sale doesn’t happen, and the cause of the failure is the buyer, the EM usually serves as “Liquidated Damages“.  In effect, it compensates the seller for the extra costs of removing their property from the market.

How much Earnest Money is enough?

 

An icon from the Crystal icon theme.

Image via Wikipedia

A good rule of thumb is 1% of the purchase price.  In most cases, the buyer will need to have a minimum of 3.5% at the closing table, so having less than a third of that wrapped up with the contract shouldn’t seem onerous.  In some institutional sales (generally foreclosures), the seller requires Cash Buyers to put up 10%.  Their thought is that if there is enough money in the bank to buy the property, coming up with a tenth of that shouldn’t be a problem.

 

Sellers always want to see more EM…  Buyers usually want to use less.

What happens to the Earnest Money?

If the sale closes, the EM is credited to the buyer at the closing table.  It goes toward closing costs, down payment or as a credit against the price (in any winning combination).  In that regard, more EM isn’t a hardship for buyers… up to a point.

If the sale doesn’t close, then there are more possibilities… all are ruled by the purchase contract.

  • If the property has an inspection issue, generally the EM is refunded to the buyer.
  • If the buyer is unable to qualify for financing, the contract will state the time-lines that will determine if the buyer or seller gets the EM.
  • If the buyer backs from the sale outside of the contract’s time-lines, the seller generally gets the EM.
  • If the seller misrepresents the property, even after the Due Diligence period, the buyer may have a claim on the EM.

A couple of final thoughts…

There ARE costs for a seller in removing a property from the market.  Seldom are they direct, though.  But, by removing a property from the market for a sale that ultimately fails, the seller may lose out on a buyer that WOULD be able to fulfill the purchase contract.  And, in many cases, the property may be stigmatized from going under contract and then coming back on the market… other buyers may assume that the reason the property was off the market was that there were inspection issues rather than financing issues on the part of the buyer.

As a bottom line, Earnest Money is an important, but often overlooked part of the initial offer, negotiations and the contract to purchase a home.

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