Author Archives: Lane Bailey

What a Seller Sees in YOUR Offer…

Friday, 12 July 2013 09:41

Written by Lane Bailey

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Last week I outlined 5 things you might be able to do to make YOUR offer the winner in today’s real estate market. Now we are going to look at offers from the perspective of a seller…

What is important to a Seller?

English: “The Flower Seller,” a portrait by photographer Joseph Knaffl, taken circa 1916 at his Knoxville, Tennessee studio. (Photo credit: Wikipedia)

To begin with, keep in mind that each seller is a unique individual (or pair of unique individuals… or company with unique individuals overseeing sales of assets/homes). What tops the charts for one seller might hardly merit a mention with another.

Timing. This is huge for some sellers. As mentioned before, the longer the time between contract and closing, the more than can go wrong. And what sellers often worry about “going wrong” is that the buyer will simply back out. But there are also considerations that revolve around the cost of holding the house, like mortgage payments, utilities and maintenance. The seller has likely “disengaged” from this home and invested themselves in another. On the flip side, some sellers might need some time here because they still have to find a house. Offering a fast close, but stating that you are flexible and able to meet the seller’s needs may be a deal-maker.
Financing. First, there is NO excuse to not have a good pre-approval letter. OK, the one acceptable excuse is if you have a “proof of funds” letter and you’re paying cash. If you have the money for a larger down-payment, that might be the deal-maker for you. And at least explore alternative options to FHA and VA financing. FHA or VA may be your best bet… but KNOW they are instead of just assuming. And if you have the liquid cash to make the purchase, talk with your mortgage professional about the option of purchasing with cash and then doing a cash out refi.
Photo taken in Bodie, California. See file name. (Photo credit: Wikipedia)

Inspections. I expect that any of my buyers will want an inspection. However, if you REALLY know what you are doing, buying a house “as-is” instead of subject to an inspection or “due diligence” period can really set the mood for a better deal with the seller. There are dangers, but they might be offset by the savings.
Earnest Money. I almost always recommend that a buyer offer up 1% for earnest money ($1000 minimum). Offering up less just doesn’t seem as serious to me. While seldom do buyers lose it unless they do something egregious, it does look better to sellers.
Price. If you are deficient in one area, you may be able to make up for it in another. I know that isn’t the goal, but it is a reality. You aren’t going to get the best price, while at the same time getting the seller to accept a long closing, riskier lower down payment and loan type, long due diligence period and other non-monetary concessions.

So, let’s put on the Seller shoes…

Your house is on the market, listed at $250k. Sales have been moving along well in the neighborhood, and like almost all sellers, you think your house is “better than average”. Here are three offers to look at. Which one do you think is going to be the winner?

$230k price. No closing costs. 21 day close. $2,300 in earnest money. No inspection.
$250k price. $7,500 in closing costs (3%). 45 day close. $2,500 in earnest money. 10 day due diligence period.
$260k price. $10,400 in closing costs (4%). 60 day close. $1,000 in earnest money. 7 day due diligence period.

I’d love to get some comments as to which offer YOU like most and why.

5 steps to get YOUR offer to be the one that WINS

Wednesday, 10 July 2013 08:06

Written by Lane Bailey

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Be the winner…

A couple of years ago all of the strategies revolved around finding ways to get the lowest price out of a seller. Then, it morphed to finding the line where the bank would sell. Over the last few months, the next evolution has come…

Winning the bid.

Often we see good houses come on the market and go under contract in less than a day. These homes are often pulling in multiple offers, some considerably above the asking price. Yet, many buyers are still convinced that we are in a market that favors them. We aren’t… except for a few less desirable neighborhoods or some very high price points.

master_bedroom_2 (Photo credit: lane.bailey)

In order to actually buy a house, instead of just making offers, there are a few steps you can follow to “win the bid”.

Get a serious pre-approval. If your mortgage person isn’t pulling your credit and spending some time getting it, it probably isn’t worth getting. Sellers see an offer with a pre-approval as being MUCH more serious than one without.
Have a down payment. The larger the down payment, the more stable to buyer. Of course, this is going to vary depending on the buyer segment (1st time buyers usually don’t have 20% to put down… I understand that).
Cash is King and FHA is the Stable Boy. FHA loans are the toughest on sellers. Not only does the property need to appraise on value, but it has to meet specific criteria for condition. Most houses meet everything, but an old roof or a missing handrail can turn into anything from a headache to a nightmare for the seller (and the buyer). A cash sale, on the other hand, is pretty assured. Conventional loans fall somewhere in the middle… and VA are more rare, but slightly tougher than FHA on the seller.
Be ready to close ASAP. The longer the seller has to wait between an agreement and a closing date, the more that can go wrong and the more expenses that can get racked up. Aside from the seller’s house payments and utilities, there is lawn upkeep and maintenance on the house. Not only that, but if you are waiting 2 or 3 or 4 months to close, the seller may think you could develop a case of “cold feet” and change your mind.
Price heals all. We used to tell this to sellers… poor condition can be corrected with price. Much to their dismay, that “correction” was usually an over-correction. Now, the shoe is on the other foot. Buyers that have issues with some of the above conditions can “heal” their offers with price. But that “healing” is likely to involve a larger bump in the offer than one might think… Of course, in the end, it comes down to the seller and what is most important to them.

In next week’s post, we’ll look at 3 sample offers and compare them…

Lilburn, GA Market Report, May, 2013

Monday, 08 July 2013 08:38

Written by Lane Bailey

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Market stats for Lilburn, GA, May, 2013, indicate that there were 194 properties on the market, up 15 from last month. Overall, there was about an 3.4 month supply of properties and 61 properties that closed (sold) in May. It was a slight decrease from last year’s sales (68) and from April’s (50 sales). The Absorption Rate notched down slightly. Lilburn had been among the weakest of Gwinnett County, GA, cities I track. But, at 3.44 months of inventory, it is strong now. Six months is considered balanced, lower is a seller’s market and higher is a buyer’s market.

In the sub-$200k arena, there were 126 listings, with about an 2.8 month supply with 51 sales. This represents most of the sales in the market area. Sales were up from last month (38), and down from last year (59). While the Absorption Rate isn’t as low as many other areas, sales are strong, and I’m think we are in a comeback for Lilburn. At 2.84 months of inventory, with a few months of stats getting better, we’re there.

Between $200k and $400k, there are 57 listings for sale, and about 4.9 months of supply. This segment had been quite weak for months, and had stalled a little, but came back with a vengeance… only to stall a bit again. There were 9 sales compared to 12 last month and 8 last year. Lilburn has never been seen as a luxury market. The decrease in listings has really helped. I’m still not as confident about this portion of the Lilburn market coming back quite yet… It is strengthening, just not as consistently as I’d like. April was strong… We are in Seller’s Market territory.

From $400k to $600k, there are just 9 homes on the market. The absorption rate is 27 months. There was 1 sale in May. Poised for a comeback, but an increase in listings and weak sales don’t give the right ingredients for that to happen. To start with, we can’t have 7 month blank spots in sales (none from Aug11 through Mar12). If we can keep up a sale each month on average, this one will be back.

From $600k to $800k, $800k to $1M and Above $1M, there are 2 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 in 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

Atlanta Metro Home Values – Interactive chart

I have a page dedicated to Lilburn Market Data.

Norcross, GA, Market Report, May 2013

Friday, 05 July 2013 09:10

Written by Lane Bailey

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Market stats for Norcross GA, May, 2013 indicate that there were 123 properties on the market, down 4 from last month. Overall, there is about a 2.7 month supply of properties. The last year has been fairy strong… it hasn’t slowed much, if at all. May saw 48 sales, up a little from the 44 last month, but down compared to the 57 for May last year.

In the sub-$200k arena, there were 59 listings, with about 2.3 month supply. Sales are up a little from last month (25) and way down from a year ago in this segment, which is the main driver of sales in this area (27 v 37 – May13 v May12). For the last two years, the AR has been tilted in favor of sellers. This still looks like one of the strongest price/area segment in Gwinnett County, GA. At a 2.30 month A/R, this is pretty strong for sellers.

Between $200k and $400k, there were 43 listings for sale, and about 3.2 months of supply. This segment had been weakening for the last few months. But, the 16 sales were flat from last year’s 16 sales, but up from last month’s 10 sales. Even though it isn’t as gangbusters as some of the other areas, it is certainly better than the 28 months of inventory we had in December, 2010. I think this is starting to look like a pretty settled market here…

From $400k to $600k, there were 18 homes on the market. The Absorption Rate is around 3.2 months. The AR had been fairly steady all summer, then shot WAY up in September/October. May’s 5 sales were down from the 8 last month and up from last year’s 3 sales. This had actually been a pretty good area for homes in this price range to sell… for the last few months.

In the $600k to $800k arena, there were 2 listings on the market. The Absorption Rate is at 6.0 months of inventory… but with only 4 sales in 2010 and 4 sales in 2011, obviously it is easy to bump one way or the other. One reason for the strong looking Absorption Rate last month was that there were so few listings. The was 0 sales for May13, 1 for Apr13 and 0 for May12.

The range from $800k to $1m, there were 0 homes listed on the market and 0 sales in May. There were no sales last year. Unfortunately there isn’t enough data for a good A/R number.

Above $1m, there was 1 property listed. But because of the smaller numbers of sales, the absorption rate could be significantly impacted by just a couple of sales. There is simply not enough activity for an A/R figure. The last sale was January 2011.

Norcross, GA is a suburb of Atlanta in Gwinnett County. The population is 2000 was 8,410 but that only included the area inside the city limits, and it has seen tremendous growth since that census. The City of Norcross revamped their old town a long time ago, and it has served as a model for other towns in the area. It is also home to Meadow Creek and Norcross High Schools. One of the things that Norcross is known for locally is the beautiful older homes in the downtown area. They have maintained their historic flair quite successfully.

I have a page dedicated to Norcross Market Data.

Atlanta Metro Zillow Home Value Index

Atlanta Metro Home Values – Interactive chart

Duluth, GA, Market Report, May 2013

Monday, 01 July 2013 09:51

Written by Lane Bailey

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This map shows the incorporated and unincorpor...

Image via Wikipedia

Market stats for Duluth, May, 2013 indicated that there were 276 properties on the market, down 12 from last month. Overall, there was about a 3.8 month supply of properties. Sales in May were 80, down from 91 a year earlier. Sales were up compared to the last month (62). Duluth had been slightly leading Gwinnett County as a whole, but not so much over the last few months. It is still in the Seller’s Market zone.

In the Under $200k arena, there were 81 listings in Duluth, GA, with about a 2.6 month supply. The Absorption Rate for last May was 3.2. Sales were WAY down this year v last year (31 v 50), and up compared to last month (26). The Absorption Rate (A/R) is a bit better than much of the county…

Between $200k and $400k, there are 83 listings for sale, and about 3.6 months of supply. Absorption rates have similarly risen, dropped and then risen again. Sales were up compared to May, 2012 (25 v 20) and compared to last month (18). Duluth is a market that favors luxury, but this segment is not doing as well as I would have expected… but it might be constrained somewhat due to low inventories. It is still a Seller’s Market.

From $400k to $600k, there were 25 homes on the market. The Absorption Rate was around 3.3 months. May brought in 11 sales. There were 8 last year and 9 last month. Unlike many of the market areas, Duluth is a luxury centric market, and it is doing better than the rest of Gwinnett County, GA, especially at this price level. This month saw a HUGE drop in the A/R. We’ve spent the last few months wandering around in Buyer’s Market territory. However, because of the drop in listings and increase in sales, this is ostensibly the best Seller’s Market in the county.

In the $600k to $800k arena, there were 22 listings, with about 3.5 months of supply. Sales were 5 for May… 2 for last year. And month to month sales were flat (5 v 5). I would like to see three consecutive months with strong sales, and haven’t seen that for a while. Since Duluth does favor luxury sales, it has been looking better than the much of the rest of the County at this price level. That A/R is great, and getting better.

In Duluth, GA, from $800k to $1m, there were 22 homes listed and approximately 16.5 months of inventory on the market. The 0 sales for May were worse than the 6 last year and the 3 last month. Sales haven’t been moving much for the last couple of months, but 4 sales for the last 3 months were well under the same 3 months from last year (9 sales).

Above $1m, there were 43 properties listed. The current absorption rate indicated about 11.7 months of inventory. A couple of sales at this level could have a large impact on the Absorption Rates. There were 11 sales in the Mar-May period this year, and 8 for the same time last year. We should be posting four sales a month here regularly… and we fell short the last few months but barely had a start with it this month with 8 sales. There were 5 sales last year and there was 1 last month.

Duluth, GA is a suburb of Atlanta, in the heart of Gwinnett County. It actually straddles the county line and has unincorporated portions in South Forsyth County. The population of Duluth is estimated as about 26,000 people as of 2008, but this doesn’t include unincorporated areas outside the city limits, but with a Duluth mailing address. It is also home to Sugarloaf Country Club, a PGA stop until recently. Forbes Magazine rated Duluth 26th in their nationwide survey of the best places to move, and it is one of the wealthiest parts of Georgia. It is also home to the Arena at Gwinnett Center (Home of the ECHL Gwinnett Gladiators) and the former Atlanta Thrashers practice facility (the Duluth Ice Forum). There is a LONG list of celebrities and athletes that call Duluth home, largely because of the country clubs and proximity to Atlanta.