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Category Archives: business of real estate

So, You Have An Accepted Offer… All Is Good, Right?

Saturday, 13 November 2010 08:32
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Clear sailing at sunset
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Not so fast there, Mr and Mrs Homeseller…

A lot of sellers think that the sailing is going to be smooth after they go “Under Contract”.  After all, the hard part is getting an offer, right?

Maybe…  Maybe not…

Actually, I have dealt with a rash of buyers falling out of contract lately.  Inspections haven’t been good to a couple of sellers.  The specific issues aren’t as important as the concept here.  The home isn’t sold until you clear the closing table.

Homes fall out of contract for a variety of reasons.

  • Inspection issues
  • Buyer financial problems
  • Buyer’s remorse
  • Appraisal comes in too low
  • Seller can’t produce title
  • Lender changes standards

And of course there are always strange and unique ways for sales to fail.

What can a seller do?

One of the things I always recommend is for a seller to get an inspection… just like the buyer would.  This gives the seller the opportunity to look at the property through the eyes of a buyer.  And then act on the results.  The BEST time to take care of inspection issues is BEFORE the buyer has them.

While, as a seller, you usually don’t have the ability to derail financial problems on the buyer side, or buyer’s remorse… and certainly not things like changes in lending standards… and even title issues (the closing attorney will find them), YOU CAN often figure out if there will be appraisal issues.

Appraisers are VERY conservative in the current environment.  While I wouldn’t tell every seller to run out and drop another $300 on an appraisal, it wouldn’t be a terrible idea to get your agent to check with one of their lenders to see what the AVMs (Automated Valuation Models) say.  Check Zillow, too.  It isn’t the last word, but it gets you in the realm.  Most homes are fairly easy to value.  There are similar comparables in the same neighborhood, so an appraiser can grab those, make a few adjustments and come out with a value.

But, in addition to your real estate agent’s CMA (Comparable Market Analysis), getting a real appraisal may be a good idea for an unusual home.  Remember, though, appraisers issue an opinion, so while one might assign an agreeable value, another may not.

The best tactics are to go into the process aware of the pitfalls, and do what you can to minimize the poor outcomes.  Keep your property clean and neat and in good repair.  And be flexible with the buyer…  Sometimes the next offer is just as good as the first one, but we often see the best offer is the first one to hit the table.

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Flashback Friday… Tax Credit Gambling

Friday, 12 November 2010 08:24
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This week last year, the biggest news in housing was all about the Tax Credit expansion and extension.  It went from just being for First Time Home Buyers to allowing existing home owners to get a credit also.

Those credits finally expired in April (with closing mostly by June).

Looking back on the market reports for the last year, the effect of the tax credits is pretty obvious.  And I wouldn’t call it all a good thing.  There certainly was an increase in closed sales leading up to the original June deadline.  But, there was a VERY sharp fall off in almost all markets in July through September (and more current data isn’t available yet).  Sales were well below last year for the same periods.  Of course, there was another tax credit at that time, so it may be hard to judge.

The fear for those of us in the real estate business that weren’t thrilled with the credit was that it was “stealing buyers from the future”.  It wasn’t creating new buyers, but just altering the time table.  That theory is borne out by the data we’ve seen so far… sales dumped after the credit expired.

For those that pushed for the credit, there was an expectation that it would “jump-start” the housing market.  It did, but as soon as the cables came off, we saw that the battery was still dead…

Real estate economics - increase in demand in ...
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Personally, I am of the opinion that the way to boost the housing market is with sustainable private sector jobs.  When people aren’t worried about the pay check next month, they are more likely to think about buying a home.

However, right now, interest rates are amazing and home prices are too.  I have been in a few homes in the last couple of weeks with prices that were just shockingly low.  And my mortgage guy is working on a loan for someone WITHOUT perfect credit with a rate in the low 4% range…  Another client (with EXCELLENT credit and a 15 year loan) was in the high 3% range.  (Please keep in mind that there are a LOT of variables that determine your interest rate… talk with a mortgage pro).

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Norcross, GA, Market Report, September 2010

Thursday, 11 November 2010 08:48
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Market stats for Norcross, August, 2010 indicate that there were 375 properties on the market. Overall, there is about a 8.3 month supply of properties. September sales were down v 2009 (43 v 55), but August was way up (52 v 43).  Overall, the market isn’t terrible here, looking back.

In the sub-$200k arena, there were 192 listings, with about 6.2 month supply.  Sales are way down from a year ago in this segment, which is the main driver of sales in this area.  But the segment is still looking pretty strong, despite the weakness in July and September.

Between $200k and $400k, there were 136 listings for sale, and about 12.4 months of supply.  Sales have been down and slowing for the last few months.  But September was up slightly (14 v 12 last year).  With the increase in inventory, I think October might be rough, too.

From $400k to $600k, there were 39 homes on the market. The absorption rate is around 13 months.  Sales have actually been strengthening since March (with a few ups and downs…), but much of the perception is from shrinking inventories.  Actual sales have been mostly decelerating.  I expect to see the numbers move the other way in the next few months.

In the $600k to $800k arena, there were 4 listings on the market.  Inventories have decreased as sales have increased compared to last year.  The absorption rate (three month average) is steady at 12 months of inventory… but with only 4 sales this year, obviously it is easy to bump one way or the other.

The range from $800k to $1m, there were 1 homes listed on the market and no sales… seemingly forever.

Above $1m, there were 3 properties listed.  But because of the smaller numbers of sales, the absorption rate could be significantly impacted by just a couple of sales.  There have been two sales in the last year (Nov 09 and Apr 10).

Norcross, GA is a suburb of Atlanta in Gwinnett County. The population is 2000 was 8,41, 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.

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Wayback Wednesday… Set the Hook…

Wednesday, 10 November 2010 08:04
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Two years ago there were worries among sellers that buyers couldn’t obtain financing.  Those worries are back… but, then as now, money was available.

Of course, in the middle there were issues with getting loans funded.  But now, the loans are available.  Of course the credit restrictions are tighter and there are fewer loans available for those with weak credit.  But, many would be buyers think that getting a loan is all but impossible… that may be what they heard on TV or saw in the paper.

So, a great opportunity for sellers (and their agents) is to make sure that would be buyers KNOW that they can get a loan.  When I take listings, I call up one of my best mortgage guys and have him build out a few financing scenarios.  This lets prospective buyers know up front what their payment options might be… and if the property might be within their budget.

When I am working with buyers, if they haven’t already, I get them to get a pre-approval.  This allows them to deal with issues with which they might not have been aware, PRIOR to putting an offer in on a property.

Here are a couple of links for Ken Cook, one of my mortgage guys.  He has access to a LOT of programs for buyers (there is audio on this link) that might be on the edge, as well as tools to help those that might have credit challenges to overcome.

Let’s not forget the post from two years ago…

When selecting a listing agent, it helps to have one that also works with buyers.  A balanced agent has the resources and relationships to make it easier for a buyer to get your home.

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Buford, GA, Market Report, September 2010

Tuesday, 09 November 2010 08:34
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Market stats for Buford, GA, September, 2010 indicate that there were 612 properties on the market. Overall, there was about an 14.3 month supply of properties.  Sales were down radically in July (19 v 71 for 2009), but August was back in the realm (57 v 61 for 2009).  September was slightly below last year (52 v 60 for 2009).  But the magic has been a little underwhelming since June.

In the sub-$200k arena, there were 316 listings, with a 11.9 month supply.  Sales for July were down by 70%.  There was actually one extra sale for August, but two less in September.  May was the best absorption rate of the year, and it has been going downhill ever since.

Between $200k and $400k, there were 233 listings for sale, and about  17.1 months of supply.  Again, July was the dog, with sales down by 75%.  August and September were also slightly down.  This is one of the weakest segments in the county (excluding the very high end of the market…).

From $400k to $600k, there were 39 homes on the market. The absorption rate is around 19.5 months.  This shouldn’t be acting like a high-end luxury segment, but it is.  There have been 6 sales in the last 3 months.  When the market is rolling, there should be 5-7 sales a month during this part of the year.

In the $600k to $800k arena, there were 8 listings.  Sales in this range are pretty sporadic, but steady when looking at the long-term.  The drop in inventory over the last few months from 14 homes to11 homes have made things look less slow… but there have been 2 sales in this segment since November… but one was in September.

The range from $800k to $1m, there were 3 homes listed. And with only 2 sales in the last year (Nov. 09 and Feb 10), obviously  trends are hardly definable.  At least listings are down by 50% compared to last month.

Above $1m, there were 13 properties listed.  The last sale in the segment was in April… of 2009… still…

Buford, GA is a suburb of Atlanta in Gwinnett and Hall Counties. The population is 2000 was 10,668, but that only included the area inside the city limits, and it had seen tremendous growth since that census.  Buford is home to Lake Lanier, one of Georgia’s premiere recreational areas, and Lake Lanier Islands.  Recently, the City of Buford has revamped their old town. It is also home to Buford (Buford City Schools aren’t a part of Gwinnett County Schools), Mill Creek, Mountain View and Lanier High School (Lanier will open for the 2010-11 school year).

I have a page dedicated to Buford Market Data.

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