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Category Archives: buyers

How to Get THE Best Deal…

Monday, 11 June 2012 08:00
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Every buyer in the market has one goal in mind… get the best deal possible on the exact house that they want.  Of course, there are a few problems… but like most problems, there ARE solutions.

exterior

exterior (Photo credit: lane.bailey)

The first problem is understanding value…  To begin with, the quality of the deal is NOT measured by sale price v listing price.  The list price and the value are NOT directly related.  You might actually have a better deal in your hand at full price… or even above… with one property, while another might be over-priced at half of the list price.  Compare the price you are getting to the value of the comps.  Don’t forget to subtract (or add) for needed improvements, updates and other differences.  That is what real estate agents do when they create a Comparative Market Analysis.

The second problem is being realistic…  Sure, there is a chance that you might be able to get a property that has a realistic worth of twice what you will pay for it, but don’t expect it.  Especially if you are looking for a property YOU are going to live in.  If you are looking for a rental/investment property, then you don’t need to worry as much about the particulars of living in the property… only how it will work financially.

Third, learn the real market…  You need to have a heart to heart with your real estate agent.  You need to talk openly about the area values and trends.  Not the national values and trends, not the state… not even the city or ZIP code, but the area… subdivision or neighborhood, as well as the price range.  In the market areas I monitor, I see instances where the direction of the market in one price range is opposite that of the adjacent price range.  The same thing happens with locales.

English: To Let in Dover As the estate agent w...

English: To Let in Dover As the estate agent would say , 'A property with potential'. (Photo credit: Wikipedia)

The fourth problem is REAL big.  Don’t “just toss something out there as a starting point”.  This one is huge.  I see it all of the time.  Buyers toss out an incredibly low offer “to get the ball rolling”.  BUT, when working with an actual human seller, it often only serves to anger them and get them to dig in their heels.  When dealing with an institutional seller, it makes them think the buyer isn’t serious.  In either case, what ends up happening is that the chance of a deal gets slimmer… and if there is a deal between the buyer and seller, it might end up not being as good of a deal as if the buyer had made a higher initial offer.  (BTW Sellers… this one works both ways… pricing too high often leads to a lower selling price in the end).

Finally…  Be READY to act when you find what you want.  It isn’t a deal if you leave it laying on the side of the road.

If YOU are ready, give me a call.  Lane 678-200-5895…

 

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Wayback Wednesday… Incrementalism Revisited

Wednesday, 06 June 2012 08:00
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I am a gearhead.  And the last vehicle that I really built up was a Jeep Wrangler.  A friend of mine and I coined a term (at least WE think we coined it).

Incrementalism

English: A Jeep Wrangler TJ with a 2 inch susp...

English: A Jeep Wrangler TJ with a 2 inch suspension lift, 1 inch body lift, 12,000 pound winch and 33 inch tires offroading in the snow in Alaska. (Photo credit: Wikipedia)

For us, we were talking about building Jeeps.  And the steps… and the changes along the way.  On MY Jeep journey, I went from 29″ tires and a stock suspension to a 2″ lift and a 31″ mud tires.  Then there was a 3″ lift.  Then we tweaked it to 4″ and put on some 33″ tires.  Then we got wild and built a new suspension that was 6″ over stock… slapped on some 34″ tires… then 35″ tires (there was room, why not?).

There were other things aside from the height… in fact, every part of that Jeep went through multiple incarnations before it finally went away (the only time there are done is when they are gone).

The point about incrementalism is that the steps just follow each other… whether we mean them to or not.  When I started, I didn’t intend to end up with a big Jeep on 35s.  Furthermore… had that been my intention, I should have just done that the first time.  I spent a LOT of money on the intermediate steps.

But it just kept creeping along… out of control.

I see it with home buyers, too…

Of course, it is a little different.  But what happens is that they go from having a $175k budget to liking a house priced at $200k… they might be able to negotiate it down and it isn’t that much more, right?  Then we are looking at homes that are $210k… then $225k… $250k.  Now we are looking at a house that is very unlikely to get negotiated back to their range, and the payments would be significantly higher.

Some buyers might be able to swing it… others, not so much.  But the point is that the change is gradual.  Kind of like the boiling frog story.

Be careful with incrementalism.  It can bite.  Here is my original post about incrementalism, from June 7th, 2008.

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Norcross, GA, Market Report, April 2012

Monday, 04 June 2012 08:00
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This map shows the incorporated and unincorpor...

Image via Wikipedia

Market stats for Norcross GA, April, 2012 indicate that there were 257 properties on the market.  Overall, there is about a 5.2 month supply of properties. The last year has been fairy strong… it hasn’t slowed much, if at all.  April saw 50 sales, slightly over the 49 for April, 2011, and slightly below the 51 for March.

In the sub-$200k arena, there were 136 listings, with about 3.6 month supply.  Sales are well off from last month and from a year ago in this segment, which is the main driver of sales in this area (37 v 44 in Apr11 & 36 Mar12).  For the last seven months, 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 just over a 3½ month A/R, this is VERY strong for sellers.

Between $200k and $400k, there were 91 listings for sale, and about 12.4 months of supply.  This segment had been weakening for the last few months.  But, the 7 sales were pretty good compared to last year’s 3 sales, but got kicked by last month’s 11 sales.  Even though it isn’t gangbusters, it is certainly better than the 28 months of inventory we had in December, 2010.  We really need a strong May for this segment to look good.

From $400k to $600k, there were 25 homes on the market.  The Absorption Rate is around 8.3 months.  The AR had been fairly steady for months, then shot WAY up in January.  April’s 5 sales were up from the 3 the month before and up from last year’s 2 sales.  This had actually been a pretty good area for homes in this price range to sell…  The good news is that it would only take a few sales to put it back in a balanced range.

In the $600k to $800k arena, there were 3 listings on the market.  Inventories tripled compared to last year.  The Absorption Rate is at 4.5 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.  February had 1 sale.  The was 1 sale for Apr12, 0 for Apr11.

The range from $800k to $1m, there was 1 home listed on the market and 1 sale in March (0 sales for April).  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.

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Atlanta Metro Zillow Home Value Index

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Duluth, GA, Market Report, April 2012

Friday, 01 June 2012 08:00
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This map shows the incorporated and unincorpor...

Image via Wikipedia

Preliminary stats for Duluth, April, 2012 indicated that there were 434 properties on the market.  Overall, there is about an 6.0 month supply of properties.  Sales in March were 77, up from 70 a year earlier.  Sales were up slightly compared to the prior month (75).  Duluth had been slightly leading Gwinnett County as a whole, but not so much over the last four months.

In the Under $200k arena, there were 172 listings in Duluth, GA, with about a 3.8 month supply.  The Absorption Rate for October, was 3.55.  Sales in April were way up this year v last year (47 v 37), but only slightly up compared to last month (44).  The Absorption Rate (A/R) is a bit better than most of the county…

Between $200k and $400k, there are 110 listings for sale, and about 7.7 months of supply.  Absorption rates have similarly risen, dropped and then risen again, but they are moving the right way now.  Sales were down compared to April, 2011 (16 v 17) and compared to last month (19).  Duluth is a market that favors luxury, but this segment is not doing that well… although it is one of the few to beat last year.

From $400k to $600k, there were 47 homes on the market.  The Absorption Rate was around 7.1 months.  March brought in 6 sales.  There was 1 last year and 6 last month.  As with much of the county, the recovery that seems to be solidifying at the lower end of the price strata is much weaker here.  Duluth is a luxury centric market, and it is doing better than the rest of Gwinnett County, GA, but the segment is still kind of weak, but it’s better than last month.

In the $600k to $800k arena, there were 39 listings, with about 13.0 months of supply.  Sales were 5 for April… 8 for April last year.  But, month to month sales were down (5 v 3).  Last month was ok, but 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 looks better than the rest of the County at this price level.

In Duluth, GA, from $800k to $1m, there were 24 homes listed and approximately 14.4 months of inventory on the market.  The 1 sale recorded for April was down from last year’s 3 and from the 2 from last month.  Sales haven’t been moving much for the last couple of months, but 5 sales for the last 3 months was killed by the same 3 months from last year (11 sales).  It isn’t as weak as that suggests… at least I hope it isn’t. And four month ago the A/R was 69 months.

Above $1m, there were 42 properties listed.  The current absorption rate indicated about 31.5 months of inventory.  A couple of sales at this level could have a large impact on the Absorption Rates.  There were 4 sales in the Feb-Apr period this year, and 7 for the same time last year.  Fall was weak last year, but we should be posting four sales a month here instead of the 2 we got.

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.

Atlanta Metro Zillow Home Value Index

I have a page dedicated to Duluth Market Information.

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A Perfect Storm for “Move-Up Buyers”?

Wednesday, 30 May 2012 08:00
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Interest rates are at historic lows… leading to incredible affordability.

Picture of the

Picture of the "Gingerbread House" in Essex, Connecticut, USA (Photo credit: Wikipedia)

Entry level inventories are at historic lows… leading to some price strength at base price levels.

Still some weakness at some “move-up” price levels… leading to great deals on homes at those price levels.

For a while now, many of us in the real estate world have been saying two things.  First, until jobs come back and people feel secure, real estate would struggle.  Second, the market wouldn’t come back until “move-up” buyers were in a position to make a move.

I don’t know that the majority of consumers are “comfortable” with their job situation, but when they are, the deals will start to dry up.  Those that get off the fence early will have the best choice of bargains… and inventories are actually dropping.

Move-up buyers had been somewhat locked into their homes with crappy resale values.  They couldn’t afford to move out and be in a position to put anything down on another house.  But now that there is a bit of stability in in the entry level, more of those buyers ARE able to sell and move up the market.

 

If you want to see if you are in a position to trade up, give me a call.  Lane Bailey 678-200-5895.

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