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Category Archives: foreclosure

So, you want a Foreclosure…

Wednesday, 26 June 2013 08:58
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I have been getting a lot of calls lately asking about foreclosures.

English:

English: (Photo credit: Wikipedia)

Almost word for word, “I’m thinking of buying a foreclosure… what do you have for me?”

My reply is generally along the lines of “where were you last year… or the year before… or the year before?”

A year ago I was saying that the market was poised to turn.  And that when it DID turn, it would be fast.  It would be REALLY fast.  Here we are.  There is little inventory.  Prices have shot up.  Foreclosures are few and far between… hardly the controlling factor they were not that long ago.  Short sales are no longer prevalent, although there are some hanging around.

A couple of years ago, you could make an offer on a foreclosed property… below the asking price… and have it be THE offer they had to look at.  You were betting against the table, but only the table.  A bit over a year ago, that started to change.  Multiple offers started happening on the cream of the foreclosure crop.  No, you were betting against the table and several other players… but usually the list price could win the day.  In fact, it would usually more than win the day.  We were begging buyers to get back in the market.

Now, bidding full price on a freshly listed property isn’t even close to a guarantee.  In fact, some fo the nicer ones can go for considerably over the list.  And the list isn’t all that hot to begin with.

All is not lost…  There are still deals in some pockets.  But the pockets are moving and the deals are fleeting.  Right now, if you want to find a reasonable deal, you have to be ready to look FAST.  And you have to be ready to make an offer just as quickly.  You better have your financing in order as well.

Of course, you can wait until things calm down… but that might mean that a similar house costs 10-20% more.  Interest rates might not be as nice, either.

If you are ready to make a move, give me a call.

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Foreclosure Wave Broken on the Shore?

Wednesday, 05 June 2013 16:19
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For years I have been hearing (and talking about it here) the “wave of foreclosures that are just around the corner”.  For years the wave has been just around the corner, over the horizon and getting ready to hit.  We did have a tsunami of foreclosures, and Gwinnett County has been one of the worst hit in Georgia, but the second wave has been a phantom…

Foreclosures fall behind retail sales in Gwinnett

Foreclosures fall behind retail sales in Gwinnett

And I am about ready to say that it will remain a phantom.  That isn’t to say that there won’t be more, but I would like to lay to rest the idea that the banks have a pile of foreclosures that they are “about the release” or that “will hit the streets in the next few months”.

If there was a time, it would be NOW.  There is little inventory, prices are starting to strengthen… the time would be ripe.

Instead… we see the first chart.

The green line represents wholesale (foreclosures, short sales, pre-foreclosure sales, etc.).  It has dropped over the last few months… as retail (that would be regular sellers) have surged.  One not to include here… the red line (new homes) only represents a portion of new home sales.  Builders only report “inventory sales” to the MLS.  And many of their sales are “pre-sales” (houses purchased before they are built).  Some builders are selling 3 or 4 pre-sales for each inventory home.  Expect that the red line might actually be 50% higher than it shows…

Prices rebounding in Gwinnett County, GA

Prices rebounding in Gwinnett County, GA

To be sure, everything isn’t all wonderful… but it is a load better than a year ago.  Right now, actual people that want (or need) to sell their homes have a shot.

The next issue that will start to right itself over the next couple of years regards the people that have been through this wave of foreclosures…

It takes most people 3 years to recover from a foreclosure, short sale, pre-foreclosure, deed-in-lieu or other mortgage shortfall.  So, over the last three years, as Gwinnett County has been ravaged by foreclosures and similar issues, thousands of homeowners have been locked out of the market… instead, largely joining the ranks of renters.

That won’t last…

And as they come back into the home market, with the reduced inventories we’re seeing, expect to see continued price strength.

Like I said, it isn’t all wonderful, but we are looking at the beginnings of a Gwinnett recovery.  If it follows the Forsyth recovery (they weren’t hit as hard) you can expect to see the market heat up quite a bit through the end of the year as the pent-up demand is released.

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Options Instead of Foreclosure…

Wednesday, 22 May 2013 21:39
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Yes, there are still buyers out there underwater.  Things are getting better, but just because the flood waters have started to recede doesn’t mean that all of the land is out of the water.

English: Sign of the times - Foreclosure

English: Sign of the times – Foreclosure (Photo credit: Wikipedia)

Here are the choices that “under water homeowners” face if they need to sell… or just really want to sell.

  • Short Sale – These have gotten much better over the last couple of years, and especially the last few months, but they are still tough and hurtful.
    • They take a long time to process.  While it isn’t the 2 years that they took not that long ago, don’t expect the bank to be done in less than 60 days… after they start looking at the offer.  And they might drag it out for six months or more, only to end it all with a rejection.
    • Credit scoring agencies look at a foreclosure and a short sale in EXACTLY the same light.  So, despite all of the work that you, as a seller, may put into a short sale, the bank doesn’t care.
  • Foreclosure – Stressful and kills your credit for two to three years… or maybe a little more, depending on what you do to recover.  And for many, the stress of knowing that a Sheriff’s notice could hit the door any day can be pretty rough.  It may be embarrassing, too.  Many don’t want their neighbors to know about financial hardships they may be facing.
  • Renting your home – There are a lot of folks out there we call “accidental landlords”.   But it isn’t all flowers and unicorns…
    • A credit card, the biggest beneficiary of the ...

      A credit card, the biggest beneficiary of the Marquette Bank decision (Photo credit: Wikipedia)

      It might seem either like it doesn’t matter or nothing matters more, but you NEED to be able ot be cashflow positive… more in rent than house payments.  And remember, insurance is a different game as a landlord than as a occupant.

    • You need to be financially solvent enough to afford repairs on the home if needed.
    • Keeping up with the house payments will take on even more importance.  If you were to rent out your house and default on the payments… if the renter could prove that you knew you could default, they might take you to court… maybe not, but…
    • Your mortgage likely includes language saying that if you move out, the mortgage is due in full.  Again, the mortgage company may not care, but it is a risk.
  • Write a check – If you can pay off the shortage at closing, that is a pretty good option.  But most people don’t have the resources to write the check…

If you are wondering if you are underwater, we can talk about it.  I have an option for those that want to go the short sale route.  If you are interested in renting, we can talk about that, too.  I generally don’t handle rentals, but we can talk over the options.

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So, You Want To Be a Real Estate Investor…

Monday, 13 May 2013 09:08
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I had a call recently from a “would-be” real estate investor.  He wanted me to find a few properties for him to flip.  He’s been looking at the Atlanta market for a few years (his words) and decided that now was the time to jump in and flip some properties.

Atlanta

Atlanta (Photo credit: Lima Pix)

Specifically, he was looking for entry level homes that he could pick up needing a little work, maybe in the $50-75k range, needing $10-15k worth of renovation.  His goal was then to sell them for $100-$125k.  East peasy.

Except, it isn’t… 

In fact, right now that would be ANYTHING except easy peasy.  It would be quite difficult.  And here’s why…

  • A few Billion Dollars in “hedge fund money” floating around the Atlanta market
  • A market turn that while not “complete”, is far from unnoticed.
  • A limited inventory, especially on the entry level end.
  • Lack of easily available financing.
Billion Dollar Car

Billion Dollar Car (Photo credit: soul_motor)

This was a guy without a load of cash, unable to offer quicker closes than “the next guy”, and unable to out-spend the competition.  He was not only convinced that there was a glut of homes, but that he was completely in the driver’s seat on these types of deals.

That is NOT the case.  In fact, small investors are regularly SHOCKED at what the hedge funds are paying for houses right now.  They are bidding them up on the open market.  They are bidding them up on the Courthouse steps.  They are willing to pay top dollar whenever and where ever they find them.

They don’t care what they can sell them for right now.  They are looking at 5 year turns… with rental income in the mean time.  The “over-payment” will be erased by the rental income and the increase in values over the next few years.

If you want to compete right now, THAT is what you have to compete with.  A few years ago, you might have been able to pick up a cheap property and flip it… not so much any more.

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It’s Even In the BAD School Districts Now…

Wednesday, 17 April 2013 08:01
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And no, I am NOT going to volunteer which ones those are…

Gwinnett County, Georgia

Gwinnett County, Georgia (Photo credit: Dougtone)

Today during our weekly brokerage meeting, my broker was talking about builder activity.  South Forsyth County has been going nuts for a few months now.  And since inventory has been so low and demand so high, he mentioned that it’s even spilling over into bad school clusters…

Frankly, I got a kick out of that.

 

But, it is also VERY true.  We’ve been seeing inventories drop like a rock in a lot of pockets.  Interest rates are trolling along at unbelievably low levels and prices are still suppressed by short sale and foreclosure activity.  Gwinnett is moving in a strong direction…  Forsyth has been there for a while and we have watched as the builders moved further up-market… now it seems like there is a LOT of activity in the $500k range.  A year ago, it would have been suicidal for a builder to put up anything at that price… now they are pre-selling half of their lots before getting a model built.

In fact, one community opened in the last few days and had people CAMPING out over night to be first in line to reserve houses…  Real estate is such a deal right now that it is getting BLACK FRIDAY attention.

 

Rural public high school, Walkertown, Forsyth ...

Rural public high school, Walkertown, Forsyth County, NC (Photo credit: Government & Heritage Library, State Library of NC)

I need to be quick to point out that Gwinnett isn’t quite as far along as Forsyth in that regard… GREAT if you are a buyer, and not too bad if you are a seller.  Forsyth had a little advantage in that there weren’t as many foreclosures as in Gwinnett.  Gwinnett is also a much larger market, so it takes more to turn it.  But we are seeing dramatic decreases in “wholesale” activity (foreclosures) as well as distressed properties like short sales.  At the same time, “retail” sales are surging and inventories are dropping.

 

So, while prices are still struggling a little, they are much stronger than the last few years, and often, well prices homes are pulling in multiple offers… even over listed price.

 

If you want to have a conversation about YOUR Gwinnett County home, give me a call.

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