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Category Archives: real estate

Gwinnett County Homestretch… Again…

Friday, 26 August 2011 08:00
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I wrote a post a few months ago about the Gwinnett County Homestretch Program.  It is a REALLY cool program for buyers with qualified incomes.  The actual caps change regularly, but follow HUD limits.  Buyers also have to go through a financial counseling class.

But the end result is that buyers get $7,500 in Down Payment Assistance.  This is money that does NOT need to be repaid, as long as the buyer stays in the home at least 5 years.

Earlier in the year, when I wrote the post, funds were available even for existing home owners, not just first time home buyers.  Since that time, Gwinnett County has changed that… they ran out of funds for existing home owners.  But they still have plenty of funds available for first time home buyers (remember, to qualify as a first time home buyer, you can’t have owned a home for the last three years).  BTW, please don’t think that there is a way around that by not having a spouse on the title or something.  It doesn’t work…

In order to qualify, the buyer needs to have $1000 in the deal.  I recently was asked what qualified as part of the $1000…  Did the inspection count?  Did the earnest money count?  I wasn’t asked about the appraisal…  Here are the short answers.

  • The inspection doesn’t count.  I ALWAYS recommend that buyers get an inspection, but it isn’t part of the $1000 that the buyer has “in the deal.”
  • The appraisal DOES count.  It is a requirement, and it is a closing cost.  The funds CAN be used to pay closing costs.
  • The earnest money is actually like a security deposit.  It is money credited toward the closing and/or down payment, so therefore it DOES count.

One thing to keep in mind… money can NOT flow back to the buyer at closing.  Even if they overpay closing costs, they can’t be refunded at closing.  Ken Cook (of America Home Key) and I have been through the rules and know how the program works.  If you want to see if YOU qualify, contact us.

 

We’d love to help you buy a home.  There are great deals on the market right now, and interest rates are exceptional.  For more info, click here. There are other Down Payment Assistance programs available around the Metro Atlanta area.

Here is my video from the original post.

Wayback Wednesday… Police Response, 15 Minutes…

Wednesday, 24 August 2011 08:00
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Special Response Team of the US Mint Police

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Every job has it’s hazards, and one of the ones we face in real estate is the occasional police call…  and my last one was two years ago this week.  It was an alarm.  It has happened a couple of times.

It actually happened twice on the same house on different days.  I wrote the post, and then we went back out to look at the house a second time… my buyer was pretty serious about it.  The seller had actually changed the code between our visits.  So, even though I had left the information in the lockbox (per the Listing Agent’s request) it was wrong.  The seller also didn’t bother to tell the agent that they had changed the code. Gee… thanks.

On the second call, the exact same officer showed up.  He didn’t even stop the car.  Rather, he recognized us, made a radio call and just rolled by, waving to us out of the window.  I guess we had made him pretty comfortable with us on the previous visit.

Should I also mention that the house was vacant and cleaned out?  There wasn’t much to steal… but vandals could have had a field day stripping out copper.  I understand the fears on the part of the seller, but they were actually making it difficult to show their home.

For sellers, the piece of advice I would pass along is this…  Make your house easy to show.  Communicate with your agent if you are changing alarm codes, and trust your agent to have a fail-safe code if the normal one is lost. 

 

Picture of the

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For buyers, I would say this…  Stuff happens.  Keep a cool head.  Your agent should be cool under pressure, too, but ii helps if you aren’t flipping out.  

 

And for other agents…  You are the pro.  Don’t get flustered.  Getting angry won’t help.  No person involved in this little event woke up that morning looking to pee in your oatmeal.  Stuff just happens.  If it is an alarm, walk outside, relax, gather up any papers you might need and stay in view.  Keep your buyers calm and with you. 

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Pricing for Sellers…

Monday, 22 August 2011 08:00
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DSCN2847

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When you are selling real estate, there are generally two competing needs that have to be balanced while deciding on a price.

Getting the property sold (low price).

&

Maximizing the price.

It’s a no-brainer that if you price your property at a ridiculously low price, it will sell very quickly.  We see some of those amazing deals pop into the MLS… the seller needs to get out of a property immediately and is in a position to be very aggressive with price.  Undoubtedly, an investor will swoop in and buy the property if a owner/occupant isn’t fast enough.

 

On the other hand, it is just as much of a no-brainer that if a property is ridiculously over-priced, it will hang out in the listings long enough to actually be stigmatized.  Even with a new MLS number and a new brokerage handling the property, it will have a cloud hanging over as buyers wonder why it has been on the market so long… wondering what must be wrong with it.

And yet… there is almost a mantra from some real estate agents that they will “sell your house for the most money in the least amount of time.”  Of course, it is an easy thing to say, and an impossible thing to prove…  but just look at the statement for a moment.  The least amount of time generally means the least amount of money.  And in order to maximize sales price, sellers have to be willing to wait a long time.  (Lightning could strike and a cash buyer could drop out of the sky and decide that they HAD to have the property, regardless of price… but not likely).

So, what is a seller to do?

  1. An unidentified seller in an unknown location....

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    Price competitively.  No matter what else, the price HAS to compete with the comps in the neighborhood and area.  In the unlikely event you can get a buyer to pay a price that is too high, the property will not likely clear an appraisal if the price is too high.  Heck, even fairly price properties get clipped by appraisers sometimes.

  2. Price on a “node”.  A node is where multiple price searches might come together.  Buyers tend to fall into habits of searching with common boundaries… $100k, $150k, $200k, etc.  Instead of pricing like the grocery store ($2.99), price ON the node…  $300,000.  That way, searches are much more likely to hit your property.  This can be tough sometimes…  but, the thing to keep in mind is that while it is common, pricing that ends in a $999, $900 or even a $950 should be avoided.  End on a round number, and the rounder, the better.
  3. Know that you may be expected to contribute Closing Costs.  This is more true for a $150k home than a $500k home, but many buyers will look to the seller to contribute to closing costs.  Bake it into the price, so that it isn’t a shock when the buyer asks for 4-6% to help them with closing.
  4. Don’t build in fat.  Seems to be the opposite of point #3, but it is what it is.  Don’t price too high thinking it is “negotiation room”.  Buyers are unlikely to offer if they think the price is too high.  Instead, offer up your negotiation room up front.  Tell the buyer that you are willing to contribute 5% (or whatever) towards their closing costs with a full price offer.
  5. Level with your Agent.  Talk with your real estate agent frankly.  Some sellers don’t want to tell their agent what they are willing to do because they assume the agent will use that knowledge to beat them down if they get a buyer.  However, with most listing agreements, the seller’s agent actually has a legal duty to look out for the best interests of the seller.  Simply put, it is an ethical breach, if not a legal one, for the seller’s agent to betray the interests of the seller.
  6. Don’t use the agent that tries to “buy your listing.”  No, I don’t mean one that puts down cash and offers to buy your property…  I’m talking about the agent that comes into the listing presentation with a price that is higher than everybody else’s.  They tell you that your house is worth more than it really is… and then usually say that they will “sell your house for the most money in the least amount of time.”  They want the listing… and the probably know it won’t sell for the initial offering price.  But they are pretty sure they can beat you down on the price later.  If not, they just won’t give much effort to selling your house… and mark it up as a loss.  Many of these agents are playing a numbers game.  If they take 100 over-priced listings, they can get some percentage of them to reduce price and sell.  Buy, listings that start off over-priced usually sell for less in the end.

There are a lot of things that sellers have to balance as they go through the process of pricing their homes.  It isn’t easy…  A good agent can help guide the way, but in the end, the sellers are the ones that have to live with the pricing.

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Mortgage Rates Lowest in 50 Years… according to Freddie Mac

Friday, 19 August 2011 08:00
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Freddie Mac

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Freddie Mac issued their Primary Mortgage Market Survey yesterday, and the rates are unbelievable.  Let me click off a few quotes from the Press Release.

30-year fixed-rate mortgage (FRM) averaged 4.15 percent with an average 0.7 point for the week ending August 18, 2011, down from last week when it averaged 4.32 percent. Last year at this time, the 30-year FRM averaged 4.42 percent.

15-year FRM this week averaged 3.36 percent with an average 0.6 point, down from last week when it averaged 3.50 percent. A year ago at this time, the 15-year FRM averaged 3.90 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.08 percent this week, with an average 0.5 point, down from last week when it averaged 3.13 percent. A year ago, the 5-year ARM averaged 3.56 percent.

1-year Treasury-indexed ARMaveraged 2.86 percent this week with an average 0.6 point, down from last week when it averaged 2.89 percent. At this time last year, the 1-year ARM averaged 3.53 percent.

I guess that is the upside of economic stagnation.  And when combined with the amazing prices on homes in the market right now, it makes for a GREAT time to buy property.  Assuming that you don’t have to sell first.

And that is the flip side.  Many would be buyers are sidelined because they can’t afford to sell their current home.  The best they can hope for is to re-finance with the low rates… of course, that isn’t helping those that have a need to relocate.

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Mortgage Interest Deduction… Good or Bad?

Monday, 15 August 2011 10:16
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The NAR building and the U.S. Capitol in the b...

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There is a lot of discussion in the real estate world about the Mortgage Interest Deduction (MID) on Income Taxes.  The National Association of REALTORS® (NAR) is virtually flipping out with just the thought that it could be eliminated by Congress as they look for more “revenue enhancements” (they are unwilling to say “tax increases”).

The NAR position is that with a weak housing market, and the fact that homeowners have benefited form the MID for decades, this is NOT the time to eliminate it, increasing taxes on mostly middle class taxpayers/homeowners.  I can’t argue against that position very forcefully.  It isn’t that I want to agree with the NAR, because I don’t.  And, in fact, my reasoning is much different from theirs.

Opponents of the MID argue that homeowners shouldn’t get special treatment v. renters in getting a tax credit for a portion of their mortgage.  And that IS  a strong argument, but there is one HUGE flaw…

Renters might not get a tax credit, but Landlords DO.  They may or may not pass that savings along to the renter (depending on the competitiveness of their rental market), but as a business, interest is a deductible interest expense.  So, in effect, a homeowner would be penalized for occupying a home that they own.  And with all of the talk of “fairness” coming out of Washington, DC, taxing the Mortgage Interest for Owner/Occupants, while not taxing it for investors seems kind of dumb. 

Also, this would be going after the heart of the middle class.  Many opponents argue that upper middle class families benefit more from the MID than those with lower incomes… although, the truth is that income isn’t as much of a determinant as is mortgage debt.  BUT, those with higher incomes might have a tool available that those with lower incomes may not.  Many are already business owners.  And, it wouldn’t be that tough for them to incorporate, transfer the ownership of their home to their business, and rent the house. 

This would give them the tax deduction for the mortgage interest as a business expense.  Homeowners with smaller mortgages and/or smaller incomes might not be able to swing the same deal… meaning that they would be more adversely impacted by the change than higher income and/or higher debt homeowners. 

One other thing, which I personally think is important, but a back burner aspect of the debate, is the benefit of a home-ownership society.  Simply put, home owners are a more stable group than renters.  They have a stake in their neighborhoods, schools and communities.  Renters want nice neighborhoods, schools and communities, but have a much easier time escaping if things go sour.  They won’t pay a financial penalty for getting out… in fact, if demand increases for a specific area, they might actually end up having to pay more.

BTW, I DO consider business deduction of interest to be something that should NOT be taxed.  It is a legitimate business expense.  And since I don’t think businesses should have to pay taxes on the interest THEY pay, I don’t think it would be right to force owner/occupants to pay interest for the exact same thing.

What do YOU think?  I’d love to hear your thoughts.  Add a comment.

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