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Tag Archives: financial crisis

First Time Home Buyers… I just found a REAL bargain…

Saturday, 26 September 2009 23:47
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Abandoned mine buildings (Anaconda Copper Mini...
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The October issue of Realtor Magazine (our industry magazine) had an interesting article about dispelling myths while educating first time home buyers.  The third point was about the realities of “bargains”.

There are absolutely some bargains in the market…  But, often those properties that are the real bargains are NOT the ones that have rock-bottom prices.

The HECK you say…

Really…  I have been in some pretty cheap properties in the last few months.  It seems that a house priced at $25,000 in a neighborhood or $150,000 homes would be a slam-dunk, right?  That deal starts to look WAY less attractive when the issues get added up…

  • roof
  • mold
  • floor coverings
  • appliances
  • plumbing fixtures
  • electical fixtures
  • copper wire
  • copper plumbing
  • landscaping (not to make it pretty, but to stop water from washing away the foundation)
  • HVAC
  • driveway paving

Seriously, I looked at a house that needed all of that.  It would be faster, easier and probably cheaper to bulldoze the house and start over.  Since the lot would be worth about $10,000… and it would take about $15,000 to clear the lot and get it ready for a new building… This wasn’t a deal.

Of course, most aren’t that severe…

However, there are a lot of times where one house will be significantly cheaper than another for sale, but after correcting its issues, it actually ends up costing more.  It might be simple things like carpet and appliances, or maybe something more involved, like a roof or HVAC.

This often ties back to “I need to see all of the options“, presented earlier.  In this case, we just want to get a look to make sure that it really is in that bad of shape.

I have looked at a lot of “bargain” properties and have a pretty good feel for them.  There are some great deals, but they are usually not the first ones to present themselves…  They are generally in much better shape and slightly more expensive.

Finally…

Remember that the deal properties often still need work.  And it is probable that the buyer will have to come up with cash for that work, in addition to downpayment and other closing costs… it isn’t something to bootstrap.

from GwinnettGarageGuy.com

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First Time Home Buyers… I need to see all of the options

Friday, 25 September 2009 23:42
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CHICAGO - OCTOBER 16: A trader in the S&P 500...
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The October issue of Realtor Magazine (our industry magazine) had an interesting article about dispelling myths while educating first time home buyers.  The second point was about excessive caution, and buyer, especially new buyers, wanting to see “everything on the market”.

I have to admit… the writer at Realtor Magazine got another solid base hit.  I have worked with buyers that wanted to see a LOT of houses… even houses that really didn’t suit their purposes… even houses that they KNEW didn’t suit their purposes prior to wanting to see them.  And there are a LOT of houses on the market.

While inventories are down around 25% from last year, there are still about 80,000 homes on the market in the Atlanta Metro area.  Generally, in ANY given price range and area there are scores of homes.  Even Lilburn, GA has several dozen homes priced under $150,000.  And by the time a buyer makes his or her way through all of them, there are new ones to see.  It just isn’t practical.  Tighten the search criteria…

It isn’t just a matter of spending a lot of time looking at houses… it is losing out on houses because of spending time looking at other houses…  It goes like this… A buyer goes out and looks at 5-10 properties.  They find a couple that they like and one that they REALLY like.  Instead of deciding to write an offer, they feel that there is time to look (after all, the market is weak, right?).  So, they schedule more time to look at homes.  In the mean time, the home that they REALLY liked goes under contract to another buyer.  When they have looked at more homes and decide that the home that they REALLY liked is the one that they want to buy… that home is no longer available.

We call it analysis paralysis.  Another type of analysis paralysis comes after the buyer decides to write an offer.  They spend days and days trying to figure out what to offer.  While they are doing that, another buyer puts the house under contract.

Don’t get me wrong… these are important decisions. Buying a home is a BIG deal… ESPECIALLY for first time home buyers.  You want the right home and you want it at the right price.  I understand.  But, I also don’t want you to regret a lack of action. Right now, if you see the right home, be ready to make the offer.  We’ll check the comps and craft the offer… but YOU need to be ready.

Being ready means getting prequalified with a lender.  Getting ready means knowing how much money you’ll have available to close.  Being ready means knowing that you have the down payment.  Being ready means being prepared to break a lease or being out of the lease in an appropriate time frame.

But, being ready may mean getting the right house at a great price.

from GwinnettGarageGuy.com

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First Time Home Buyers… Is the market weak?

Thursday, 24 September 2009 23:37
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the weakest link
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The October issue of Realtor Magazine (our industry magazine) had an interesting article about dispelling myths while educating first time home buyers.  The first point was about the weakness of the housing market.

They are absolutely correct that we can’t flip on the TV, radio or computer, nor pick up a newspaper or magazine… or even sit in a restaurant without hearing about the tremendous “Buyer’s Market” taking place right now.  Quickly, the common wisdom is that since there are few buyers in the market, the ones that are there can beat sellers into incredible deals…

Of course, there is some truth to that.  There aren’t as many buyers in the Gwinnett County and Lilburn, GA markets as there were a few years ago… at least buyers that can get financing.  BUT… in some segments, there is actual competition for properties. The First Time Home Buyer’s Tax Credit is pushing buyers into the market at the entry level.  Prices are rising, and we are seeing properties bringing multiple offers.  For now.

So, while there is still definite weakness in the luxury market, the entry level market is much different.  Just as the market can vary from one ZIP code to another, it can also vary by price range. From now until the beginning of November (the credit currently is set to expire at the end of November, but most closings take 30 to 45 days to consumate), I think we will continue to see strength in the entry level market.

This is actually helping the move-up market, since many of the first time buyers are freeing the sellers to step up to a new (to them) home.

Things could be very different by January…  Or not.  If this indeed kicked the market, then we may see continued strength into the first quarter of next year.

from GwinnettGarageGuy.com

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The Press Is On…

Thursday, 17 September 2009 09:12
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Dale Stinton, CEO, National Association of Rea...
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I have recieved emails this morning from the NAR and from my local association regarding the $8,000 First Time Home Buyer Tax Credit.  There is a full court press from the National Association of Realtors as well as the local associations to not only continue, but expand this program.  And there is NO doubt that the program has been effective, especially in the last few weeks.  Entry level home sales are up.

But, honestly… it needs to end as scheduled.

But it is helping my business…

I can hear some of my real estate agent friends saying that very thing.  That is the basis of why the NAR wants to continue the program…  But, we really need to examine the long term implications of what we are doing.  NOT paying attention to the long term implications of current actions are what made this problem to begin with…

Whether you think that the bubble was caused by the Community Reinvestment Act, Fannie and Freddie pushing for lower and lower barrier to home ownership, out of control credit markets or even just people buying more home than they could afford… thinking that they could always bail out for more money… it is obvious that nobody had their eyes on the future.

And there is an solid fact… the market is going to find its bottom, and then begin recovery. No matter how the government intervenes, the market HAS to find a REAL bottom… a place where people look at their situation, and see that homes look like a deal and they feel like it is time to jump.

Many think that the initial $8,000 FTHBTC short circuited the process and gave the market a bottom.  But, there are some economists that think the bottom was happening anyway… others think that prices may go down after the tax credit expires.

If prices may go down when the tax credit expires… we need to keep it!

Newsflash.  If we aren’t at the bottom, and prossibly even if we were, prices will likely go down when the tax credit expires.  Demand has been juiced in the last few weeks because of the immediacy of the tax credit expiring.  That has eaten a little of the supply and buoyed prices.  If the Tax Credit is extended, the immediacy goes away and demand will slacken again. If the tax credit goes away, the demand will still slacken.  The difference is that our children and grandchildren won’t be left with yet another bill from the government.

But, what happens when the demand weakens and prices start to drop?  Gee… I don’t know…  what happens when the store runs a sale and you can get that flat screen you’ve been looking at for the last 3 months?  If you have a little money saved up, you go buy it.  That is the market working.

Prices will drop, and people will buy properties that seem like good deals to them.  A few buyers in the market will see properties that they have been eying getting snapped up before they respond… and the market will start its recovery.

The Home Buyer Tax Credit is a stalling tactic…

That’s all.  It doesn’t create recovery, it spurs demand from the people that were on the fence… but we need a constant stream of people coming OVER the fence.  The ONLY way to do that is to make people comfortable with their jobs and with the family finances.  The economy needs to begin recovery for that.  Adding more deficit spending isn’t going to do that…  That actually hurts, because it places a restriction on credit availability… subject for a different blog post…

The bottom line is that housing has to recovery naturally.  Yes, real estate agents have been helped by the program, but it is our kids that will get the bill for that help.  We need to call a stop to this before it gets more out of hand.

originally posted to GwinnettGarageGuy, another of Lane’s blogs

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Mold, not just for bread and cheese anymore…

Friday, 04 September 2009 12:07
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Moldy nectarines that were in a refrigerator. ...
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Ok, mold has NEVER just been for bread and cheese.  and while it can be useful stuff… when it is penicillin… the rest of the time, it is NOT something we want in our bodies.

So, Mold and Real Estate?

I’m seeing it more and more.  Actually, it started a few years ago, but as more foreclosures come on the market, mold gets to be a bigger issue.

In some homes it is a minor issue… a little musty smell that can be handled with a couple of filter changes in the HVAC and a good cleaning.  There are even some homes that don’t seem to have any mold smells present.

But in other homes it is a MAJOR problem.  We aren’t talking about a little smell, we are talking about unhealthy levels of toxins… and in some cases, they could cause serious respiratory distress, or worse.  In those cases, if the price is good enough, and the home is otherwise desirable, a mold remediation company could be brought in to kill the mold and bring the property back into a healthy state.

How can we know?

Get an inspection.  Of course, I ALWAYS recommend getting an inspection from an ASHI Certified Inspector for any home… even brand new.  But there are actually specialist Mold Inspection companies.  If you suspect that there could be mold in the property, getting it inspected is cheap insurance.  Mold remediation can be simple, or VERY involved and expensive.  Knowing during the Due Diligence Period is much better than unexpectedly finding out that your good deal is going to suck $50,000 out of your pocket before you can move in.

Some favorite mold hangouts…

  • Crawlspaces and basements
  • Under sinks in kitchens and bathrooms
  • Attics
  • The back of closets
  • Anywhere there isn’t airflow

Be aware.  Do a little research… even trolling Google, Yahoo or Bing for a few minutes can yield a lot of good knowledge.  of course, getting professional advice isn’t a bad idea either.  And remember, almost every property is going to have SOME mold.  But, if the humidity and moisture levels are in line with what they should be, there is good airflow and the space is kept clean, the mold can’t get a solid foothold and take over the house.

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