Grant Hammond - Nashville Homes

I'm not sure that anything is wrong with Hampton Reserve, but there is certainly something wrong with the high end housing market in Brentwood...BUT, that's only if you are a seller. If you are a buyer who has always wanted a McMansion in a gated neighborhood, break out the drool bib because your day has cometh. Currently, of the 16 houses for sale in Hampton Reserve, 5 are on the distressed market as foreclosures (2) or short sales (3) and that ratio is becoming more prevalent in the newer luxury neighborhoods in Brentwood. The previous statement may be shocking to those of you who are still under the 37027 fairytale spell, but the outside world is finally creeping into this idyllic world and is having a profound effect on Brentwood homes.

There are currently more than 36 distressed sales in Brentwood and these are not tear down handyman specials. These are homes that reach well over $2 million in neighborhoods like McGavock Farms, Governors Club, Heathrow Hills and Hampton Reserve, but there are also some incredible homes in the more traditional price ranges in neighborhoods like Princeton Hills, Crockett Springs and Brookfield. That's all good and well as most of these 36 homes are known to buyers in the MLS, but what about the 12 homes that are also distressed sales, but not listed properly or at all in the MLS? These are homes that are quietly being fished by several local banks who are hoping to quietly disburse prior to having to suffer a public sale. Several of these homes are not deals...they are steals and some of my clients should go to real estate jail for buying so low. This practice has been common in the Nashville real estate market for the better part of 2 years and is becoming more widespread in Brentwood.

There are several items to keep in mind when buying distressed Brentwood home. If the house is a bank owned foreclosure, you can forget having in contingencies in your offer. You lose the opportunity to tie the home up while you inspect, appraise, comb through the HOA docs and line up your financing. Instead, your offer will only be considered if you can show proof of funds (either cash or an approved loan already in place) and a closing date within the next 30 days. You need to do all of your due diligence up front and your Realtor better know the steps, potential pitfalls and place where you can be exposed to potential harm.

Brentwood short sales are a little safer in terms of allowing inspections and other financial contingencies, but they are also typically a much longer process, especially if the seller does not have their short sale approved by their lender. Typically, most sellers do not have their short sale approved and that can cause a 60-90 delay in closing. Again, this is where an experienced agent will make all the difference in the world in guiding the purchase towards a swift and favorable result. That result usually being one of the lowest prices in Brentwood.

The Newest Short Sale in Brentwood

How much would you have paid for a custom 10,167 square foot, 5 bedroom, 6 full bath, 3 half bath home with a gourmet kitchen, movie theatre and elevator 2 years ago? You would have paid between $1.7 to $1.8 million. Take into account that this mansion was built by Dan and Adam Stern and some may have paid a premium. Today, let the bidding begin at $1.39 million. The home is a Mediterranean style home located at 9557 Sanctuary Place in Hampton Reserve and was just listed for sale by my fiend Chris Fuller with Bob Parks Realty.

Quite a few people have been calling, emailing, Facebooking, instant messaging, tweeting and texting me with a million different variations of basically the same two questions. 1) I am a potential condo buyer, where can I buy the best deal in Nashville and 2) Which building(s) are the safest for condo investment?

General advice for condo buyers

Now is a great time to be a buyer, in fact, the next 12 months might be the best time in the history of Nashville to be a condo buyer. Obviously, there are traps one could fall into, but for the most part, the landscape is pretty clear cut. For instance, we know that there are now a finite number of condos that will exist in downtown Nashville for at least 5 years. Should our inventory absorption continue at the past 6 month's pace, it is reasonable to assume that a developer will begin building another condo project in downtown by 2015 (most likely in the Gulch).

We also know that several developers still have excess unsold inventory. The Icon and Velocity each have more than 200 unsold condos and 5th & Main has around115. The Terrazzo has right at 100 unsold condos and is hosting a 30 condo auction this coming Saturday. The West End is also planning on an auction to relieve excess inventory, selling 45 of their 70 unsold condos on December 5th. The Encore and Rhythm each have around 78 unsold condos and both are offering heavy discounts to move that inventory. Not to mention that Rolling Mill Hill has 72 units and sits idle in receivership with no condos listed on the MLS.

The rest of the Nashville condo story

Everyone knows the above information, but very few know the whole story. Which buildings are the best projects from an investment standpoint? Which projects have the possibility of going bankrupt? Which projects have the best pure deals with the lowest risk? These are all questions that I know the answers to because I know all of the players involved.

As an example: The Encore is 80% sold and closed out, leaving 78 unsold condos on the market. There is a pervasive rumor in the real estate community that Tony Giarratana is going to lose those 78 condos plus the 18,000 square feet of retail space in that building because his development partner, Novare Group out of Atlanta, is going to file for bankruptcy in the near future. It is also a consensus that $5 million of the original construction loan still exists as secured debt on the Encore project.

This sounds like a good theory, but I rate the Encore as the second safest place to buy a condoin downtown Nashville behind the Adelicia in Midtown. I also rate it as the best place for an investment minded buyer to purchase for 2 year appreciation. Obviously, I don't buy into the rumor that Giarratana is going to lose the building. What do I know that you guys don't know? Yes, Giarratana has loans coming due on several development sites including the Signature Tower site on 5th Ave and Church Street, but will that fact affect the Encore? If so, how will Encore be affected? Are the banking entities and financial partners all the same on all of the deals? The answer is that several partners are involved in several deals, but there is an angel among them who shall remain nameless on my website.

BTW - anyone notice the site work being done on the lot next door to the Encore and just behind the Pinnacle office tower? The Sobro Development Company owns about half of that city block, C B Ragland owns the rest with a small sliver still owned by Norma Crow. Three guesses who is a development partner is the Sobro Development Company? That's the easy part, now guess what they are clearing that land for (gravel top parking lot is not the end use). Hint - the Mayor's office, Governor's Office and CVB are all working behind the scenes to make this happen.

I digress. The point is that if you are a condo buyer, do your research, don't just buy a condo because someone tells you it's a good deal (especially the onsite agents who all work for the sellers, not you). Tour all of the buildings and create a spreadsheet that compares the prices, views, unsold inventory, retail and location in town. Be patient - do not walk into a development one day and write a contract on a condo the next day. Negotiate - figure out what else you can get other than a price concession. There are other items like closing costs, HOA forgiveness, appliances, storage units, parking spaces and property management fees that can all be throw-ins to get you the best possible deal.

Be mindful, but don't wait too long

I don't know about you, but I love the Oracle of Omaha and his everyman's sayings. Here's the one that you need to embrace at this very moment: "Be fearful when others are greedy, and be greedy when others are fearful." The deals are happening now while the developers are fearful of their construction lenders, but it does not take long for those developers (and banks) to regain confidence. Case in point, the Icon negotiated several sweetheart deals on downtown facing condos in the tower section of the building this past Spring, but as soon as they got to 60% sold out, the deals stopped that day. Now, if you want to negotiate a juicy deal in the Icon and want a downtown view, you have to settle for a condo in the mid-rise. The moral of this story is that there is a point at which the developers will hold onto their best inventory and if those condos are the ones you want the most, you better negotiate before they sell too many.

Of course, there are times when the opposite is true to. During the "sell out" phase of a development, typically the last 10%, you can normally wheel and deal your way all the way to the end on any of the condos. The downside is that last 10% of unsold condos are typically the least desirable floor plans and views.

Should I negotiate myself or use a real estate agent?

Working with a buying agent is not going to cost you a penny (condo sellers pay all commissions) and and buyer agent's advice will typically save you from making a mistake. The mistake could be in scheduling the punch walk too close to your closing date and not having a fully completed condo on the day you close. It could also be smaller, like forgetting to secure contents insurance. It could also be huge, like leaving $14,450 on the table during negotiations (sorry Mike). Always work with a real estate agent who knows this market and the dynamics that drive it. I am not saying that I am the only agent who ‘gets' it, but I am saying that the typical suburban agent does not. There are plenty of us who thrive on market knowledge, who own a copy of The Plan of Nashville, who attend community action meetings to learn about what might be coming or closing, who talk to the developers, banker and appraisers...and who have data based every single downtown condo closing from 2008 until now; well, maybe there aren't that many of us.

Contact me for a private consultation

This article entitled "Terrazzo auction will impact condo prices across Nashville" appeared in the Nashville Business Journal on November the 6th, 2009. The author is Eric Snyder:

Velocity, the last new condo project that will come to the downtown Nashville market for several years, has officially opened its doors. Meanwhile, Terrazzo, one of downtown's more luxurious condo towers, is poised to slash its prices by as much as half at an upcoming auction.

The stage appears set to at least create momentum to move units. What's less clear is whether that momentum will come as a result of severely discounted prices - not just at Terrazzo, which is selling 30 of its 117 units for up to 50 percent off original asking prices, but across the market.

Grant Hammond, a buyer's broker who specializes in condos, said the Nov. 21 auction will serve as a "crystal ball."

"This should tell everyone exactly where the market is for downtown living," said Hammond, who will represent two potential buyers at the auction. Hammond said the auction will determine whether the downtown market is viable, or whether it's moving toward or away from viability.

Hammond will set his compass by final sales prices, adding that auction prices of $250 a square foot will represent a viable market. Read Eric Snyder's full Nashville Business Journal article.

When you break down the available condo inventory in downtown, you find that the numbers aren't as bad as you may have been led to believe. What does appear to be at odds however, are the wishes of current condo owners and condo developers who want to build again. Owners are hoping for prices to remain stable during the next 1-3 years of inventory burn-off whereas developers would rather see prices fall to the point where 100% of the inventory burns off in one year.

I see the arguments from both sides and each has a valid point, what I have not determined is the perfect solution for both owners and developers. What I am sure off is the fact that the Gulch does have legs. The Icon has been selling very well during a recession and once Velocity gets a little more serious about their prices, it will be the most affordable entry property in the downtown market. The Gulch is quickly becoming a ‘see and be seen' neighborhood in Nashville as certain celebrities tend to slink in and out of 2 restaurants in particular.

This article entitled "High-end homes take a hit" appeared in the Williamson AM on September the 11th, 2009. The author is Nancy Mueller:

BRENTWOOD - Short sales and foreclosure sales are now being seen in some of Williamson County's most expensive neighborhoods.

During the first week of September, there were four short sales available in the Governor's Club, plus one foreclosure. Down Concord Road at Hampton Reserve, there was one foreclosure and one short sale.

These distressed situations translate into some excellent buying opportunities.

"If you are an executive who is moving to Nashville and you want a $1.5 million house, you only have to spend a million point two," said Grant Hammond, a Cool Springs-based agent who is launching a Web site called NashvilleShortSales.com that will list short sales and foreclosure sales in the Nashville area.

But even Hammond may be under-selling some of the deals to be had in the upscale neighborhoods.

A five-bedroom, custom-built home that backs up to the second hole at the Governors Club golf course is a "short sale steal" according to agent Vanessa Stalets. The owners' asking price is $1.25 million. Stalets says the owners paid $2 million for the house, which was built in 2005 and is at 217 Governors Club Way.

Another Governors Club short sale is a 6,000-square-foot home at 4 Spyglass Hill that was listed for $1,398,000 in May. The price dropped to $1,249,000 and then to $1,099,000. On Sept. 2, it dropped again to $1,050,000.

The house has four bedrooms, four bathrooms and two powder rooms and, according to Hammond, "another rare feature" - gap equity.

"This is going to be a heck of a deal for the just-under million dollar buyer," he said.

Some fear stigma of cuts

The short sales and foreclosure sales in Hampton Reserve and Governors Club are among 111 that Hammond found while researching information for his new Web site. There is no central clearinghouse or system for finding such sales, and sometimes listing agents do not promote the nature of the price cuts.

"There is some debate that the words 'short sale' or ‘foreclosure' stigmatize the property," Hammond said. "A buyer may assume that there is something wrong with the property itself, beyond the financing."

That is not necessarily the case, although it is possible that such properties might not have been maintained normally and buyers should be prepared for the fact that if the seller is a bank, it may be pointless to negotiate for upgrades or home improvements within the offer to buy.

Additional deals in Governors Club and Hampton Reserve include:

• 2 InnisBrook Lane, a short sale, has 4,735 square feet, four bedrooms, 3½ baths, a pool and hot tub. Built in 2002, its asking price is $889,000.

• 9554 Sanctuary Place, a foreclosure, has 6,988 square feet and was built in 2006. With five bedrooms, 5½ baths, a four-car garage and an elevator, it is listed for $999,999. It sold in 2007 for $1.345 million.

• 9576 Hampton Reserve, a short sale, is listed for $1,295,000. It's a lot of money, but this house sold in September 2005 for $1,525,000. It has 7,782 square feet, five bedrooms, five bathrooms, two powder rooms, a theater room, a stocked wine cellar, a five-car garage and an elevator.

With a little effort, high-end buyers can sniff out additional deals these days, such as the mansion at 1216 Waterstone Boulevard in Laurelbrooke.

With more than 11,000 square feet, an elevator, pool and six fireplaces, it is listed for $2,399,000. According to the agent, the sellers invested $2.8 million in this house, which was built in 2006.

• 10 Sawgrass Lane, a short sale, is a 4,642-square-foot home built in 2006 listed for $749,000, down from $930,000. It has five bedrooms, 4½ baths.

• 91 Governors Way, a foreclosure, has 6,242 square feet with five bedrooms, five baths and three half-baths. It has a full basement. Built in 2007, its price is $749,900.

If you are thinking about buying a condo in the Encore condos building in the SoBro area of Nashville, you need to speak with me now. If you are buying a condo or loft in any building in downtown Nashville, call me now.

Buying a condo in downtown Nashville can be a good investment if negotiated correctly.

You do not want to be the person who paid $139,885 more for the exact same 2 bedroom floor plan than the person 3 floors below you. This is a real example. This actually happened and I have the data to prove it. I will make sure that you are the person who paid $139,885 less.

Just like with the Icon, I am one of the extremely rare people who has collected all of the closing data for the entire project and inserted that information into a graphic spreadsheet. I then ran a price regression analysis that accurately calculates probable condo prices. My spreadsheet shows you exactly what has closed at which price and when. This is invaluable information that you need in order to make an educated offer in this project. There is no better negotiating tool than this information, period.

According to my data, as of July 7th 2009 73% of the Encore building had closed with the greatest percentage being on the Cumberland River side of the building. This means that you have the best opportunity to steal a condo on the downtown urban view side of the building, the best side of the building in my opinion. There are a greater number and percentage of 1 bedroom condos still available in the building and the latest closings show that some low ball offers are being accepted.

What's next?

In order to protect the integrity of this research I will not email you this spreadsheet, you must meet me in person in order to review this information. I am a licensed real estate agent, therefore, if you are currently working with a buyer's agent, I will not be able to assist you unless you can sign a buyer's agency agreement with me. If you are only working with a representative from the Encore, there is not a conflict of interest and you should have an agent solely representing you interests (representation will not affect the price). If you have a pre-construction contract on a condo and you did not sign an exclusive buyer's agency agreement with your agent, you may switch, however, that is a decision that you must make. It is NOT my intention to separate anyone from their current or past agents. It is my intention to provide the highest quality buyer's representation in this project. As a real estate agent who has been quoted more than 25 times in the Tennessean, City Paper and Nashville Business Journal, I am confident that I can provide you with insight and guidance you cannot find elsewhere.

Are you also considering buying a condo in the Icon in the Gulch? I have collected the same information and performed the same analysis in this building as well.

Contact Grant Hammond to make sure you negotiate the best deal:

Email is usually best Grant@remarkablehomes.com however, you can always call my cell 615-945-7123.

If you liked this post, you may also enjoy:
Pictures of The Encore in Nashville, TN
New Nashville Convention Center Already Booking
Downtown Nashville Condos Sold in 2009
Downtown Nashville Condo Update