John Foster

The Biggest Mistakes Sellers make when selling a home in Cumming and Alpharetta in this market

Biggest Mistake: There is one item that stops a home from selling more than any other factor. When Sellers list their homes in Cumming and Alpharetta, the single biggest mistake I see is the listing price of their homes. Last week I had a listing appointment with a couple that purchased their home in 2005 and paid $609,000 -I explained the market from my experience, we looked at the area, county and subdivision comps, and my highest recommended price was $599K - understanding we will drop the price every 28 days until we get an offer. He asked if we "could" list the home at $634,900 and my response was "we can, but not if you want to sell it". Pricing a listing wrong at the beginning is a huge mistake and costs the seller in the long run. Let me give an example.

I listed a great home, by far and away the nice home in the community. The issue was the seller had put way to much money in the home for the subdivision. The maximum homes sold for the low 400s so I recommended a maximum price of approximately $439K. The response is what kills most homes sales - it was that they ‘needed" to get more for their home. They said "if it did not sale it would be O.K.". So we listed their home for signicantly more than $450K.

Well after a month of showings their attitude of "if it did not sale it would be O.K" was forgotten or changed so we held several discussion about how to sale the home. Needless to say we decreased the price by $5K every month, but the seller really struggled to decrease the price - it was extremely emotional for the seller to decrease the price. We had a verbal offer of around $415K which "offended" the seller. At the end of the listing the seller decided to take their home off the market until spring.

This week I received a call asking me about expired listing that was just listed for 399K. This is an example of what I call "Seller Capitulation" - the seller went through all the emotions of trying to keep their asking price very high, knowing it would not sale but hoping it would - then when the next agent came in they accepted a significantly lower price and since the seller knew what was coming said yes to whatever price the second agent suggested. Sometimes it pays to be the second agent. This is an example of overpricing a home at the beginning cost these sellers a minimum of $20K.

Pricing right at the beginning is the best way to get the most for your home when you sell it. The couple I mentioned at the beginning decided to stay in their home until 2010.

I would love to get any stories you have on pricing homes at the beginning of a listing.

Local Markets: The saying that all real estate is local is very true, but in todays market the price of the home determines the supply of inventory of homes. Yesterday and today I called to see if I could show a total of 11 homes in Cumming and Alpharetta, and in talking with the listing agents 4 are either under contract or have a verbal acceptance. These homes are priced around $200K - This is the same price range as last week when I called an agent in Cumming to submit an offer and he said the home listed at $199K just went under contract. In looking at the stats for Forsyth County it looks like in that price range there is a 5.2 month supply of homes at the end of December - that amount of supply is what I would call the right amout of property - around a 5-6 month supply is considered neither a buyers market nor a sellers market.

It would be nice to see the media pick up on that segement on the market. I do think the lower interest rates are helping - my buyer is motivated because he locked a rate in and needs to find a home. If you have a home to sell - call me at 770 722-7010.

I have been looking at the Swim/Tennis community of Chadbourne in Alpharetta. This subdivision is located close to the technology centers off Windward Parkway (like McKesson, Choicepoint, AT&T and UPS) and is close to HWY 400 and has low Forsyth County taxes.

I sell a lot of homes in Chadbourne and here is a summary of 2008 for Chadbourne:

1. 21 homes sold in 2008 21 (down from 41 in 2007)
2. 7 homes currently on the market
3. 99 days was the total days of market for the homes that sold (this includes listings that did not sell during their original listing and were re-listed)
4. 47 Total Listings in 2008
5. 19 listings expired or were withdrawn from the market (did not sell during the original listing period)
6. 10 of the 21 homes that sold during 2008 expired and were relisted and sold (48%)
7. 94.5% was the original list price to net sales price ratio for the homes that sold.

These stats tell me homes that are priced right and in good condition will sell in Chadbourne. The list to net sale price ratio tells me on average there is 1 or 2 price decreases before the homes are getting priced right to sell. The inventory level in the Chadbourne subdivision is actually low for the area, with only a 4 month supply of homes on the market.

If you are looking for a great swim/tennis community in Alpharetta, priced from the low 200s to the mid 300s, call John Foster with Remax Greater Atlanta at 770 722-7010. I know the Chadbourne Subdivision, as well as the Alpharetta market and would like to help you find your next home.

We say good buy (pun intended) to 2008 and look forward to 2009 these are my thoughts on the market in North Atlanta, specifically the real estate market in Alpharetta, Cumming and Suwanee Ga.

No doubt that 2008 was a tough year compared to 2007 - the credit markets changed considerably, the economy stumbled at the end of the year, $4 a gallon for gas and the stock market losing 1/3 of its value all made consumers less confident and less wealthy. All of that hurt the real estate market. A couple of items people do not mention are interest rates were above 6% for a good part of the year and every election people wait to see who is elected - that uncertainty affects the how people feel about moving. Most people need to feel confident in their jobs in order to buy a new home, particularly if purchasing a more expensive home. Additionally, most people that bought homes in the last 5 years have interest rates below 6%, so not only do they get a larger mortgage but their interest rate increases. All that lead to the sales levels of 2008.

While 2008 was nothing like 2005-2007, I do not think we will get back to the 2005 levels for many years. Remember, in 2005 close to 40% of all homes purchased were second homes. 2008 sales levels were similar to 2004s - and once everything is totaled will be in the top 10 years for real estate, even with the issues noted in the first paragraph. In 2009, this is what I see taking place:

1. The interest rates decreasing to 4.5% (30 year fixed rate) will bring many people into the market. The interest rate is a huge factor in determining the affordability of a home. I have seen an increased interest in Buyers. Buyers that have been sitting on the fence for the past year are looking again.

2. The supply of homes in Alpharetta and Cumming is decreasing. Builders have stopped building, the builders that had great deals seemed to have gone out of business or sold their excess inventory and prices in general have declined. In some price ranges now the days on market are around 6 months - 5-6 months supply is a good level. The price ranges where supply is down is below $250K, but as that market tightens, and they are able to make a decent return on their home, they step up and purchase more expensive homes. They cycle starts all over again.

3. In 2008, NAR reported that close to 40% of the homes sold were foreclosures and short sales. Right now with interest rates at 4.5%, this is the treasury department allowing those people that used the ARM/Interest only mortgages to get out of those mortgages and into a great fixed rate. There is a lot of refi business taking place right now and that will help the real estate market in 2009 because people rarely lose a home they refinanced in the same year. I see this strengthening the market towards the end of 2009.

4. In 2009 I think you will see the average sales price of a home decreasing. Be careful how that data is used. If the average sales price of homes in an area decrease 10% from one year to the next, that does not mean if you own a home worth $250,000 one year that your home is worth $225,000 a year later. It means the mix of more expensive homes to less expensive homes is changing. In Alpharetta and Cumming, that means less million dollar plus homes are selling so that average and median sales price goes down. Again, if less million dollar plus homes are selling, you would expect the average sales price to go down, and that will happen. I think the 250K and below market will strengthen as well as the 500K and below. I think the million plus will still struggle because until the economy strengthens this part of the market will struggle.

5. Volume wise in 2009, based on what I am reading I think it will be slightly better than 2008. I think we will still have record setting foreclosures in the first 3 quarters of the year and I see the Alpharetta, Cumming and Suwanee markets absorbing them.

6. I think we will see the bottom of the real estate market in the first half of the year.

I expect 2009 will be a better year than 2008 and I think the Alpharetta, Cumming and Suwanee markets will be stronger than the rest of the Nation as well as stronger than the Atlanta market. In Cumming in particular, with no significant new inventory coming into the market the inventory levels will continue to drop. In fact from 10/07 to 10/08 the inventory in Forsyth county decreased by 10%. That will help prices in 2009. In looking forward to 2009 I am optimistic look forward to 2009. If you need to sell a home you should be fine as long as you remember this - you will be engaged in a price war and a beauty contest. If you price your home correctly and it is in excellent showing shape it will sell. If you are buying in 2009 - you are buying at a great time. Call me at 770 722-7010 if you, or anyone you know, is looking to buy or sale a home. I will provide them excellent service.

Forbes.com has a great article on "America's Best Long-term Real Estate Bets" which is a great article. Basically, they give the 10 Metro areas that are the least likely to bust and have what they belive are the best economies moving forward.

They list Atlanta in the top 10 because of the City is a big driver of job creation in the Southeast. They do say construction peaked in 2006 and I belive we are working off the excess inventory. The article is located at http://www.forbes.com/2008/12/16/cities-ten-homes-forbeslife-cx_mw_1216realestate.html. Homes for sale in Alpharetta are up about 1% from 10/07 to 10/08, while in Cumming the inventory of Detached homes has dropped about 10% from 10/07 to 10/08 (detached resale homes only). I think that is a great sign.

In the long run, I think with interest rates where they are today and the supply of homes that many people that have recently bought a home, or that buy in the immediate future will be glad they did. I would love to find out what your thoughts are about buying in this market - what are your concerns and what excites you.