Buying Foreclosed and Distressed Property in Metro Atlanta
If I had a dime for every inquiry about buying distressed properties over the last year I'd be writing this from a tropical paradise instead of North Atlanta. It's easy to get the impression that banks and lenders are giving these properties away; they're not. In fact, most of the properties start about where "conventional" homes are listed. Some sell, if they don't then the seller either corrects issues in them, lowers the price until they do or does a combo of both. Are there exceptions? Of course and in December two buyer clients of ours scored huge deals. What did they do? They prepared, they knew what they wanted and they were DECISIVE. In this market, I'm seeing lenders look first at the strength of the buyer, then how fast they can close, then the price - that's a HUGE change as now "speed kills"; we've seen lower prices accepted for buyers that will close quickly. Here are my steps for success:
1. Get prequalified. Don't waste your time or ours, if you can't afford to buy then either get there or forget the idea.
2. Get mentally prepared. Our two buyers above went from walking the home to owning it in less than 21 days. It happens fast and you need to be ready for the process as it will test your metal.
3. Be decisive. Define success and when you attain it, take it. Vegas, Atlantic City and other casino towns thrive on gamblers that don't know when to cash in. I have three buyers right now lamenting over being unrealistically greedy and losing opportunities that they know they should have jumped on.
4. These homes might be nasty. Understand that these homes are usually "as is - where is" and all the other "is's" that you can imagine. I'm actively completing about 30 appraisals a month - about 10 are either distressed or headed that way. I have seen owners vandalize them, strip them bare, pop holes in plumbing lines to facilitate mold, use the air ducts as for pet waste and other nasty things and even pour fast hardening cement products down the drains. There's a reason many homes are priced low.
5. Get ready for head games. Some listings will be sold immediately upon listing (think insider trading), some will be intentionally listed low to facilitate a bidding war (works well), some will be contracted and still appear as active (to collect leads if the contract fails) and some lenders will simply not negotiate choosing instead to wait for their price. You can almost bet the house that a home can sit for a year and the minute your offer goes in the selling agent will tell you they need your "highest and best"....often you bid against yourself.
6. Work with professionals. I promise you that if you go in without a skilled buyer's agent and a reputable lender you will be filleted. Once you find a house it has to be literally taken apart to ensure that you're aware of any issues and cost to repair. You better have trusted contractors and tight reins on the budget, cost overruns and "unknown" issues tend to surprise folks. Learn a lesson from all the "TV infomercial investors"; know what the spread is between your final costs and comparable homes. It's funny tragic how many of these homes have an "investor owned" pedigree.
7. "YES Men". If you're surrounded by "yes men", fire them. It's a great time to buy SMART but the number of SMART buyers and legitimate deals out there is limited - very limited. If all you hear is a Pollyanna song about the market, agents tossing "rebates" at you, lenders "cutting to the bone" and such nonsense...you're headed for trouble. This economy is a train wreck and will be well into this year, buy accordingly.
The bottom line is that you can achieve success with distressed properties, the key is how well prepared you are. I know we're uniquely qualified because we complete prelisting appraisals on them, churn data literally for hours each day, work with buyers actively searching them, work with lenders and attorneys skilled in this area and we have trusted contractors. We're always ready to go - if you are then I'm certain we can help.
The past year and especially the last few weeks have been interesting, but not in a good way. As many of you working this site are in the process of working with sellers, selling homes or maybe contemplating it, I want to share a few thoughts. We'll do one at a time so no one falls into a coma...
First and absolutely foremost: Don't list if you don't plan to sell. As stupid as that sounds, I had a listing that received TWO CASH offers with 30 day closes, ZERO closing costs and no crazy requests. BOTH were 96%-98% sale to list price ratio. Done deal, right??
The first was rejected as my seller felt they needed an additional 0.01% more. Just that simple, no real other sound reason. No need to look at the couple of pounds of data I provided endorsing this deal, no need to understand that in this community less than 10% of the homes are getting offers, no need to understand that the real estate Gods were smiling on them. Nah...just call Mom who lives several states away and let her influence and ultimately make the decision. That decision was "ask for more". The response from the buyer (which is completely understandable) was "see ya".
Lightning struck again just a couple of weeks later. Unbelievably, I received a call from their agent, they still wanted the house. Knowing my sellers I worked the buyers into an offer netting my sellers $3,000 MORE than the figure that they hung up on last time. Another call to Mom, another NO for me. The problem this time, "We have to close in 30 days, where will we go?" Fool me once, shame on you - fool me twice shame on me. Those buyers have since moved on and so have I as we were both fooled twice; I declined the opportunity to relist their home.
Why did these people even list? They had two outstanding opportunities to do what very few people are doing - sell their home for a profit and do it quickly - and they rolled over on both chances.
I'll dive into this more, but here are a few points to remember starting with Be committed to SELL if you LIST
I'll continue on this situation in future posts along with others that have occurred this year. I know many other full time agents will agree; I've had deals fall apart this year for reasons I couldn't possibly think up.
I welcome you comments, I'll respond to everyone. I invite you to visit our site at www.hankmillerteam.com where you'll find a wealth of topical and useful information.
Things remain unsettled in the Alpharetta - Roswell - Marietta corridor of North Atlanta; we haven't rolled into the expected "buy" period just yet. This is normally the time that we see a spike in relocation activity and I can say that hasn't happened with agents I speak with. It's clear that buyers remain convinced values will continue to fall - they might but buyers also need to watch rates. The Fed has all but said that they will hold and likely increase the discount rate in the near future to curb inflation. Buyers that wait on prices will lose on rate. Again - if you're a qualified buyer now is the time to pull the trigger. Buy with your head, not over it and you'll be fine.
A major issue currently impacting home sales in the Alpharetta - Roswell - Marietta is the jumbo mortgage market; those rates remain higher than they've been in years. We expect this market to remain slow until rates become more competitive, many home buyers in these areas will require jumbo loans. One thing hasn't changed and isn't likely to; North Atlanta home buyers must be prepared for a thorough vetting, expect lenders and underwriters to turn you inside out! The inventory of homes for sale in Alpharetta - Roswell - Marietta is significant and weeding through it to find the right home is a chore. We find the vast majority of homes either over priced, not in show condition or in a literal state of disrepair. This is usually due to desperate owners that are trying to catch lightning (in the form of a stupid buyer) and can't get their homes squared away or insist on trying to get out even. Either way the market will take care of them. The homes properly presented and priced are actually selling in reasonable times for prices that are higher than expected. In fact we've seen several homes contract in less than 30 days in the high 90% sale to list ratio range. Alpharetta - Roswell - Marietta home buyers have an advantage to be sure, but we caution ours not to get ridiculous; find the right home and secure it because another qualified buyer will if you don't.
So what should a home seller in these areas expect? That depends on how realistic you are. The first and most important thing you must do is acknowledge the statistics. This market and the limited buyers don't care what you paid, what you owe or what you think of the value. The market will dictate value, nothing else. Ask yourself "would I buy this home "as is" right now at this price?" you better answer yes or you'll be there a long time. We're finding that sellers don't want to be "confused by the facts" and prefer to think that they will buck the data. Successfully selling a home in the Alpharetta - Roswell - Marietta area in the current market requires three main factors ACCURATE PRICE - EXTENSIVE EXPOSURE - APPEALING HOME. You have to price it right, it has to be easily found by buyers and agents and it has to show well. We're selling many of our Alpharetta - Roswell - Marietta homes off buyer direct contact - not agents as many "opportunity" agents are leaving the business (thank God!). If you're selling a home in Alpharetta - Roswell - Marietta I'd encourage you to contact us, there's much we can do at no cost to you.
You can read extensive info on the local North Atlanta real estate market, my observations on trends and forecasts, and much much more at WWW.HANKMILLERTEAM.COM and on my site. Make use of the tremendous number of market data sources we have available to you for FREE! Real estate in North Atlanta is what my team and I do full time, all of the time. We educate our clients; we sleep at night knowing that you do as well. Appraising and selling since 1989 has given me the opportunity to help sellers through cycles like this and the myriad of issues and challenges you will face. As for buyers, now is the time to exploit the advantage you have in the North Atlanta, GA real estate market. Whether buying or selling, we'll ensure that you get the best opportunity. Please visit our site, email, or call - I look forward to helping you - WWW.HANKMILLERTEAM.COM
The inventory of homes for sale in Alpharetta, Roswell and Marietta GA is rising as expected in a spring market. The number of qualified buyers is also as expected - that's right, the key word being QUALIFIED. The nation is relearning a basic lesson; home-ownership isn't a right; it's a privilege and not everyone that wants one is able to buy one. There's no point in droning on about all of this as the media is doing a great job at convincing us that the next depression is right around the corner. It's not, but the nation better get a grip on things or....
Basic economic rules apply when shopping for a home in Alpharetta, Roswell and Marietta; "buy with your head, not over it" (I kind of swiped that from the NY lotto slogan!). We're putting QUALIFIED buyers in North Atlanta homes and we're negotiating from a position of strength. Our buyers are sleeping at night knowing that they took their time, saw the data, understood the process and made smart purchases. We counsel our North Atlanta buyers to get preapproved - not prequalified - so we can demonstrate to sellers that they are serious. The North Atlanta real estate market is an oyster to our buyers and we find them the pearls. Have a look at how we operate CLICK HERE
So what should a home seller in overall Atlanta real estate market expect? That depends on how realistic they are. The first and most important thing they must do is acknowledge the statistics. Harris Interactive completed a study that showed only 23% of owners feel that their home has lost value over the last year. I'd hope that this 23% just purchased their home but that's not likely. We're finding that sellers don't want to be "confused by the facts" and prefer to think that they will buck the data. Successfully selling a home in metro Atlanta in the current market requires three main factors ACCURATE PRICE - EXTENSIVE EXPOSURE - APPEALING HOME. You have to price it right, it has to be easily found by buyers and agents and it has to show well. We're selling many of our Alpharetta, Roswell and Marietta homes off buyer direct contact - not agents as many "opportunity" agents are leaving the business (thank God!). If you're selling a home in Atlanta I'd encourage you to contact us, there's much we can do at no cost to you. Have a look at how we operate CLICK HERE
Clients in this market expect a depth of knowledge that can only be obtained from experience. As an associate broker & certified appraiser there's not much I haven't seen over 20 years!
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