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Jim Crawford ~ Atlanta Real Estate-ABR E-PRO

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Buying a Home - A Personal Budget Could Prevent Disaster!

11-17-09
Jim Crawford ~ Atlanta Real Estate-ABR E-PRO

Gambling when buying a homeWhen they say "A home is the biggest investment of your life..!" They weren't kidding. It is! As you can see now what is ocuring in our economy today...it should never be taken or treated lightly as people were doing. A sudden illness, job loss can turn your world upside down. I recently heard of a friend speaking of a couple that just recently lost their home. Both the husband and wife lost their high paying jobs. They had no reserves. They lived in such a "Big home, drove a big car, and lived a big lifestyle!" At first glance, you would believe they were very well off, but it was a mirage. It was all done on credit.

Sometimes you sit back and are overwhelmed when you hear stories like this, but I no longer do. I am not cynical, a better word is that I am 'numbed to it!' I really think that too many persons lived way beyond their means and needs and what we are witnessing in our society to day is the price many are paying for the financial distress. As a parent would tell a child with too much food on the plate, "Your eyes were bigger than your stomach!" So too is the predicament that many home buyers placed themselves in. They placed themselves and their future in harms way. This is really a pretty common place story in America today. They did not anticipate income, their real financial obligations in life, increases in mortgage payments, taxes, utilities and even increases in the cost of gasoline. It was a true recipe for disaster of epic proportions.

Compulsive gamblers get a thrill by pushing the envelope a litter further than they should, and get a rush when they beat the odds. The difference is that many compulsive gamblers take calculated risks. They make their moves based upon certain known facts and odds. Unlike many homeowners that may be foreclosed on...many of them moved into deals that could never work out for them in their favor.

A budget could have laid out everything for them even before they went in on the home. A home should never be purchased on impulse or whim. The ability to buy a home, does not mean you should move forward. Down payments, monthly payments are only part of the big picture. There are many other monthly expenses that have to be allotted for in a budget. The math never lies. Before a person buys a home is the time to look at the math, once you are in the home it is pretty much too late. Many persons are finding this out the hard way that you cannot flip an expensive home in a six months or a year if every one of your neighbors are trying to do the same thing too.

This is especially true for first time home-buyers in a shaky economy and high unemployment.. Before you buy a home have a plan! make sure it is your plan...one that you are comfortable with and do not feel you are pressured into it.

  1. Start with the right mortgage that you can afford. A mortgage payment is one thing, but the reason a 30 year fixed rate became so popular after the last great depression is that it is a budgeted mortgage. It provides a fixed rate payment for the term of the loan. Principal, Interest, Taxes and Insurance are all provided for. If you know that your payments are for the next 30 years, you can plan around it. The secret is you pay it down, and NEVER borrow against the equity! Don't have enough money for a down payment? Get a second job! Try to put down the most possible, again...pay it down.
  2. Assess Your Finances. Once you know what your monthly payment is now you can look at all the other items in your life. Income, taxes and expenses. Some expenses may be fixed, and others will fluctuate. It is the monthly expenses that are most important. Sometime they are not constant. In summertime the air conditioning usage will be higher, and so will your electric bill. In the winter Your electric bills may go down, but your gas or oil bill will rise due to heating. Water usage may rise. There are many fees that are necessary and others that are not.
  3. Know Your Financial Obligations:Home insurance, electric, gas, sanitation, water and sewer will fall into this category. Cable tv is optional. Then there are expenses of home maintenance, auto payments, car insurance, hospitalization, the cost of maintaining a cars(s), fuel, car insurance, registration, parking tolls, food, medical, personal care, taxes and more. On top of this is you should have a good nest egg or an emergency fund. I would suggest at least 6 months in the bank!

  4. Don't Have a Budget? Get one! Plan it out! Download a free Family Budget for Microsoft Excel

Personal Budget

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Marketing Atlanta Real Estate – An Insight to a Generational Gap.

11-16-09
Jim Crawford ~ Atlanta Real Estate-ABR E-PRO

Todays Home BuyersNo matter how much hype we have in Atlanta Real Estate about the buyers in the current market, one thing everyone is in agreement on is that the largest percentage of Atlanta Real Estate sales is still going to the first time homebuyers. This is the generation of current home buyers that instead of sports after school or building go carts made of crates from produce stands - after school they were busy gaming. That is their recreation and entertainment. This is the generation that grew up online. If they want the news, they do not even turn on the TV. They instead rely on the Internet or cell phone to update their need for more information and faster connectivity speeds. Unlike any other generation, their lives embrace technology and accept it as their way of life. The problem to most real estate agents there is a major disconnect. The average agents age in in the 50's while the average buyer is in their mid 20's. So it is a generational gap that cannot even be fathomed by the experienced agent. We are totally blindsided to how they think, act and make decisions. While the agent is busy writing ads for open houses that will be opened a week from now on a Sunday between the hours of 1-5PM. The "iGeneration buyer" has already found 5 or 6 high quality virtual tours online and has texted, emailed or Twittered this home to others that may be involved in the purchase decision and has already made appointments to see the home. He does not have to wait 5-6 days to see the inside of a home, and sign your guest register while you give them the "Third degree!". They prefer the anonymity that is offered online.

Flyers, directional signage, and classified ads have gone the way of the mammoth and mastodon to this generation of buyers. High Definition video tours online and advanced street level mapping may in time eliminate open houses, perhaps not entirely but the next gen of buyers coming from the Internet generation will view and disseminate not only properties online but surrounding areas before deciding which ones to pursue further. With the trend moving away from the ex-burbs and into the city center or fringe suburbs, it may become location, location, location again instead of the present day price, price, price. With the extension of the $8,000 tax credit, more first time home buyers are in the market again for some time to come - and searching the Internet, the medium they grew up on. They will not be getting their fingers dirty with stale classifieds, or black and white or color real estate magazines. Life as they know it is a "Print free world!" They expect and demand more than a one dimensional marketing approach, and have grown up in a world where they do not have to accept less. The will look to avoid intrusive forms, and try to get to the next level of the game without giving up any of their points. It is only when the prize is in sight will they reveal their identities. Will they be able to find your home? On our Atlanta Real Estate site they will! For over 13 years Atlanta Best Homes has had high ranking visibility on all the major search engines. We recieve over 2000 unique visitors a day!

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Home Buying in America - There's No Place Like Home!

11-15-09
Jim Crawford ~ Atlanta Real Estate-ABR E-PRO

Home Sweet HomeWhen I was a kid and a couple married, they saved and saved until they could actually afford a little house. We reckoned 2.5 times your salary minus debt (who had credit cards?) After all, there was insurance, the utility bills, a few sticks of furniture, maybe a fence in the yard if children were in the offing, and always save a little for a rainy day. Friends would come over on a designated Saturday, bring their kids to play in the yard, and they'd help you paint, fix the small plumbing problem, do a little re-wiring and you'd do the same for them. Even if you wanted to buy a home large enough to grow into, banks were so strict on their lending practices you couldn't over buy. Foreclosures occurred when a factory town somewhere out in the middle of Unheardofville shut down the main and perhaps only source of income. When someone purchased one of those foreclosed homes, you generally walked into years of equity. Forget that today. You're lucky if you pay "market value," whatever that has come to mean. People used to have goals - college for the kids, retirement, the odd vacation usually spent at a retired in-or-out-law's home in a neighboring state perhaps.

Twenty-five years ago, it was very common for your Dad to go to work and your Mom stayed home, even if there was only one child. If your Mom got a little part-time job while you and your siblings were at school, that money was gravy. Workers got perks called raises and sometimes a bonus annually, and not just a turkey. Inflation has deflated the housing balloon.

In 2009 we just about have to have dual income households. Since child labor laws have eclipsed the Dickensian England, there's no one else to help with the slack if Mom and Dad both lose their jobs. What does that mean for families now - something's got to give if everything is being thrown on the mortgage such as your retirement. Our parents retired on a decent monthly income that were the benefit of putting in your thirty years. A matching program made retirement idyllic, but if you didn't have that, you still had your pension. Persons did not live or borrow against the equity in their homes.

I'm not touching healthcare with a ten foot pole today, don't get me started.

There's No Place Like Home!

"To thee I'll return, overburdened with care;
The heart's dearest solace will smile on me there;
No more from that cottage again will I roam;
Be it ever so humble, there's no place like Home."
Melody by Henry Bishop

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No Georgia Homestead Exemption? What Gives?

11-14-09
Jim Crawford ~ Atlanta Real Estate-ABR E-PRO

No Georgia homestead relief? OOFFAAH! It's like getting taken down by an NFL player you never saw coming, although you thought you heard he was in the neighborhood. A friend of mine from Roswell called today, frantic that the tax bill had gone UP. Something to do with that word homestead again. Yesterday, another friend in Gwinnett had just returned from the tax assessor's office. He doesn't want to escrow his taxes, he just pays them in person once a year. SLAM! $460.00 more dollars in taxes than he thought he owed, but he'd been alerted by snail mail and was vaguely aware the freight train was coming, he just ignored the crossing guard lights and bells. So while the Georgia Homestead Exemption lives (for now), expect tax increases. Doesn't that usually occur when property values go up? That's what we all thought.

The Georgia Homestead has provided tax relief to Georgia homeowners in the form of a credit on their property tax bills for many years. However, as in many other states and the the nation...falling tax revenues, rising unemployment has put an extreme burden on many states including GA. The GA state government has scrambled to balance revenue-strapped budgets - Georgia lawmakers approved the repeal of the Homeowner's Tax Relief Grant (HTRG). For most Georgian homeowners, this has already translated into an average increase of between $200 and $300 on each property tax bill. Be prepared for the loss of homestead this year when paying your tax bill, higher mortgage escrows, less government service and higher tax bill in the future.

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Atlanta Short Sales - Patience, Patience, and More Patience.

11-13-09
Jim Crawford ~ Atlanta Real Estate-ABR E-PRO

Generalities on Atlanta Short Sales:

#1 rule for Atlanta Short Sales: Patience, patience, and more patience.

No matter how many pages of documents you are required to fill out, initial, and/or date and sign, if you want the bank to even consider your offer, Nike - Just do it, don't question it. The entire contract should include ALL paperwork (and some may come later), a copy of your earnest money check, a letter from your lender or a letter from your bank if you are paying cash. If you pile on the special stipulations, ask for closing costs, give a distant closing date, or don't want the property sold in strictly "as is" condition, your chances of consideration are between slim and none.

The term "time is of the essence" will take on new meaning. The bank will want you to jump when they say and then take weeks to get back to you. No rhyme, no reason. While the bank may have given themselves the ability to move the closing date, they will have a "take no prisoners" attitude should you want to change the closing date for any reason, valid to you or not. Let your attorney tear the addenda apart at $200 per hour, send your changes to the bank and kiss the property goodbye.

Don't be under the assumption that a given foreclosure is the deal of a lifetime, most especially if there are two mortgages on the property. I had lunch with a colleague yesterday who is in her 18th month on a short sale (notice it's not "quick sale"). There's a primary and secondary mortgage and neither bank can agree on anything at the same time. The other side of the coin-if you are willing to do all those repairs to the roof, systems, updating-you might want to look at a great deal with a builder or home listed at fair market value.

There's always that allure of "let's wait and see how far the bank will drop the price." You'd be surprised at how long banks will hold on. Other buyers may say, "let's offer half price and see what the bank says." The bank will issue a resounding "NO!" or merely ignore your offer if the pricing is at market. As the price may drop in the event the market price in the area drops, the powers that be at the bank already have the math figured out.

The coup de grâce - all sides are seemingly settled in, all's right with the world and another offer comes in.

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