LOCAL,LOCAL, ALL MARKETS ARE LOCAL

The real estate euphoria continues. Here is an excerpt from the National Association of Realtors: "February pending home sales flattened with limited buyer choices, but remained at the second highest level in nearly three years, according to the National Association of Realtors®." No doubt we are busy in the Atlanta area but you need to break down "Atlanta" into smaller segments to get the truest sense of the local market. Th60 e Atlanta area alone comprises between 8 and 14 counties depending on who runs the statistics. Here is my example: February home sales for 8 counties in the North Atlanta Metro Area: Average list price $432,000 Average sale price $247,000 Average days on the market 71 February home sales for Forsyth County. This county is 30-45 minutes north of downtown Atlanta: Average list price $383,000 Average price sale price $280,000 Average day on the market 85 February home sales for Dawson County. This county is 45-60 minutes north of downtown Atlanta: Average list price $413,000 Average sale price $220,000 Average days on the market 112 My neighbohrood Chestatee It is a Lake Lanier community with a golf course one hour north of Atlanta in Dawson County. Average list price $504,192 Average sale price $309,250 Average days o the market 174 Where am I going with this? There is a home listed in the Chestatee neighborhood or $699,000. The home has been on the market, up and down, for three years. The home has been lowered to the current price. We put an offer on the home last month. An offer that dictated a counteroffer. The listing agent is located about 35 minutes south of the neighborhood in area with a buiser market. He told his buyers to counter by lowering the price by $4000. He said the market is great for sellers, and houses are selling very quickly. Do you know that the listing agent had never been to the neighborhood? (his partner had). Moral of the story: When the media says Atlanta is booming and is a sellers market, the buyers need to know more. They need us to break down the market into very specific areas in order to educate them to the fullest. Markets are truly local!

I Want it All Including the Cat!

Real estate transactions are becoming increasingly complex. Put together a contract, add financing contracts, inspection reports, appraisals, and the paperwork adds up. This was a first for The Wells Team: We received an offer on a home in North Georgia. Under Special Stipulations they added the following sentence: Home sold completely furnished! The alarm bells went off! Our seller did not know how to react. All of the furniture? Including the dishes? The silverware? The garden gnomes? The cat? Needless to say that makes it a very complicated transaction. First let me clarify this point. This was the primary home for my sellers. Not a vacation home. Selling a vacation home turnkey is pretty common. This was not. My sellers were trying to place a quantitative amount to all of the furnishings. It is hard to figure out how much a used leather couch is worth on the open market! There were also items that they wanted to take to their next home. To sell some of these items at "used furniture" prices and buy the same item new continues to complicate the decision. Here is my advice very simply: When your buyer wants furniture in a home have them buy the home first then negotiate the furniture separately with the seller. And if you want the cat please negotiate that after we close on the home!

The Pricer per Square Foot Argument

As I go another listing appointment I know the first question that will be asked: HOW MUCH IS MY HOME WORTH? Of course that is the most important factor our sellers look at when deciding to sell their home and of course which realtor to choose. I lost a listing last month because the seller held me to a price that was said as part of a lengthy discussion on marketing the property. Side-note: This home in question is in my neighborhood where my real estate partner and I have lived for over 12 years. We have had the most resale transactions in the neighborhood for the last 4 years! Back to the story: I gave him a quick number with the comment "If you want to sell it quickly". To this day he took that number, held me to it, and hired another agent two weeks later. However the seller does not seem to remember that our discussion continued. The seller had taken price per square foot of recent sales and arrived at a much higher price. We discussed this and I said he had a very valid argument. At the end of the discussion the seller said he wanted to list it for his amount and I said we could do that and see how the market reacts. Quick history of the home: •Built in 2005 •Approximately 3675 square feet plus unfinished basement •Went into foreclosure in the summer of 2013 •Overall good shape for a foreclosure •Listed, in foreclosure, for $327K, lowered to an auction price of $289K after 6 months of being on the market! •Present seller buys home in foreclosure auction for $284K •Present seller puts approximately $10K to 20K in work on home. •Present seller wants to list it at $399K! •I bring him an offer, before it is listed, at $389K, with $11K in closing cost. Seller turns offer down. Says he wants $10K more Here is my point: We cannot base the price of a home exclusively using a price per square foot model. In this particular case the home did not sell in foreclosure at a much lower price. It had to be sold at auction. Why is it going to miraculously sell now, over $100K higher than auction price, because the seller has cleaned it up? The home is located in a part of the neighborhood that is in lower demand than in other parts. It does not have a golf course or lake view that most buyers want in our neighborhood. When pricing a home you need to know the history of the home, its location in a neighborhood, and other subjective criteria, before pricing it. The price per square foot is a great start but it is not the ultimate determining factor!

Build or Buy in North Georgia

According to everything you read in the media the housing market is booming. Prices are up and inventory is down. New home sales are also starting to see an increasing demand. So this must be a good time to build!!!! In North Georgia the jury is still out. Here are some considerations: •Price pre square foot will be higher on a custom built home over a resale •Lenders, for new construction, are available but not easy to find •Lenders have tough terms when building a new home •Lenders have a fear that a new home will not appraise in a neighborhood of resales •Price overruns are possible I have seen great deals on new home construction. This is in new neighborhoods built by large builders who can keep their cost competitive. For now I advise my clients to take a good hard look at the pros and cons of each situation.

A Line Drawn in the Sand

The media is full of great stories about our national housing market. Atlanta is also included as one of the latest success stories. If you read between the lines in these articles you will see that the surging house market is also causing other issues for homeowners. For the homeowner who is "underwater" in their home, moving forces them into a financial dilemna: lose money on their existing home to pay more for another home or stay where they are? What I am seeing an hour north of Atlanta is a direct result of the perceived surge in home sales: My neighbors are holding out for 2007 prices. I live in the only golf/boating community on Lake Lanier. At one time I saw homes selling for $1 million dollars! Last year the highest priced sale was $430,000! Many of my neighbors bought lake homes at the top of the market. In addition they spent more money on upgrades. As the foreclosures and short sales appeared in the neighborhood, prices declined. Finally we have reached the bottom. In the case of our area it was a 30% decline to the bottom. So now my potential sellers are in a quandry: •I want to sell my home but I dont want to lose money •Everything I read says the housing market is on its way up. Where is my price increase? •I dont understand why buyers will not pay what I have in my home. As a result they have "drawn a line in the sand". They are going to hold out until they can get their "fair" price for their home. The line has been drawn.

Short Sales and Electronic Signatures

I was so excited to see electronic signatures become acceptable in Georgia. In the comfort of my home I can fill out contracts, email them to clients for signatures, and have them returned to me via email. NO MORE PAPER! Now lets talk short sales. I happily sent two separate banks two purchase and sale agreements. What lending institution would not be happy to receive an offer on their distressed property? In both cases the bank rejected the offers because of the purchase and sale agreements. They would not accept electronic signatures! If we wanted to use these contracts we would have to fill out additional paperwork that required regular signatures! I was back to paper! So much for a good idea.

It's Ground Hog Day

I was watching Ground Hog Day over the weekend with my son. This was the movie with Bill Murray where he went to Punxsutawney PA, as a newscaster, to report on Ground Hog Day. He ends up repeating the same day over and over in the town until eventually the cycle is broken. (I do not explain movies very well!) Ground Hog Day would be the perfect theme for a lot of clients I am dealing with in North Georgia. The Atlanta area had a good year last year. Reports of a 1 to 2% price increase, lower inventory, and new construction. That is great news for an area that went down approximately 30% after the market peaked in 2005! Unfortunately we have sellers who had bought their home at the peak of the market. They also put additional money into their home as upgrades. Our sellers are under the impression that the market has turned around to the point that they can receive a higher amount for their home. The reality is that when a market goes down 30% and has since gone up 2%, we have a long way to go. In other words it is Ground Hog Day: Bill Murray has woken up in bed to the same Atlanta housing market he saw last year. Bottom line: Yes our market is doing better but it is not back to the 2005 levels. Our sellers need to take this into account when they decide to sell their home.