It is easy to give advice to clients, friends, and family when it does not directly affect you.
In this situation I had to practice what I preached.
My family has owned a condo in Florida for over five years. We bought this condo to enjoy with our family not as an investment.
Then the housing market collapsed. The result: The market value of the property went down by 53%
After three attempts at a short sale, loan modifications, and refinancing, we were at a crossroads. Do we continue to put money into the property or cut our losses and move on?
It is easy to tell your clients to cut their losses, take money to closing, and move on. It is easy to tell your clients to run spreadsheets, do a cost anaylsis, and see if the property will return a positive investment.
Now it was time for me to take my own advice. I ran the spreadsheets, did the cost analysis, and conferred with my financial planner, and accountant. The answer was the same: Sell the property, take the loss, and move on!
I did not like the answer. I spent countless hours rationalizing why I should keep the condo. We enjoyed it, the beach was wonderful, and it gave us a chance to relax. Unfortunately those are not raitonal reasons.
I will be closing on the sale of the condo by the end of the year. The monetary loss is going to hurt and hurt badly. But in the long run it was the only solution.
The next time I give advice about losing money on the sale of a home it will come from the voice of experience.
Monday, December 12, 2011
They Took the Doors
This market continues to amaze us. It forces people into irrational behavior. Take the case of the latest home to go into foreclosure in my neighborhood. The home had been for sale approximately two years. A custom built home with upgraded appliances, light fixtures, and a pair of handmade antique front doors.
Needless to say the home was advertised for foreclosure at the beginning of December. Our team put a short sale offer on the home two weeks before it was to go into foreclosure. At that point the "owners" had taken the appliances, and changed out the light fixtures. We pressed ahead with the short sale offer despite the changes they had made.
Then they came back to us and said that they were taking the doors! What do you mean they are taking the doors! The same doors that they had advertised for two years as part of the home had suddenly become a "wedding present". The sellers had now laid claim to the doors.
After some tense negotiations the sellers agreed to leave the doors with the home. However after all that work the lender declined our short sale offer. The home was then foreclosed on the following. It happened on a Tuesday. I bet you will never guess what happened Tuesday night? Yes you guessed it. The doors disappeared. They were replaced by two standard metal doors.
My question to all of you is this: When you build, or buy a home, do you buy the doors, light fixtures, and appliances for cash and place them in the house or are they paid for by the mortgage? I will bet that all of the items are part of the mortgage. If the lender paid for all of these items then why do sellers feel it is their right to take these items out of the home?
Has this housing market killed our integrity?
Saturday, November 19, 2011
Water Levels at lake Lanier
For all of us "locals", we are all very familiar with Lake Lanier and its ever changing water levels.
As of today Lake Lanier was down over 14 feet!
What does that have to do with a real estate agent who sells Lake Lanier property? I think you know the answer.
We had been working with a client for over six months. We had showed them Lake Lanier property and knew their desire to live in our area. We were waiting for them to sell their Florida home.
You probably know how this turned out. Our clients had sold their Florida home however I did not hear from them. I made the phone call that I dread making. When they answered the phone they apologized for not keeping in touch but they were going to buy a home at Lake Oconee!
Regardless of the outcome we always take the high road. We wished them the best of luck.
They are moving to an area that is double the distance from their grandchildren in Atlanta. They are moving to an area that is more rural with less to do. But they were moving to a lake where the water level stays constant.
Lake Oconee is run by a power company. They keep the level constant. Lake Lanier is run by the Army Corp of Engineers.
The priorities of Lake Lanier are flood control, water supply for Atlanta, enforcement of the Endangered Species Act, among the many. Boating, recreation, and real estate are at the bottom.
As residents of the lake, boat owners, and real estate agents, we always knew the priorities. However this does not make the situation any easier.
As we continue to have water wars with Alabama and Florida over the lake, have a growing population, and put more strains on the infrastructure, we will continue to see this situation every other year.
An unfortunate situation that is caught up in local and national politics. The solutions are attainable but they need to be implemented not discussed.
Until them we will keep losing customers.
As of today Lake Lanier was down over 14 feet!
What does that have to do with a real estate agent who sells Lake Lanier property? I think you know the answer.
We had been working with a client for over six months. We had showed them Lake Lanier property and knew their desire to live in our area. We were waiting for them to sell their Florida home.
You probably know how this turned out. Our clients had sold their Florida home however I did not hear from them. I made the phone call that I dread making. When they answered the phone they apologized for not keeping in touch but they were going to buy a home at Lake Oconee!
Regardless of the outcome we always take the high road. We wished them the best of luck.
They are moving to an area that is double the distance from their grandchildren in Atlanta. They are moving to an area that is more rural with less to do. But they were moving to a lake where the water level stays constant.
Lake Oconee is run by a power company. They keep the level constant. Lake Lanier is run by the Army Corp of Engineers.
The priorities of Lake Lanier are flood control, water supply for Atlanta, enforcement of the Endangered Species Act, among the many. Boating, recreation, and real estate are at the bottom.
As residents of the lake, boat owners, and real estate agents, we always knew the priorities. However this does not make the situation any easier.
As we continue to have water wars with Alabama and Florida over the lake, have a growing population, and put more strains on the infrastructure, we will continue to see this situation every other year.
An unfortunate situation that is caught up in local and national politics. The solutions are attainable but they need to be implemented not discussed.
Until them we will keep losing customers.
When Do I File the Deed?
After six years I still learn something new everyday!
I have a client who is buying a home from a seller who purchased the home on the courthouse steps. The seller, with his investment group, paid cash for the property.
As we finalized the agreement with the seller we did negotiate with one disadvantage. We did not know what the seller paid for the home. Why? Because the seller had not filed the deed with the county!
After we finalized the agreement I brought up this point with the seller. The seller waited to file the deed because he did not want any potential buyers to know how much he paid for the home.
This seller has purchased numerous foreclosure homes in the North Atlanta area. After he purchases a home he does what he feels is needed to ready the home for sale. Obviously repairs and upgrades cost money and are taken in account when he prices the home.
The problem in the past is that potential buyers look up the home on the tax records, see what the seller paid for the home, and offer a slightly higher amount. There is no regard for repairs or upgrades made to the home. In many cases he has been offered $5000 to $10,000 more than what he paid for a property!
So this seller holds the deed as long as he can.
Of course once our deal is finalized the deed needs to be filed. If it is not filed the lender will not approve the deal and the lawyer cannot do a credible title search.
An interesting strategy in this crazy market!
I have a client who is buying a home from a seller who purchased the home on the courthouse steps. The seller, with his investment group, paid cash for the property.
As we finalized the agreement with the seller we did negotiate with one disadvantage. We did not know what the seller paid for the home. Why? Because the seller had not filed the deed with the county!
After we finalized the agreement I brought up this point with the seller. The seller waited to file the deed because he did not want any potential buyers to know how much he paid for the home.
This seller has purchased numerous foreclosure homes in the North Atlanta area. After he purchases a home he does what he feels is needed to ready the home for sale. Obviously repairs and upgrades cost money and are taken in account when he prices the home.
The problem in the past is that potential buyers look up the home on the tax records, see what the seller paid for the home, and offer a slightly higher amount. There is no regard for repairs or upgrades made to the home. In many cases he has been offered $5000 to $10,000 more than what he paid for a property!
So this seller holds the deed as long as he can.
Of course once our deal is finalized the deed needs to be filed. If it is not filed the lender will not approve the deal and the lawyer cannot do a credible title search.
An interesting strategy in this crazy market!
Top Trends from The Norton Agency
We had the opportunity to attend The Norton Agency Advanced Seminar last week. Our President, Frank Norton Jr, gave us a lot of statistics, information, and trends for the national and local real estate market.
Top ten trends, for our area, as identified by The Norton Agency
Expect no upward swing (in regards to prices)
Foreclosures have run their course in Georgia
Lending is invisible (more lending alternatives)
Cash is piled up on the sidelines (folks in a holding pattern)
Value price is in
Healthcare sector is pumping
Agriculture is back (demand for small farms)
Function before glamour (in regards to a home)
Rampant uncertainity is paralyzing!
We are on the edge of a centennial investment opportunity!
With interest rates being the lowest since 1930, owning a home being cheaper than renting, and low pricing, this could very easily be the best opportunity we will have in our lifetime! Take advantage of it!
Top ten trends, for our area, as identified by The Norton Agency
Expect no upward swing (in regards to prices)
Foreclosures have run their course in Georgia
Lending is invisible (more lending alternatives)
Cash is piled up on the sidelines (folks in a holding pattern)
Value price is in
Healthcare sector is pumping
Agriculture is back (demand for small farms)
Function before glamour (in regards to a home)
Rampant uncertainity is paralyzing!
We are on the edge of a centennial investment opportunity!
With interest rates being the lowest since 1930, owning a home being cheaper than renting, and low pricing, this could very easily be the best opportunity we will have in our lifetime! Take advantage of it!
Frustration with Appraisals!
I know every agent in this country is feeling the same pain that I feel when it comes to appraisals!
At my weekly Rotary Club meeting I had a friend share his frustration. He recently had his home appraised for refinancing.
His frustration was in the fact that, in his opinion, the appraiser had no idea about the details of the home. When my friend had his home built he spared no expense. Extra insulation, upgraded hardwoods, top of the line fixtures, counter-tops, and extra energy efficiencies throughout.
In a normal market all of these upgrades would weigh on the price of the home. In this market all bets are off!
I told my friend that my home was appraised for $50,000 less than I paid for it in 2001! I have put in a new Kitchen, new Master Bathroom, and screened in the porch! My reward? $50,000 in lower value!
What I saw on my appraisal is that a home is rated excellent, good, fair, or poor. A higher rating is the most you can expect and I do not know how much that adds or subtracts to the value of the home.
Bottom line: I told my friend that I agree with him. Until the appraisers take more factors into account when appraising a home, our values will stay the same
At my weekly Rotary Club meeting I had a friend share his frustration. He recently had his home appraised for refinancing.
His frustration was in the fact that, in his opinion, the appraiser had no idea about the details of the home. When my friend had his home built he spared no expense. Extra insulation, upgraded hardwoods, top of the line fixtures, counter-tops, and extra energy efficiencies throughout.
In a normal market all of these upgrades would weigh on the price of the home. In this market all bets are off!
I told my friend that my home was appraised for $50,000 less than I paid for it in 2001! I have put in a new Kitchen, new Master Bathroom, and screened in the porch! My reward? $50,000 in lower value!
What I saw on my appraisal is that a home is rated excellent, good, fair, or poor. A higher rating is the most you can expect and I do not know how much that adds or subtracts to the value of the home.
Bottom line: I told my friend that I agree with him. Until the appraisers take more factors into account when appraising a home, our values will stay the same
Monday, November 7, 2011
Extension of HUD Property Flipping Exemption
A couple of points:
The FHA is extending the availability of the temporary waiver of its regulation that prohibits the use of FHA financing to purchase single family properties that are being resold within 90 days of the previous acquisition, until December 31, 2011
To use an FHA loan on a home that is being flipped: All transactions must be an arms-length transaction. The home cannot have a pattern of previous flipping activity as evidenced by multiple title transfers within the last 12 months. The property must be marketed open and fairly. If the property is being sold for more than 20% of what the seller purchased the home then an appraisal must be done. Also an inspection must be performed.
If you have a client buying or selling a foreclosure property a knowledge of this directive will help especially if an FHA mortgage is involved.
Check with your lender to verify the current rule changes.
Overall this will give you some additional options with FHA financing.
(HUD Docket No. FR-5397-N-03)
The FHA is extending the availability of the temporary waiver of its regulation that prohibits the use of FHA financing to purchase single family properties that are being resold within 90 days of the previous acquisition, until December 31, 2011
To use an FHA loan on a home that is being flipped: All transactions must be an arms-length transaction. The home cannot have a pattern of previous flipping activity as evidenced by multiple title transfers within the last 12 months. The property must be marketed open and fairly. If the property is being sold for more than 20% of what the seller purchased the home then an appraisal must be done. Also an inspection must be performed.
If you have a client buying or selling a foreclosure property a knowledge of this directive will help especially if an FHA mortgage is involved.
Check with your lender to verify the current rule changes.
Overall this will give you some additional options with FHA financing.
(HUD Docket No. FR-5397-N-03)
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