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4 Problems of Overpricing

Price Problem #1: Where's the Excitement?

The first problem is... it's hard to get sales people excited.  

And it doesn't make any difference how much marketing you're doing... the problem is the same ... its hard to get sales people excited.

You see ... agents generally know what buyers are willing to pay for similar homes in similar areas in this market right now. 

And when a house is sitting on the market for any length of time not selling, their reaction might be that it's overpriced.  

They won't get excited because they know they can't get their buyers excited.

On the other hand ... when your price your home competitively ... this is what happens:

Agents get excited because they know they can get their buyers excited. 

Excitement is contagious. 

So is apathy. 

You have to ask yourself:

Which emotion am I generating?  Excitement or...

The Market Is Always Talking

With a steady stream of negative news on the economy and real estate market, I think it's important to mention - despite what the media has to say – we’re selling houses!  

My team and I have closed on 10 houses so far this year and, as we head into the spring season, I expect we'll more than triple that number before the tax credit runs it's course on April 30th.

Sure ... it's a taking a bit longer than it did a couple years and prices are, without a doubt, lower today than they were a year ago.

It's times like this I remind myself:

Selling real estate is simple. 

Simple... but not easy.

And selling real estate, for all it's complexity, boils down to very simple rules and universal truths. 

But to hear the truth about selling ... you've got to "listen" to what the market is saying ... because the market is always talking.

Are You Listening?...

Enemy #1

Water is the #1 enemy of a home.

...

Atlanta Foreclosure Report: February 2010

In February foreclosure notices skyrocketed 27 percent erasing the memory of declines reported in January. A total of 10,357 notices were published this month compared with 8,181 last month.

The most recent report by Equity Depot also reveals a 34 percent year-over-year (YoY) increase with 7,701 published foreclosures notice in Februray 2009.

What's striking is there is no marked difference in foreclosure rates relative to price range or geography. 

It's seems this recession doesn't discriminate.

Gwinnett topped the charts this month with 2,163 foreclosures, Fulton came in close second with 2,008 and DeKalb County rounded out the top 3 with 1,511.

February foreclosures notices are scheduled for auction the 1st Tuesday in March....

FHA Changes the Investment Game

In addition to residential sales, my team is heavily involved in helping investors profit by investing in foreclosure properties. Mainly by purchasing small single family homes in Atlanta foreclosure market at 60% to 70% of future value, rehabbing them, and quickly reselling them for a healthy profit. Most of these properties are in blue collar neighborhoods that we resell to first time buyers using FHA insured financing. Most of the foreclosed properties we purchase were also financed by FHA insured mortgages.

The one wrinkle in this buy, rehab, and resell process was the arcane Housing and Urban Development anti-flipping 90 day rule 24CCFR 203.37a(b)(2). This rule "provide that a rehabbed property would not be eligible for another FHA insured loan if the contract of sale was executed within 90 days of the prior acquisition by the seller and the seller was not exempt from this rule". What this meant in plain non-bureaucrat English was that if an investor purchased the property for...

What's Up With FHA?

FHA announced this week it will seek to implement changes to current policies.  These changes are all restrictive and have a significant impact on the real estate buying public.  

You can read all about the changes here: FHA Announces Policy Changes to Address Risk and Strengthen Finances 

For those less inclined to sift through all the beauracracy ... here's a quick snapshot:

  • The upfront mortgage insurance premium will increase by 0.5% from 1.75% to 2.25%
  • The maximum seller concessions will decrease from 6% of the sales price to 3% of the sales price
  • There are some credit score/LTV limitations that should not affect “A” paper lenders

When Do The Changes Go Into Effect?

FHA will issue a notice and have a comment period on most...

Atlanta Foreclosure Report: January 2010

2009 was a record setting year in Metro Atlanta with 117,107 published foreclosure notices.

And the 2010 outlook doesn't look promising as the economy and job market continues to show signs of weakness.

But with just 8,181 foreclosure notices filed in Janaury 2010 we're able to breathe a small sigh of relief.  Surprisingly, we saw the first January-to-January decline in 10 years.   So what is the can this decline be attributed to?  Likely a combination of several factors, not the least of which being that we are finally seeing fall out from the "subprime" crisis getting cleaned up.

But it's far too early to predict how the year will go from here.  With many banks slowing the pace of foreclosure through the Holiday season -- it's possible this is just a seasonal dip and the relentless pace of 2009 will continue as we head into the spring in summer season.

So how did the 8,000+ foreclosure notices fall county-to-county?  Fulton County...

Taxation Without Representation

In the wake of the 2008 real estate meltdown lies Georgia's property tax system - in shambles.

Atlanta Home Values have plummetted but, as the AJC reports today, county tax appraisals are not along for the ride down.

In examining 550,000 residential property tax records in 5 major Metro counties (Fulton, Dekalb, Gwinnett, Cobb and Clayton) it was determined county appraisals are higher - in some cases, much higher - than your property is now worth.

What Does This Mean For You?

In simple terms it means that you are, quite likely, being taxed on value your Atlanta Home no longer holds.  I'm sure this comes as no surprise.  Afterall, 2009 Atlanta property taxes have been due for some time now.  And if you were alive and owning Atlanta real estate during the last 18 months ... you don't need an 8 Day investigative report to tell you your home has lost significant value and your...

Failure

Our environment, the world in which we live and work, is a mirror of our attitudes and expectations.
Earl Nightingale

Here, sipping my morning coffee and digesting the news of more Georgia Bank failiures.

What's striking isn't that more banks have failed.

Truth is, I've come to expect news like this. 

And that, to me, is the more compelling story.

It's there, in my approach, that work can be done and change happens.

...

The If and When of Recovery (video)

It's worth taking a look at this recent Wall Street Journal interview with Real Estate expert John L. Burns.

Mr. Burns confirms a lot of what I've been predicting for months now for the 2010-2011 Atlanta real estate market.

In the video he explains why FHA loans and migth contribute to a prolonged recovery.

Here are a few reasons why 2010 will not be the year of recovery:

**We are likely to see what economists refer to as a ‘W’ shaped recovery…recent news and the surrounding economic environment supports us being in the first leg of the "W"… going up (only to come back down in 2010)

**FHA, with it's monstor growth (2% of the market in 2007 to over 23% right now), has become the new ’sub-prime’

**Without continued government intervention (tax credits, FED purchasing mortgage backed securities to keep interest rates artificially...

The Market Is What The Market Does

There are a number of ways to analyze exisiting homes sales.  Today I'm looking at comparative monthly homes sales not "seasonally adjusted".

So what you're looking at here is a graph that shows monthly existing homes sales from 2005 to 2009.  And what you're seeing is that for the 5th straight month, sales are higher in 2009 vs. 2008.   And for 2 consecutive months now we've seen sales higher in 2009 vs. 2007.

existing-home-sales_480

Why the improvement?  It goes without saying many of these sales can be directly attributed to first time home buyers storming the market to take advantage of the $8000 tax credit.  Though now extended through April 30th 2010, the original deadline was November 30th.  The mad dash to beat the expiration this month...

Atlanta Foreclosures Hit New Record High

The number of Atlanta foreclosures hit a new record in September with 12,207 foreclosure notices filed in the 13-county area that is Metro Atlanta, according to Alpharetta-based Equity Depot. (www.equitydepot.net). 

That's an increase of 22% over August when 9,930 foreclosure notices were filed with the courts and 282 more foreclosures than the previous record of 11,925 set in June of this year.  

This moves the total number of foreclosures notices at 87,679 for the year - a new record for a 12 month period and we've still got 3 months to go.  The previous 12 month record was set in 2008 with 79,484 foreclosures notices.

Fulton County led the 13 county area with most foreclosures in September at 2,666; edging out Gwinnett County which followed with a close second at 2,304.  DeKalb County totals came in third at 1,770 followed by Cobb and Clayton with 1,474 and 994, respectively.

What does all this mean for the Atlanta real estate market and economy...

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