|
|
|
Bank Owned Homes Make Up Half of Atlanta Sales Activity - 2009-05-17 |
An increasing number of prospective home buyers in the Atlanta area are including foreclosures on their list of homes they are willing to consider. And that represents a major change in the way both buyers and their agents do business.
In the past, many buyers wanted to look only at homes which were in “move-in” condition. This could easily include resale homes, but only those houses which needed no major improvements before occupancy.
But today, things have changed. About half of today’s sales activity is in the area of distressed property or bank-owned homes that have been through the foreclosure process. And these homes are some of the most popular in the metro area.
As recently as five or six years ago, bank-owned homes represented such a small segment of the resale market that it was not even a specific subset in the multiple listing computer. But today, the MLS specifically recognizes this category. In fact, most of the larger real estate firms have agents who specialize in the sale of these homes.
There are several reasons that have prompted this reaction:
* The sheer number of bank-owned homes has exploded in direct proportion to the number of homes advertised as going into foreclosure. In one recent month, Equisystems foreclosure trackers reported more than ten thousand houses listed in foreclosure ads, just in the 13 county metro area. This is not only a new record, it is a tsunami of homes.
The owners of the vast majority of these houses are “upside-down” in their loans, meaning that they owe the bank more than the house is worth. Because there is no hope of selling the home before the foreclosure auction, many simply walk away or abandon the house. And it’s a fact that most vacant homes tend to deteriorate and begin to decline in value.
* These homes aren’t just in undesirable neighborhoods. Instead, they are scattered all over metro Atlanta, distributed largely in line with the population as a whole. They are the homes which sold to buyers on exotic or sub-prime adjustable loans three and five years ago, and the payment amounts are now adjusting to unmanageable levels.
So if a buyer wants to live in a specific neighborhood and wants to see everything on the market, they will of necessity need to view some of the bank-owned houses.
* The financial incentives for buying a foreclosed home are compelling, provided you meet the requirements.
First, the feds offer a Federal Housing Tax Credit of $8,000 for most who buy and occupy a home this year, provided they haven’t owned any residence in at least three years. The credit can be applied against any current tax liability, and can be taken this year. It does not have to be repaid.
Then, the Georgia Department of Community Affairs offers the Georgia Dream downpayment assistance package of up to $14,000 for any qualifying first time buyer who buys a foreclosed home from a bank or government agency. Known as the Georgia Dream Loan, the cash is in the form of a zero-interest second mortgage, which is forgiven over a period of six years, provided conditions are met.
While not everyone will qualify for either or both of these programs, enough do to have created a potent home-buying army seeking over $20,000 of credits and cash toward the purchase of their home.
* The permanent financing available is good enough to take your breath away.
Thirty year fixed rate loans with interest rates as low as 4.50 percent promise mortgage payments that are, in some cases, lower than the monthly cost of renting an apartment. And those payments are locked in for the next three decades, regardless of what happens with our economy.
* But the real icing on the cake, the true motivator of all buying behavior in real estate and everything else is price. And when you look at home prices of today’s bank-owned homes in the Atlanta area, the price is finally right.
Home lenders have reluctantly realized that the federal bailout is unlikely to relieve them of ownership in these vacant houses, and that the only way to sell them is to lower the price. And it’s actually beginning to happen.
Agents tell me that today’s best Atlanta area bargains are to be found in bank-owned homes in good neighborhoods. These homes often need a ten thousand dollar facelift (paint, carpet, some repairs), but not a major rehab project. In exchange for the hassle, the buyer gets a significant discount on a good house in a proven neighborhood.
If you think you might be in the market for such an opportunity, seek an agent with experience in the foreclosure sector of the market. Dealing with lenders and their loss mitigation departments can be a maddeningly unproductive experience, and your agent should be able to push the bank forward.
In addition, I would recommend buyers select a broker with an active foreclosure department. Having access to fellow agents who may have had direct experience with a certain lender might prove extremely helpful if negotiations come to an agonizingly slow crawl, which happens routinely.
Questions or comments?
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
|
|
Upcoming Events
John Adams Presents
REAL ESTATE ACADEMY
with John Adams
Saturday, May 19th
This ONE DAY INTENSIVE is designed to bring the REALTOR or INVESTOR to the next level in today's GUERILLA INVESTOR techniques, from finding & evaluating BANK OWNED HOMES to FINANCING & REHAB techniques. Includes using ROTH IRA and RETIREMENT FUNDS to invest in Real Estate, Income Tax and Property Tax Reduction strategies, Landlording methods for maximum cash flow, Exit & Retirement planning, and Pre-emptive Disruptive Appraisal Methods. In addition, a bonus session on GOOGLE TOOLS for Investors has been added to this class to allow you take full advantage of the power of the Internet to your profit system.
For more details and to REGISTER, Click HERE
The Foreclosure Tour of Homes
Saturday, May 26th
Starting at 9:30am, a small group of investors and buyers will have the experience of a lifetime. First, we have an in-class learning session where we learn about today's market.
You will see abandoned dumps and finished products, and everything in between.
And Snap will be there to answer all your questions and explain the rehab and rental strategies.
For more details and to REGISTER, Click HERE
|
Resources