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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.
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"EPA CERTIFIED RENOVATOR" TRAINING
Do You Work with Real Estate? You Must Be LEAD SAFE CERTIFIED as of April 22nd.
To all owners, realtors, investors, property managers, contractors, electricians, plumbers and painters. Do you ever engage in any level of renovation? If so, read this:
Any renovator, from owners to contractors, from plumbers to electricians to painters, who disturbs lead paint while working in a pre-1978 home, school or day care center, now must be Lead-Safe Certified. If you’re not, you can face tens of thousands of dollars in fines. Plus, you put the health of yourself, your workers and your customers at risk, which could result in lawsuits. One simple 8 hour class certifies you for five years. It’s that easy.
Since April 22, 2010, there are new Federal rules regarding how you perform any work that disturbs lead-based paint in homes, child-care facilities and schools built before 1978. You now must be EPA certified and follow specific work practices to prevent lead contamination.
Failure to follow the new rules can result in federal fines of up to $32,500 per day or up to 5 years in federal prison, or both. Don’t take a chance - it’s not worth it.
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- Friday, July 30th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
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- Friday, August 06th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
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- Friday, August 13th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
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and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
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- Friday, August 27th at Suburban Plaza, 2643 North Decatur Road
and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
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Total Course Cost: $295, includes exam and EPA-HUD 400 page manual
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John Adams Presents
“The MetroVestAtlanta.com REO Bus Tour”
Get on the bus for a tour of South DeKalb County’s “Real Estate Owned”
homes. Each house you visit will be available that day for purchase at
a giveaway price, regardless of current condition. Financing is
available!
Throughout the day, we will hear from mortgage providers, people in the
construction business and property managers all discussing today’s
situation with Bank Owned REO properties.
Who Should Attend: Investors, Realtors, Lenders, Prospective Buyers, and
anyone who might want to buy a super-bargain house and either do the
rehab themselves or have all the work performed by the pros.
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.
Saturday, August 21st, 9:30 AM to 4:00 PM
Your $49 fee includes the bus tour and lunch. You must make reservations. No walk-ups.
There is limited seating and the seats are filling fast. ACT NOW before you miss the bus.
We will be meeting at Suburban Plaza, 2643 N. Decatur Road and Church Street, Lower Level, Decatur 30033 (beneath Hancock Fabrics, in the arcade.)
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