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Hang On To Your Wallet - Interest Rates Will Be Heading UP

Posted by Doug Quance on February 16th, 2010

Need A Reason To Buy A Home In Atlanta? Consider This:

I’m not into the hype. It’s not my style. While I have spent more than twelve years watching other agents and brokers hype their clients on the market… or a particular property… that’s just never been me.

So when I tell you to pay attention to what is going on around you in this Atlanta real estate market - I’m doing so not because it will benefit me. I’m telling you because I believe it will benefit YOU.

In the last year or so, we have witnessed the federal government pumping countless dollars into the banks, insurance companies, auto companies… you name it. Our deficit this year might actually be as high as the entire fiscal year 2000 federal budget. That’s just the deficit! We can not even get a proper accounting of how much money that Federal Reserve has pumped into the system.

The last time our federal government printed money like this was in the late 1970’s. The government was trying to stimulate the economy, and printed a great deal of money to ostensibly accomplish that goal. Unfortunately, it resulted in the dilution of existing dollars through inflation - and a jump in interest rates.

Reproduced with the permission of Mortgage-X.com

I have been watching for the tell-tale signs that interest rates will be heading up… and today I believe we are witnessing the beginning.

Foreign demand for our U.S. Treasury securites fell by the largest amount on record in December with China reducing its holdings by $34.2 billion. As a result, Japan now has the top spot in foreign ownership of Treasury securities - a position it lost in Autumn 2008 when China surpassed Japan.

If foreign demand continues to wane, the Treasury Department will have to raise interest rates - which will set off the domino effect which will eventually result in higher mortgage rates.

Which brings me to my BUY recommendation. Locking down a good property in today’s market is not difficult. Many properties are selling for a fraction of what they sold for just a few years ago. Current 30-year fixed interest rates are nearly as low as they can possibly go… and as rates begin to rise, more buyers will begin to commit to finding a home before the interest rates become unaffordable.

If you are considering a purchase, I suggest you take advantage of the homebuyer tax credit while it is available - but more importantly, take advantage of these incredibly low interest rates… because like the snow in Atlanta - these interest rates won’t be around for long.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

Consumer Alerts, Mortgages, Tips For Buyers, Trends | No Comments »

Landlords - Beware Of Unscrupulous Agents

Posted by Doug Quance on January 24th, 2010

Hard Times Lead Some Agents To Unethical Behavior

Many home sellers have been forced to become landlords, as they are unable to sell their properties in this down market. Many of these sellers turn to real estate agents to find them tenants and manage their properties.

While many agents are hardworking, honest people who are sincerely interested in serving their clients’ best interests… that isn’t the case for all of them.

Yesterday, I was talking with a broker who had just shown a rental property in Smyrna. She said that she could not believe the number of rental listings that were offering a ridiculous co-broke commission. This is a phenomenon I wrote about a year ago on the Bloodhound Blog.

As a landlord, your objective is to not only lease your property to a good tenant - it is to lease it as quickly as possible. When you enlist the services of a real estate agent, you expect that agent to use their affiliation in the Multiple Listing Service to help find a co-op agent who is working with a tenant - and that affiliation requires the offer of compensation. Unfortunately, it doesn’t require the offer of compensation to be reasonable.

A reasonable level of compensation, in my opinion, starts at 25% of the total brokerage fee  - and that is with the listing agent doing all of the paperwork.

If you are engaging the services of a real estate agent to help you lease your property, pay close attention to the item 1B in the Leasing Listing Agreement - particularly the portion I have highlighted for your review.

Sadly enough, simply having an agreement that specifies the co-op commission still does not guarantee that the agent will actually offer that level of compensation. To truly ensure it, you might consider having the co-op agents call you before they show the property… and when they call - simply ask them what the level of compensation is being offered in the MLS.

I believe that agents who offer ridiculously low co-brokes should not be in this business. They can’t be trusted. If you find your agent undermining you by offering a low co-broke - I recommend that you fire them…. and if you catch them violating their listing agreement with you by offering a lower co-broke than specified in the listing agreement - I recommend that you file a complaint with the Georgia Real Estate Commission.

Consumer Alerts, Investment Properties, Tips For Sellers, Trends | 2 Comments »

Foreclosures: Worst Three Months Of All Time?

Posted by Doug Quance on October 15th, 2009

No Abatement From The Foreclosure Juggernaut?

From those of us in the trenches during this real estate depression, I can tell you that "it ain’t over, yet".

NEW YORK (CNNMoney.com) — Despite concerted government-led and lender-supported efforts to prevent foreclosures, the number of filings hit a record high in the third quarter, according to a report issued Thursday.

"They were the worst three months of all time," said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes.

During that time, 937,840 homes received a foreclosure letter — whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008. Read the rest of the story here.

There’s another part of this story that hasn’t been reported - the part where the banks have been screwing around wasting valuable time when a short sale offer has been presented.

Since the bank bailouts last year, many agents have reported an increase in the length of time it is taking to get a short sale approved… and in many instances, the buyer gets frustrated and walks away.

Here’s the rub - the banks are not prioritizing their short sale offers properly. Quite often, really good offers made by people who intend to live in the property are treated the same as the lowball offers that investors make.

This makes absolutely no sense.

When a properly submitted short sale package comes in, the lender should have a way of screening and prioritizing those offers so that the good offers are addressed quickly - and the lowball investor offers are put on the back burner. After all, the investor doesn’t really care if it takes a few extra months.

Our short sale packages have always contained a complete analysis that shows the short sale to be the logical course for the bank - because we would never take the time to create a package that did not meet that objective. Our packages are usually contain between 100 and 130 pages of documentation, all properly indexed for easy access to any infomation the lender might require.

We have come to the point where I don’t want to take a short sale listing if the seller’s lender is on my &^%$ list… nor do I want to represent a buyer in the purchase of a short sale. The banks have become unreasonable in their expectations of how long this process should take, with many now saying that 4 to 6 months is the current norm.

The sad part is that in nearly every case I have seen where the bank has wasted so much valuable time evaluating a short sale that the buyer walked away - the property is foreclosed and sold for a lower price.

I can stay home and go broke - I don’t have to waste my time with unresponsive banks that shouldn’t have been bailed out.

While I will still evaluate a short sale for a client - my inclination is to stay away. Far away.

Foreclosures, Rants, Short Sale, Tips For Buyers, Trends | 4 Comments »

Search The MLS For All Of Atlanta’s Listings Without Registration

Posted by Doug Quance on August 27th, 2009

Stating Our Policy To All Who Use Our MLS Search Engine

I have been making real estate listings available online since 1999, and throughout that time I have adjusted our policy regarding forced registration to be in accordance with the rules that are set by our local Board of Realtors - as well as in accordance with my own personal beliefs.

In the beginning, there were no other agents in Atlanta offering listings online. I contracted with a company called Soar Solutions, and they set up a gateway to access data from the First Multiple Listing Service (FMLS). Jealous agents (most of whom didn’t have websites at that time) quickly complained about my online offering - and tried to shut me down.

Luckily for me, Erealty came to town with their deep pockets and massive advertising campaign. If not for them, I would have had to back away from a legal battle that I had no way to win. They helped fight the battle, and as a result - Georgia agents were able to provide complete public listing data (including addresses) as long as the customer registered on the agent’s website.

Over the years, I have been able to relax the policy - and currently you can peruse listings without registration here. You will, however, be asked to register on your second visit - and every visit thereafter - but registration is optional. Either way, you’ll get listings from BOTH of Georgia’s statewide listing services - the Georgia Multiple Listing Service (GAMLS) and the First Multiple Listing Service (FMLS).

One day, you might want to use the additional features that are available to those who register - and you can do so without the worry that someone is going to call and pester you. It won’t happen. Feel free to use the system - and remember we’re only a phone call or an email away when you have a question or you want to see a property.

Be sure to check out our tutorial so that you’ll understand the powerful features that our MLS search engine offers.

I don’t believe in forced registration - even though it would be financially rewarding to implement. In my eyes, you are not a meal ticket to be punched - you are a fellow traveler in life who I might be able to help… but in order for me to help - you will need to ask. Fair enough?

Others have different opinions. Take a look at the conversation over at BloodhoundBlog.  Please feel free to read the comments in that thread, and decide for yourself whether our approach is one that fits your style - or not.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

Consumer Alerts, On The Web, Tips For Buyers, Trends | 1 Comment »

Ask The Broker - Why Did My Short Sale Purchase Fall Through?

Posted by Doug Quance on July 8th, 2009

A Few Tips To Help You Navigate A Short Sale Purchase

Not all that glitters is gold… and not all homes that are marketed as short sales can actually be sold as such.

I received a call this morning from a buyer who couldn’t understand why she couldn’t buy a particular home that was offered as a short sale. She was told that the bank would not approve the short sale and the home went to the county courthouse steps for auction.

While I couldn’t tell her exactly why her particular deal fell through, I could give her some possible reasons as to why it might not have been approved. The price seemed reasonable, but there were several variables that she could not address.

The first variable was that of hardship. She had no idea as to why the seller could not keep the home. If the seller can not demonstrate hardship, why would the lender help the seller avoid a foreclosure by permitting a short sale? Think of a short sale as the opposite of getting a mortgage - you must prove you can no longer afford the property.

Another variable was that of time on the market. Most lenders prefer to see that a home was marketed - by a Realtor - for at least 90 days. In this particular instance - it was not. It’s not a deal killer by itself - but  it’s also not helpful.

Most lenders - particularly with FHA loans - want the owner to occupy the property during the process of negotiating the short sale. When lenders discover that a property has been abandoned, they are likely to enforce a provision of the mortgage that allows them to secure the property after 15 days of observed abandonment. This property was indeed vacant.

When second mortgages are involved, it can sometimes be difficult to negotiate the release of the second mortgage. The second lien holder usually wants more than the first lien holder will allow - and the matter is complicated if the second mortgage is a HELOC (home equity line of credit), as the nature of that particular loan allows the debt to follow the borrower after foreclosure just like a credit card.

This buyer also had no idea as to what the foreclosing lender’s valuation of the property might have been. When a short sale package is delivered to the seller’s lender(s), the lender(s) will order a BPO (broker’s price opinion) to help establish the market value of the property.

Sometimes, the BPO comes in high - as the BPO agent might be hoping to get a foreclosure listing by showing the lender that they believe they can get more money for the property if the lender decides to foreclose. Sometimes it comes in high because the BPO agent - who earns just $45 - $90 to do this valuation - is simply in a hurry and is careless.

Since I was not involved in this transaction, I can only speculate as to why the lender did not accept this particular agreement.

As a buyer, you can get a very good deal when purchasing a short sale, but your agent needs to understand the mechanics of a workable deal for the bank - lest you waste a few months of your time. If your agent is not well-versed in short sales - you might consider finding another agent to represent you.

If the listing agent is not proficient in performing short sales, there is no law that prohibits the buyer’s agent from selecting a short sale negotiator and specifying that this selected negotiator be permitted to conduct the negotiations. While there is no guarantee that the seller will agree to this - a reasonable offer and an rapidly approaching foreclosure date can sway an otherwise reluctant seller.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

 

Ask The Broker, Mortgages, Short Sale, Tips For Buyers | 1 Comment »

Using The Georgia Dream NSP Loan To Purchase HUD Foreclosures

Posted by Doug Quance on July 6th, 2009

Incentives Of Up To $23,800 For Georgia Home Buyers

The Georgia Dream NSP (Neighborhood Stabilization Program) was created to encourage the purchase of foreclosed properties in select Georgia counties that have been affected by high foreclosure rates. All metro Atlanta counties are currently eligible for this program.

The program provides up to $14,000 (up to 10% of the purchase price) that is disbursed in the form of a second mortgage lien - with no interest or monthly payments. This lien is released after a period of five and a half years.

The funds may be used for down payment and/or repairs and rehabilitation. The funds may NOT be used for closing costs; discount points; or prepaid items such as tax and insurance escrows. The funds may not be used to purchase a manufactured home.

To be eligible, you must occupy the property as an owner-occupant and must participate in an eight-hour in-person home buyer’s counseling course offered by a HUD-approved counseling agency. You must also have a total household income that is less than 120% of the median income for the county of which the property is located.

For home buyers who have not owned a property for the last three years, the federal government also has a refundable tax credit of 10% of the purchase price that can add up to another $8000 in incentives - and add up to another $1800 in tax credits from the State of Georgia.

All together, the incentives can add up to $23,800 in incentives - but these incentives are available only for a limited time.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

 

Foreclosures, Mortgages, Tips For Buyers, Trends | 1 Comment »

Is The Atlanta Real Estate Market Nearing The Bottom?

Posted by Doug Quance on June 30th, 2009

Some Indicators Are Beginning To Show Strength

NEW YORK (AP) — There is a clear trend U.S. home prices declines are moderating — another sign the beleaguered housing market is stabilizing, according to data released Tuesday.

While the Standard & Poor’s/Case-Shiller index of 20 major cities tumbled by 18.1 percent, it marked the third straight month the decline was not a record. And yearly losses in 13 metros improved compared to March.

"The stock market bottomed in March and measures of consumer confidence have turned upward. This report shows that these better spirits are also appearing in the housing market," said David M. Blitzer, chairman of the S&P index committee.

Eight of the 20 metro posted price gains from March, with Dallas recording the largest increase at 1.7 percent. And every city except Charlotte showed some kind of improvement month-over-month.

Still, a housing recovery is distant on the horizon. The 20-city index is off almost 33 percent from its peak in the second quarter of 2006, which means home values are now around 2003-levels.

Hardest hit remain Phoenix and Las Vegas, where home prices have lost more than half their value since their peaks.

The Case-Shiller index tracks repeat sales on a specific group of homes in each city. Sales between related parties, such as family members, are excluded.

We are seeing some anecdotal evidence that supports this theory - particularly with newer homes that are in relatively good condition.

A year ago, there was an incredible selection of new construction available - much of it in the form of bank foreclosures. Builders who couldn’t sell their homes in 2007 saw much of their inventory sell as foreclosures in 2008 - and the trend continues.

The selection is not nearly as good right now, as much of the new construction has been purchased - and fewer homes were built in 2007 and 2008, so fewer new homes are left.

Additionally, many buyers are looking  to take advantage of low interest rates coupled with federal and state tax incentives - up to $9800 in Georgia - which could further explain the firming of certain sectors of the real estate market.

With energy costs rising - and the fear of additional taxes added to those rising energy prices - consumers are wary of purchasing older, less energy-efficient homes… and that reluctance is reflected in the lower demand for those homes.

If you are trying to time the market in Atlanta, the time to start paying close attention might be upon you.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

 

Foreclosures, Real Estate News, Tips For Buyers, Trends | No Comments »

Ask The Broker - Why Buy A Home In Atlanta While Prices Are Falling?

Posted by Doug Quance on June 3rd, 2009

Catching A Fallling Knife Just Might Be Your Best Bet

A fear among buyers these days is that of buying a property that will be worth less next year… or next week, for that matter.

Since many homes are now selling at discounts of 30% - or more - off their prices back in 2006, and there is no evidence that prices are ready to turnaround and rise - it’s a fair fear.

As many of you know, I’m not a cheerleader who goes around telling everyone that the best time to buy real estate is NOW.

It’s just not my style… and I’m not Nostradamus.

Prices could continue to tumble for several more years, for all I know. However, if history is any guide, I can make the argument for a purchase in today’s Atlanta real estate market.

With the current economic policies of the Obama administration, we are in for some very high inflation. Some believe that at the rate that U.S. currency is being printed, we might even see hyperinflation if the presses aren’t stopped.

When inflation runs rampant, interest rates must rise - and that includes mortgage interest rates. When Jimmy Carter entered office, mortgage interest rates were around 9% - but Mr. Carter printed a lot of money… and interest rates rose substantially. By the time he left office four years later, rates had jumped to more than 14% - and didn’t peak until two years later at 18%.

But Jimmy Carter was a mere piker compared to Barack Obama.

When you consider that the money supply is being doubled this year - you can only imagine where interest rates are going. One thing is certain - the rates are heading up. Big time.

Let’s look at a $200K mortgage at today’s rate of 5.25%. The monthly principle and interest payment on a 30 year fixed rate note would be around $1104. If property values dropped another 40%, but interest rates jumped to 10%, that same property with a $160K mortgage would have a monthly payment of $1404.

Now let’s look at it another way. The property with a $200K mortgage today was probably worth at least $260K a few years ago. The price would have to fall more than 50% off the high to $126K to have a similar payment of $1106 with an interest rate of 10%.

When you consider that mortgage interest rates are very likely to go much higher than 10% - and that hard assets like real estate become very desirable as a hedge against inflation - you can see why "catching a falling knife" could be your best move.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here. 

Ask The Broker, Mortgages, Tips For Buyers, Trends | 2 Comments »

In Observance Of Memorial Day

Posted by Doug Quance on May 25th, 2009

It’s Not All Backyard Barbecues And Waving Flags

In a time when the very fabric of our free nation is at risk of being torn by those who want our country to be more like a European - or Middle East - nation, I appreciate the service of my fellow military men and women more than ever.

Perhaps I feel differently about this day because I am a U.S. Navy veteran. Like many others who have served, I get a little choked up on this day. To me, it’s not simply a day of celebration - it’s a day of solemn observance.

I truly appreciate all of those who gave their lives or limbs to help create and protect the greatest country in the world. Most of us will never know the sacrifice that these great men and women selflessly endured so that we could live in freedom - and sadly, many do not appreciate the freedom of which these patriots gave their lives.

While today is a day of remembrance for those who have fallen, every day is a day of appreciation for our uniformed men and women. When you see a man or woman in military uniform - go shake their hands and thank them for their service. Since 9/11, every single one of them is a volunteer during wartime - and they deserve our respect and praise. 

Enduring Interest, Personal Journal | No Comments »

More Information About The First-time Homebuyer $8000 Tax Credit

Posted by Doug Quance on May 14th, 2009

Cutting Through Some Of The Tax Credit Misinformation

Fellow Bloodhoundblogger Tom Vanderwell is trying to make some sense of the first-time homebuyer’s tax credit here:

http://www.bloodhoundrealty.com/BloodhoundBlog/?p=8412

It is reported that over 500,000 first-time homebuyers have taken advantage of this program since its inception - and if you are a first-time homebuyer interested in Atlanta real estate, you might want to keep an eye on these developments.

Mortgages, Tips For Buyers | No Comments »

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