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Some Unsettling Facts About The Current Real Estate Market In Atlanta

Market Conditions Worsen For Residential Resale Properties

I spent most of the day yesterday analyzing the sold properties in the Greater Metropolitan Atlanta area… and the results of my research are much more troubling than I had previously feared.

Resale homes - for the most part - are not selling.

When we look at the overall market statistics, we see that overall sales in the past year were down roughly 30% - but what is not so evident is exactly what has been selling. Our MLS’s do a good job of making this data difficult to mine.

So I spent the day simply looking at sold listings - the full report - and the results are very troubling. Well, troubling if you sell resale homes - or have a resale home to sell.

For quite some time, I have counseled home sellers to improve the condition of their properties while pricing their properties competitively - if they are truly serious about selling.

Unfortunately, this advice has often fallen on deaf ears.

I took fewer listings in 2007 than in 2006 (and participated in the marketing of fewer listings, as well) - because in my discussions with sellers - I was not convinced that they really wanted to sell. And if you can’t convince me that you are serious about selling - I’m not going to take your listing. Marketing can be both time-consuming and expensive - and in today’s market, there is no room for unmotivated sellers.

As I analyzed last years sold listngs, the vast majority of them were coming up as bank-owned properties (also known as REO for real estate owned) or HUD foreclosures. What was once a minor component of the overall sales figures had become the majority component.

Not good - unless, of course, you are in the market to BUY.

New homes don’t enjoy the volume that they once had… and when you combine the new sales with the foreclosures - it leaves little room for the resale home seller.

"None of my listings are selling," one broker told me. "But I have some buyers I’m working with," she said with some relief.

I know a couple of top agents in the area, so I went to analyze their sales numbers over the last twelve months… and that was shocking, to say the least.

Both of these agents use similar sales and marketing systems, but one of them had started to pursue REO properties while the other had not. And the one who had not went to the radio with commercials on some top radio stations.

To hear these radio commercials, you are led to believe that this agent sells nearly 400 houses a year. Not so, according to the MLS. While he did do those numbers years ago, it no longer seems to be the case.

With well over 300 active listings, he has only four that are pending sale… and only 35 listings which have sold in the last twelve months. Ouch. That’s a lot of signs and lockboxes and marketing costs to spread out over 35 sales.

So naturally I assumed that he was making it up on the sales of other properties listed with other brokers.

Nope. Only 10 sales of other brokers properties. Now you would think that an agent with that many lisitngs would attract more buyers with all those signs in the ground and listings on Realtor.com, etc. - but apparently not.

By the way, I am pulling the number from the entire brokerage - as both of these agents operate their own brokerages - so these figures are for their entire sales team.

This agent also features the guaranteed home sale mantra about how he will "step in and buy it". Yeah, right. Here is a portion of one of his recent sales:

In the example above, the original list price was $799,900, the sales price was $525,000; and the time on the market was 154 days. I guess that the guaranteed sale program must either include a 35% discount - or the intricate details are even worse than that for the seller. If this guaranteed sale program really worked - this agency would have sold more than 35 homes in the last twelve months… to themselves, if no one else.

Now that’s a slap in the face for the rest of us. If after all that marketing - including expensive radio spots - can’t net you more than 35 sales from hundreds of listings… the newly licensed agent is doomed. For that matter, so are the experienced agents.

On the other hand - the other top agent , while doing better, is not doing the kind of numbers that he has done in the past. He currently has some 269 listings - but since he is lisitng many REO properties, his sales statistics are much better. He currently has 14 pending sale - and 79 sold in the last twelve months.

So what is the difference between these two agents?

The primary difference is the motivation of the sellers… and the ability to lower the price until it sells. Obviously, that option isn’t available to all sellers. The agent who represents a seller of a foreclosure is more than twice as likely to sell their listing, as the bank must cut their losses by systematically lowering the price until the property sells.

My oh my, how times have changed.

Just a couple of years ago, an agent could count on half of his or her listings selling during the first listing period - and a quarter of all their listings selling in the second listing period - with a quarter of them pending sale at any given time. Oh how we all miss those good old days.

So, the bottom line is - if you are a buyer, you are king.

But if you’re a seller, even hiring the top guns is no guarantee… as these statistics are worse than most agents I know.

In this current market condition, I must admit - I do enjoy working with buyers. It really is rewarding to help a client find a good value.

Meanwhile, I can only hope and pray for the sellers.

Posted by Doug Quance on Friday, February 1st, 2008 at 3:24 am.

8 Responses to “Some Unsettling Facts About The Current Real Estate Market In Atlanta”

You have certainly showed us two great examples of how to pick a realtor and what to ask when choosing one. Thanks for the insight and the hours it took to come to this update of realtors.

Left by Florida commercial real estate on February 1st, 2008

Very interesting and I am sorry to say very true picture of the current market. I feel sorry for those that have to move and sell their homes. Beyond that, I find it hard to say one is a motivated seller.

Left by Nightwatch on February 1st, 2008

Hope and pray that the Sellers are too stubborn to lower their prices. That has the net effect of softening the landing on this down turn. The lenders that are holding onto foreclosed inventory are doing exactly the same thing.

It has me perplexed that they can take this kind of beating, but interest rates are coming down rapidly and that might be the timing that they were waiting on.

Regardless, sales appear to be picking up for now. I doubt we are out of the woods, but I’ll gladly take this breather.

Left by David Phillips on February 2nd, 2008

Great and scary post Doug.

I guess that applying for the job is not the best way to sell the house.

You have to wonder if he is setting himself up for a big ol’ class action lawsuit that will be all over the news if these stats are accurate.

Watching the local market things are not as dire as the overall Atlanta market but still not coming up roses.

Left by Tom at the Real Estate Bloggers on February 2nd, 2008

Well Tom - the ads have changed!

Now he says that he averages a few hundred sales a year… which would probably still be true, if you average those years out. But he’s definitely not talking about how many homes he sold LAST year…

The power of the pen…

Left by Doug Quance on February 6th, 2008

[...] recently discovered that a few of Atlanta’s top agents were getting killed, as well. Agents that had done hundreds of sales per year no longer able to hit a hundred sales in [...]

Left by The Light At The End Of The Tunnel Is Really An Oncoming Train | BloodhoundBlog: Real estate marketing and technology blog | Realtors and real estate, mortgages, lending, investments on February 18th, 2008

I still believe that the real estate market is in a holding pattern and buyers are in a state of mind that refelects the current uncertainty of the economic situation of the United States and the world.

No one likes to shop for a new product and then find that 6 weeks later the store has slashed the sales price and is going out of business!

I belive that homebuyers, unless they are are part of the percentage of buyers that have to move such as job relocation, divorce etc, are waiting to the real estate market bottom out.

From a buyers point of view, seeing rates drop and foreclosures become more and more prominent means that there are more and more bargains to be had.

In the end the gains made by the home buyer tend to be offset by the reduction in sales price they will probably have to make when it comes to selling their current home. So proportionally there is probably no real difference to buying and selling within a local market because the gains you make are also relected in the sale you make.

If the market is a sellers market the same applies.

Really the whole market is about precieved value and when that value is going to be maximised and that basically comes down to sell high and buy low…and selling high and buying low in the same local market may be a contradiction in terms…but coming from a stronger market and buying in a weaker or undervalued market does mean the buyer is holding the cards!

All in all the downturn is part of the economic lifecycle of real estate and eventually all the holding back will result in a reduction in new construction and price reductions that at some point become recognised by the buyers as great value…then the floodgates will open and the demand will be seen to increase…and slowly the market will turn from a buyers market to sellers…and then the cycle will begin again.

I’m sure that this is all over simplified but I do belive there is a large element of truth based on my observations in the Nashville Real Estate market. The demand is still evident based on the number of online inquiries but people are much more cautious about buying before the crash

Left by Gary Ashton on February 19th, 2008

[...] surprising (if you have the source or are are the source of this let me know and I will add it). Doug Quance has noticed the same issue here in [...]

Left by Sign of the Times: RE/MAX Partners With RealtyTrac To Add Foreclosure Data To Websites — The Real Estate Bloggers on April 24th, 2008

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Some Unsettling Facts About The Current Real Estate Market In Atlanta

8 Responses to “Some Unsettling Facts About The Current Real Estate Market In Atlanta”