South Atlanta Househounds

You don’t have to be a tree hugger or environmental activist to want to be green.  In addition to reducing your monthly utility bills we have to recognize that the world’s energy sources are not unending.  Here are some ways that will not only reduce your monthly expenses but help to increase your homes value. 

Lighting

In addition to using florescent bulbs whenever possible, there are two other options for efficient lighting… light dimmers and motion sensors.  Light dimmers are switches that allow you to increase or reduce the light intensity in a room.  Be careful when using some dimmers with some florescent bulbs, they don’t play well together.  Motion sensors turn lights on and off automatically by sensing when folks enter and leave a room.  These are more effective when used in rooms that are used less often. 

Insulation

Good insulation is probably the number one way of increasing the energy efficiency of your house.   Insulation is rated upon an “R” value used to measure its ability to resist heat flow.  The higher the “R” value, the more effective it is.  Here are a few tips about insulation.

• One type of insulation maybe thicker or thinner, but if the R value is the same they should insulate equally.

• R value performance testing is done in a 70 F environment with no air movement. Ironically enough, when you need insulation the most you’re generally not in these ideal temperatures or conditions. This can result in the rated house insulation R value being higher than the actual effective R value.
• The average recommended R value of insulating material for basement insulation in North America is R-12.
• The R value in house insulation is substantially lowered when there are any air or water/moisture leaks.
• The standard R value for house insulation varies based on climate and temperature
• 1 inch of insulation is = to 30 inches of concrete.

Windows and Doors

Windows and doors account for 30% of the loss of heating or air conditioning.  Well sealed windows and exterior doors are just as important as insulation for preventing energy loss.    Wood frames are the most efficient in terms of energy loss but require painting or staining to keep them looking sharp.  Aluminum frames are very easy to maintain but are the worst rated in energy efficiency.  The best of both worlds is the aluminum-clad windows that have the easy maintenance of aluminum but the improved efficiency of wood. 

Cooling

Ceiling fans are much more energy efficient way of cooling than air conditioners.  Also using light colored drapes or blinds will help to reflect much of the suns rays away from your house.  You can save as much as 10% a year on heating and cooling bills by turning your thermostat back 10-15% for 8 hours a day.  This can be done without sacrificing any comfort by installing a programmable thermostat. 

Landscaping

The way you landscape your yard can drastically reduce your energy bills.  To provide more shade plant large growing trees, vines and shrubs on the south and west sides of your house.  In addition to adding curb appeal, careful planting of trees can add windbreaks which shield your house from the wind, to prevent heat loss.  Also planting trees or shrubs around air conditioning units can help to keep them cool, but they should not block airflow. 

Use an Energy Efficient Mortgage for your remodel

An energy efficient remodel will result in lower monthly bills but the start up costs are often higher.  If you are planning on remodeling a good option might be an EEM (Energy Efficient Mortgage).  To qualify for an EEM, the money you save on your monthly utility bills must be greater than the monthly repayment of the EEM, and your total savings must also be more than your total costs (including maintenance). When you are granted an EEM, you have 90-180 days to carry out the remodeling work. Additionally, you cannot be granted an EEM if you apply after remodeling has started, or if you apply after any other financing has been granted.  You can find more information on EEM’s here:   http://www.pueblo.gsa.gov/cic_text/housing/energy_mort/energy-mortgage.htm

Just because we’re having cooler temperatures it doesn’t mean cooler home sales.  The trick is to warm up and make your home a refuge from the cold.  While it is true that there are less buyers during the colder months, there is also less competition… and even fewer folks properly showcasing their home during this time of year.  In fact, most people who are shopping this time of year tend to be more serious buyer than some of the “shoppers” during the warmer months. 

Warm It Up

Think “Warm and Cozy”.  Before the buyers come through, adjust the thermostat to make it warm and welcoming.  Build a fire or turn on the gas logs.  The smell and crackle of a fire is always welcoming.  Add seasonal touches like warm throws on the couches or turning back the thick comforter on the beds. 

Make A Good First Impression

Your entryway or foyer sets the tone, so clean or paint the front door and polish the brass door knocker. If your welcome mat looks shabby replace it with a new one.  Wash the windows as the strong southern light can reveal grime and make it look like they haven’t been washed for ages. 

Let There Be Light

Encourage showings during the high daylight hours, if you show after work your practically in the dark.  Make the most of the light available by having the curtains and blinds cleaned and fully opened.  Clean all the light fixtures and put in the highest wattage bulbs they will safely take.  Before the house is shown, turn on All the lights. 

Can You Smell That?

The number one favorite is the smell of chocolate chip cookies.  Everyone likes the smell, and leave a few out on the counters for your buyers to nibble on.  Other great scents are cinnamon rolls, fresh baked bread, apple pie, apple cider or even a few drops of vanilla placed on the burner of the stove.  But be careful not to overdo it.  If  you run around with the bottle of air fresheners, burn scented candles and have a plug in each socket, it makes the buyers think your trying to cover something up. 

How About A Little Music

Create a relaxed atmosphere by tuning the radio to classical or light jazz.  You only want it playing in the background so you can barely hear it.   Even if love a good polka or metal rock, stick to classical or light jazz for the showing as they tend to have the greatest appeal to buyers. 

Make It Festive

While the holidays are over and yes, the Christmas decorations should come down, you can still use winter wreaths and dried arrangements around the door, foyers, kitchen, living room and hallways.  Another nice touch is to set the dining room with the good china and have something waiting for the buyers such as warm cider or bottled water. 

To fully understand the entire REO process lets start at the beginning  
It all begins with Foreclosure.  In the initial stages it’s called pre-foreclosure and there are still several options open to the homeowners at this point.  Shortsales, short refinancing and deed in lieu of foreclosure are all options on the table during this time.  It’s unfortunate but over 60% of the homeowners who were foreclosed on felt they had it under control so they waited until it was too late to explore these options.  If you are having a hard time paying your house note, please don’t wait any longer to contact your mortgage company and try to work it out.  Here in Georgia we have the shortest foreclosure process in America.  It only takes 42 days to foreclose on a property.  Additionally the homeowner has no recourse once foreclosure has taken place.

Heading to the Courthouse Steps 
The next stage on our way to REO is the courthouse steps.  Here in South Atlanta we do property auctions on the first Tuesday of each month on the courthouse steps of the county where the property is located.  Are there deals to be had there?  Sure… but only for the seasoned veteran.  You must be prepared to pay cash and you’ll receive the property as is.  Sometimes that means you also inherit current occupants that need to be evicted and any liens on the property.  The banks and mortgage companies are also going to be there and they will always bid the amount of the loan balance plus any interest and other fees associated with the foreclosure.  The bad news is that many of the houses up for auction were purchased with zero down, interest only or negative amortization loans and have no equity to take advantage of.   

Now it’s a REO 
REO is an acronym for ”Real Estate Owned”.  As stated above these are properties that have been foreclosed on, went to the courthouse steps but didn’t get a high enough bid and then ended up being owned by a bank or mortgage company.   The advantage of REO properties is they are much more attractive to purchase.  Since the bank or mortgage companies now own it they will see to the removal of tax liens, evict occupants and prepare for the issuance of a title insurance policy. There are some items you need to be prepared for when dealing with an REO.  First there will not be a disclosure statement from the seller so buyer beware.  Always, always, always get a professional home inspection when dealing with REO homes.  There is also a wide range of special stipulations that vary from one mortgage company to another.  You should always (yes I know I’m using that word a lot lately) read and fully understand any special stipulations before you place an offer on a REO property.  Make sure you deal with an agent who is comfortable dealing with REO’s or the special stipulations can truly catch you off guard.  Lastly, since many of the REO properties are owned by companies outside Georgia, be prepared not to use our standard Georgia Association of Realtor (GAR) Forms. 

Are All REO’s a Good Deal?
Typically it’s assumed that all REO’s are a real steal.  This is not always the case.  Yes it is true that the bank does not want to own homes and they are rather anxious to sell it quickly.  They are also strongly motivated to recoup as much loss as they have already taken on this property.  The average REO in Georgia costs the mortgage company between $30,000 and $40,000.  Before they even put a property on the market each one has had two BPO’s (Brokers Price Opinion – similar to a CMA) and in most cases a professional appraisal. 

There are bargains to be had and many people do very well with foreclosures and REO’s.  There are also many so-so deals that are unlikely to turn a significant profit.  Be sure you look closely at the area comparable sales and don’t forget to add in the cost to repair/remodel and any holding costs.

Ready to make an offer?
Most of the time the REO property is listed with a local agent who will market the property somewhat and list it on the local MLS.  It is good to try and contact the listing agent but many are very busy and can be hard to reach.  As I said before REO’s are AS IS so be sure to include an inspection contingency in your offer.  All REO’s will require a pre-approval letter, not a pre-qualification.  Also, many will expect a final approval letter within 5 days of notice of acceptance so be sure to have your financing well in order before you place your offer.  Many REO properties will not allow financing contingencies and on some if you try to scratch through anything on their forms the entire offer becomes void. 

Make Your Offer and Let The Games Begin
Once you make your offer expect the bank to make a counteroffer.  Then it will be up to you to decide if you will accept it or make your own counteroffer.  Instead of dealing with a local homeowner you will be presenting offers to multiple levels of management at the bank, all filtered through the listing agent.  Expect the offer, counteroffer and notice of acceptance to take longer than you expect.  They work bankers hours remember so don’t look for any news at night or on weekends. 

In an REO negotiation the buyer is in the stronger position but don’t expect the banks to act that way or to give the property away.  REO managers expect you to try and lowball them but some of the offers are laughable and won’t even be considered.  Some REO managers take it very personally when you place a ridiculously low offer.  From that point on they don’t think your serious and won’t truly consider any further offers from you, even reasonable ones.  I’m not saying it’s right, I’m just saying it happens.  I believe it’s best to set your price range, make your offer, counteroffer and if you get a no just walk away.  More times than not I get a call to see if my buyer is still interested. 

But What’s The Secret Formula? 
Well therein lies the problem.  There isn’t a secret formula, golden ratio or magical percentage.  There is a lot of “information” out there that promises you can shake the money tree with no effort, but that’s just plain false.  As with most things, good deals on REO’s are there for those who have a good guide and do their homework.