South Atlanta Househounds

From College Park down through Stockbridge, McDonough to Griffin and Peachtree City in the west and Covington in the east, the majority of loans are being written in the price range of $85,000 to $150,000.  This value range is what we affectionately call the sweet spot and it accounts for over 70% of the home sales throughout South Atlanta. 

Let me begin by saying that there are a ton of deals in the sweet spot.  There is still an oversupply of distressed properties such as REO’s or short sales in the sweet spot, but as this value range represents such a large percentage of the sales, the principle of supply and demand comes into play.  You have to move quickly and we are beginning to see many more full priced offers… an early sign that the market is improving. 

But what about those properties that are on either end of the spectrum?  If you have the ability to pick up lower end properties as an investment or can afford higher end properties then now is a great time for you to buy.  In looking at property values for the past year we see that overall throughout all of South Atlanta we averaged being down by approximately 10%.  But if you look at the percentage discounts taken on the properties that are either above the sweet spot or below it, you find discounts in the 40, 50 even 60% range.  As the market continues to evolve we are going to see more and more purchasing pressure put on these properties and the values will stabilize, but if you’re looking to buy in the price range either above $175k or below $50k, now is the perfect time. 

If you need any help finding a property above, below or right in the middle of the sweet spot, just give us a call.  We know the market, we know the area and it would be our privilege and honor to assist you with your purchase.

 Our goal is to become the best real estate resource for all of South Atlanta – Henry, Clayton, Spalding, Butts, Rockdale, Fayette and surrounding counties. The ideas in this blog are our personal opinions and subject to market uncertainties. Should we ever be able to assist you with any of your real estate needs, please give us a call at any of the numbers to the right or call our main line at (770) 769-8000.

Like me, I’m sure you’ve heard that “You have to kiss a lot of frogs before you find your prince“.  That may or may not be true in relationships, but it’s definitely true in real estate.  When it comes to real estate, I for one, am not afraid to kiss a frog.  But what does this odd idea of planting a big wet one on Kermit’s cousins have to do with real estate? 

Many people can’t see past the superficial, cosmetic or easily fixed items that a potential house may have.  Paint, carpet, appliances and landscaping are all easy fixes.  Just last week I was showing a buyer some homes.  We pull up and he says “Lets not bother with this one; it looks like the south side of a north bound mule”.  I throw out the old adage that you can’t judge a book by its cover and he only agrees to go inside after more prodding by me.  Once inside he finds the interior is perfect.  We place an offer that evening and at a steep discount.  Yes the landscaping was horrible and incredibly overgrown, but he got an amazing deal. 

How to tell the difference between a frog and a prince? 

Go frog kissing – look at the ugly houses.  See what it will really take to make that house your dream home.  Look to what’s really important to you and look past the bright avocado bathroom and stained carpet.  Does it have the right bedrooms, bathrooms, floorplan, style, design, lot size, neighborhood, school district, etc. 

Protect Yourself

While most of your ugly houses are bank owned and they can be a deal, not all bank owned homes are instant deals.  Use a reputable agent that knows how to find deals and is knowledgeable about the market.  If you do bid on an ugly house, be sure that you’re protecting yourself.  Make sure your offer includes a inspection contingency (5 to 10 days is common) and have the house inspected by a certified home inspector.  This can save you thousands of dollars down the road. 

Don’t Get In Over Your Head

The more work to be done can mean even greater discounts, but don’t step outside your comfort zone.    If you’ve never taken on a major renovation or remodel then stick to homes that need minor improvements.  There are a lot of deals out there that only need paint, carpet and counter tops and can still provide you with an awesome deal. 

Be Realistic 

Some folks have no idea what it costs to replace carpet, paint the interior or exterior or how much physical work it takes to prune back years of overgrowth in a yard.  If you can do the improvements, great… you’re going to save yourself even more money.  For most folks even if they can, it’s so much easier and more economical in the long run to have the work done.  If you don’t know who to call, ask us and we’ll be glad to give you a reference.  We work with tons of reputable contractors and sub contractors.  If your not comfortable accurately estimating the cost of the work, have the sub contractors come out during your due diligence period. 

Financing

There are several programs that are available to help with turning your frog into a prince.   FHA 203K is popular as well as the Georgia Dream program provides up to $14,000 towards down payment assistance and repairs.  Wells Fargo has an excellent program called the remodel express which works like a FHA 203K except all repairs are done by Home Depot or Lowes and all work is guaranteed for a year.  Contact Kevin to discuss which financing option would best fit your situation. 

So the next time your out looking at real estate and that last house was a real looser, just remember that’s one frog down… next house can be your prince. 

Our goal is to become the best real estate resource for all of
South Atlanta – Henry, Clayton, Spalding, Butts, Rockdale, Fayette and surrounding counties. The ideas in this blog are our personal opinions and subject to market uncertainties. Should we ever be able to assist you with any of your real estate needs, please give us a call at any of the numbers to the right or call our main line at (770) 769-8000.

If you’ve been sitting on the fence waiting for the right deal in South Atlanta to come along, well my friend… your time has come.  While the drop in property values throughout South Atlanta has been an unpleasant pill for most homeowners to swallow, it has provided some great opportunities for buyers.   So if your wondering if you too should jump off the fence and buy a home in South Atlanta, the answer is without a doubt yes. 

I realize that many view our profession as a bunch of namby-pamby snake oil salesmen and if you watch the news for more than 5 minutes you’ll be sure to see just how we destroyed the housing market that we’re dependent on for our livelihoods.  That said, we truly are seeing many former “fence sitters” jumping off and making offers.  The phones really are ringing and most are interested in foreclosures.  Right now the prices are amazing… here’s just a few of the deals:

In Henry County look in Lake Dow, Eagles Landing Country Club and Hampton:

• 3 bedroom, 2 bathroom in Lake Dow with new paint and carpet for $151,000
• 6 bedroom, 4.5 bathroom on Winged Foot Drive in Eagles Landing for $209,900
• 4 Bedroom, 2.5 bathroom brand new construction in Hampton for $90,000

In Clayton County Lake Spivey and Fairfield are great buys:

• 4 bedroom, 3 bathroom with a boat slip $224,900
• 5 Bedroom, 2.5 bathroom, John Weiland home for $149,000
• 4 Bedroom, 2.5 bathroom with full brick front, swim/tennis community $149,900

In Spalding County look around the Crescent School District:

• 4 bedroom, 2 bathroom with full finished basement for $69,900
• 3 bedroom, 2 bathroom ranch style home built in 2005 for $82,000
• 3 bedroom, 2 bathroom 4 side brick ranch in great neighborhood $46,900

Ellenwood in Dekalb County is a great buy:

• 3 bedroom, 2 bathroom 4 side brick – great rental property $26,900
• 4 bedroom, 2.5 bathroom, spacious with all black appliances $80,000
• 4 bedroom, 2.5 bathroom, full brick front, 2600 square feet for $94,900

In Butts County check around Lake Jackson:

• 2 bedroom, 2 bathroom sits directly on the lake for $139,900
• 2 bedroom, 1 bathroom on deep water w/floating dock $164,000
• 4 bedroom, 3 bathroom 4 side brick ranch, deeded lot $225,000

So get off the fence.  We’re seeing that the best deals are selling quickly, but don’t worry inventory is still good.  I don’t see prices rising yet, but we are seeing many more full priced offers, which is a positive change.  If you’d like to see more information on any of these properties just drop me an email at alrichard@charter.net and I’ll send them to you along with the full MLS listing on each property. 

Note: Our goal is to become the best real estate resource for all of
South Atlanta – Henry, Clayton, Spalding, Butts, Rockdale, Fayette and surrounding counties. The ideas in this blog are our personal opinions and subject to market uncertainties. Should we ever be able to assist you with any of your real estate needs, please give us a call at any of the numbers to the right or call our main line at (770) 769-8000.

It use to be where a hand shake and a person’s word was how a deal got done… especially when you were talking about a rental property in South Atlanta.  There was no paper trail or deposit money needed in order to rent a property.  Ahh… the good ole’ days.  These days we need to submit an application fee, deposit, credit check, reference check, previous landlord reference check and list just seems to go on and on. 

But what about when you don’t have to jump through those hoops?  What if there is no checks and balances?  Well… your Spidey senses should be tingling! 

We know a very nice lady at church that just told me her story.  After looking through 50 plus rental units they finally found not just a house, but a house that was more then she could have imagined.  The rent was way less than any of the other rentals in the area, the square footage was nearly twice what she was looking at in her price range and it was in a private, gated community in McDonough.  She and her husband signed a year lease agreement, paid 2 months of deposits and also put down 3 months worth of rent in advance.  Within 45 days she had an agent knocking on her door and she was told that the house had been foreclosed on and she needed to make arrangements to move within next 10 days.  Needless to say, she was distressed. 

Unfortunately with today’s market, some homeowners are not able to maintain their home and as a last resort, they try renting the home out.  Because it took so long to obtain renters and in the meanwhile they have moved out of the house in preparation for foreclosure, they have depleted their checking account.  It wasn’t their intention to take someone else’s money, but they needed it more than the bank.  So here you have a renter who is out of the deposit money as well as any advance rental money that was given. 

So what can you do to avoid this situation? 

Use a reputable Real Estate Company when looking for a rental property.  At least make sure the landlord is asking for all the proper information such as place of employment, length of employment, reference check, previous landlord references, permission for credit check and appropriate amount for deposit.   A true professional landlord will place all your deposits into an escrow account.  If the property is being managed by an agent, ask to have the deposits placed in their brokers escrow account.  Ask questions.  Ask the landlord about their rental experience to see if this is their first go around or if they are in a desperate situation.  It’s amazing how much you can learn just through normal conversation.  If your instinct says “it’s too good to be true”, then it probably is.

Unfortunately for this nice family, they were forced to move out.  The bank was good enough to offer them cash for keys and it helped them to recover some of the moving expenses.  Looking back, she said that she should have known better because the landlord did not ask for previous landlord referrals, references, employment verification or credit checks.  The landlord did talk them into putting 3 months of rental fees, so that was rather slimy of them. 

Just a quick note, this situation also applies to Lease Purchases.  Make sure your agent has inquired with the listing agent of the seller’s situation and have all deposits held in either your agent’s or the listing agent’s brokers escrow accounts.  This is to protect you so you can get your deposit back. 

Note: Our goal is to become the best real estate resource for all of
South Atlanta – Henry, Clayton, Spalding, Butts, Rockdale, Fayette and surrounding counties. The ideas in this blog are our personal opinions and subject to market uncertainties. Should we ever be able to assist you with any of your real estate needs, please give us a call at any of the numbers to the right or call our main line at (770) 769-8000.

For the background on what a loan modification is, how it works and if it can help you, click here.

Step 1 – Evaluate Your Situation

Honestly decide if a loan modification is what you truly need. Only 37% of loan modifications end up with the homeowner attaining at least a 10% reduction in monthly payments. So using 10% as your target, if your monthly mortgage was 10% less than it is now, would you be able to maintain your monthly finances? If your answer is no then it may be better to consider a short sale or deed in lieu of foreclosure and plan on renting for a while. You also need to consider the amount of time, trouble and effort you are willing to put into attaining a modification. Even if you utilize a government or non-profit company it is still going to take a lot of your time just to get the information together. You should expect that this process will take 3-4 months to complete and you should plan on spending 3-4 hours each week.

Step 2 – Have Realistic Goals

Everyone would like a principal reduction, but that very, very, very rarely happens. In the past year only 2% of all loan modifications had a reduction in principal, and nearly all of those were in California or Michigan. As stated above, a reduction in monthly payments of over 10% is a good starting goal but your specific situation may require different goals. Remember that this is a negotiation and in a successful negotiation each side has to give some and take some. Please don’t threaten or try to throw your weight around telling them to come and pick up the keys. You will feel like telling them that several times through this process, but bit your tongue and remember what your goals are and have a plan to achieve these goals.

Step 3 – Get Your Paperwork Together

Regardless of who owns your loan, nearly all the mortgage companies will require the same basic information. The more information you have ready at your disposal the easier this entire process will be. Also the more information you have ready, the better informed you are as to what concessions you are willing to give on and which you can’t when you get to step 5, the negotiation. The usual documents you will need are:

• Proof of income.
• At least four months of bank statements.
• A hardship letter explaining your situation and requesting a loan modification.
• A monthly expense sheet detailing all your expenses.
• Your most recent mortgage statement
• 2 years W2 forms
• 2 years tax returns

Most of the list is self explanatory, but the hardship letter is critical. The hardship letter should be about 1 page long, but no more than 2 pages ever as most lenders and extremely busy, backlogged and staffed with overworked employees so keep it short and to the point. It should be a basic blueprint of how your current financial situation is, how you got into this situation and any other issues affecting your ability to meet your financial obligations.

Remember to include any of the following issues in your hardship letter if they apply: adjustable rate mortgage reset, death, death of a spouse or co-borrower, loss of job, reduction in salary, job relocation, did you business go under, divorce, separated, accident, illness, medical bills or military duty. I do not suggest you try and convince them about your local real estate market or how the value of your house has gone down as most lenders do not do any principal reductions anyway. Don’t blame the lender and don’t blame the value of your house. It is not the lenders fault that you have the loan on your home and trying to say that you can’t pay because your house is worth less now than what it was when you bought it doesn’t make any sense. You may not want to pay, but it doesn’t mean you can’t.

Step 4 – Contact Your Mortgage Company

It’s astounding the number of delinquent borrowers who never have the courage to pick up the phone and just talk to the lender before heading into foreclosure. Make the call and ask to speak to customer service. Have a note pad to keep up with everyone you talk to and what each person says they are going to do, yourself included. Identify yourself and ask to speak with the loss mitigation department. Don’t spend too much time with customer service, they generally can’t help you, but before you get transferred, ask for the direct dial number for the loss mitigation department. This will save a step in your many, many follow up calls.

Once you get the loss mitigation department get the name of who your speaking with and position and let them know your keeping a record of all your conversations to ensure all the I’s are dotted and t’s are crossed. Explain in general terms to the person that your having trouble making your monthly payments and that you are or may become delinquent on your loan and you need to modify it or there is a serious chance you’ll fall farther behind or could go into foreclosure. Don’t throw out the foreclosure word too much or threaten them, if they feel your headed into foreclosure they won’t waste their time with a lost cause. What you want to clearly communicate to them is that this is a serious problem and it requires their immediate attention.

Be prepared for them to ask you some basic questions. Have the list I gave you above handy to help with specific details. You MUST be honest or it will come back to bite you in the butt. You shouldn’t be overly optimistic or too upbeat about your financial situation, but it can’t be all gloom and doom either. Within the bounds of honesty you need to communicate that your in a bad financial place. Just as you had to qualify yourself to get the loan the first time, now you have to qualify to get a loan modification in much the same way. You have to prove that you are financially incapable of making your mortgage payments in the manner they are currently structured. Lastly, your going to have to prove that a loan modification will actually improve your situation to the point where you will be an acceptable risk to them.
If the lender decides that your situation qualifies, they will send you a loan modification information packet along with a worksheet to calculate your monthly expenses. Even if you already have it all in your own format, take the time to copy it over to their forms, it will speed up the process every time.

Step 5 – The Negotiation

Remember that the banks don’t want to loose any money, so don’t expect their initial offer to be worth taking. Fully expect that it will take 3, 4, 5 or more offers back and forth until you find one that is acceptable to both you and the bank. In most cases this is the time consuming and frustrating part of a loan modification. The endless calls going back and forth, waiting and waiting on the phone all to end up with a loan modification offer that just insults or angers you is what you should fully expect until you finally reach an agreement that you both can accept.

The average loan modification should result with a 31% debt to income ratio for your home which means your house payment should be around 31% of your gross monthly income. This is all about give and take for both sides. You can expect that the first loan modification the bank offers will actually have your monthly payments increase, for at least a few months. This seems idiotic but it’s true as the banks will initially try to begin with a forbearance agreement which temporarily increases payments because they try to add in any past due payments, penalties, interest and late fees. Don’t accept this, simply let them know you don’t have the ability to meet that financial obligation and you head back to the drawing board. Expect to have to say this several times during the negotiation.

Here is the list of the most common concessions.

• Reduction in interest rate or converting from an adjustable rate to a fixed rate. This can be a permanent or temporary (1-5 years). Some loan modifications reduce the rate down to as low as 2% for a short term. This is almost always the most favorable to both parties and is the most used concession.
• Forbearance Agreement. Expect them to try to add in missed loan payments, interest payments, insurance and other costs the lender paid on your behalf. You should try and fight these costs as much as possible.
• Extension of the length of the loan. You can expect them to extend the loan to 35 or 40 years. This is a toughie for many people, but it is one of the most used ways to reduce your monthly payment.
  Principal Forbearance. Basically they will defer payment of part of your loan and add it to the end of your loan or until you refinance or sell your property. This is commonly referred to as a “balloon payment”.
• Principal Reduction. As stated many times before, do not expect this. Only 2% of all loan modifications done in the past year had a principal reduction, and most of those were done in Michigan and California.

Step 6 – Wrap it up

Once you reach an agreement you can expect to be on a 3 month “trail period” in which if you are current at the end the lender will execute a permanent modification agreement and forward to you to sign.
Sign the paperwork, return it to the lender.

Good luck and if I can be of any further assistance give me a call at (770) 616-5062 or send me an email to alrichard@charter.net. I don’t do loan modifications and will not charge you any money but I can offer my opinion based upon my experience. I do not provide any legal advice and anyone seeking such advice should consult with their own lawyer.