The Atlanta Dream Real Estate Blog

Buyers should jump and buy now

2011-11-02T11:45:00.007-04:00

U.S. house prices have plunged by nearly a third since 2006, and homeownership rates are falling at the fastest pace since the Great Depression.

The good news? Two key measures now suggest it's an excellent time to buy a house, either to live in for the long term or for investment income (but not for a quick flip). First, the nation's ratio of house prices to yearly rents is nearly restored to its prebubble average. Second, when mortgage rates are taken into consideration, houses are the most affordable they have been in decades.

Two of the silliest mantras during the real-estate bubble were that a house is the best investment you will ever make and that a renter "throws money down the drain." Whether buying is a better deal than renting isn't a stagnant fact but a changing condition that depends on the relationship between prices and rents, the cost of financing and other factors.

But the math is turning in buyers' favor. Stock-oriented folks can think of a house's price/rent ratio as akin to a stock's price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.

Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody's Analytics. The average from 1989 to 2003 was about 10, so valuations aren't quite back to normal.

But for most home buyers, mortgage rates are a key determinant of their total costs. Rates are so low now that houses in many markets look like bargains, even if price/rent ratios aren't hitting new lows. The 30-year mortgage rate rose to 4.12% this week from a record low of 3.94% last week, Freddie Mac said Thursday. (The rates assume 0.8% in prepaid interest, or "points.") The latest rate is still less than half the average since 1971.

As a result, house payments are more affordable than they have been in decades. The National Association of Realtors Housing Affordability Index hit 183.7 in August, near its record high in data going back to 1970. The index's historic average is roughly 120. A reading of 100 would mean that a median-income family with a 20% down payment can afford a mortgage on a median-price home. So today's buyers can afford handsome houses—but prudent ones might opt for moderate houses with skimpy payments.
For example, the median home in the greater Phoenix market, including houses, condos and co-ops, costs $121,700, according to Zillow.com. With a 20% down payment and a 4.12% mortgage rate, a buyer's monthly payment would be about $470. Rent for a comparable house would be more than $1,100 a month, according to data provided by Zillow.com.

Of course, all of this assumes mortgages are available—no given now that lending standards have tightened. But long-term data on down payments and credit scores suggest conditions are more normal than many buyers think, according to Stan Humphries, chief economist at Zillow. "If you have good credit, a job and a down payment, you can get a mortgage," Mr. Humphries says. "There's more paperwork and scrutiny than five years ago, but things are pretty much like they were in the '80s and '90s."

Not all housing markets are bargains. Mr. Humphries says Zillow has developed a new price/rent ratio that uses estimates for each individual property rather than city medians, to better reflect the choices facing typical buyers. A fresh look at the numbers suggests Detroit and Miami are plenty cheap for buyers, with price/rent ratios of 5.6 and 7.7, respectively. New York and San Francisco are more expensive, with ratios of 17.6 and 17.2, respectively. The median ratio for 169 markets is 10.7.
For investors seeking income, one back-of-the-envelope way of seeing how these numbers stack up against yields for other assets is to divide 1 by the price/rent ratio, resulting in a rent "yield." The median market's rent yield is 9.3% and Detroit's is 17.9%.

Investors would then subtract for taxes, insurance, upkeep and other expenses—costs that vary widely. But suppose total costs were 4% of the purchase price. That would still leave a 5.3% rent yield in the typical market. With the 10-year Treasury yield at 2.2% and the Standard & Poor's 500-stock index carrying a dividend yield of 2.1%, rents for residential housing in many markets look attractive.

A few caveats are in order. First, not all transactions are average ones. Even in low-priced markets, buyers should shop carefully. Second, prices could fall further. Celia Chen, a senior director at Moody's Analytics, expects prices to drop 3% before bottoming early next year and rising slowly thereafter. "If the economy slips back into recession, however, we could easily see a 10% drop," Ms. Chen says.

And property "flipping" can be dangerous even when prices are rising. That is because, absent a real-estate boom, house price gains simply aren't that exciting. Research by Yale economist Robert Shiller suggests houses more or less track the rate of inflation over long time periods.

Houses aren't the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.

2011-05-22T12:44:00.004-04:00

More than just real estate.

PAYBACK ON YOUR HOME REMODELING PROJECT

Dollars Invested Don't Always Add To Value

During economic downturns, home improvement stores often see increased sales as homeowners decide to improve their existing homes rather than buy new ones. Unfortunately, taking on those common home improvement projects may not return as many dollars as you hoped.

Replacing the front door of your Atlanta home may be the most cost efficient remodeling project you can make. That's according to the annual "Cost To Value" survey conducted by Remodeling Magazine in conjunction with data supplied by the National Association of Realtors. The project involves removal and replacement of both the existing door and jamb, and replacing the lock and entryset. The new door is steel clad and contains dual-pane half glass panels.

According to numbers representing the Atlanta metro real estate market, such a project would cost just under $1,150, but would add only $1,099 to your home's projected resale value. Of all the remodeling projects listed, this one was the only one that recouped close to 100 percent of its cost.

Construction cost figures include labor, material, and subtrade expenses, plus industry-standard overhead and profit, and reflect local commodity and labor costs. Resale estimates are based on responses to a poll of appraisers, agents and brokers.

The 2010-2011 edition of the report found that a typical garage-door replacement project in the Atlanta area cost around $1,245, and recouped about $1,039 - or about 83 percent - of that cost upon resale. In this case, it was specified that the motorized door opener was not replaced, but re-used.

The next two highest scoring home remodeling projects should be no surprise to Atlanta residents:

* Addition of a 16' by 20' pressure-treated wood deck with a built-in bench and planter is projected to cost about $10,500, but would recoup only about $8,018 - or only 77 percent - at time of sale. I found this to be the most surprising data of the Atlanta survey, based on my personal selling experience. I can't begin to tell you how many houses I have sold by taking prospective buyers out on the deck in nice weather and painting them a word picture of rib eye steaks sizzling on the grill. * Replacing 1,250 square feet of existing siding with new vinyl siding, including all trim, was estimated to cost around $10,948 in our area. This project was expected to return a disappointing $7,111 - about 65 percent - of the dollars it cost. * The "attic bedroom" project was specified to convert unfinished attic space to a 15-by-15 foot bedroom and a 5-by-7 foot bathroom with shower. This would include a 15-foot shed dormer, four new windows, and closet space under the eaves. The contractor would insulate and finish ceiling and walls, and carpet the floor. HVAC will be extended into the new space; electrical wiring and lighting to code.

Again, I was surprised by the poor return.

The survey estimated that this project would cost just over $50,000, which seems a speck high for this market. There are plenty of skilled home builders who are hungry for work right now, and I think you could find a good contractor who would find a way to do this job for less. Maybe I am wrong.

In any case, survey respondents estimated that this project would return only 64 percent of the dollars invested - just $32,276 - upon resale.

Particularly disappointing in this survey was a ever-popular major kitchen remodeling project. It involved updating an outmoded 200-square-foot kitchen with a functional layout of 30 linear feet of semi-custom wood cabinets, including a 3-by-5-foot island; laminate countertops; and standard double-tub stainless-steel sink with standard single-lever faucet. Included was an energy-efficient wall oven, cooktop, ventilation system, built-in microwave, dishwasher, garbage disposal, and custom lighting. This project was estimated by Atlanta remodelers to cost about $57,000, but added only about $33,400 on resale.

Copyright John Adams April 2010.

5 Reasons you should sell your home now

2010-12-22T17:44:00.004-05:00

Selling your house in today’s market can be extremely difficult. It is for that reason that every seller should take advantage of each and every chance that appears. There is a fantastic opportunity available right now. Meet with your real estate agent and mortgage professional today and see whether it is the right time for you and your family to make a move.
Here are five reasons you should consider selling in the first 90 days of 2011.
1. Interest rates have spiked up.
Rates have jumped over 1/2 point in the last several weeks. The short term result of increasing rates is a surge of buyers jumping off the fence to purchase in fear that rates may continue climbing upward. This is a short window of opportunity. If rates fall again, buyers will jump back on the fence. If rates continue to rise, it limits the number of buyers who can qualify at each price point. Now is the best time to sell your house.
2. If you are moving up, you can save thousands.
If your family goal is to sell your current house and take advantage of the fabulous selection of properties currently available to buy the home of your dreams a at bargain basement price, DO IT NOW! Prices will continue to soften in most markets. However, if you are buying, COST should be more important than PRICE. Cost can be dramatically impacted by rising mortgage interest rates. Do the math and decide if now is the time.
3. During the winter months, the buyers are serious.
We all realize that buyers are not quick to pull the trigger on the purchase of a home today. There is no sense of urgency with the supply of eligible properties at all time highs. However, at this time of year, the ‘lookers’ are either staying warm (in the North) or just busy with other priorities. The home buyers left in the market are serious and are more apt to buy. Less showings – but to more motivated purchasers.
4. You beat the rush of inventory that is coming next year.
Every year there is an increase of inventory which comes to market from January through April as homeowners put their houses up for sale in preparation for the spring market. Here is the number of listings available for sale in 2010.
• January – 3,277,000
• February – 3,531,000
• March – 3,626,000
• April – 4,029,000
We believe there is a pent-up selling demand (homeowners who have held off selling over the last year) that will lead to an increase in these numbers this spring. You won’t have to worry about this increasing competition if you sell now.
5. You have less ‘discounted’ inventory with which to compete.
This year, sellers of non-distressed properties have been given an early holiday present. With banks trying to rectify their foreclosure procedures, there has been a large supply of discounted properties removed from competition. No one knows how long it will take banks to return to the normal flow of foreclosed properties to the market. However, until they do, every homeowner has a better chance of selling their property.
Bottom Line
If you are looking to sell in 2011, there may not be a more opportune time than this right now. Serious buyers, great move-up deals and less competition from super-motivated sellers and foreclosures creates the perfect selling situation. Don’t miss it! Wherever you are located, contact me at 770 377 1319. As a Member of Leading Real Estate Companies of The World I have access to the best and most professional agents in almost every city.

Uderwater borrowers have decreased

2010-12-22T17:35:00.004-05:00

The number of homeowners in the U.S. who owe more on their properties than what those homes are worth has declined steadily for most of 2010, according to Santa Ana, Calif. research firm CoreLogic. But the drop in properties with negative equity has more to do with troubled borrowers losing their homes to foreclosure than an increase in prices. About 10.8 million, or 22.5% of residential properties with mortgages were in negative equity positions at the end of the third quarter. That is down from 11 million, or 23%, in the second quarter.
The number of underwater borrowers has declined by more than 500,000 during the first nine months of 2010, according to CoreLogic.

“Negative equity is a primary factor holding back the housing market and broader economy,” CoreLogic Chief Economist Mark Fleming said. “The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement.”

About 2.4 million borrowers had very little equity, less than 5%, at the end of the third quarter. Underwater and near-underwater loans accounted for 27.5% of all U.S. mortgages.

The states with the most underwater mortgages at the end of the third quarter were Nevada with 67%, Arizona with 49%, Florida 46%, Michigan 38% and California 32%.

(c) 2010, Los Angeles Times.

RISMEDIA, December 15, 2010—(MCT)—
Distributed by McClatchy-Tribune Information Services.

2010-06-15T22:32:00.006-04:00

More than just real estate.

Locally there are many Atlanta Real Estate bargins to be had, some investors and home buyers choose get a bargain by offering to buy homes owned by banks after the conclusion of the foreclosure process. Unfortunately, many of those homes need a substantial amount of work before they can be occupied, and it may not be possible to obtain financing on such a property.

But there's another way to pick up a good deal on your next house. And it can be a win-win transaction for all parties to the deal. It's called a short sale, and here's how it works:

When a borrower decides that he can no longer make the required monthly payments, he may contact a real estate professional about obtaining help with selling his house rather than losing it to foreclosure. If the agent then determines that more is owed on the loan than the house is currently worth, she can call the lender's loss mitigation department.

If the agent can convince the lender that 1) a foreclosure is imminent and that 2) the lender is going to lose money on the eventual sale of the house, the bank may agree to accept less than the full balance of the loan as a payoff. They will only consent if they believe this course of action will result in less of a loss for the bank. And in today's Atlanta Real Estate market that's a fairly easy case to make.

One of the biggest hurdles to a successful short sale is getting the lender to make a decision on any "short sale" offer you might make. And because the process of getting to a closing can be an extremely difficult one, it pays to work with an agent who is a short sale specialist. While there is little anyone can do to move a bank forward in the process, a persistent agent can try to get all the required paperwork submitted in a timely manner. And yes, there is a remarkable amount of paperwork required. Remember, you are dealing with a bank.

Perhaps the biggest problem is that the bank will require that the homeowner (also the defaulting borrower) prove that he has no assets and no income, and that he has suffered some misfortune that prevents him from paying. Proving financial hardship is an art form all its own. In addition, the homeowner can not benefit financially from the sale of his home.

As a result, the homeowner has little incentive to participate in the short sale. And if the bank discovers that you have compensated the seller in any way, they will revoke their agreement to participate in the sale. This is where the patience and professionalism of the facilitating agent can make all the difference.

Finally, make sure you obtain solid legal advice during these transactions. Short sales are not your typical transaction.

Based on an article that appeared in the Atlanta Journal-Constitution

2010-03-09T19:34:00.002-05:00

The YOUR HOME Credit Guide

Credit is one of the most important tools in the arsenal of your
financial health. Here’s how to keep it sharp.

As a homeowner, you already know the importance of good credit. But no matter how
hard you try, you may not be able to maintain perfect credit year after year. Your
circumstance may change, priorities could shift, and despite good intentions, you could
end up damaging your credit rating.
If you think this is happening to you, what should you do? First, understand that you
are not alone. Millions of Americans every year discover that their credit “score,” the
numerical calculation lenders use to gauge a borrower’s creditworthiness, has fallen.
Second, educate yourself. Though mysterious on the surface, the logic behind credit
scores—how they are determined, how they are used by lenders—is pretty simple, and
there are a few steps you can follow to improve your credit standing.
What’s in a Score?
The three main credit reporting agencies, Experian, Trans Union and Equifax, collect
data on consumers and their borrowing history and share this information with lenders
nationwide. A fourth company, Fair Isaac Company has designed a simple way of
interpreting this data, known as a credit score. Lenders use this score to make quick and fair decisions when offering credit.
Credit scores can range from 350 on the low end to 850 at the top, with the low 600s
representing the generally accepted cut-off for “good”credit. Lenders, such as your
mortgage company or auto dealer, often set numerical guidelines based on credit scores to help them determine whom to offer credit and on what terms. According to Costa Mesa, California-based Experian, the average nationwide credit score as of May 2007,was 692.
Your credit score isn’t the sole determinant of whether or not you are able to secure
credit—and at what interest rate—but it is a factor. Some lenders may set a floor (or
lowest acceptable credit score) beyond which they will not offer credit, while other
lenders may simply assign different interest rates or payment terms to borrowers with
lower scores.
Credit Culprit: Identity Theft
One of the biggest single threats to a homeowner’s credit today is identity theft.While you may not be responsible for the debt if fraud was proven to be the culprit, it could take months or even years to clean up the mess. And during that time, you may have trouble refinancing or getting other credit.
Tracking your credit use is the best method for detecting identity theft. Each of the three credit agencies provides a service (for about $50 annually) that will alert you to unauthorized use of your credit.
Certain financial institutions offer similar types of services, such as e-alerts, which will automatically notify you of any suspicious activity on your account. Many times these services are free.

The Right Mix
Credit scores are influenced by a number of factors, some of
which go beyond the simple standard of whether all your bills
have been paid on time. According to Fair Isaac, the weight of
any one factor depends on the overall information in your
credit report(s).
The biggest determinant (35 percent) of a credit score is your
payment history—how timely and fully you’ve made your
payments. In this regard, every additional month you fall
behind on a payment can lower your score further, while long
stretches of on-time payments are viewed favorably. The
second most important determinant (30 percent) is the total
outstanding amount that you owe, particularly in relation to
your income. Lenders perceive every additional line of credit
(from any source) as a potential barrier to your ability to pay
your bills on time, particularly if your yearly income remains
the same. As a rule, experts suggest carrying no more than 50
percent of your total available credit. In other words, if you
have $20,000 available on all of your credit cards, you should
try to restrict your amount owed to less than $10,000 at any
one time. A common misconception is that closing some
credit card accounts will boost your score. In reality, your
score will only rise if you’re paying down the outstanding debt
on those cards as you’re closing them.
Another factor is the amount of time you’ve had available
credit, particularly revolving credit lines like credit cards or
home equity loans. A credit report with mostly new accounts
is not as favorable as one with accounts that hold a long credit
history. It may be useful to consider any accounts under a year
old as “new.”The type of credit matters, too. A borrower who
has a mortgage, a home equity loan, credit cards and an
education loan, for example, has a healthier mix of credit
products than just holding credit cards. A final significant
factor in determining your credit score is the number
of “inquiries,” or times that a potential lender reviews your
credit report. Even though all credit inquiries received
within a 14-day period is seen as a single inquiry, shopping
for credit numerous times throughout the year can raise a
red flag. This doesn’t include the unsolicited, preapproved
credit card offers you receive in the mail.
Get a Better Score
So what do you do if you discover that your credit score is
lower than desired? Here are a few simple rules to follow
that can help boost your score.
• Pay down your revolving debt. Don’t move debt
around between credit cards.
• Get current on bills and stay current. If paying your
bills is an issue, consider using online bill paying or
other automatic ways to pay your bills. You’ll set it up
once and not only pay your bills but build your score
automatically
• Don’t open a lot of new accounts. Instead, hang onto
and maintain your older accounts.
• If you are having trouble making ends meet, contact
your creditors or see a legitimate, non-profit credit counselor.
Believe it or not, creditors (mortgage or otherwise)
would rather work out a payment schedule than see you
fall delinquent and not pay at all. Good credit can be a
homeowner’s most valuable possession. Use it wisely and
guard it well!

By Robert Irwin

More than just real estate.

House Passes Federal Homebuyer Tax Credit

2009-11-05T16:37:00.001-05:00

More than just real estate.
Fantastic news! The House of Representatives just voted 403-12 to pass the Homebuyer Tax Credit! This is the same bill that passed in the Senate yesterday. The next step is the President’s signature, but he has already committed to signing it (probably tomorrow). This news should help us build on the momentum that we are now experiencing in our housing market.

After the Senate gave final approval last night without a dissenting vote, the House of Representatives voted overwhelmingly this afternoon to pass legislation containing an extension and expansion of the homebuyer tax credit, completing Congressional action and sending the tax credit to President Obama for his signature, possibly as early as tomorrow.

The $8,000 homebuyer tax credit for first-time buyers, due to expire in 25 days, will be extended through April 30 of next year and buyers will have an additional two months, until the end of June, to close. First-time buyers who are in the process of making a purchase will no longer need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline. The new legislation increases the income limit for couples with income up to $225,000, a nearly $55,000 increase above the level in existing law.

For the first time, the new legislation makes buyers who already own a home eligible for a credit. A $6,500 maximum credit will be available to existing homeowners who have lived in their current residence for five of the prior eight years. The legislation limits eligibility for the existing homeowner credit to homes worth $800,000 or less.

The legislation takes effect December 1 and is not retroactive. Both credits are available only for primary residences, not second homes or investment properties.

In the House debate, Speaker Nancy Pelosi (D-Calif.) took the floor to say the homebuyer tax credit was helping a new generation of Americans live out their dream of homeownership and financial independence. Debate on the homebuyer credit was overwhelmingly positive and the legislation passed 403 to 12.

However, several leading economists have voiced concern about the $16.7 billion cost of the credit and the wisdom of spending up to $400,000 per homebuyer to stimulate real estate sales and White House support for extending the credit has been lukewarm at best. However, it is virtually certain that the President will sign the legislative package, which contains an expansion of unemployment benefits as well as the tax changes.

In the Senate, the homebuyer tax credit was amended to a bill expanding unemployment benefits by 20 weeks for those who have exhausted their benefit. The latest unemployment numbers are due out tomorrow and Congressional leaders are rushing the unemployment bill to the White House so that the President can show compassion by signing on the same day more job losses are announced.

The legislation included provisions added to address complaints of fraud. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

The legislation also contains a provision supported by the National Association of Home Builders which will help larger companies strapped for cash with net operating losses (NOL). Ordinarily these companies can carry back these losses for only two years to qualify for a tax refund. The provision would make this process extend the carry-back to five years for either 2008 or 2009. The tax break will now apply to losses in either 2008 or 2009, and the income cap will come off.

From RISmedia

More news for local investors

2009-11-04T22:10:00.005-05:00

More than just real estate.

Last week we saw that some 35 percent of home sales during the past year were bank-owned foreclosures or government-owned resales. That is a huge increase from just a few years ago when sales of these homes were not a significant part of the Atlanta market.Two factors cause these homes to sell at dramatic discounts:* Lenders and government agencies are charged with disposal of these properties regardless of price. These sellers simply do not have the luxury of waiting until the market improves; and* These same sellers have a strict policy of selling the properties in "as-is" condition, meaning no repairs and no disclosure statements. The buyer takes all the risk. As a result, the only potential buyers are investors looking for a bargain.So, what are the specific characteristics investors look for in today's market? There are many, but the main three are:

1. A LOW PRICE This is the most important part of the equation. The acquisition price needs to be low enough to cover all needed repairs, carrying costs, marketing expenses and still represent a bargain to the end consumer. Whether the investor intends to resell to an owner-occupant, or hopes to rent for long-term appreciation, the price paid for the acquisition is critical to all later profitability.In the case of Atlanta's post-foreclosure marketplace, investors have found a "market bottom." In other words, almost anything will sell very quickly if it is offered in the $30,000 to $40,000 range. Furthermore, the market is getting hotter.

2. SCOPE OF REPAIRS While the uninitiated might think that the level of repairs necessary would be the most important consideration of an investor, such is not the case. Instead, price conquers all. Sometimes the best deals require cash for major systems as well as structural repairs.That being said, every investor hopes to minimize capital outlays for the rehab. Paint and carpet is a must, and updated countertops and lighting fixtures are almost always part of the needed work. Beyond that, the house becomes less attractive. Smart investors are experts at estimating overall repair costs. And finally,

3. NEIGHBORHOOD Investors always look for pride of ownership in the neighborhood. In other words, is this the kind of area where a typical buyer or renter would want to live once the renovation is complete? If the answer is no, then all other factors become less important.Graffiti in the community, junk cars littering the yards, "boarded up" or vacant homes are all indications of problems in the neighborhood. Wise investors try to avoid these signs.The good news is that Atlanta's investor community is working hard to absorb this glut of bank-owned homes. The question no one can answer is when the supply of these homes will begin to decline.

Great News For Veterans

2009-09-07T11:05:00.003-04:00

More than just real estate.

Veterans Can Buy a Home for Nothing Down, and also get the $8,000 Rebate.

Long regarded as one of the best programs of its kind, the VA Home Loan program guarantees loans made to veterans of the United States armed forces, and allows them to purchase a home with little or no down payment. In fact, in some cases, the veteran can even include the costs of closing in the loan itself, allowing a home purchase with literally no down payment.
Couple that program with the soon-expiring federal "First Time Home Buyer" tax credit of up to $8,000, and there is an almost irresistible incentive for any qualifying vet to stop renting and start owning now.
Here's what you need to know:
* VA loans are available to qualifying veterans, up to a limit of $417,000 in most Georgia counties. In most cases, the veteran will need 181 days of active service, but requirements vary based on service dates and branch of service.
* VA loans are available through most mortgage lenders, although my advice is to seek a lender who specializes in VA and FHA products, as they require a different qualification process from most conventional loan programs. Your real estate professional can suggest several lenders.
* Because VA loans are guaranteed by the government, lenders are willing to lend up to 100 percent of the purchase price, and, in some cases, include all closing costs and expenses. No mortgage insurance is required. In addition, because the lender sees little risk in a guaranteed loan, the interest rates are typically competitive with conventional loans.
* Qualifying for a VA loan is easier because the lender's loan is backed by the government, so a less-than-perfect credit application may be accepted. Even so, your income, your monthly debts, and the proposed mortgage payments are all totaled up to see where you land in terms of debt.
The VA loan program is a great benefit for veterans, but coupling it with the First Time Home Buyer tax credit makes the purchase almost too good to be true.
* First time home buyers purchasing any sort of home, new or resale, are eligible for the tax credit. The credit can be used against future federal income taxes, or you can file an amended return for last year and get a check quickly.
* The credit is for an amount equal to 10 percent of the purchase price, up to a maximum of $8000. It is available to anyone, not just veterans. And "first-time" means neither you nor your spouse may have owned a principal residence during the 3 years prior to this purchase.
Here's the kicker: this tax credit is currently set to expire on the first of December, so my advice is to move quickly. There's still time! For more information, talk to any real estate professional or home loan originator.
Courtesy Atlanta Journal-Constitution.

Things are looking up

2009-06-06T10:41:00.005-04:00

More than just real estate.

There was a flurry of unexpectedly good economic news recently, and it gave rise to a little optimism in the real estate sector, something we haven't seen in quite some time. Maybe this is the start of something big.For starters, Federal Reserve Chairman Ben Bernanke said there are signs of a bottom in the housing market and that consumer spending had stabilized. These pieces of the economic puzzle are important because spending represents some 70 percent of our economy, and because confidence pays such a large part in the home buying decision. And remember, these words of encouragement are from a man of few words, and his words are often intentionally vague. Atlanta Federal Reserve president Dennis Lockhart was slightly more reserved, but unmistakably positive last week when he told a group on Jekyll Island that "conditions are now calmer, but it is too soon to breathe easy." OK, no easy breathing yet! But just look at all the good news:New job losses were lower than expected, and well under the benchmark of 600,000 that some economists think signals a declining versus recovering economy. And consumer spending for the first quarter showed unexpected strength after a dismal fourth quarter last year.And even though the stock market is largely unrelated to housing, the recent surge of 35 percent in the S&P 500 Index has boosted consumer confidence at all levels, reflecting Americans belief that the economy is moving toward recovery mode.On top of all this good news, I received the results of the RBC CASH Index. CASH is an acronym for Consumer Attitudes & Spending by Household. Here are their findings in a nutshell:* The RBC Jobs Index saw a rise of 9.2 points in May to 54.4, compared with 45.2 last month. Ratings of 50 or better imply optimism. This is the second consecutive increase in the jobs index following six straight months of decline. Interestingly, it seems that jobs confidence is improving even as overall unemployment is growing across the nation. Expectation for future employment showed the strongest improvement.* The RBC Expectations Index showed that 36 percent of consumers believe the economy will be stronger next month, while only 20 percent expect it will continue to weaken.* their Investment Index rose to 49.6, reflecting an improvement in respondents personal financial conditions and growing comfort with investments and major spending, such as buying a house.And it’s more than just me seeing the writing on the wall. There is a growing belief among financial experts that the recession is over. Barry Knapp, a strategist at Barclays Capital, wrote recently that the economy appears "to be in the sweet spot of a recovery" and that the recession may have ended last month, according to Bloomberg News. Liz Ann Sonders, chief investment strategist at Charles Schwab, said on "Good Morning America" recently that she agrees with that conclusion. "It isn't any brilliant prescience on mine or anybody else's part," Sonders said. "There's certain indicators we can look at to set the turn, and I think we have seen that turn." Sonders warned that unemployment is a lagging indicator and, historically, employment figures don't begin to recover until six months after the end of a recession. That means that this time around, unemployment likely won't peak until the end of this year. But, she added, there are already positive signs on the employment front. Layoffs are slowing, and unemployment claims are starting to edge lower. Meanwhile, there is more good news in housing: "We're hitting some trends that show that we may be approaching a bottom, or we may be at a bottom right now," said Pat Lashinksy, the CEO of online broker ZipRealty. A leading indicator for the housing market is inventory, the number of homes on the market. When the number of homes for sale goes down, prices rise and the market improves. Lashinksy said that's what's happening now. New data from ZipRealty shows that buyers are moving into the housing market at levels not seen in two years. "Inventory levels are actually declining, and median home prices of homes available for sale have actually gone up," Lashinksy said. ZipRealty said that as of right now, it would take 8½ months to sell all the homes currently on the market, down from a high of 11 months in October 2007. Most market watchers feel that an inventory of about six months creates an equilibrium between buyers and sellers. "The fact that inventory is declining is suggesting that soon we may see home prices begin to stabilize. In some markets, it may begin to turn upward. But the downturn in the housing that we've had for the last three years may be coming to an end," said Lawrence Yun, the chief economist for the National Association of Realtors. "Buyers are a lot more engaged," Yun said. "There's an excitement and a passion that hasn't been seen in the last 18 months right now." What's motivating buyers is low interest rates on mortgages, lower home prices and a new $8,000 tax credit for first-time buyers. In addition, some first time buyers in Georgia will qualify for up to $14,000 in additional grants under the Georgia Dream Loan program.So, is this recession over? It’s too soon to tell, but the signs are beginning to look encouraging.

Information from AJC 05/09

2009-04-30T20:52:00.001-04:00

More than just real estate.

Helping Homeowners
New Details Emerge about ‘Making Home Affordable’ Program

The new Administration has announced details of new efforts to help bring relief to responsible homeowners under the Making Home Affordable Program, including an effort to achieve greater affordability for homeowners by lowering payments on their second mortgages as well as a set of measures to help underwater borrowers stay in their homes. “With these latest program details, we’re offering even more opportunities for borrowers to make their homes more affordable under the Administration’s housing plan,” said Treasury Secretary Tim Geithner. “Ensuring that responsible homeowners can afford to stay in their homes is critical to stabilizing the housing market, which is in turn critical to stabilizing our financial system overall. Every step we take forward is done with that imperative in mind.”
“These new details will make it easier for borrowers to modify or refinance their loans under FHA’s Hope for Homeowners program,” said HUD Secretary Shaun Donovan. “We encourage Congress to enact the necessary legislative changes to make the Hope for Homeowners program an integral part of the Making Home Affordable Program.”
The Second Lien Program, one of the new details, will work in tandem with first lien modifications offered under the Home Affordable Modification Program to deliver a comprehensive affordability solution for struggling borrowers. Second mortgages can create significant challenges in helping borrowers avoid foreclosure, even when a first lien is modified. Up to 50% of at-risk mortgages have second liens, and many properties in foreclosure have more than one lien.
Under the Second Lien Program, when a Home Affordable Modification is initiated on a first lien, servicers participating in the Second Lien Program will automatically reduce payments on the associated second lien according to a pre-set protocol. Alternatively, servicers will have the option to extinguish the second lien in return for a lump sum payment under a pre-set formula determined by Treasury, allowing servicers to target principal extinguishment to the borrowers where extinguishment is most appropriate.
Separately, the Administration has also announced steps to incorporate the Federal Housing Administration’s (FHA) Hope for Homeowners into Making Home Affordable. Hope for Homeowners requires the holder of the mortgage to accept a payoff below the current market value of the home, allowing the borrower to refinance into a new FHA-guaranteed loan. Refinancing into a new loan below the home’s market value takes a borrower from a position of being underwater to having equity in their home. By increasing a homeowner’s equity in the home, Hope for Homeowners can produce a better outcome for borrowers who qualify.
Under the changes recently announced and, when evaluating borrowers for a Home Affordable Modification, servicers will be required to determine eligibility for a Hope for Homeowners refinancing. Where Hope for Homeowners proves to be viable, the servicer must offer this option to the borrower. To ensure proper alignment of incentives, servicers and lenders will receive pay-for-success payments for Hope for Homeowners refinancings similar to those offered for Home Affordable Modifications. These additional supports are designed to work in tandem and take effect with the improved and expanded program under consideration by Congress. The Administration supports legislation to strengthen Hope for Homeowners so that it can function effectively as an integral part of the Making Home Affordable Program.
Making Home Affordable, a comprehensive plan to stabilize the U.S. housing market, was first announced by the Administration on February 18. The three part program includes aggressive measures to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac; a Home Affordable Refinance Program, which will provide new access to refinancing for up to 4 to 5 million homeowners; and a Home Affordable Modification Program, which will reduce monthly payments on existing first lien mortgages for up to 3 to 4 million at-risk homeowners. Two weeks later, the Administration published detailed guidelines for the Home Affordable Modification Program and authorized servicers to begin modifications under the plan immediately. Twelve servicers, including the five largest, have now signed contracts and begun modifications under the program. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than 75% of all loans in the country are now covered by the Making Home Affordable Program.
Continuing to bolster its outreach around the program, the Administration also announced a new effort to engage directly with homeowners via MakingHomeAffordable.gov.
Homeowners will have the ability to submit individual questions through the website to the Administration’s housing team. Members of the Treasury and HUD staffs will periodically select commonly asked questions and post responses on MakingHomeAffordable.gov.

information from Risemedia 04/09

Atlanta Real Estate Investment Market

2009-04-02T12:20:00.004-04:00

More than just real estate.

Those of you who are seasoned investors out there will have realized by now that Today’s dire economic circumstances have conspired to produce the perfect real estate storm for buyers and investors. Huge inventory, low interest rates, and highly motivated sellers all combine to make this an ideal time to pick up a house, or two, or even three. But before we all rush out and buy the first house we can find, let’s look at the four most important factors of an investor real estate deal:

LOCATION
If you are looking for a rental property that will pay for itself on a monthly basis, you may be best off looking in lower middle class neighborhoods where most of the owners occupy their homes and keep their homes in relatively good condition.

Gang graffiti and boarded-up doors and windows are signs to avoid, while accessibility to transportation and relatively recent construction make for good rental income properties. Good public schools are also an important feature for many prospective renters.
Another desirable feature related to location is a neighborhood where most of the homes are similar in size and amenities. You want to buy in a neighborhood where the other properties won’t pull down your value due to wide-ranging sales prices.

CONDITION
Try to avoid neighborhoods where most of the homes are less than three bedrooms and two baths, or where most of the construction is pre-1950. Homes more than fifty years old will eventually need almost all systems updated, and that is an expense to avoid in a rental situation.
Homes less than ten years old have almost all up-to-date systems, and shouldn’t need major renovations any time soon. In addition, newer homes sometimes offer space for expansion, an inexpensive way to add a bedroom or office.
In an ideal situation, the home should need no work before the renter moves in. However, in today’s real estate market, the condition is where you are going to find the greatest degree of variation. At no time in the past thirty years has there been such a large number of homes on the market needing significant repairs.
Many of these homes are bank owned, and some are uninhabitable. Others may need nothing more than paint and carpet. Being able to distinguish between the two extremes is critical to your success in finding a great deal. At the very least, make all offers
contingent upon a full inspection of the property and a satisfactory estimate for
all needed repairs.

PRICE
The glut of bank-owned homes has, in my opinion, kicked the floor out from under the Atlanta residential real estate market. We don’t know what anything is worth, because so many of the comparable sales that appraisers use a re distressed sales.
But if you can get a price discount in the 40% to 50% range, it really doesn’t take a great investor to see that there is plenty of room for upside profit, both in the monthly cash flow and in the long term resale price. I believe that most lenders had, until recently, hoped for a “Resolution Trust Company style” bailout from the federal government. But now that the Obama administration has indicated that troubled bank assets will not be
purchased directly, pressure to sell is mounting on a daily basis. Seller motivation is growing. Investors making initial offers on bank-owned homes should be especially
careful to stay in touch with the current market of bank resales. Discounts of 25% are not uncommon, and sales at 50 cents on the dollar are being seen by investors. My advice is to start low, then be prepared to negotiate up.

FINANCING
This is the big wildcard for investment property, because the current Fannie Mae “ten property rule” has kept many veteran investors on the sidelines. But if FNMA were to relax investor guidelines, or if banks began offering any kind of reasonable seller financing, the floor under housing prices in Atlanta could be re-established
fairly quickly.
All but the most ardent “doom and gloomers” believe that the current condition of variable home values will end sooner rather than later, and anyone who can lock in a low price now will be glad they did. But the real key is how to finance that low price.
A super-low price combined with a great financing makes for a fabulous real estate investment opportunity. And I believe the solution to this problem is seller financing. I am already starting to get reports of banks selling their houses and agreeing to carry back some sort of financing. The key for investors is not necessarily a 30-year fixed rate loan at 6% interest with nothing down, although that would be nice. Instead, the key is for banks to be able to convert their non-performing assets (the vacant houses) into performing assets (loans requiring a substantial down payment and reasonable qualification guidelines). These loans can be good for the banks and good for the borrower, and they could still be attractive with terms as short as five to seven years. The investment community is ready, but needs the financing to act. Once the banks make this leap of logic, the huge oversupply of vacant houses in Atlanta can begin to disappear, and we can get on with the business of re-establishing a market for real estate.

Source John Adams - March 09

Foreclosure Prevention Plan

2009-03-06T11:00:00.004-05:00

More than just real estate.

Dear friends, below is information taken from an article by James Haggerty of the Wall Street Journal, hopefully it will help you to answer some of the common questions about the new foreclosure prevention plan.

What do these programs involve?
One component calls for reducing payments for distressed borrowers through modifications of loan terms, known as loan mods. A second involves refinancing mortgages for some people who are current on their payments but have little or no equity in their homes.

When does this start?
Immediately.

How do I know whether I qualify for a loan modification?
For starters, this program applies only to your primary residence. That could be a home for one to four families, condo, cooperative apartment or manufactured home affixed to a foundation. It doesn't apply to second homes or investment properties, and the home can't be vacant or condemned. It also doesn't apply to mortgages on one-unit homes whose balances exceed $729,750.
And it isn't for people who can easily afford to pay their loans. You qualify only if your mortgage payment is more than 31% of your pretax monthly income. The monthly payment includes principal, interest, taxes, insurance and homeowner association or condominium fees. Income includes wages, salary, overtime, fees, commissions, tips, Social Security, pensions and other items.
You may qualify whether or not you are up to date with your payments, but you will need to show that you don't have sufficient cash or other readily available assets to meet your current payments.

If I think I may qualify, what's the first step?
Call your loan servicer, the company that sends you your monthly mortgage bill. If you want a counselor to help you, you can request free counseling from approved counseling organizations by dialing the Hope Hotline at 888-995-4673. Avoid firms that charge you a fee for helping you get a loan mod.

Aside from lower payments, what are the benefits of participating?
As long as participants stay current on the modified loans, they can get reductions of as much as $1,000 each year in their principal balance for five years.

Can everyone with a hardship be helped?
No. Servicers will apply a "net present value" test to determine whether a loan modification is in the financial interests of the lender or investor who owns the loan. If it isn't, you may not qualify.

Do I have to pay a fee for a loan mod?
No.

How do I know whether I qualify for the refinancing part of this plan?
You must be current on your payments and your loan must be owned or guaranteed by government-backed mortgage companies Fannie Mae or Freddie Mac.
These refinancings are designed for cases in which the loan balance is between 80% and 105% of the estimated value of your home. (Those below 80% should be able to get refinanced without the help of this program by contacting lenders or mortgage brokers.) Loan servicers will use computer programs or other means to estimate the value of your home.
These refinancings also are available for second homes and investment properties in some cases.

How do I find out if my loan is owned or guaranteed by Fannie or Freddie?
Your loan servicer or counselor should be able to determine that. On your own you can contact Fannie by calling 1-800-7FANNIE or visiting this Web site: www.fanniemae.com/homeaffordable. To reach Freddie, call 1-800-FREDDIE or go to www.freddiemac.com/avoidforeclosure.

Do I have to pay a fee for a refinanced loan?
Lenders or mortgage brokers may charge fees, which are likely to vary.

How long will these programs last?
The modification plan ends Dec. 31, 2012, and loans can be reworked only one time under this program. The refinance program ends in June 2010.

Where can I get more information?
The U.S. Treasury has provided information at www.financialstability.gov.

courtesy James R. Hagerty Printed in The Wall Street Journal, 03.06.09

What are the details of the $8,000 Tax credit

2009-02-26T17:29:00.003-05:00

More than just real estate.

Dear friends,

Below are some Q and A regarding the recently announced tax credit.

Hopefully this will answer most of your questions, if not feel free to contact me.

Q&A on $8,000 First-Time Home Buyer Tax Credit Q: Who is eligible to use the tax credit? A: The $8,000 tax credit is available for first-time home buyers only. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. All U.S. citizens who file taxes are eligible to participate in the program.
Q: Are there any payback provisions? A: The tax credit is a true credit. It does not have to be repaid. The only repayment requirement is if the home owner sold the home within three years after the purchase.
Q: Are there income limits to qualify for the credit? A: Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000. Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit. Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit. The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with a MAGI that exceeds $170,000.
Q: What are the effective dates for the tax credit? A: First-time home buyers would receive an $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.
Q: Is the tax credit refundable? A: Yes. A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference. For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).Q: What years can buyers apply the tax credit to their tax returns? A: Buyers can take the tax credit on their 2008 or 2009 income tax return.
Q: What types of homes qualify for the tax credit? A: All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.
Q: Where can I find more details on the tax credit? A: NAHB has a consumer Web site that provides comprehensive information on the tax credit. The Web site is http://www.federalhousingtaxcredit.com/ .

Courtesy of John Adams 02/26/09. http://www.money99.com/

Your personal stimulus tax break

2009-02-22T17:00:00.005-05:00

More than just real estate.

Roughly 97% of American households could see tax savings as a result of the American Recovery and Reinvestment Act, according to a new analysis by a nonpartisan research group.
The Tax Policy Center crunched the numbers and concluded that the average savings would be $1,179. But how much a household actually gets depends on income, marital status and whether a filer has children. The savings range from a few hundred dollars to several thousand.
The law, which President Obama signed on Tuesday, contains a range of tax breaks for individuals. Those likely to affect the greatest number of households are the new Making Work Pay credit worth up to $400 ($800 for joint filers); a patch to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax; and expansions of the earned income tax credit and the child tax credit for low-income families.
There are also breaks that address specific situations: a new credit for first-time home buyers, a sales tax deduction for car buyers and a new credit to help pay for college tuition. For people receiving unemployment benefits, the first $2,400 will be tax free.
On Saturday, President Obama said the government had already taken action on the broadest of the law's cuts -- the Making Work Pay.
The Treasury Department has told employers to reduce the amount of taxes withheld from paychecks by April 1. Treasury estimates that a typical family will begin taking home about $65 more per month, according to Obama.
"Never before in our history has a tax cut taken effect faster or gone to so many hardworking Americans," Obama said in his weekly video and radio address.
In addition, the economic recovery plan contains a host of tax breaks for small businesses.
The Tax Policy Center used a representative sampling of all tax filers and non-filers, including information on their income, their spending and their demographics. And then they applied the various tax provisions for which those in the sample pool qualify.
Some tax-saving scenarios
A single person with no children making between $20,000 and $30,000 would see a 12.5% reduction in his or her tax liability for an annual savings of $453. The same person making between $50,000 and $75,000 would see a 4.6% drop, or $626.
At the upper income ranges, someone with income between $100,000 and $200,000 would see a 2.1% drop, which translates into $706.
With or without kids, a married couple filing jointly making between $50,000 and $75,000 could see a 10.5% drop for a savings of $991. Those making between $75,000 and $100,000 would see their tax liability go down 9.1%, or $1,457.
Couples with very high incomes -- between $200,000 to $500,000 -- could see a 7.5% decline in their tax bill, or $5,645.
Households with children, regardless of the parent's marital status, would see savings on their tax bill averaging 9.7% of their tax liability, or $1,975.
When you'll see savings
The first tax credit filers will enjoy is the Making Work Pay credit, which will show up in increments in people's paychecks starting in April.
In some instances, such as with the first time home buyer's tax credit, the money can be claimed on one's 2008 tax return if the home purchase occurs between Jan. 1 and before Nov. 30 of this year.
But in many cases, a household won't see some of their stimulus savings until they file their 2009 returns, which they can't do until 2010.
Of course what filers' save on their federal taxes under stimulus may be muted by the fact that their cities and states -- facing steep budget shortfalls that will be lessened but not eliminated by stimulus funding -- may end up raising taxes and fees.

Source; CNN Money Feb 09.

Property Tax relief

2009-02-17T20:14:00.007-05:00

More than just real estate.

The Georgia Senate recently passed two property tax-relief bills, overcoming criticism from minority Democrats and some Republicans that the measures were unnecessary and would raise taxes on businesses.
Senators voted 40-14 to double Georgia’s homestead property tax exemption from $2,000 to $4,000. A few minutes later, legislation already passed by the House to preserve the state’s Homeowners Tax Relief Grant program this year cleared the Senate 29-24.

Mortgage rates fell during the past week, pushed lower from the uncertainty stemming from the bank bailout plan unveiled Tuesday.
The average 30-year fixed mortgage rate fell to 5.34% from 5.70% for the week ended Feb. 11, according to Bankrate.com.
The average 15-year fixed rate mortgage sank to 5.03% from 5.31%, and the average jumbo 30-year fixed rate slipped to 6.98% from 7.12%.
Adjustable rate mortgages also dropped over the past week, with the average 1-year ARM falling to 5.67% from 5.73% and the 5/1 ARM sinking to 5.37% from 5.5%.

Meanwhile, foreclosure filings more than doubled in the first three months of 2008, spiking 112%. So far this year 156,463 families have lost their homes to repossessions. Many markets won't hit bottom till late 2009 or even 2010.
Pity the residents of Stockton, Calif., whose homes are likely to lose more than half of their 2006 value. But if you happen to live in Texas, congratulations: The housing tornado passed you by.

The Obama administration is looking at subsidizing the mortgage payments of struggling borrowers before they default, according to sources familiar with the discussions.
If it comes to pass, the program would blaze a new trail in the federal government's foreclosure prevention initiatives. Until now, the efforts have focused on helping those already behind in their payments through interest-rate reductions and other loan modifications. The Bush administration had not committed any money to helping borrowers.
Obama, however, has pledged to spend at least $50 billion to help borrowers in trouble. Treasury Secretary Tim Geithner said Tuesday that the administration would release its plan within a few weeks. He and Housing Secretary Shaun Donovan have been meeting with banks, housing advocates and trade organizations this week to listen to their foreclosure prevention proposals.
Details remain scarce, but at this point the subsidy plan entails having struggling homeowners take an affordability test and undergo a re-appraisal to see if they are eligible. The subsidy would allow servicers to adjust the loan terms without having the mortgage's investors take a loss, which should make them more open to the loan modification.
Assisting borrowers before they default would help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.
"This will help put a floor on home values," said one person familiar with the negotiations.
Obama's plan is also likely to include ramping up the streamlining of modifications for borrowers already in default. Already, several banks and Fannie Mae and Freddie Mac are working with homeowners to make their monthly payments more affordable by reducing interest rates, lengthening loan terms and deferring principal to the end of the loan

Inauguration time

2009-01-28T18:20:00.010-05:00

More than just Real Estate.

Thanks to the procurement abilities and connections of CJ Bland, the founder and CEO of Minority Professional Network, I was able to witness first hand the Inauguration of the 44th President of the USA in Washington DC. CJ also managed to get me a ticket one of the official balls 'The Southern Ball', below are a few pictures of the evening. MPN provides the premiere web-based interactive global Career, Economic, and Lifestyle Connection™ marketing portal and resource network for progressive multicultural and women professionals. The MPN web portal - http://www.minorityprofessionalnetwork.com/ionalnetwork.com/ is regularly visited by millions of entrepreneurs, consumers, community leaders, corporate professionals, politicians and other progressive multicultural and women professionals and students throughout the USA and around the world.

MPN provides the premiere web-based interactive global Career, Economic, and Lifestyle Connection™ marketing portal and resource network for progressive multicultural and women professionals. The MPN web portal - http://www.minorityprofessionalnetwork.com/ is regularly visited by millions of entrepreneurs, consumers, community leaders, corporate professionals, politicians and other progressive multicultural and women professionals and students throughout the USA and around the world.

Why should I use a Realtor?

2009-01-15T00:05:00.004-05:00

Happy New year everyone!! I wish you all Health, Happiness and prosperity. Lets make it a great year.

I will start by reminding you of some of the reasons why you need to use a Real Estate professional in your Real Estate tranactions Surveys show that many homeowners and homebuyers are not aware of the true value a REALTOR® provides during the course of a real estate transaction. The list here is just a baseline since the services may vary within each brokerage and each market. In Atlanta and around the USA, many REALTORS® routinely provide a wide variety of additional services that are as varied as the nature of each transaction. By the same token, some transactions may not require some of these steps to be equally successful. However, most would agree that given the unexpected complications that can arise, it’s far better to know about a step and make an intelligent, informed decision to skip it, than to not know the possibility even existed. The Critical Role of the REALTOR® – 180 Steps Listed here are 180 typical actions, research steps, procedures, processes and review stages in a successful residential real estate transaction that are normally provided by full service real estate brokerages in return for their sales commission. Depending on the transaction, some may take minutes, hours, or even days to complete, while some may not be needed. More importantly, they reflect the level of skill, knowledge and attention to detail required in today’s real estate transaction, underscoring the importance of having help and guidance from someone who fully understands the process – a REALTOR®.

Pre-Listing Activities
1 Make appointment with seller for listing presentation
2 Send seller a written or e-mail confirmation of listing appointment and call to confirm
3 Review pre-appointment questions
4 Research all comparable currently listed properties
5 Research sales activity for past 18 months from MLS and public records databases
6 Research "Average Days on Market" for this property of this type, price range and location
7 Download and review property tax roll information
8 Prepare "Comparable Market Analysis" (CMA) to establish fair market value
9 Obtain copy of subdivision plat/complex lay-out
10 Research property's ownership & deed type
11 Research property's public record information for lot size & dimensions
12 Research and verify legal description
13 Research property's land use coding and deed restrictions
14 Research property's current use and zoning
15 Verify legal names of owner(s) in county's public property records
16 Prepare listing presentation package with above materials and HomeTrack™ information
17 Perform exterior "Curb Appeal Assessment" of subject property
18 Compile and assemble formal file on property
19 Confirm current public schools and explain impact of schools on market value
20 Review listing appointment checklist to ensure all steps and actions have been completed

Listing Appointment Presentation
21 Give seller an overview of current market conditions and projections
22 Review agent's and company's credentials and accomplishments in the market
23 Present company's profile and position or "niche" in the marketplace
24 Present CMA Results To Seller, including Comparables, Solds, Current Listings & Expireds
25 Offer pricing strategy based on professional judgment and interpretation of current market conditions
26 Discuss Goals With Seller To Market Effectively
27 Explain market power and benefits of Multiple Listing Service
28 Explain market power of web marketing, IDX and REALTOR.com
29 Explain the work the brokerage and agent do "behind the scenes" and agent's availability on weekends
30 Explain agent's role in taking calls to screen for qualified buyers and protect seller from curiosity seekers
31 Present and discuss strategic master marketing plan
32 Explain different agency relationships and determine seller's preference
33 Review and explain all clauses in Listing Contract & Addendum and obtain seller's signature

Once Property is Under Listing Agreement
34 Review current title information
35 Measure overall and heated square footage
36 Measure interior room sizes
37 Confirm lot size via owner's copy of certified survey, if available
38 Note any and all unrecorded property lines, agreements, easements
39 Obtain house plans, if applicable and available
40 Review house plans and make copy
41 Order plat map for retention in property's listing file
42 Prepare showing instructions for buyers' agents and agree on showing time window with seller
43 Obtain current mortgage loan(s) information: companies and & loan account numbers
44 Verify current loan information with lender(s)
45 Check assumability of loan(s) and any special requirements
46 Discuss possible buyer financing alternatives and options with seller
47 Review current appraisal if available
48 Identify Home Owner Association manager if applicable
49 Verify Home Owner Association Fees with manager - mandatory or optional and current annual fee
50 Order copy of Homeowner Association bylaws, if applicable
51 Research electricity availability and supplier's name and phone number
52 Calculate average utility usage from last 12 months of bills
53 Research and verify city sewer/septic tank system
54 Water System: Calculate average water fees or rates from last 12 months of bills )
55 Well Water: Confirm well status, depth and output from Well Report
56 Natural Gas: Research/verify availability and supplier's name and phone number
57 Verify security system, current term of service and whether owned or leased
58 Verify if seller has transferable Termite Bond
59 Ascertain need for lead-based paint disclosure
60 Prepare detailed list of property amenities and assess market impact
61 Prepare detailed list of property's "Inclusions & Conveyances with Sale"
62 Compile list of completed repairs and maintenance items
63 Send "Vacancy Checklist" to seller if property is vacant
64 Explain benefits of Home Owner Warranty to seller
65 Assist sellers with completion and submission of Home Owner Warranty Application
66 When received, place Home Owner Warranty in property file for conveyance at time of sale
67 Have extra key made for lockbox
68 Verify if property has rental units involved. And if so:
69 * Make copies of all leases for retention in listing file
70 * Verify all rents & deposits
71 * Inform tenants of listing and discuss how showings will be handled
72 Arrange for installation of yard sign
73 Assist seller with completion of Seller's Disclosure form
74 "New Listing Checklist" Completed
75 Review results of Curb Appeal Assessment with seller and provide suggestions to improve salability
76 Review results of Interior Décor Assessment and suggest changes to shorten time on market
77 Load listing into transaction management software program

Entering Property in Multiple Listing Service Database
78 Prepare MLS Profile Sheet -- Agents is responsible for "quality control" and accuracy of listing data
79 Enter property data from Profile Sheet into MLS Listing Database
80 Proofread MLS database listing for accuracy - including proper placement in mapping function
81 Add property to company's Active Listings list
82 Provide seller with signed copies of Listing Agreement and MLS Profile Sheet Data Form within 48 hours
83 Take additional photos for upload into MLS and use in flyers. Discuss efficacy of panoramic photography

Marketing The Listing
84 Create print and Internet ads with seller's input
85 Coordinate showings with owners, tenants, and other Realtors®. Return all calls - weekends included
86 Install electronic lock box if authorized by owner. Program with agreed-upon showing time windows
87 Prepare mailing and contact list
88 Generate mail-merge letters to contact list
89 Order “Just Listed” labels & reports
90 Prepare flyers & feedback faxes
91 Review comparable MLS listings regularly to ensure property remains competitive in price, terms, conditions and availability
92 Prepare property marketing brochure for seller's review
93 Arrange for printing or copying of supply of marketing brochures or fliers
94 Place marketing brochures in all company agent mail boxes
95 Upload listing to company and agent Internet site, if applicable
96 Mail Out "Just Listed" notice to all neighborhood residents
97 Advise Network Referral Program of listing
98 Provide marketing data to buyers coming through international relocation networks
99 Provide marketing data to buyers coming from referral network
100 Provide "Special Feature" cards for marketing, if applicable
101 Submit ads to company's participating Internet real estate sites
102 Price changes conveyed promptly to all Internet groups
103 Reprint/supply brochures promptly as needed
104 Loan information reviewed and updated in MLS as required
105 Feedback e-mails/faxes sent to buyers' agents after showings
106 Review weekly Market Study
107 Discuss feedback from showing agents with seller to determine if changes will accelerate the sale
108 Place regular weekly update calls to seller to discuss marketing & pricing
109 Promptly enter price changes in MLS listing database

The Offer and Contract
109 Receive and review all Offer to Purchase contracts submitted by buyers or buyers' agents.
110 Evaluate offer(s) and prepare a "net sheet" on each for the owner for comparison purposes
111 Counsel seller on offers. Explain merits and weakness of each component of each offer
112 Contact buyers' agents to review buyer's qualifications and discuss offer
113 Fax/deliver Seller's Disclosure to buyer's agent or buyer upon request and prior to offer if possible
114 Confirm buyer is pre-qualified by calling Loan Officer
115 Obtain pre-qualification letter on buyer from Loan Officer
116 Negotiate all offers on seller's behalf, setting time limit for loan approval and closing date
117 Prepare and convey any counteroffers, acceptance or amendments to buyer's agent
118 Fax copies of contract and all addendums to closing attorney or title company
119 When Offer to Purchase Contract is accepted and signed by seller, deliver to buyer's agent
120 Record and promptly deposit buyer's earnest money in escrow account.
121 Disseminate "Under-Contract Showing Restrictions" as seller requests
122 Deliver copies of fully signed Offer to Purchase contract to seller
123 Fax/deliver copies of Offer to Purchase contract to Selling Agent
133 Fax copies of Offer to Purchase contract to lender
124 Provide copies of signed Offer to Purchase contract for office file
125 Advise seller in handling additional offers to purchase submitted between contract and closing
126 Change status in MLS to "Sale Pending"
127 Update transaction management program show "Sale Pending"
128 Review buyer's credit report results -- Advise seller of worst and best case scenarios
129 Provide credit report information to seller if property will be seller-financed
130 Assist buyer with obtaining financing, if applicable and follow-up as necessary
131 Coordinate with lender on Discount Points being locked in with dates
132 Deliver unrecorded property information to buyer
133 Order septic system inspection, if applicable
134 Receive and review septic system report and assess any possible impact on sale
135 Deliver copy of septic system inspection report lender & buyer
136 Deliver Well Flow Test Report copies to lender & buyer and property listing file
137 Verify termite inspection ordered
138 Verify mold inspection ordered, if required

Tracking the Loan Process
139 Confirm Verifications Of Deposit & Buyer's Employment Have Been Returned
140 Follow Loan Processing Through To The Underwriter
141 Add lender and other vendors to HomeTrack™ so agents, buyer and seller can track progress of sale
142 Contact lender weekly to ensure processing is on track
143 Relay final approval of buyer's loan application to seller

Home Inspection
144 Coordinate buyer's professional home inspection with seller
145 Review home inspector's report
146 Enter completion into transaction management tracking software program
147 Explain seller's responsibilities with respect to loan limits and interpret any clauses in the contract
148 Ensure seller's compliance with Home Inspection Clause requirements
149 Recommend or assist seller with identifying and negotiating with trustworthy contractors to perform any required repairs
150 Negotiate payment and oversee completion of all required repairs on seller's behalf, if needed

The Appraisal
151 Schedule Appraisal
154 Provide comparable sales used in market pricing to Appraiser
152 Follow-Up On Appraisal
151 Enter completion into transaction management program
153 Assist seller in questioning appraisal report if it seems too low

Closing Preparations and Duties
154 Contract Is Signed By All Parties
155 Coordinate closing process with buyer's agent and lender
156 Update closing forms & files
157 Ensure all parties have all forms and information needed to close the sale
158 Select location where closing will be held
159 Confirm closing date and time and notify all parties
160 Assist in solving any title problems (boundary disputes, easements, etc) or in obtaining Death Certificates
161 Work with buyer's agent in scheduling and conducting buyer's Final Walk-Thru prior to closing
172 Research all tax, HOA, utility and other applicable prorations
162 Request final closing figures from closing agent (attorney or title company)
163 Receive & carefully review closing figures to ensure accuracy of preparation
164 Forward verified closing figures to buyer's agent
165 Request copy of closing documents from closing agent
166 Confirm buyer and buyer's agent have received title insurance commitment
167 Provide "Home Owners Warranty" for availability at closing
168 Reviews all closing documents carefully for errors
169 Forward closing documents to absentee seller as requested
170 Review documents with closing agent (attorney)
171 Provide earnest money deposit check from escrow account to closing agent
173 Coordinate this closing with seller's next purchase and resolve any timing problems
174 Have a "no surprises" closing so that seller receives a net proceeds check at closing
175 Refer sellers to one of the best agents at their destination, if applicable
176 Change MLS status to Sold. Enter sale date, price, selling broker and agent's ID numbers, etc.
177 Close out listing in HomeTrack™

Follow Up After Closing
178 Answer questions about filing claims with Home Owner Warranty company if requested
179 Attempt to clarify and resolve any conflicts about repairs if buyer is not satisfied
180 Respond to any follow-on calls and provide any additional information required from office files.

Courtesy Realtor.org 2008-07-10. Based on a list prepared by Belton Jennings, CEO of the Orlando Regional REALTORS® Association

A comment on the growth of Atlanta

2008-12-14T16:37:00.004-05:00

More than just real estate.

Sprawl to meet its limit in Atlanta
By Christopher B. Leinberger
From News Services
Wednesday, November 05, 2008

I have been coming to Atlanta for 35 years, consulting for the likes of Trammel Crow Residential, Cousins Properties and Carter and Associates, and I have witnessed one of the most remarkable metropolitan transformations in the country. Those changes led me to remark in a speech in the 1990s that metropolitan Atlanta was the fastest-growing human settlement in history regarding land consumption.

This phenomenal growth has been in all four cardinal directions but particularly to the north, up I-75, Ga. 400 and I-85. This northern thrust is in the heart of the “favored quarter,” that 90-degree arc coming out from downtown that has been the focus of the vast majority of growth in Atlanta, just as it is in every metropolitan area in the country.

However, this development pattern is changing.

The underlying population and employment growth will continue —- well above national rates. However, where that growth will locate is evolving.

We are witnessing the beginning of the end of sprawl. Like much of the rest of the country, the overproduction of automobile-driven suburban development at the fringe of the Atlanta metropolitan area has reached its limits. The combination of outrageous commutes, environmental degradation and the increasing number of consumers preferring a “walkable urban” way of life have combined to start the end of the geometric increase in land consumption of the past half century.

The subprime crisis and the energy price spike of the past 18 months have just accelerated an underlying market trend.

Evidence of this structural change comes from many sources:

> The city of Atlanta had been losing population since 1960 in spite of rapid metropolitan growth. That changed in the 1990s and has phenomenally accelerated this decade. The city is now among the top 10 fastest-growing cities in the country.

> The city of Atlanta’s share of office market demand had been falling for at least a half century; it stabilized a couple of years ago. If you follow trends from other metro areas that are ahead of Atlanta, the office market share and the employment that comes with it should start gaining on the suburbs during the next upturn.

> While the national housing depression has not affected metro Atlanta quite as badly as many other regions, it has followed national trends in one important respect: Homes in the center of the region and close to job centers have not suffered much, if any, price declines. Prices on the fringe are down twice the regional average, losing on average at least 14 percent of value. The highest-price housing on a per-square-foot basis is now in the city and close-in suburban job centers, a fundamental change from 20 years ago.

Metro Atlanta is following a national trend in creating and growing high-density, walkable urban places. The two-week party that was the Olympics in 1996 first showed you how exciting a temporary walkable urban place could be, and you set out to make it permanent over the subsequent decade.

But it definitely is not confined to downtown.

Midtown, Atlantic Station, Virginia-Highland, Buckhead, Vinings and Decatur have also emerged as walkable urban places. There will be many more.

The metro area that has the most walkable urban places, per capita, is the region surrounding Washington. It has 20 such urban communities today and 10 more are emerging; 20 years ago there were just two. Given that metro Atlanta has exactly the same population as metro Washington, if you follow the Washington model, you will be growing 15 to 25 more walkable urban places in the next decade. This represents tens of billions of dollars in investment over the next decade and will be home to thousands of jobs and housing.

But where will they be? Follow the MARTA rail and other planned rail lines, such as the Beltline. Ninety percent of Washington’s 30 current and emerging walkable urban places are served by rail transit.

However, these walkable urban places will not all locate in Atlanta. The experience in Washington and other metropolitan areas indicates that the majority of these places will be in the inner suburbs and job centers. Think of places such as Alpharetta, Doraville, Norcross and Smyrna.

There will be losers. Certain fringe, drivable-only suburbs will find themselves too far out and unaffordable to drive there and back for every trip from the house. The emerging demographic trends show that the vast majority of households created over the next 20 years will be singles and couples. Most of these households will eschew the Ozzie and Harriett houses on the fringe, preferring the many options offered that are walkable or a close transit ride away from home. The end of the “drive until you qualify” housing will mean Atlanta needs a conscious strategy to provide work force and affordable housing.

Yet on balance, more walkable, urban centers in metro Atlanta will have many environmental, financial and social benefits. It may hurt certain households on the fringe, but its societal and family benefits far outweigh the costs. In any case, it is what the market is demanding.

> Christopher B. Leinberger is a visiting fellow at the Brookings Institution, a professor at the University of Michigan and a real estate developer. He is author of “The Option of Urbanism: Investing in a New American Dream.” Sarah Kirsch of the Atlanta office of RCLCO, a real estate advisory firm, helped compile local data.

Atlanta Real Estate Investor

2008-11-26T15:59:00.005-05:00

More than just real estate.

Now that we are happy that interest rates are on the way down from an already reasonably low level, we can all ponder why am I not investing in Real Estate? after all we are hearing every day that this is the best time to be a buyer or an investor in Atlanta Real Estate.

Let take some advice from someone who is an Atlanta Investor, John Adams, the guru of Atlanta Real Estate.

Real Estate Investments Yield Income on a Monthly Basis

One of the questions I am most frequently asked is this: In a world of financial opportunities as diverse as it has ever been, why would anyone want to invest directly in rental real estate? It’s a good question, and one that deserves a response.
And because I have owned and managed residential real estate for more than thirty years, it’s hard for me to relate to the question. I admit that I eat, sleep, and breathe rental houses, and it’s been that way for a long time. But I do keep up with alternative opportunities, so I think I can be objective.
As a preface, I question the use of the word "investment" as it applies to residential real estate. The act of investing has been defined as "the laying out of capital in an enterprise with the expectation of profit," and that sounds fairly passive. Most people who think of investing in something don’t expect to have to work at their investment.
For example, when you buy 100 shares of stock in a company, you have made a decision to leave the management and direction of that company to the board of directors. Not only that, the board of directors is not likely interested in your opinions on which way the company should move.
Instead, you pay cash for the stock and hope for dividends. In addition, it is hoped that the stock will, over time, go up in value. Typically, there is nothing you can do to personally affect the company performance. That is a passive investment.
Residential real estate is different. It requires some level of personal attention to make it successful.
Some people have described ownership of rental real estate as a second job, and there is definitely a "hands-on" component. But management of a rental house can be delegated to a property manager or a real estate professional, so you can minimize the owner’s day to day involvement.
Even so, I consider rental houses to be an active investment.
Once you have gotten past the basic management difference between real estate and other investments, the true major benefit of real estate becomes clear.
It is income. Rental real estate generates income. That income arrives in the form of monthly rental payments, and can begin on the first day of ownership and continue indefinitely.
Some critics would say that, in a low interest rate environment, many of those who have rented in the past have moved out of rental property and purchased homes of their own. And while that is true, the fact remains that more than one-quarter of all households in this country pay rent every month.
In recent years, our government set of goal of increasing home ownership, and we have seen a strong increase in first time home buyers. But that rate now stands at 77 percent, and further advances are increasingly difficult. Those who rent today either choose to do so for the sake of convenience, or find loan approval much more difficult as a result of income or credit issues.
And with home prices advancing faster than wages, along with recent interest rate increases, it is likely to become harder for first time buyers in the future, not easier.
The remarkable thing about the income that can be generated by residential real estate is that the income can pay for the investment.
To my knowledge, there is no other mainstream investment that the average person can buy which requires little cash up front and pays for itself over time. And that’s because lenders have found that lending a large percentage of a home’s purchase price is usually a safe bet.
The ability to easily borrow a large portion of a home’s purchase price is called leverage, and is another key advantage of real estate.
Many homeowners become landlords when they need to move to their next house and are unable (or unwilling) to sell their current residence. Rather than sell for a reduced price, they may decide to rent, simply to cover the payments. This is a viable alternative for many owners.
If you decided to move around in metro Atlanta every two or three years, and keep your old house every time you move, you could build up quite a portfolio. And there is effectively no limit to the number of times you could repeat this procedure over a period of years.
Government subsidies of the home lending industry make it possible to borrow almost the entire purchase price at relatively good rates, which are locked in for as long as thirty years. And this type of financing is simply not available to any other investment.
The combination of income and leverage creates a powerful opportunity which requires little cash in the beginning, then produces income to cover payments over the life of the investment.
This type of self-sustaining model is simply not available for mainstream investments like the stock market, precious metals, or bonds. Instead, real estate has unique advantages which make it extremely attractive to the investor who understands the risks involved.
John Adams Money99.com

Hurrah, Interest rates going down

2008-11-26T15:45:00.004-05:00

More than just real estate.

Well we now have a new President elect, who is currently choosing his cabinet in double quick time.

But what else is happening out there to help with the financial stress in the Real Estate market?

The newly announced Federal Government Plan is an Important Move for Real Estate
Following the Fed’s announcement of its plans to buy up to $600 billion in mortgage-backed assets, the housing industry welcomed this solution, citing Main Street and mortgage rates as the direct beneficiaries.”This is one of the key actions we’ve been advocating ever since the Treasury altered its course on how it would use the $700 billion recovery package passed in September. This is great news for home buyers and sellers and we applaud the Fed for taking this historic step,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Housing recovery is the key to economic recovery in this country and it always has been.”
To support the mortgage markets and bring down mortgage rates, the nation’s home builders also called on federal officials to clearly affirm that the government will provide long-term guarantees for the debt and securities purchased by Fannie Mae and Freddie Mac.
Investors are confused over the extent of federal support for long-term obligations held by the housing government sponsored enterprise (GSEs) and that uncertainty has pushed spreads on GSE debt in relation to Treasury yields to record highs, Jerry Howard, president and CEO of the National Association of Home Builders (NAHB), said in a letter to Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart.
“As a result, mortgage rates are at unacceptably high levels, which is forestalling recovery of the housing market and creating a major drag on the economy,” Howard added.
In yesterday’s announcement, the Fed said it would purchase mortgage-backed securities from Fannie Mae, Freddie Mac, and Ginnie Mae for up to $500 billion. “This will be critical to a housing recovery,” McMillan said.
Lawrence Yun, NAR chief economist, said purchasing debt obligations of Fannie and Freddie is an important move. “We commend the Fed decision because it will directly bring down long-term interest rates,” he said. “The level of investment should be aggressive enough to bring interest rates down in a meaningful manner. As we’ve seen in past recessions, home sales rise when mortgage interest rates fall.”
Yun said that given the present state of the mortgage market, interest rates on 30-year fixed-rate mortgages are too high. “If Fed action brings down mortgage interest rates by even 1 percentage point, it would increase homes sales by 500,000 units. That should help to draw inventory down and stabilize prices.”
Yun said higher home sales are critical now to absorb inventory and stabilize prices. “Only with stabilization in home prices can we have a healthy housing and economic recovery,” he said.
In its announcement, the Fed said it will purchase up to $100 billion of GSE debt from primary dealers through a series of competitive auctions to begin next week. Purchases of up to $500 billion in MBS will be conducted by selected asset managers before year-end. Both the direct obligations and MBS purchases are expected to take place over several quarters.
It also will purchase another $500 billion in mortgage-backed securities, which consist of mortgage loans that are packaged together and sold to investors. These securities, viewed as toxic now because so many mortgages are going unpaid, are at the heart of what’s weighing down troubled banks. Purchasing them is intended to free up bank lending, which would spur the economy.
© 2008, McClatchy-Tribune Information Services. RISMEDIA, Nov. 26, 2008-(MCT/RISMedia)-

Butterfly effect

2008-11-09T14:54:00.004-05:00

More than just real estate.

Despite his lame-duck status, George W. Bush, president of the United States of America, is still arguably the most powerful man in the world-at least for another two months. Secretary of the Treasury Henry Paulson and Federal Reserve Chairman Ben Bernanke have more influence over U.S. and international financial market performance and monetary policy than almost anyone else.
Yet, for all the influence and all the resources at their disposal, these three powerful men have been largely ineffectual in their efforts to stave off an economic meltdown far worse than anything seen in several generations.
Bernanke has slashed Fed funds rates, flung the discount window wide open and orchestrated buyouts of once-dominant financial institutions. Paulson fired his infamous “bazooka” and took Freddie Mac and Fannie Mae into conservatorship. Over $1 trillion has been earmarked to prop up the imploding housing and financial markets. Have all these efforts been for naught? And if these powerful men have been unable to turn the tide, who can?

The Butterfly Effect
An offshoot of Chaos Theory, the Butterfly Effect suggests that small variations of the initial condition of a system may produce large variations in the long-term behavior of the system. A butterfly’s wings might create tiny changes in the atmosphere that, ultimately, alter the path, delay, accelerate or even prevent the occurrence of a tornado in a certain location. The flapping wing represents a small change in the initial condition of the system, which causes a chain of events leading to large-scale alterations of events. Had the butterfly not flapped its wings, the trajectory of the system might have been vastly different.
All Real estate sales are an opportunity to break the cocoons and become butterflies, altering the course, slowing down or perhaps even preventing severe financial storms from devastating their neighborhoods, cities and states. One flap, one home, one family at a time. And the place to start this chain effect is in the foreclosure market.
Agents of Change
Think about what happens when an agent conducts a successful short sale: the homeowner is spared the emotional and economic trauma that comes with foreclosure and eviction; the lender saves tens of thousands of dollars in legal and processing fees; a home buyer gets a property below market value; Who loses in that transaction?
There will be over 1 million REOs on the market by the end of this year. Until this inventory is exhausted, home prices and new home sales will continue to languish. Bank-owned homes can quickly ruin a neighborhood-nothing drives property values down more rapidly than vacant homes, and nothing is more of a safety hazard than an empty, boarded-up property. The faster a first-time home buyer can take possession of an REO, the faster the neighborhood has a chance to stabilize and recover. Foreclosure sales, in today’s troubled market, present a rare opportunity to do good for others.
The current problem isn’t a battle between Main Street and Wall Street; it’s a systemic problem that threatens both. Like it or not, the Realtors role in this drama has shifted from “real estate agent” to “agent of change.” And we are uniquely positioned to help affect the recovery for which the powers-that-be have provided massive financing. Start flapping, and let’s see what happens. Contact BJ webb today for further information on how to start flapping.

Adapted from an item by Rick Sharga, who is senior vice president at RealtyTrac.

Think outside the box

2008-11-02T18:17:00.005-05:00

More than just real estate.

Worried about home values?
If you own Atlanta real estate and you are not in trouble with your mortgage, don’t, worry about the appreciation of your property, when it comes to reduction in home values the places of greatest risk are, California, Nevada, Arizona.

If you have access to cash or financing, it still a great time for housing bargain's.
The Georgia Multi Listing System recently confirmed that of its71,000 active home listings, 7,400 were classified as bank owned homes. Banks are finally getting the message and they are selling some of these homes at reasonable prices, unfortunately the processing times are lengthy as the banks shuffle the papers from one department to another in some cases this can take up to six weeks, so buyers and agents need to work hard to keep these deals moving forward.
For buyers, you need to work with an agent who has experience of dealing with bank owned properties and short sales.

Think Outside the Box
With so many homes out there sellers have to creative to stand out from the crowd.
The people at The Mansion at Peachtree in Atlanta, Georgia have gone far outside of the box. The customers they are courting are those who expect their needs to be met. That is why they have partnered with MD on Call to provide on site medical care to their residents. The first 2 years of the service are included in the purchase price of the units.
Now that is thinking outside of the box.
Along with butler and concierge service, spa and sauna, buyers who purchase homes at the new luxury high-rise the Mansion on Peachtree receive two years of service from MD on Call, a mobile medical practice that treats patients in their homes.
The Mansion, which opened in Buckhead in May but is yet to be occupied, is believed to be the first residential property in Atlanta and among the first in the country to offer medical services to its homeowners.
“Our resident profile was people who anticipate every service being available to them,” said Clark Butler, president of City Centre Properties, owner and developer of the upscale, 2,500- to 10,000-square-foot residences ranging in price from $2.5 million to $1
Along with butler and concierge service, spa and sauna, buyers who purchase homes at the new luxury high-rise The Mansion on Peachtree receive two years of service from MD on Call, a mobile medical practice that treats patients in their homes.
The Mansion, which opened in Buckhead in May but is yet to be occupied, is believed to be the first residential property in Atlanta and among the first in the country to offer medical services to its homeowners.
“Our resident profile was people who anticipate every service being available to them,” said Clark Butler, president of City Centre Properties, owners and developers of the upscale, 2,500- to 10,000-square-foot residences ranging in price from $2.5 million to $12 million. “It seemed to be a natural fit.”
Neither City Centre, which sought out the partnership with MD on Call, nor other developers or concierge medicine experts contacted knew of any other such arrangements.
It’s a sign of the economic times, said Georgia State University real estate professor Julian Diaz.
“People have got to be very creative in selling real estate now,” said Diaz, noting the economy’s negative impact on even the luxury housing market. To sell to this smaller clientele, developers must differentiate themselves by offering such services. But he doesn’t expect such perks to become a permanent part of the real estate landscape.
“It’s a very specialized market with not a whole lot of players,” he said. “A lot of people would like to sell to that handful, so you’re trying to distinguish yourself among a very select group.”
New homeowners at The Mansion can take advantage of the services, valued at several thousand dollars, once they close on their units. Appointments are not necessary because the physicians group sees patients in their homes, offering everything from a throat culture to an EKG.
Holly and Rick Wolfert received details about the amenity last week when they closed on their new residence at The Mansion. The couple, who moved from Connecticut to Lake Oconee in 2007, plan to maintain their primary residence in Greensboro, so they do not anticipate utilizing the medical services often. Still, they said the service should attract other homeowners, especially retirees and the less mobile.
“It’s a great convenience for people who don’t like to make appointments and go to the doctor,” said Holly Wolfert.
Concierge medicine practices — also called “boutique” or “executive” medicine — are rapidly growing among patients and doctors who seek a higher level of medical service. Doctors charge patients an annual fee ranging from about $1,500 to $20,000 for 24/7 availability by cell phone and e-mail, total body exams and same-day visits. After paying their annual fee, patients can use their insurance plan, in some instances.
An estimated 1,100 concierge practices exist nationwide, most formed by small groups of doctors who limit their practice loads to several hundred patients or fewer, compared to a typical practice’s 2,500.
Atlanta emergency room specialist Ellen Frauenthal founded MD on Call 11 years ago. Her partnership with The Mansion is a new wrinkle for her practice, she said.
MD on Call focuses on preventive medicine, wellness and healthy lifestyles to ensure that patients are not ignoring the things that keep them well, said Frauenthal, who refers to her practice as “health care without the hassle.”
MD on Call services are not covered by insurance, and each annual retainer covers a specified number of hours, depending on size and needs of the family. Her practice’s three physicians limit their patient load to fewer than 100 and conduct lifestyle assessments of their patients to help personalize their medical treatment.
“We become patient advocates,” said Frauenthal, who said her practice has grown mainly by word-of-mouth. “Just like people have financial advisers, we are the equivalent in terms of health care.”
2 million. “It seemed to be a natural fit.” via the ajc.com.

What a Week!!

2008-10-12T19:15:00.009-04:00

More than just Atlanta Real Estate

Today I was going to talk about the buy out and if it is an example of socialism, but the historic and calamitous events of the past week have been so dire I decided to postpone the investigation of socialism and look more closely at the recent worsening of events of the financial markets and the way they directly affect the Real Estate Market.

Over the last 8 trading days the Dow has plunged 2400 points or 24%, who could have predicted that. Two weeks ago we all hoped that by now things would have least stopped getting worse. Sow how did we get here?

Firstly the government takeover of Fannie Mae and Freddie Mac had the temporary effect of lowering interest rates, which is a good thing. But the bankruptcy of Lehman Brothers, the failure of Washington Mutual and the sale of Wachovia, as well as the stock market sell-off, has affected investor confidence in the financial markets, and that has pushed home-loan rates right back up. Also despite the fact that the goverment reduced the interest rate that banks are allowed to charde each other to borrow money, they arent lending money!! this "credit crunch" not only affect the banks but also the businesses that rely on credit to purchase raw materials, make pay roll, and even buyers who want to borrow for a home are now having more difficulty.
So the government bailout could help home prices if the banks that get relief turn around and make new loans, but so far it's not clear that they will. More importantly, housing prices are not just a factor of mortgage rates. Foreclosures and slow sales have left 4-million-plus homes on the market, nearly half a million more than two years ago. That could get worse before it gets better if rising unemployment translates to fewer buyers to work off that fat inventory.
Until homes for sale are again scarce, it will continue to be better to be a buyer than a seller.

According to CNN, most economists expect another 10% drop in housing prices nationally.
"I don't see the slump in housing prices ending anytime soon," says Dean Baker, co-director of the Center for Economic Policy and Research.
“Well how soon is soon?” I hear you ask
"In the long run none of what we're doing now is going to matter that much to real estate," says Wellesley economics professor Karl Case. "Home prices have to do with the scarcity of land and perception of that scarcity."

I agree that in the long term real estate has always shown that it is a great investment, after all God isn’t making anymore land is he !!.

So sellers hang in there and buyers and investors now is the time to buy selectively and pick up some great deals. Georgia Real estate had over 10,000 new foreclosure filings in July (courtesy www.Realtytrac.com) which is a sad number for every one of those owners, but it also opportunity for investors and buyers. I recently met with some new investors who are looking to buy unfinished subdivisions, owned by distressed builders or banks, and buy them out, sit on the land, and then build and sell the homes when the market recovers. I say bravo, this is how millionaires are made.

Today on CNN I heard George Soros comment that stabilization of home prices is fundamental to any recovery attempt. He advocates that re-negotiation of foreclosures of up to 85% of the value of the mortgage should be a tactic of the lenders, the banks would still have losses, but they would be less than the losses they will suffer otherwise, and of course it would keep people in their homes, and limit the effects that foreclosures have on the local real estate and general real estate market. What do you think?

Some more good news, the national Association of Realtors says pending home sales increased 7.4% from July to August, the highest increase since 2007.

Word of the Week - Bailout

2008-09-28T20:22:00.004-04:00

More Than Just Atlanta Real Estate

What a week! This must be one of most eventful in terms of the financial markets and the US economy.

Whether you live in Atlanta or Alaska, the word of the week was ‘bailout’ but is has also been called ‘financial stimulus package’, or by some ‘wall street giveaway!!’ what ever you want to call it, there is definitely a split in opinions as to whether it is even needed.

Some of the pundits were even suggesting that we should ‘let the chips fall as they may’ in other words, all of these financial institutions that are in trouble should be left alone to fail and then let the markets settle and reset.

At the other end of the spectrum there is President Bush, who on Tuesday is claimed to have said during the talks ‘If money isn’t loosened up, this sucker could go down’, he apparently made those comments as he saw the package he offered fall apart.

In between these two opinions there are some people who although they believe that the markets are king, they see the flaw in the do nothing plan. Although on the outset it would not cost the taxpayer billions of dollars, once these institutions fail, due to the complex nature of the modern financial markets their effect is always wider that just their employees and shareholders, the markets have a tendency to panic and become unstable, and as I said in the last blog, they all effect each other in some way, so this approach although well meaning in its nature has major problems. That said, this plan does highlight one observation, no one knows what the full depth or potential cost of this situation is.

It seems most people believe that the problem is big enough that we need to do something. Amongst this crowd are people who claim that Hank Paulson’s main interest is saving the value of his Goldman Sachs stock, true he is an ex-chairman and CEO of the financial giant, but actually what gave Goldman Sachs a great boost was the announcement on Tuesday by Warren Buffet that he would invest $5 Billion in Goldman Sachs. I should disclose that Warren Buffet owns the company that I work with, but without favoritism I can honestly say that there are many, many people and financial institutions that follow the words and deeds of Warren Buffet, after all he didn’t get to be the richest person in the world (Forbes.com 03/05/08) without understanding the financial markets, value, economics etc.
But coming back to the bailout, I have heard people saying that we should use this $700B in other ways, such as handing thousands out to each household. Now while this is a great thought (I really need a big screen HDTV) what they misunderstand is that we don’t actually have this money. We are going to have to go with our begging bowl to other countries such as China, to lend it to us, and with our credit rating being as low as it is, you know the interest rate will be high, so this will just be added to the approximately 9.7 trillion that the USA owes other countries.

The plan it its original form was only three pages long, this seems short for a high school essay, never mind a financial plan to save the world! Well the senators (and public) have seen through that ploy and have asked for more detail to be added to crucial elements, such as executive pay to those involved in bailed out institutions, are there limits to the size of loans or bad paper that is covered. How long will the government hold them for? And will they sell them on at a profit? By Monday the document was 42 pages long, by Friday the working version was up to 102 pages.

Whatever we do to fix this the bigger picture also involves fixing the mechanism that allowed this to happen in the first place…………….lack of regulation and oversight of the banking and financial institutions. We have already heard from countries like China, and Germany saying ‘I told you so’ as we sailed towards the iceberg. The markets will never have the same confidence in American investments if we don’t fix it. The days of property prices rising annually by double digits are gone, what it proved is what all grandmothers know ‘Things that come to quickly always end in tears’.

But ironically the objective of all these bailout plans is to achieve one very basic aim…….. Help property prices to stabilize, bottom out, and then start to increase. Once that happens we are all back on the good ship ‘happiness’ as this is an indication that the economy is headed in the right direction.

Is this the way to do it…………..what do you think?

Good news….Our company’s market share of sales of Atlanta homes rose by 30% in August 2008 over August 2007.

The next Blog - Is this socialism?

2008-09-23T18:10:00.007-04:00

More than just real estate.

I believe that this blog should be about more that just Atlanta Real Estate, after all as we now see nearly all financial markets are tied to each other, and calamity in one market can have global effects. Therefore where the opportunity arises or circumstances dictate I will blog about matters that are widely related to the Atlanta Real Estate market such as Finance, Economics, Politics, world affairs etc etc.

How did we get in this mess?
I have a large number of friends and investors who reside outside of the USA. Some of them have been asking me “How did we get in this financial mess?”. The effects have truly been felt all over the world. Huge investment banks that had weathered, world wars and depressions have thrown in the towel. (eg. Lehman Brothers, founded 1830). Yes this latest problem did originate here in the good old USA. I will devote a little time to help us all to understand how, and why it happened. I will stick to the facts, as far as possible and of course any views offered are my own personal views.

The current financial crisis definitely has its beginnings in the housing market. Greed and dishonesty …………those two bed fellows often found in the rubble of many a financial crisis, sure did play their part here, but let’s leave that for another time. Two of the biggest players on the block of housing finance were Freddie Mac and Fannie Mae.

Fannie Mae was created in 1938 at a time when millions of families could not become home owners or were at great risk of losing their homes. Fannie Mae’s role was to expand the flow of funds in all communities and enable more people to become homeowners. But it also had a duty to its private investors (read more about their history at http://www.fanniemae.com/index.jhtml ) Basically Fannie Mae is a privately owned company with a congressional charter (hence it became a Government Sponsored Enterprise - GSE) to operate in the secondary mortgage market, to guarantee loans and make sure that Mortgage Banks and other lenders have enough funds to lend prospective home buyers.

Freddie Mac is another GSE with the same role (http://www.freddiemac.com/.) It was created in 1970 to end the monopoly of Fannie Mae.

Unfortunately with the incestuous relationship these GSEs had to the government and Congress they were not as heavily regulated as they should have been. It became clear to a few trained observers that some of the subprime mortgages that were being bundled by the lenders (who incidentally only had to keep some of them for only 30 days!) were carrying huge risk. The issue was ignored by congress. Now we know that all financial markets thrive on risk, but as investors all over the world, purchased these bundles of loans, that carried the promise of collecting mortgage payments in the future, it slowly became clear that these bundles were not going to pay off. The other ingredient that turned a misfortune into a disaster was the falling house prices. Under normal circumstances when a home owner defaults on the mortgage, the lender takes over the property (foreclosure) and sells it off and gets their investment back. But unfortunately US house prices were falling, thus the banks could not sell them and break even, and when the market became flooded prices fell even further, creating a very difficult situation for everyone, from home owner, lender, Freddie Mac, Fannie Mae and even the investment banks, pension funds etc etc that held these bundled investments.

That’s it for today, next time I will talk about what being done to steer a path out of this situation.

On a positive note now is a great time to be buying a home, whether you're looking to move to Atlanta or anywhere else in the USA or become an investor, there is plenty of choice, property prices are amazingly low, interest rates are historically low, and with foreclosures at an all time high, there a plenty of prospective tenants. If you have any questions hit me back.

New Website Launch

2008-09-19T10:54:00.002-04:00

Hello everyone! It's official, the new website was launched on September 5, 2008 at a launch party. The newly designed website has something for everyone looking to buy, sell, or invest in real estate.Some features of the new site are:

Why you should move to Atlanta
Historical and informative data on the Atlanta area
For the investor, view thousands of investment homes, including some with tenants to pay your mortgage
View and comment on beautiful kitchens in Atlanta homes
The easiest way to find your dream home
Get information on how to get free flight and hotel accommodations (see terms & conditions)

For this and much more, visit www.TheAtlantaDream.com.