There is a light at the end of the tunnel and no, it’s not a train!
May 5, 2008
Spring has sprung, the weather is great. Interest rates are wobbling a little but they are still at all time lows. The endless droning of the bobbling head news guys who tell us how bad it is….and how many foreclosures and short sales there are, is having an interesting effect. People are starting to think that this may actually be a good time to buy a house. The market is really pretty active.
For the first time in decades in Atlanta there are homes that you can buy and rent out and actually make positive cash flow. There are neighborhoods that have been out of reach for lots of folks who would love to live there that suddenly are having some actually affordable homes on the market. It’s no longer true that you can’t get a decent home in a safe neighborhood under $300,000 any more. There are actually lots of homes for sale in safe areas closer to $200,000. And there are homes out there that I would live in myself or let my daughter live in under $100,000! …even inside the perimeter, in Atlanta Georgia today! You can own a decent home at an affordable price.
The Intown areas that were being renovated heavily and flipped a few years ago, like Reynoldstown, Kirkwood, Edgewood, East Atlanta and East Point had begun to get pretty pricey. When the crunch started a lot of the investors/ house flippers with short term hard money loans were left holding the bag. A number of big builders went down because they were sitting on too much inventory. So a lot of these those houses are now on the market as foreclosures. They are in various stages of completion, some are done and move in ready and some have been gutted and have nothing put back. A house in the West End that I personally sold (as the listing agent) nearly 2 years ago to a first time homebuyer for $134,900, recently went on the market in exactly the same condition for $44,900. This was not a loan fraud deal, no money went back to the purchaser under the table. This was an educated buyer who bought a home to live in and lost it. What this means is that if you missed the boat ten years ago when prices were low, you have been given a second chance to own a home at an affordable price. There are a lot of people who get it. When a home goes on the market in these types of neighborhoods for $64,000 is sells, frequently in a bidding contest.
Loans after Bankruptcy or Foreclosure - FHA Insured Loans
May 2, 2008
In todays volatile lending market there is an old standby that is moving forward to a new place in American finance…. The FHA loan.
The History of the FHA The Federal Housing Authority was set up after the depression of the early 1930’s to help Americans recover from the tremendous numbers of foreclosures during the depression and get Americans back into home ownership. Prior to the FHA there were not 30 year loans generally available, people were financing homes with 5 to 10 year loans. FHA may be doing the same thing now as traditional lending goes through it’s changes. Initially and for most of the history of the organization it was completely self funded and did not rely on any taxes for it’s operating capital. It was funded initially by mortgage insurance premiums and appraisal fees. It took till this year for the FHA to come to the Government to help make up a budget shortfall. The predictions are that the FHA will recover as it is the only option for credit challenged borrowers, and is writing a record number of loans.
Today’s FHA We have seen conventional loans tacking on rate increases for borrowers with lower credit scores. A couple of years ago anything above 600 was considered decent while now some lenders are adding 1/2 a point to the interest rate on 30 year fixed rate loans for borrowers with credit scores between 650 and 680 and 1.25% added to interest rates for borrowers with credit scores between 620 and 650. Below 620 is considered "subprime" and the rates rise dramatically. Yet FHA will still make loans to borrowers with credit scores as low as 580. These are 3% down loans with interest rates fluctuating between 6 and 6.25% 30 years fixed. The loan amount has increased to $346,250 recently in most of metro Atlanta. It may now be a better deal for not only credit challenged buyers, but for the mid-range credit purchaser with 650-680 credit scores.
There is a one time mortgage insurance premium of 1.5% of the loan amount which can either be paid in full at closing or added to the loan amount and financed, then there is a monthly mortgage premium which is .5% of the loan amount per year, (1/12 of that paid each month). Conventional loans also have mortgage insurance. The rate is about a quarter of a percent higher than the lowest conventional rate available for strong credit borrowers but for people under a 680 credit score, it is a lower rate!
Some of the Guidelines for FHA insured loans after Bankruptcy or Foreclosure
FHA INSURED LOANS are available to people who have had both bankruptcies and foreclosures in their past. There are some restrictions, the borrower must have virtually perfect credit since the bankruptcy or the foreclosure. These loans are also subject also to normal qualifying guidelines with income and debt limitations.
- Chapter 13 Bankruptcy There must be 12 consecutive months of on time payments on all accounts (including utilities, cell phones etc) from the filing of the chapter 13 bankruptcy.
- Chapter 7 Bankruptcy There must be 24 months of perfect credit from the disposition of a Chapter 7 bankruptcy.
- Foreclosure There must be 3 years of perfect credit from the foreclosure.
FHA Appraisals
March 13, 2008
I had a call last week from a woman who wondered where she could find out if certain homes for sale were approved for FHA financing. As I talked to her about the fact that, for the most part, it takes an appraiser to determine whether or not a home qualifies, I tried to explain what she would need to look for so she could avoid paying for appraisals on property that may not qualify. It occurred to me that there was a good blog post in that explanation so here it goes!
FHA appraisers do a different type of appraisal than appraisers for conventional loans. They are more concerned with the health and safety of the borrowers. They look at the standard things that all appraisers look at, and they take it a little further. FHA is not only concerned with the property value but is also concerned with things like handrails on steps, broken windows, lack of screens, evidence of rodent infestation and other issues that don’t affect a normal appraisal to the same degree. If the house was built before 1978 and may have the potential for lead based paint, the FHA appraiser looks for peeling paint. The FHA appraiser needs to see that the bedrooms have egress in case of a fire, the windows have to work and if there are burglar bars they need to have the code approved methods of opening them from the inside in case of a fire. They want to see smoke detectors. The FHA appraiser needs to see window screens if there isn’t central air conditioning. They look at the remaining life of the roof and the furnace and hot water heaters and want to see a stove in the kitchen. The utilities have to be on during the appraisal and they check that the various components are working. The appraiser looks for evidence of environmental contaminants like asbestos and mold. The FHA appraiser looks for earth to wood contact and other evidence of termites.
So for the most part, the home has to be livable. If the carpet can be cleaned or the house needs paint to make it clean and fresh, this will not generally be enough to cause the appraiser to require that the work be done before closing (or after). If you want to read the actual FHA appraisal guidelines you can see an article from HUD here. The basic HUD website can be found here and the FHA Appraisal page has an overview of the entire process.
Foreclosures in the Atlanta Market - Where the Deals Are…
February 26, 2008
After 22 years in the real estate business I can tell you that the foreclosures are offering opportunity like we have not seen since I have been selling property. Atlanta narrowly missed being on the top ten list for the highest foreclosure rate in the country in 2007. According to the Atlanta Business Chronicle, 2.5% of Atlanta homeowners were in the foreclosure process in 2007. In every price range, in every neighborhood, we can see the stark reminders of those poor folks who reached too high, didn’t pay enough attention, or had the unfortunate luck to get an expensive illness without insurance. Many of these houses were simply vehicles for loan fraud. Whatever the story, there are so many that it is really pretty amazing. Many are beaten and bruised and will take a lot of elbow grease too bring them back to life. On the other hand, there are some still have tracks in the carpet where someone vacuumed and cleaned, they still have their appliances and window treatments and are ready for their new homeowners.
Greatest Real Estate Agent in the World
February 13, 2008
First and foremost the greatest real estate agent in the world is not the one you think he is. He isn’t the one who sells the most houses in a given year or the one with the best car. He is not the one who has the highest priced listings or the one who lives in biggest penthouse in Trump Tower. He is not the one who knows all of the best closing techniques or the one who could sell ice to an Eskimo.
The greatest real estate agent in the world is the one who tells the first time home-buyer the truth about the mortgage he is thinking of getting. He’s the one who can tell a Buyer that even though the bank will give them an adjustable rate mortgage to buy the house, he shows them where the payment could go, and explains what happens if he can’t make the payment. He doesn’t tell the buyer that they can always just sell or refinance, because he knows that the market could change and the prices could go down. He knows that just because there are 100% loans today for stated income borrowers with 620 credit scores, that two years from now the loan programs could expire. He knows that sometimes bad things happen to good people and pushing the envelope and borrowing the absolute max has brought many people to ruin.
Virginia Highland’s year end market report.
January 14, 2008
We have all been hearing about the doom and gloom of the real estate market, so I thought I would do some research and see how bad it actually is for Virginia Highland. These numbers are for single family detached homes only, i.e. no condos or lofts or attached town homes.
Just for those of you who like to get straight to the point: Yes, the market is down in terms of overall volume but the average prices are up and the average days on the market is down !
The Atlanta Buyer’s Market
December 31, 2007
Everyone knows that we are in a Buyer’s market. You hear about it on the network news and read about it in the Atlanta paper…. in the Atlanta area we are in a Buyer’s Market!
One of the big brokerages has billboards around Atlanta which show how many homes are on the market today. It was up to 109,000 about a month ago and now it is down to 101,000. You will normally see it refresh and have the numbers change as you drive by. It catches my attention every time I drive by! The company is attempting to advertise the web search tool that they offer, but in my opinion, the only message it is really sending is that there are a boatload of houses for sale today in Atlanta Georgia!
I think the billboard undermines any feelings of optimism that may be brewing out there and they may be turning more Buyers off than they are turning on!
Candler Park Market Report
December 20, 2007
I saw something interesting while looking at the sales for the last 12 months (12/20/2006-12/20/2007) in the Candler Park neighborhood. We have exactly the same number of sales that we did in the period from 12/20/2005-12/20/2006. There were 51 sales listed in the FMLS during both 12 month periods. That kind of disproves the theory that the market has softened this year!
Right now there are 22 properties on the market and 4 of them are under contract. They range from $299,000 to $949,000 and the average price is $526,888! This is the first time in a few years that we have seen some homes sell around $300K or less, but there are more homes selling at the top of the range than ever (mostly new construction) so the averages have been going up.
If you are interested in living in this neighborhood you can see what’s for sale on my Candler Park page and I would be happy to show you any that look interesting. I have been living in this great area since 1991 and think it’s Atlanta’s best neighborhood!
$100 Down Payment for HUD Homes
December 3, 2007
HUD homes continue to be a bargain for owner occupants with the $100 down payment option available on all properties beginning with the extended listings on October 5 2007. Then the properties listed on the General List (Owner Occupant preference) after October 10, 2007 are also eligible. This applies to the insured properties and the uninsured IF the buyer is using the FHA 203K loan to purchase! This is a program available to Georgia residents, and they must be owner occupants. One restriction on the program is that if the homeowner bids over the appraised value, then they must bring the "overbid" amount to the closing.
If you want to see what HUD homes are on the market look at my Atlanta Foreclosure page and you will see a link to HUD homes near the bottom of the page. While HUD homes are listed by Realtors and are in the lists of foreclosures that you can search by neighborhood, the only way to get an up to the minute accurate look at what is available is to go to the HUD site. Properties will still show active on the MLS when they are actually under contract. If it is on the HUD list, they are available!
If you find a home you want to see or bid on call me. You must have a registered HUD broker to make a bid and if you forget my phone number just call 770-HUD-HOME and you will find me!
Come and Get Your Flat Screen TV!
November 30, 2007
This Sunday (December 2, 2007) a group of Realtors with listings in Colonial Hills, a subdivision in East Point Georgia, have decided to see if we can shake up the lagging showings by offering a flat screen TV to one lucky winner. To qualify for the drawing you have to preview all of the listings participating. Right now there are 8 Realtors participating and everyone is running their own ads and we are running some group ads. If you want to come to my listing first, I will have maps to the others and the address of mine is 2295 Newnan St. East Point, Georgia 30344.
This is the first time I have participated in this type of incentives, we are seeing more of this as the market cools. Builders are offering incentives on new homes and you see a lot of agents in the Caravan (Tuesday agents preview each other’s listing) giving away bottles of wine or "cash grab bags" to lure their fellow agents into the open house.
Comments
RE/MAX of Buckhead
DAN Connolly
404-370-0050
O. 404-233-4633
Fax: 404-370-0377
Toll Free: 866-RE/MAX-76 (866-736-2976)
Recent Posts
- There is a light at the end of the tunnel and no, it’s not a train!
- Loans after Bankruptcy or Foreclosure - FHA Insured Loans
- FHA Appraisals
- Foreclosures in the Atlanta Market - Where the Deals Are…
- Greatest Real Estate Agent in the World
- Virginia Highland’s year end market report.
- The Atlanta Buyer’s Market
- Candler Park Market Report
- $100 Down Payment for HUD Homes
- Come and Get Your Flat Screen TV!