Tag Archives: buyer’s market

How is the Atlanta Real Estate Market? “FANTASTIC” (Always)

10 Tuesday Jan 2017

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How is the Atlanta Real Estate Market? “FANTASTIC” (Always)

By Mary Anne Walser, Realtor & Attorney, 404-277-3527, maryannesellshomes@gmail.com

EVERYONE, it seems, is interested in real estate, and the most common question I get is “how’s the real estate market?” I always say, “IT’S FANTASTIC.” Because when you think about it, the market IS always fantastic for SOMEONE. Sometimes it’s fantastic for buyers. Sometimes for sellers. Sometimes it is a fantastically BALANCED market. Right now, as you are likely aware, we are in a strong seller’s market in most locations (since real estate is very local, the “market” varies widely from one location to the next, even within Atlanta, but generally speaking we are in a recovery phase where prices continue to rise).

So given the fact that any real estate market can be “fantastic” in some respect, at a cocktail party if I say the real estate market is “fantastic” I also have got to go beyond the “fantastic” and explain. Right now we’re in an expansion phase in Atlanta. Generally, we are in a fantastic market for Sellers. But eventually and inevitably we will again be in a fantastic market for Buyers.

But our human tendency is to think that when things are good, they will stay good, and when things are bad, they will stay bad. That explains those clients in the years from 2008 to 2012 who would say “I don’t want to buy now – the market is bad.” In that time frame, prices were extremely low and inventory was high. Those buyers were correct that the market was bad…for SELLERS. It was great for buyers. The market has steadily improved since, and those who did buy in that time frame are now reaping the benefits if they are selling, since right now we are in a seller’s market – the market now is great for SELLING a home.

Psychologists have documented many logical fallacies and biases to which humans are prone – one of which is the “status quo bias.” The potential buyers in that time frame often fell into this bias. Making great real estate decisions depends upon recognizing any potential bias you may have, looking at the current market objectively, examining trends, and realizing that things will not always be as they are now.

If you look at real estate pricing over the years, starting when the US starting selling land in 1800, real estate prices peak about every 18 years, and the worst downturns are preceded by high prices and great demand. Here are the two most recent 18 year cycle examples. In 1990, we experienced a downturn after the broad expansion of the Reagan years (when tax incentives helped fuel housing increases). 18 years later – in 2008 – another downturn, this time a huge one. It really needn’t have taken us by surprise; the depth of the disaster was due to banks giving away money far too freely, but most experts would argue that some sort of slump was inevitable. The real estate cycle is somewhat predictable.

So the next downturn? If you follow the 18 year formula, should be in about 2026. But of course it’s never entirely predictable, and it depends upon many factors. Interest rates, for instance. If they go up (they have risen a little, and will likely rise again this year), then buying power is greatly reduced. When the real estate market is improving and expanding and prices are increasing, there is pressure on the Fed to increase interest rates. This makes many new developments financially unfeasible and lessens the buying power of the homebuyer. So interest rates are an easy indicator that we watch weekly and sometimes daily. Right now there’s a huge uptick in activity because interest rates went up and homebuyers became nervous that they will continue to rise.

So for now, in Atlanta, the housing recovery continues. Interest rates rising will restrict that recovery, but there are other factors that will come into play in the next few years, both on the national and local levels. Our President Elect is a real estate developer, so while on the one hand, he will likely do what is good for real estate and loosening regulation might mean real estate financing flows more freely, on the other hand, immigration restrictions will likely increase construction costs and trade limitations could stem the foreign dollars for real estate that has helped bolster pricing.

Here in Atlanta, we are blessed with the fact that more and more companies want to move to Atlanta or expand their Atlanta based operations. This population influx gives us a buffer – even when prices go down again (as they inevitably will) as long as we have net population growth our real estate prices will remain strong.

So when asked “how’s the real estate market” – say FANTASTIC. But then dig a little deeper.

 

Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne serves on the Committee that drafts and reviews the contracts utilized by all REALTORS in the State of Georgia. In addition, she is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email: maryannesellshomes@gmail.com.

 

Channeling Don Draper – Positioning Your Atlanta Home in the Homebuying Marketplace

08 Wednesday Jun 2016

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If you are a Mad Men fan, then you know Don Draper went in for the product pitch fully prepared. He learned as much as he could about the product he was being interviewed to market, and he researched how to best appeal to the most likely buyers. Don’t forget that your home is also a product. You need to identify the strength of the market, the target buyer, and the best way to approach and appeal to that buyer. Much can be learned by utilizing some simple tools Mad Men style to position your home correctly in the marketplace. So here we go!

Like bringing any other product to the market, first we do a market analysis. We price your home right by looking at the comparables that have sold recently in a close radius – that’s looking at what has already SOLD. We also determine how much inventory is currently in your price range, how long it may take to sell, and what our competition looks like. We must keep in mind, of course, that there are many buyers who will look beyond a “close radius” of your home. For instance, a buyer may be looking in Decatur AND in Dunwoody – in Inman Park AND in Sandy Springs. While a prequalified buyer will know what they can afford, they may NOT have decided exactly where they want to live. But we do not let that overwhelm us. We start with what’s closest, since that is most immediately relevant. And we keep in mind that pricing and marketing homes is as much an ART as it is a SCIENCE.

One of the key indicators we look at is the ABSORPTION RATE in your particular market. Many sellers make the mistake of pricing their home relative to other homes that are CURRENTLY presented for sale. The problem with that is that the other homes currently on the market HAVE NOT SOLD (by definition). So if you price relative to current listings, and those homes aren’t moving, you may be overpricing, even IF you are priced less than the others.

So the absorption rate is one tool that allows us to look back at the homes that HAVE sold and how quickly they have sold. Here is what you need in order to calculate absorption rate:

  1. The market you wish to analyze. This can be one specific neighborhood or a larger area.
  2. The time period you want to analyze (typically we’ll take six months, sometimes longer).
  3. The number of homes SOLD within that time frame.
  4. The number of homes currently under contract or PENDING sale.
  5. The number of homes currently on the market.

So, by way of example, let’s take Chastain Park as of June 2016. First, know that to truly get an accurate absorption rate you sometimes need to do a specific map search. There are several reasons for this. For instance, Chastain Park is a prestigious area so some listings may claim to be in Chastain Park when they really are not. Also, there are neighborhoods within Chastain Park that are named differently – so the neighborhood name might be used in the listing instead of “Chastain Park.” So using a map search will give us the most accurate information.  And using a map search, we find that 134 homes have sold in Chastain Park in the last year. There are 27 homes that are “pending sale” or “under contract.” And there are 99 current active listings.  So what does this tell us?  Here are the calculations:

  • What is the rate of home sales in Chastain Park? We take the number of sold homes and pending homes added together, (134 plus 27 = 161), divided by the number of months in our chosen past time frame (here we will use a year, or 12 months). This calculation results in 13.41 (161 divided by 12), meaning that 13 (and almost a half) homes are sold every month in Chastain Park.
  • We can figure out the absorption rate by taking the active listings and dividing that by the average number of listings which sell per month. Thus, we get active listings = 99, divided by the average home sales per month (13.41), which equals 7.38 months. That means that if no other homes came on the market, it would take 7.38 months to sell the inventory that we have.

A BALANCED absorption rate is generally between 5 and 7 months. By balanced, we mean a market that’s balanced between buyers and sellers; neither holds a particular advantage in a “balanced market.” Less than five months is a seller’s market (meaning better for sellers), more than seven is a buyer’s market. So we’re in a little bit of a buyer’s market in Chastain Park at this particular moment in time. This is an important piece of information which tells us in part that it’s important to price competitively.

Once we have figured out the absorption rate and how quickly homes are moving, we ask: who is the likely buyer for your home? First time homebuyer? Move up executive who is now making a lot more money and ready for a showcase home to entertain clients? A downsizing widow? A couple planning to have children? You get the idea. To figure this out, we look at the types of buyers who have purchased homes like yours in the same general area. While we want to have as broad an appeal as possible (at least as to those homebuyers who can afford homes in your price range), it doesn’t hurt to also have a good idea of who the “most likely” buyer might be, and to develop a plan to target them in our marketing efforts.

Keeping the likely buyer in mind, we stage carefully. Many of our staging rules apply no matter who the audience, but we also tailor our staging to the likely buyer, the style of the house, the neighborhood and the season. The marketing plan extends to photography as well. If our target buyer is one likely to enjoy the outdoors, we play that up in photographs. If our buyer is likely to entertain in the evenings, we may take some of our photographs at night. Nowadays we often also use drone photography to showcase a particularly large lot or extensive home, a pool, or outdoor area.

After years in the business, I have become expert in marketing homes, but I always also get the input of other agents. We invite other agents into your home to get feedback on our planned approach to appeal to buyers. We often make adjustments based on that feedback.  These agent previews provide a sort of “focus group” intelligence that helps us make your home most appealing to the buyers who come through.

Once we are in the marketplace as a live listing, the adjustments never stop until your home is sold. If buyers aren’t seeing the home, we want to know why. If buyers see the home and aren’t making an offer, we also want to know why. It’s important to have continual and honest feedback until your home is sold. As a seller, you must have a tough skin and take all feedback in stride. As your agent, I will gather the feedback and let you know what I believe is valid and what is not. It’s difficult to have strangers “critiquing” your home. But know the critique is really a critique of the marketing of the home, and not of the way you live. Put on your Don Draper hat and think of it as simply more market intelligence. Together we can determine the best marketing plan and get your home sold!

 

Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email: maryannesellshomes@gmail.com.

 

Frankly, My Dear… Antebellum is Making a Comeback

23 Wednesday Jan 2013

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510 Londonberry FRONT

Atlanta will forever be associated with Margaret Mitchell and the famous novel Gone With The Wind – her tale of the Civil War South and the genteel characters who endured the war and its aftermath. Tara, Scarlett O’Hara’s fictional  home, never existed, and most real homes like it that did exist are themselves “gone with the wind”.  The quintessential architectural style of the period, and of Tara, is the Antebellum home – Antebellum means “before war” in Latin, and the term now applies to the style of certain homes built in the period prior to the Civil War which remain distinctly southern. The style is also known as Greek Revival or Classical Revival.  Not many remain in Atlanta and environs – there’s Bulloch and Barrington Halls in Roswell, but not many other examples.

But the Southern elegance and charm of the period do live on in select homes here.  Take, for example, this gorgeous Southern home on Londonberry Road, in the ritziest part of Atlanta. Scarlett would have died to live here. First, befitting a southern estate, it has a commanding presence from the street and a grand entrance featuring stairs up to a rocking chair front porch. Like many Antebellum homes, it features large Corinthian columns and a symmetrical façade.

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The home was designed by Mitch Ginn, an architect from Newnan, Georgia, for the original owner who specifically requested this style of home. Mr. Ginn and his firm have designed many homes in different styles – but some of their most memorable have been antebellum like this one. According to Mr. Ginn, “We design 150 to 200 homes a year, but the Greek Revival and Classical Revival styles are unfortunately few and far between. Popular styles today with future homeowners include Craftsman, Bungalow, and homes with English or French cottage influences. I guess I could say I look forward to a Greek Revival “revival”. “

Like many architects, Ginn enjoys recreating classic styles from the past: “I have always loved the timeless beauty and grandeur of the classical architectural styles. They are dictated by historic architectural structure and proportions. I am also a romantic sucker for the “image” of the Old South.”

The home Ginn designed on Londonberry parlays that image into the modern day. The lot was perfect for a sweeping driveway – and it made the most sense, given the lot, to place the swimming pool to the front and side of the home.  That showcases it as part of the “estate,  and allows a wonderful view of the pool area from the front porch. A meandering creek also wanders far below the home and to the back of the property, adding to the interest of the landscape.

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The interior of the home on Londonberry continues the grand southern feel with a sweeping stairwell (can’t you just imagine Scarlett making her grand entrance) and two story foyer. There’s also a screened porch overlooking the back grounds – the perfect place for some iced tea or a mint julep, don’t you think?

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And of course, the style makes way in some respects for the demands of the modern day homeowner – for instance, the kitchen is open to the breakfast and family areas, a must-have for many modern buyers. In addition, there’s a master suite on the main floor with a large master bath. The doors to the master bath and the lighting fixtures are all of grand southern design.

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As a new generation of homebuyers grows into their “dream” homes, the grandeur of the Antebellum style has a new appeal. It does come with a price tag – the home on Londonberry is currently listed for sale for $1,785,000.

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CHEAPER TO BUY THAN RENT

26 Monday Sep 2011

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I just placed an offer for a client who told me that he’ll be SAVING $450 a month by purchasing the condo we found for him.  He is actually SAVING money by purchasing rather than renting.  Really?  I asked him.  Does your calculation INCLUDE the monthly HOA (homeowner’s association) dues on the condo?  He assured me that it did – and that yes, he’ll save $450 a month.  Not to mention the money he’ll save on his income taxes.  Interest he pays on his mortgage is TAX DEDUCTIBLE, and in the early years of a mortgage, much of what you pay is interest rather than principal.  So he’ll see more savings add up when he files his income taxes with the I.R.S.

It’s unbelievable, isn’t it?  Why are so many people still renting?  My client assures me he’s going to spread the word to his neighbors in the apartment complex, and I hope to see more clients from there!  But why aren’t more people automatically following his lead, with interest rates as low as they are, and home prices bottoming out?  As long as my client holds on to his condo for a few years, chances are he’s making a heck of an investment – and saving money in the interim to boot!

One reason more renters aren’t purchasing, of course, is that many of them have been foreclosed upon or have had to short sale their properties (a short sale is when the seller sells the home for less than is owed on it, and the mortgage holder agrees to accept a reduced payoff).  If you’ve been through a foreclosure or short sale, you won’t be able to purchase a new home for some period of time.  (Typically, lenders tell me, a foreclosure will prevent you from purchasing for seven years, and short sale for at least three years, although these time periods can vary).  Then there’s another group of potential buyers who have relocated toAtlanta, but who cannot afford to buy a new home until their home in the former state sells.  And of course, it’s much harder to sell a home these days – you’re competing with all the foreclosures and short sales.

But if you haven’t had a foreclosure, short sale or bankruptcy recently, if you have steady employment and enough money for a down payment, it seems crazy NOT to buy.  The client in this example is buying a one bedroom condo in a great part of Buckhead for less than $50,000.  Just two years ago the same condo was selling for double that.  I have other clients who are looking at homes $200,000 and below – and we are finding LOTS of homes in that price range that they like.  They are having difficulty deciding upon which they like best.  Home prices are just incredibly affordable right now.

If you are currently renting, you owe it to yourself to explore whether or not purchasing a home makes sense for you.  Interest rates are again at record lows and who knows HOW LONG these low home prices will last – so please, call or email me or your other favorite Realtor – we’d love to help!

Seller Financing in a Buyer’s Market

17 Wednesday Aug 2011

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It’s a buyer’s market in real estate, but the poor buyer may find it VERY difficult to get a loan. Banks are simply not lending the way that they used to. A savvy seller with financial wherewithal can turn the second fact into an advantage in this market by offering seller financing. The potential benefits for the seller is that they can often negotiate an interest rate that’s more favorable than it would be from other investments. They might also command a higher selling price because they are offering the added benefit of financing, since the buyer who chooses seller financing is presumably unable to qualify for a conventional mortgage loan. Seller financing may be the ONLY way that type of buyer can purchase a home. There could also be tax benefit if the transaction is structured as an installment sale, which allows the seller to spread out recognition of capital gain.

Of course, the big downside for the seller is the possibility that the buyer will default. After all, by definition the buyer is somewhat of a risk – for whatever reason, presumably subpar credit, a traditional mortgage lender was unwilling to lend to him or her; that is why the seller is financing the transaction in the first place.

Here are ways to help minimize the risk for the seller: always thoroughly investigate the buyer (this should go without saying). Get a credit report, but also a criminal background check. Make sure that the buyer is not presenting you with false identification (identity theft). Make sure that you get personal, professional, and credit references – and talk personally with them all.

Secure a large nonrefundable down payment, as much as you can negotiate. The down payment can go towards the buyer’s purchase at payoff, but should remain the property of the seller should the buyer default. The larger the down payment, the less the risk for the seller.

Structure the transaction carefully, providing creative enforcement remedies. Often in such transactions, foreclosure is the seller’s only option should the buyer default. Draft intermediate remedies to the extent possible – remedies for late payments, for instance, might have a strict penalty to discourage tardiness.

Seller financing is not for every seller – but those who can offer this additional benefit may find that the potential benefits outweigh the risks.

A House Divided – Selling Your Home While Getting a Divorce

10 Wednesday Aug 2011

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It’s no secret that this real estate market is very difficult for sellers.   Home prices are lower than they’ve been since 1990, and prices are still falling.  Therefore, many homeowners are “holding on” – deciding not to sell in this strong buyer’s market.  Those who are selling generally fall into one of two categories: (1) those who have to sell (sellers who can no longer pay the mortgage or they are relocating a new city) or (2) those who want to move “up” and figure they’ll make up what they lose in selling their current home by getting a great deal on the move-up home.

And then there are divorcing couples.  Multiply the stress of divorce with the current economy and tough house-selling environment, and it adds up to a very difficult time.  Sometimes divorcing couples fall into category (1) – but oftentimes they don’t have to sell, but they want to sell in order to move on with their lives.  The house is often one of the largest, if not the largest, marital asset.  If one party decides to buy the other out, the party who is being bought out is getting short shrift – the current appraised value is certain to be low compared to what the home was worth before the 2008 housing crash – and also low compared to what the home WILL be worth when the housing market recovers.

In a relocation situation, Realtors often recommend that a seller consider renting out the home in lieu of selling, at least until the market improves.  Divorcing couples generally do not wish to explore that option, and of course it is often not in the divorcing couples’ best interest for the parties to continue to have to deal with one another in finding a tenant, maintaining the home, etc.    The divorcing party’s desire usually is to make a clean break and start a new life.  So, for divorcing couples who decide that they must sell together in order to fairly divide the marital housing asset, here are some thoughts and guidelines to make the process easier:

IF POSSIBLE, BOTH PARTIES SHOULD VACATE THE HOUSE.  Key to selling a home is making it as accessible as possible for agents and their buyers.  If your home cannot be shown, it won’t be sold.  If one or both parties are living there, it’s more difficult to show and since the two divorcing parties are often not speaking with one another, it makes it even harder to arrange showings.  It only makes sense that it is not a good idea for both parties to live in the house while it is being marketed and sold.  There is already enough stress in the relationship.

BEWARE THE “DIVORCE HOUSE” LOOK.  If only one member of the couple is living in the house, the home tends to look barren and sad with half the furniture gone. Agents can tell when it’s a divorce house, and buyers can too.  Since purchasing a home is often an emotional decision, a half-empty house is a big turnoff, even though much of the prejudice may be subliminal.  Buyers may not know WHY, they only know that the house feels sad, and they won’t want to buy it.  You are much better off selling a vacant house (totally vacant, cleaned, fresh paint) or one that has been staged nicely with furniture.   Another problem with one party remaining in the home is that it often causes disagreement between the divorcing parties as to whether the seller remaining in the home is “thwarting” the sale in any way.

IF ONE PARTY MUST STAY IN THE HOUSE, stage it.  It does not have to be “full” but it should look as if there has been time and effort put into making the house presentable for buyers.  In other words, no folding chairs and bridge tables in the dining room, and no blow up mattress serving as the bed.

CHOOSE A REAL ESTATE AGENT TOGETHER.  Both parties must trust and feel comfortable with the agent who is chosen.   Neither party should feel that the agent favors one seller over the other, communicates better with one seller over the other, or is otherwise prejudiced against one of the parties.  That said, we often represent couples when an agent on our team has been friends with one or both of them and it seems to work out fine as long as there is good communication between all three – the two sellers and the agent.  It often helps to have an agent who knows the parties, is empathetic, and fully understands the situation.  If there is any conflict or uneasy feelings during the course of the representation, be sure the let the agent know your feelings about this and give them a chance to rectify or adjust. 

COME UP WITH A PLAN OF COMMUNICATION.  We will often find that divorcing couples are not communicating well with each other.  This is not surprising, of course.  In that instance, having a plan whereby the agent communicates with both parties at once through email is often the key.  Otherwise, the agent has to choose “who to call first” and that can cause problems, UNLESS both sellers agree that the agent’s primary contact is with one particular seller.  If email is to be the primary source of communication, be sure that both sellers have ready, easy access to email and check it regularly.  Remember that DELAY – in responding to a request for a showing, or to an offer – can be deadly to a sale.  Buyers will move on quickly in this era of many, many homes on the market.

PRICE RIGHT FROM THE BEGINNING.  Divorce always takes an emotional toll, regardless of the circumstance, so you want to limit the damage as much as possible.  Better to get the house sold that to have it sit on the market forever while the parties wait – and wait – and wait – to fully move on with their lives.  Time and time again we find that the longer a house stays on the market, the less the seller ultimately gets for it, so this would seem to be a no-brainer.  Price right from the beginning!  In this strong buyer’s market, that is likely to be less than you thought or hoped you would get for it, but mitigate the damage by pricing well from the start.  Believe me, ultimately it’s better – and more lucrative – that way for all parties.

Our team has helped many divorcing couples through the process of selling a home, and we’re happy to help you as well.  Please do not hesitate to contact us at mwalser@kw.com or 404-272-3527.