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Should You Sell BEFORE You List?

21 Tuesday Feb 2017

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Should You Sell BEFORE You List?

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

It’s a hot seller’s market in Atlanta right now. We don’t have enough inventory for the buyers who are ready to purchase. So many times recently I have received offers on a home that I am getting ready to list BEFORE it was listed. This can occur when I am working with a buyer who is looking for exactly what I have coming up – or when another agent and/or buyer asks me “what do you have coming up?” and what I have coming up suits their needs and an offer is made.

So, from the seller’s perspective, is it a good idea to sell your property without ever listing it? Here are some considerations if you are lucky enough to have this dilemma.

From an agent’s perspective, I would typically prefer that a seller LIST the home with me before we agree on the contract. This way the home is exposed to fair market forces and we are sure that everyone who might make an offer on the home has the chance to see it and bid on it. Exposed to market forces, we might even get an offer above the list price or a buyer who is willing to pay above appraised value. So why would a seller EVER agree to sell a property prior to listing? Here is an examination of some of the reasons:

  • The most common seller who sells prior to listing is the seller for whom showings are a real hassle. My clients Vivian and Mike have four young children under the age of ten, two rambunctious dogs, and had trouble keeping their home clean, much less straightened up and staged for showings. They needed a bigger home as soon as possible, and needed to sell their home in order to buy their next home. So when I brought them a buyer (and an offer) that was more than they thought they would get if they had listed their property, they were ecstatic and chose to accept. This allowed them to get under contract for their next, bigger home and concentrate on the move rather than on the logistics of showing their current home and the fear that it would not sell fast.
  • Another seller who might agree to a contract prior to listing is the seller who has time on their hands and for whom this is a low risk proposition. Let me explain. If a seller gets under contract prior to officially listing the property on the MLS, and the buyer terminates, the seller can always then list on the MLS with no ill effect. Typically if one contract falls through, the world knows about it because it’s noted when a property goes under contract on the MLS. With a prelisting contract, however, if it falls through, the only parties who are informed are the seller, the buyer and the agents, not the world at large. If the contract doesn’t fall through, then the seller has saved the hassle of listing the property.
  • Some sellers want to sell before they list because they don’t want to pay agent commissions (or don’t want to pay two sides of an agent’s commissions). Agent commissions are negotiable no matter what, of course. But sellers will sometimes sell without involving agents and/or using only one agent to represent both parties, hoping that will save them money. Of course, a great agent will always maximize your return even with the payment of commissions, so I feel this logic is faulty. If you’re cutting out agent commissions, you’re also cutting out the marketing, advocacy, and market exposure that full agent representation provides.
  • Sometimes a buyer who makes an offer prior to listing is willing to pay more than they would otherwise for the opportunity to snag a great property before it is exposed to the market. While this sounds counterintuitive, we never know for sure what will happen when a property hits the MLS. While we can often predict, we are sometimes wrong. A property that we think will be hot gets few showings and no offers. If you hold that buyer off telling them you want to list and test the market first, if you do NOT get better offers then guess what? Often that buyer has cooled and is no longer willing to pay what they were willing to pay prior to you listing the property.

So as you see, there are many considerations involved, and every seller’s situation is unique and must be examined in light of your specific wants, needs, and goals. I hope that you too are lucky enough to have offers before listing! But whether or not you want to accept them is a separate determination. If you are ready to sell, please call the Walser Team today! We will strategize the right way to get the most money for your property.

 

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 & commercial 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.

 

Are You READY to Sell?

23 Monday Jan 2017

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Are You READY to Sell?

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

How do you know when it is time to sell and move to your next home? For some of my clients, it is easy. They are outgrowing their current home and have more children than bedrooms. Or on the opposite end of the spectrum, the children have left and the home is much too big without them. Other clients just like to move every five to seven years or so. And sometimes it is a major life event – a marriage, a job change, a death – that creates the need to sell. But one of my first steps as a Realtor is to gauge your motivation to move. (Or, if you are an investor wanting to sell property, to gauge your motivations in selling so that we can target your goals.)

One client, Martine, seemed eager to put her home on the market. We staged, photographed, listed, marketed, and soon she got a full list price offer on her home – but then would not sign it. She panicked – all of a sudden, she decided that moving might not be the best idea after all. She was not finding a home to purchase that she liked better (within her price range) and she was second guessing whether she wanted to move at all.  She asked me if she HAD to sell just because she received an offer at list price for her property.

If she refuses to sell, is Martine in breach of contract? Stated another way, if a buyer offers exactly what the seller asks for the property, is the seller legally obligated to sell? The answer is NO.

When we put your home in the multiple listing service and offer it for sale to the general public, in legal parlance the listing is not an “offer” – it’s an “invitation to offer.” This means that even if a buyer offers your exact list price and doesn’t ask you to pay any of their closing costs, you are not obligated to accept the offer. And this is because the listing itself does not contain all of the elements necessary to create a binding contract. For instance, the listing doesn’t state exactly when the deal will close, where it will close, how the deal must be financed, or any of the conditions of sale.

So as a seller, you can refuse even an offer that is above list price. You aren’t required to sell just because you listed your home. Of course, it’s advisable not to list your home unless you are certain you want to sell your home. And depending upon the listing agreement, you may be responsible for paying a commission if you receive a full price offer but refuse to sell. But thinking through things before it gets to that point can save a lot of heartache.

What I recommend for clients who are not entirely sure about a move is that we test their motivation by going out to see just a few properties currently on the market that they might wish to purchase. If we find properties that they can live with and live in, it makes it easier for them to agree to a sale when an offer comes in. Sometimes the “water testing” can take place entirely online; the seller does not feel as if they need to go look at properties in person in order to determine that the right property for them is out there. But one way or another, having a plan and knowing the purpose of the move makes for a smoother transaction all around – and no frustrated buyers threatening to sue.

There are also sometimes alternatives to selling that make more sense. If what you need is more space, you may want to add on or renovate your existing home. One thing that makes that very attractive is the deductibility of home mortgage interest.  If you take out a normal consumer loan – to buy a car, say, or to pay for a wedding – the interest is not tax deductible. But for a loan that is secured by your primary residence, all interest IS tax deductible (at least currently. Things could change as national fiscal policy changes). This is a bigger deal than most people realize.

The best time to meet with a Realtor is early in the process. We can help you evaluate your options and determine whether selling your home and moving or staying and renovating is best.

So KNOW BEFORE YOU GO. Know why you are moving and have a plan for where you are going to move; and keep your purpose in mind as you move forward. Knowing what you want is the only way to get what you want, so let’s figure that out before you put your home on the market.

 

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 & commercial 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.

 

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.

 

Heave Ho, Industrial – Here Come the Hipsters

16 Wednesday Nov 2016

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Heave Ho, Industrial – Here Come the Hipsters

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

 

Industrial is IN!!! If you haven’t noticed, industrial areas are hot right now, particularly if close in town. Case in point is the Armour Ottley area, where you can find Sweetwater Brewery, Mason Art Gallery, and the new ARMOUR YARDS which bills itself as “Atlanta’s newest restaurant district.” It’s in an area under I-85 near Monroe and Morningside that was, until very recently, ALL INDUSTRIAL. Now it is the cool “in” place to play and will soon be “the” place to live as well.  But note this – the industrial areas are “in” for other uses, meaning they are no longer all industrial.

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Hipster interests, then, are giving the old heave ho to industrial uses.  But of course the areas in question retain a certain industrial vibe; that’s part of the appeal. Consider Castleberry Hill, near the Falcons Stadium: still lots of warehouse space, but more and more condos, art galleries, and restaurants (like No Mas, an awesome Mexican restaurant and shop/museum – if you haven’t been there, go!)  There’s even a regular “Art Stroll.”

But let’s talk about that misplaced industrial – where is it going? There’s more and more demand for e-commerce space. After all, when you order online and want your goods delivered fast, they’ve got to be warehoused somewhere close. The worse Atlanta traffic gets, the closer those goods must be to the end user. This greater demand for industrial space, with more of former industrial space being used for “something else,” means that industrial space in Atlanta is getting more and more pricey. It’s a landlord’s market for industrial, for sure.

At a recent panel discussion before the Atlanta Commercial Board of Realtors, the panel of experts indicated that the biggest demand and most activity in the industrial sphere is in the NE Quadrant (Doraville, Buford Highway, up to Norcross), I-20 west (but inside the Perimeter), and I-85 south (airport area and south). While you might think the movie industry coming to Atlanta is driving a lot of this, it’s not. The experts indicated that the movie folks can move and store their stuff even farther out. It’s the e-commerce that is driving most of the activity.  Amazon advertises “AMAZON PRIME NOW” not “Amazon Prime whenever we can get it to you.”  Amazon and other e-commerce retailers know where development is likely to happen. It behooves us to watch where the industrial sector is hot and consider investment nearby (or investing in some industrial space).

If you are looking for industrial space for your use or for investment, give us a call. We are always happy to help!

 

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 & commercial 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.

THE RICH ARE DIFFERENT from you and me…

02 Wednesday Nov 2016

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THE RICH ARE DIFFERENT from you and me….

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

“The Rich are different from you and me,” said F. Scott Fitzgerald. “Yes, they are – they have more money,” replied Hemingway (or so goes the legend). The rich often are different in other ways, too. Let’s look at what is it that they expect and want, and how are the homes they buy different from our typical Atlanta homes. (Even if you are NOT a luxury home buyer or seller, these insights can help you when considering how to add value to your home in any price range.)

This isn’t a scientific study, but I took a look at luxury homes on the market and those that have currently sold in Atlanta. The first interesting fact is that there are more than 1300 homes in the Metro Atlanta area that are currently listed above $1M. 1368, to be exact. More than half of those, however, are between 1 and 1.5M. More than 3/4ths of them are between 1 and 2M. The pickings get slimmer and slimmer as the price is increased, with only 26 homes over $6M. When we take a look at the luxury homes above $2,000,000 (since with those numbers, 1 to 2 million is barely “luxury”), many of the homes are largely alike in ways you would expect. Most of them:

  • Are 6,000 square feet at a minimum
  • Have a lot of land – generally speaking, the more expensive the home, the more land associated with it
  • Most of them have swimming pools; infinity edge pools are particularly popular
  • A disproportionate number of them are on the following Buckhead streets:
    • West Paces Ferry
    • Blackland
    • Tuxedo
    • Valley
  • Most of them are in Buckhead or in the northeastern Metro Area, especially Milton
  • There is a lot of statuary (statues) on the grounds
  • Movie theaters with movie seats and popcorn machines are popular
  • Forget guest ROOMS – luxury estates have guest HOUSES on the property
  • Privacy is important – the homes are often gated and far from the street

There are further trends that could apply to ANY price range – so let’s take a look at those:

  • CHEF’S KITCHEN with commercial style appliances (to make it look as if you cook, even if you don’t)
  • SPA BATHROOMS – two shower heads and body jets, heated flooring, towel warmers
  • OUTDOOR KITCHEN – grill, fridge, sink, beer tap
  • TECHNOLOGY – control your entire home from your smart phone. Now that most everything is wireless, this can be the case even in lower priced homes

Even if your home is NOT luxury and worth two million or more, the more you can incorporate luxury elements the more you will be able to get from you home when you go to sell.

The most expensive home in Atlanta right now? A $48,000,000 home on Riverview, inside the Perimeter east of 75 and south of I-285. It has more than 18 private acres, 17,000 square feet and comes fully furnished. It’s an English Manor style home with… you guessed it – a four-bedroom guest house. And, of course, statuary. If that doesn’t appeal to you, there is always the “Urban Island” of Old 4th Ward, which you have definitely seen if you drive down Freedom Parkway. Right in the middle of it all with amazing views of downtown, it’s listed for $5,000,000. Or the “Zombie Fortress” at an undisclosed Georgia location, a bunker built underground with room for 15 people in the event of catastrophe – yours for $15,000,000.

If you want to buy or sell a home or just need advice, for million dollar service in any price range, call us!

 

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 s 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.

 

 

 

 

The Story of the Atlanta Pipelines & The Developer

14 Wednesday Sep 2016

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THE STORY OF THE ATLANTA PIPELINES & THE DEVELOPER

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

 

What if you bought the perfect home for your family in an idyllic neighborhood – playgrounds, pools, tennis courts, paid top dollar, settled in… and then found out that the land had suffered an immense petroleum spill several decades ago that contaminated the groundwater?  Most of us would agree that knowledge of the previous spill would have affected your view of the property and the price you were willing to pay. You might have purchased the home anyway – after all, Atlantic Station is the site of an old steel mill and many people live, work, and play there every day.  But previous environmental contamination is something a homeowner would definitely like to know about. So have a seat for the tale of the developer, the pipeline, and the title company.

A developer purchased 151 acres of property in Gwinnett County with an eye towards building a huge community of homes. Luckily no construction had started when the developer found out about a previous petroleum spill on the property. To understand the spill, you need to know about Colonial Pipeline and its large pipelines that run through Atlanta.

Perhaps you have seen the vacant land swaths with warning posts. Colonial Pipeline, the company who owns the pipeline, is based in Alpharetta. The pipeline itself consists of more than 5,500 miles of two pipelines (one 40 inches, the other 36 inches in diameter), originating in Houston, Texas, and going through many states, including Georgia, before it ends at the Port of New York and New Jersey. One of the pipelines is primarily devoted to gasoline and the other carries other petroleum products such as jet fuel, diesel fuel, and home heating oil.

And so these massive pipelines run through Atlanta – they run through this 151 acre property in Gwinnett, they run through a lot of Buckhead, and in fact run just past the house to one side of my own.  So what is it like to live near the pipelines?

In our neighborhood, no one thinks much about the pipelines – they are just “there” and have been there for as long as most of us remember.  Homeowners on either side of the pipeline property are allowed to use the property for certain uses – for walking trails, for play, for shallow gardens – but you can’t dig too deep, and no permanent structures are allowed. Periodically we get a notice from Colonial Pipeline notifying us that we live near the pipeline and outlining what we should do in case of an emergency, such as a leak. But unless and until something happens, it’s just a swath of property, much like property underneath the high voltage powerlines. Some consider it a plus to live by the pipeline – basically you get some extra land for recreational use and Colonial Pipeline maintains it for you.

But the pipeline under this property in Gwinnett developed a leak years prior (in the early 1990s). Colonial reported the leak to the Georgia Environmental Protection Division (EPD), which conducted an assessment and developed a corrective action plan.  By 2005, it was determined that the property was clear and was suitable for sale and development, and Colonial Pipeline, which also owned the land, sold it. An exhibit to the deed of sale notified the purchaser and successors that the petroleum contamination had occurred, and placed limitations on the property: (1) the groundwater could not be used for any purpose whatsoever (the land was serviced by public water from the county, so no groundwater would be used); (2) creating an easement so Colonial could maintain a monitoring well on the property to prevent future spills; (3) giving Colonial a right of first refusal to reacquire the property should it be sold; and (4) reservation of a 25 foot buffer for a creek and a river on the property.

In a subsequent sale of the property, the exhibit with this notification was left off of the deed. So that’s how the problem began. When the land was sold, the subsequent purchaser (a developer), therefore, did not know that there had ever been a spill and paid top dollar for the land. When the developer discovered the omission, they decided not to build and to try to recover some of that “top dollar” that they paid.  A Georgia court determined that the reduction in value of the property due to the fact that there had been a previous spill was worth millions of dollars. The case is still on appeal.  The land still sits empty; no houses, no one but the developer, the lender, the closing attorney and the title company paying much attention to it.

But what if houses HAD been built and you had purchased one unknowingly? How do you protect yourself from such unknowns? There are several things you can and should do when buying property. First, get a survey showing all easements of record. Then get a thorough title search (this is what your closing attorney does to be sure you are getting clear title). And then, GET TITLE INSURANCE. Title insurance helps to protect from adverse claims and notices affecting your deed that may or may not be in the chain of title – like the disappearing exhibit in the Gwinnett County case.

 

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 s 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.

The Wonderful World of Atlanta Mortgage Lending

08 Thursday Sep 2016

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The Wonderful World of Atlanta Mortgage Lending

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

Tony was a first time homebuyer. He balked at my requirement that buyers be prequalified by a lender before we go out looking at property. “I don’t want to share my personal financial information,” he said. “Well,” I laughed, “welcome to the world of mortgage lending.” Not only your personal financial information, but lots of information that you think would not even be relevant to the purchase of property must be shared with strangers (the mortgage banker and staff).

I always prepare buyers for the fact that they will be asked for a LOT of information. I joke that the lender will even ask them for their third grade report card (being particularly interested in their math scores). A recent buyer – Mia – called me up laughing one day. “You remember when you said they’d ask for my third grade report card? Well, you were almost right. The lender wants my college transcripts!” Now, Mia was well out of college and fully ensconced in her current job for at least two years. But this is just an illustration that there is no telling what the lender is going to ask to see. The best I can do for you is prepare you so you aren’t surprised. Get together everything that the lender will likely need (see the list below), but then be ready that they may ask for much much more. Like your third grade report card.

Here are some of the documents you should have ready for your lender:

  • W-2 forms from the previous two years, if you collect a paycheck.
  • Profit and loss statements or 1099 forms, if you own a business or are an independent contractor.
  • Recent paycheck stubs.
  • Most recent federal tax return, and possibly the last two tax returns.
  • A complete list of your debts, such as credit cards, student loans, car loans and child support payments, along with minimum monthly payments and balances.
  • List of assets, including bank statements, mutual fund statements, real estate and automobile titles, brokerage statements and records of other investments or assets.
  • Canceled checks for your rent or mortgage payments.

This is by no means an exhaustive list. If you have had credit problems or a complicated work history, be prepared to produce even more documents. And the requests just keep coming, sometimes right up to and on the day of closing. The lender may also pull your credit report again right before closing. That’s why we tell you not to make major purchases between loan application and close. WAIT to buy your new furniture and a new car. Big purchases on credit might disqualify you for the loan because they disrupt your income/debt ratio.

So why the need for all this information, borrower laid bare before the mortgage altar? Remember that the lender is giving you a great deal of money to purchase a home. Back in 2006-2008, they were giving money much much too freely. Back then there were even what were called “stated income loans,” where the bank would pull your credit score, ask you what your income was (without any verification requirement) and give you a loan based solely on your credit and what you claimed that you made. You can see where lots of borrowers got into trouble with this. I personally saw real estate agents who I knew did not make a lot of money purchasing huge houses, thinking that they’d be able to resell them at a profit. When the homes didn’t resell, they defaulted. This happened with borrowers of all professions on a national scale – hence the mortgage meltdown.

So now things have tightened up quite a bit, and the documentation requirements are once again onerous. There’s a person called the “underwriter” who you may label the “undertaker” before all is said and done. Your loan officer gathers the preliminary information from you, then hands the file over to the underwriter, whose job it is to “underwrite” the loan. This means that they make sure it conforms with the relevant guidelines and that it is a loan that is likely to be repaid. They require any and all relevant documentation (and some that certainly seems irrelevant) to satisfy the lender that you have the ability to and will repay the loan.

So call a lender and be prepared for the onslaught of requests. Now, let’s talk about the types of lenders. You can call a direct mortgage lender or a mortgage broker – the difference is that a direct lender is lending you money they control. A mortgage broker is shopping around for a loan and is lending you someone else’s money. So a direct lender will usually have more control over the process (through the underwriter, in particular) and the mortgage broker can shop around, but will not have a lot of control over the loan once they choose one for you. I have favorite direct mortgage lenders AND favorite mortgage brokers (call me if you want a referral!) It is just a matter of finding someone experienced and fair.

Most of my buyer/borrowers these days do a 30-year conventional loan, twenty percent down. Interest rates are still so low – I definitely do NOT recommend doing an ARM (“Adjustable Rate Mortgage”). With an ARM, you have a fixed rate for some period of years – three, five or seven – and then when the ARM expires the interest rate resets to a formula based upon the prevailing rates at the time. Since interest rates are SO low now and likely to rise, you would be better off just signing up for one continuous interest rate over years. What if you think you will move before the ARM expires? The ARM rate is generally lower than the conventional loan rate, so that is tempting. But consider that you may change your mind about moving OR about selling. When I purchased my first home, I used a seven-year ARM, convinced that I would move before the seven years were up. I didn’t! But rates were lower at the seven year mark and I refinanced to a 15 year loan instead. And I still own that property (now as a rental). If rates had gone UP, I would have been quite sorry that I had chosen an ARM instead of a fixed rate mortgage.

Find a lender you know and trust, and sit down with them and talk through the wonderful world of mortgage lending and what is best for you. Then let’s go find your home!

 

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 s 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.

 

 

Buy Land – They’re Not Making It Anymore: Investing in Atlanta Real Estate

31 Wednesday Aug 2016

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BUY LAND – THEY’RE NOT MAKING IT ANYMORE

INVESTING IN ATLANTA REAL ESTATE

Mary Anne Walser, Esq., Realtor 404-277-3527

It’s no secret that Atlanta is rich in real estate investment opportunity. We have experienced a steady rate of population growth and numerous large companies moving into Atlanta bringing thousands of workers with them. The only limitation to this skyrocketing growth might be TRAFFIC – although to date TRAFFIC doesn’t seem to have put the brakes on people moving to Atlanta at all. So Mark Twain’s advice to “BUY LAND, THEY’RE NOT MAKING IT ANYMORE” seems very good advice in our city where population is growing and the demand for housing ever increasing.

So say you want to diversify your portfolio a bit and invest in residential rental property. I help many do this and am asked some common questions that I thought I would compile to help guide others. So think of this as Atlanta real estate investment 101.

First, CAN you invest in rental property? The best scenario is if you have about $200,000 – $300,000 in cash that you can pay for a property. If you want to buy a reasonably priced property that is easy to rent out and likely to appreciate in a reasonably safe neighborhood, that’s about what you will need. Of course, I help plenty of investors who don’t have that much cash lying around. You can also get an investment loan. That allows you to leverage your investment and as long as you are careful not to get in over your head, given how low interest rates are right now, that’s an awesome option. The downside to getting a loan to invest in property is that investment loans carry a higher interest rate than owner occupant loans, and you will have more difficulty getting a great deal in purchasing a property because you will be competing with others who ARE making cash offers. For an investment loan, also, you will still need some cash – a minimum of twenty percent for most investment loans.

I generally suggest that investors consider single family properties rather than condos or townhomes. Most condominiums have rental restrictions under which only 25 to 30 percent of the units can be rented out at any given time. If all the rental permits are taken, you are not allowed to rent the unit. So rather than take that chance and deal with monthly homeowner dues and potential special assessments, with a single family home you have more control over your property and again – God isn’t making more land – so the land itself has greater value. The exception to this advice would be FEE SIMPLE townhomes. If you own a townhome in fee simple, there are no rental restrictions. You own the ground below the unit, the roof above it, and you are free to rent it out. Consider the neighbors, however; if they allow their property to deteriorate, it will directly effect that fee simple townhome.

Once you have determined if you have the financial wherewithal to invest and whether you want to consider single family or condo (or fee simple townhome), the next question becomes WHERE to buy. In a market downswing, there will be many options for good investment. In a more balanced market, you have to be a little more careful.  Right now, though, just about anything you can get under $250,000 that is inside the Perimeter on the North end anywhere or just outside it in Sandy Springs or Dunwoody is going to be a good purchase. I mentioned traffic – it’s not getting any better. And so close in properties are rising in value. Properties in that price range are already few and far between and will be more valuable in the future.

The other area prime for investment is anywhere near The Beltline. We have seen what The Beltline’s Eastside Trail has done for properties around it – property values have skyrocketed there! And “The Beltline effect” has already increased values along the not yet completed West and Southside Beltline Trails. However, there are still values to be had there if you’re quick, savvy and have a great agent.

So, you have narrowed down areas of town and we are out looking at investment property. How do you analyze it? The first thing we determine is your tolerance for repair. Do you want something that is ready for occupancy or something that needs work so you can build equity through labor? Of course the cost of the renovation – which is typically more than you think or originally estimate – must be taken into account.  I usually recommend that a first time investor without construction experience buy a property that is “ready to rent” without too much further work. If you do have some tolerance for renovation, carefully consider the cost in your investment equation.

In addition, it is best to find a property that will provide steady rental income AND will appreciate in value over the years. You cannot count on appreciation, so never bank on that alone – the property must bring in sufficient income to make sense as a purchase on its own whether it appreciates or not. So once we’ve identified the areas that are likely to appreciate, we consider how much income a given property will bring to you as an investor. The Capitalization Rate or “cap rate” is the ratio of the property’s net income to its purchase price and allows you as an investor to compare properties by evaluating a rate of return on that investment. Here is an example of how to calculate cap rate, using a quadraplex at a purchase price of $300,000. We have determined from examining other units rented in the area that each apartment will command $800 per month for rent. So here is how we figure the cap rate:

FIRST, CALCULATE GROSS INCOME

MONTHLY RENT = $3200 (quadraplex of 4 units rented for $800 each)

For ONE YEAR = 12 MONTHS

12 (months) X 3200 (monthly income) = $38,400 yearly gross income

SECOND, CALCULATE NET INCOME

38,400

-2,000 TAXES AND INSURANCE

-5,000 MAINTENANCE & OPERATING EXPENSES

$31,460 net income

THEN, DIVIDE THE NET INCOME BY THE PROPERTY PRICE

31,460 ÷ 300,000 = .104, or TEN PERCENT cap rate

Now, you can probably intuit the disclaimers I will put on this information. The net income can be difficult to figure as your expenses may be higher than anticipated. Maintenance can be a huge question. A property may need more repair than you know. Bad tenants and vacant units can be another pitfall – you may get a tenant who defaults or tears up the unit. There may be several months between tenants before you are able to rent it out again. (So you may decide to reduce the rental gross income by ten percent to account for potential vacancies in-between tenants).  If you do not want to self-manage your property, you should include management costs as part of your operating expenses. Finally, this cap rate example presumes a CASH purchase. If you are financing the purchase then, of course, you must include the costs of financing.

Generally, investors consider a cap rate of ten percent to be a “good” cap rate. You have to make that determination on your own, taking into account other avenues you have for investment. Investment in real estate requires some courage and not a small amount of intuition. But as far as we know, as Tony Soprano said (rephrasing Twain), God ain’t making any more land – so perhaps it is time for you to consider buying more of it!

 

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 s 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.

 

 

Invitations to Offer & Reverse Offers – How Atlanta Home Sellers Make Offers to Buyers (instead of the other way around)

28 Thursday Jul 2016

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INVITATIONS TO OFFER & REVERSE OFFERS – how Atlanta Home Sellers make offers to Buyers (instead of the other way around)

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

 

When you LIST YOUR HOME for sale, is this an OFFER that a buyer can accept by agreeing to the terms you present? What does it take for a buyer to have a binding contract to buy a home? This surprises some people – but legally, even if you as a buyer offer list price or more for a home, it doesn’t mean the seller has to sell it to you.

By way of example, let’s say you see a home on the market for $500,000. You offer $500,000 and do not ask the seller for anything specifically, other than the property itself – it’s just a clean, straightforward offer for exactly what the seller is asking for the property. You even offer CASH and you don’t have to sell something in order to buy, so there’s no financing contingency. Do you have a contract at that point? NO. Although a lot of buyers think that it should work that way. Why is there no contract?

A binding contract requires agreement on all basic terms. A property listing – in this example, the listing that offered the property for $500,000 – is not an “offer” that can be accepted, because there are many key terms that are not present. What DATE will you close, for instance? Will there be earnest money and if so, in what amount? Is there a right to inspect? What fixtures are included with the property?

Because there is so much that must be determined between the parties other than the price, the property listing is not an “offer” that can be accepted – it is what is called an “invitation to offer.” It’s asking for buyers to make offers, but it’s not guaranteeing that the property will be sold even if the seller receives a full price offer. Indeed, many sellers purposefully price the listing at LESS than they would take because they want to start a bidding war on the property. They hope the low list price will get a buyer feeding frenzy going and that therefore the property will sell for MORE than list price.

The listing as invitation to offer isn’t the only “invitation” the seller can extend the buyer. Many sellers overlook a very powerful tool for selling their home – the reverse offer.

Here is how a reverse offer works. Say you are eager to sell your home, and a buyer has been to your home multiple times and is obviously interested, but is hesitant to make an offer. Have your agent call that buyer’s agent and find out WHY the buyer hasn’t made an offer. If there are reasons you can do something about, make an offer TO THE BUYER and get them off the fence.

Recently I had an adorable listing and one of the buyer’s agents who showed it told me that her client LOVED the home, but was about to make an offer on another home in the same neighborhood instead. “Why the other home?” I asked. There were multiple reasons. “Why NOT my listing?” I then asked, and gathered even more information.

There were some objections the buyer had that we could do nothing about. We were a smaller home than the other one they were considering. But there were some pluses we had that the other listing did not. For one thing, my listing is right across the street from the awesome neighborhood park! For a buyer with a child (as this one was) it just doesn’t get better than that. We were also better priced than the other listing. One thing the buyer did NOT like was that our floors were scratched up and well worn.

But my seller was motivated to sell and I WANTED THIS BUYER. There was a great buyer about to purchase in the very neighborhood where my listing was located. My sellers were moving out of state and really wanted to be able to go ahead and make an offer on a home in their new state – but couldn’t do so until their current home was under contract.

SO, we made a reverse offer. We offered a lower price and refinished floors PLUS my sellers wrote perhaps the best reverse offer letter in the history of reverse offers, we came down from list price a bit, and we offered to finish the floors after closing, but before the buyer moved in. Here is a revised and edited bit of my seller’s reverse offer letter, just to give you an idea of what a seller might write in this situation:

We are so thrilled that you are considering our neighborhood for your new home. It truly is a special neighborhood. Our neighbor and friend next door (to the left as you face the house) is the best neighbor you could ever ask for. He’s quiet, hosts fantastic happy hours, and is always willing to lend a hand. I’m not sure you could borrow a cup of sugar from him, but I can speak from experience that we have borrowed a bottle of wine on occasion! And I hope you took a look at the great park across the street. I understand that you have a dog – the field is an unofficial dog park where neighbors take their dogs to run and play after work and on weekends. Having the park across the street has been like an extension of our yard and we have made much use of it over the years – and I hope that you will, too.

We’d like to offer you a reduced price on the home as well as the promise to refinish the floors to a stain of your choice. We are relocating and your timeline works extremely well with our proposed summer move date. We really feel that our home would be a wonderful fit for you!

Who WOULDN’T want to buy this Seller’s home after reading that letter? And in this instance, THE REVERSE OFFER WORKED. The Buyer purchased my Seller’s home rather than the other one she was eyeing in the neighborhood.

Real estate is an art as well as a science. The key whether you are buying OR selling is to be flexible, open, and creative!

 

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.

 

MOVING TO ATLANTA – “The City in the Forest”

29 Wednesday Jun 2016

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MOVING TO ATLANTA – “The City in the Forest”

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

Ah, Atlanta, land of opportunity and of trees. Yes, trees! We are known as the “City in the Forest” and Atlanta takes great pride in its green canopy. It’s one of the first things you will notice about the city from the airplane or car – we’re one of the “greenest” cities around. (In the conventional sense, not necessarily in the LEED certified sense).

There are some great books about the city itself – including one I love to give to my relocation clients, Moving to Atlanta by Anne Wainscott-Sargent. And great websites – my favorite is curbed.com. You will also want to subscribe to Atlanta Magazine and to the Atlanta Business Chronicle for great information about the City in the Forest.  But before we begin delving into the specifics and legalities of purchasing property here, I would like to give you just a general view of my favorite city. After all, when you are moving, it’s important to know exactly where you are moving!

When folks say “Atlanta,” they may be referring to any number of cities within the Atlanta Metro Area. Once you live here, everyone knows that “Alpharetta” and “College Park” are on opposite ends of the Metro, but when I talk to relocation clients, they sometimes speak of them almost as if they are twin suburbs of Atlanta. I had a sweet couple relocating from North Carolina. On one of our initial phone calls, they told me that they wanted to live in either Alpharetta or Decatur. As I explained to them then, Alpharetta and Decatur are hours and hours apart during rush hour, traffic wise, and are worlds apart in other ways as well. The couple turned out moving to a city in-between the two, Tucker, and they are very very happy there.

That couple’s experience is instructive in many ways, but particularly in this one: in deciding between their initial two cities, Alpharetta and Decatur, I told them about Atlanta traffic and advised them to carefully consider their commute. The wife could work from home, but the husband’s new job was in Tucker. After considering my advice and seeing Atlanta traffic for themselves, they quickly decided to live as close to the husband’s job as possible. Since he works in Tucker, that’s where they moved. We visited and considered other cities, but the ultimate “win” for them was less time in Atlanta traffic. Traffic is a HUGE “driver” (if you’ll forgive the pun) for many moving into and within the Metro.

For each of us, the primary drivers of our decision about WHERE in Atlanta to move are different and personal. My husband and I love Atlanta’s trees. We love a green, verdant forest and we love to walk.  I spend all day every day in traffic (and as a real estate agent, I always will!), so I like to come home to peace and quiet. My husband is an architect in Midtown and wanted to live as close to work as possible, but in as green a place as possible. So we are inside the Perimeter, but right near the River. We can walk to the Chattahoochee River after work and watch the sunset.

Many of my clients, however, would rather be closer to where the action is. Walking distance to The Beltline, Piedmont Park or to the restaurants and shops of Virginia Highland, Kirkwood, Edgewood, Oakhurst, Ponce City Market, Glenwood Park, Morningside, or Buckhead. If you like a quaint and charming walkable downtown atmosphere, you may prefer Decatur, or outside the Perimeter: Marietta, Roswell, or Norcross. Old Fourth Ward (O4W in Atlanta parlance) or Little Five Points (L5P) are the edgy and hip walkable neighborhoods and those who work downtown can get to work in minutes.  The downtown and Midtown commutes are walkable from Ansley Park or Brookwood Hills, and those neighborhoods are more established and traditional. Ansley is nestled between the Botanical Gardens, the High Art Museum, and Woodruff Arts Center, so if you love culture, it’s a great place for you.  In short, there are MANY neighborhoods in Atlanta to consider, each of them special and wonderful in their own ways.

I spend every day, including weekends, introducing these areas to my clients. Each is perfect in its own way, and each is perfect for DIFFERENT clients. I cannot give you a list of the “best neighborhoods in Atlanta” without knowing YOU because each neighborhood is “best” for a different client. So find a real estate agent who knows the entire Metro and who will get to know you and what will make you happy.

Here are some of the major considerations for most clients, as a guide to you in what to consider. After traffic, first, of course, is price range. Ansley Park may be perfect for you in theory, but if you want a house (as opposed to a condo) and you can’t afford a $700,000 or more mortgage, it’s NOT perfect price wise. So that’s one of the first things we figure out – how much a buyer can and wants to pay for a house. In addition, if you have children or WILL have children and want to put them into public school, you will want to consider the school districts. East Cobb has long been the bastion of close-in good schools with affordable housing. Those who work farther out or who don’t mind a commute may consider Roswell, Johns Creek, or even farther out Forsyth County.

In sum: price range, traffic, school districts, walkability, safety, proximity to golf, swim tennis neighborhoods, playgrounds, proximity to the Chattahoochee, proximity to The Beltline, historical vs. newer neighborhoods are all things you may or may not wish to consider in your hunt for a home.  Let’s get started in the search!

 

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.