Existing-Home Sales Rise Again in January

This is pretty interesting info.

I was surprised that the total number of sales in January 2011 were 5.3% higher than in January 2010. Last year, we were in the midst of the first time home buyer tax credit, which really boosted that segment of the market.

The biggest growth in January 2011 was investor purchases, which rose to 23% of all sales. With housing prices depressed, a lot of buyers are investing in real estate. If you've ever thought about it, give me a call, and I'll send you a copy of Gary Keller's book The Millionaire Real Estate Investor. It does a great job outlining a conservative plan to growing wealth through real estate.

Below is snippet of the article. You can read the entire article about home sales, prices, mortgage rates, etc. at Realtor.org.

"The uptrend in existing-home sales continues, with January sales rising for the third consecutive month with a pace that is now above year-ago levels, according to the National Association of REALTORS®.

Existing-home sales¹, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 2.7 percent to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December, and are 5.3 percent above the 5.09 million level in January 2010. This is the first time in seven months that sales activity was higher than a year earlier.

Lawrence Yun, NAR chief economist, said the improvement is good but could be better. “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” Yun said. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”

A parallel NAR practitioner survey² shows first-time buyers purchased 29 percent of homes in January, down from 33 percent in December and 40 percent in January 2010 when an extended tax credit was in place.

Investors accounted for 23 percent of purchases in January, up from 20 percent in December and 17 percent in January 2010; the balance of sales were to repeat buyers. All-cash sales rose to 32 percent in January from 29 percent in December and 26 percent in January 2010.

“Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes,” Yun said.

All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15 percent of the market. The average of all-cash deals was 20 percent in 2009, rising to 28 percent last year.

The national median existing-home price³ for all housing types was $158,800 in January, down 3.7 percent from January 2010. Distressed homes edged up to a 37 percent market share in January from 36 percent in December; it was 38 percent in January 2010."

First Time Homebuyer Series - Part 5A: Foreclosures

In today's real estate market, everyone wants to know about foreclosures. These are the most common distressed properties, and they are usually associated with "getting a good deal". Distressed sales now make up a sizable chunk of the market, so it makes sense to be educated on these properties.

When you hear someone say they bought a foreclosure, what they likely mean is that they bought a bank owned property. Foreclosure is the process in which the bank takes a property back from a delinquent borrower. However, the term foreclosure is often used to describe a property that the bank has taken back and is now selling.

When a bank takes ownership of a property, this property is initially auctioned off at the courthouse steps. This is an entirely different process, and one that likely isn't for most first time home buyers. For that reason, I'll skip it in this series. If the property is not purchased at the courthouse (and most are not), then it becomes bank owned. The bank will then decide on a price and list the property with a real estate agent. At this point, a buyer can purchase the property just like any other property that is for sale.

Is buying a foreclosure a good deal?

Sometimes. Just because a property is a foreclosure doesn't mean it is a good deal. A lot of buyers have gotten good deals on foreclosures, but they can be overpriced or underpriced just like any other property. We need to evaluate the home, the neighborhood, and the comparable sales to make sure it is the right deal for you.

Are banks negotiable on their price?

Once again, sometimes. The banks set their price by hiring a real estate agent and / or appraiser to tell them what price the property should sell for. A few years ago, our team had an account selling properties for Fannie Mae. In our experience, they were not very negotiable right after a property was listed, and I still see that in today's market. After all, they just paid someone to tell them the right price!

Is buying a foreclosure difficult?

It's usually more difficult that buying from a private seller. However, we've helped dozens of clients buy foreclosures and can help you navigate through the process. The banks and a lot of the brokers who list bank owned properties are not known for their customer service. Of course, some do make the process easier, but to make a huge generalization, it's usually a bit of a challenge. If this is your first house purchase, have someone with lots of experience help you through it.

Will a foreclosure need a lot of repairs?

Not always. Rarely is a foreclosed property in the "perfect"condition that a private seller may have their home. However, some foreclosures are in move-in condition with some great features. The banks are even making improvements on certain properties to make them more attractive to buyers looking to move right in without any work.

Can I inspect a foreclosure?

Definitely. Once you have a foreclosure under contract, you will hire an inspector to do a home inspection. One of the big differences between buying a foreclosure and buying from a normal seller is what happens after the inspection. With a foreclosure, if you find issues, you usually have to make the choice of walking away from the deal or moving forward and addressing the issues yourself after you buy the property. With a normal seller, you have the ability to ask them to fix problems, and often you can negotiate those repairs to be completed before you buy it.

Will I have to bid against other buyers?

If it is a great deal, then this is real possibility. This is one of the most difficult situations in real estate because you don't know what the other buyers are bidding. It could be well over asking price or they could be low balling. I always advice clients to find the price at which we will be excited if we get it, but if we don't, we can say that we didn't want to pay that much anyway.

How quickly can I close on a foreclosure?

The time line for buying a foreclosure is similar to buying from a private seller. You could close in as little as a few weeks or take the normal 30 -45 days.

Is it better to buy from a bank or from a normal seller?

In my opinion, if you could buy the same property for the same price from a bank or a private seller, I would pick the private seller. You usually find out more information about the history of the house, the history of systems, and the history of the maintenance. The bank doesn't know any of this information. As we mentioned earlier, you also have the ability to ask a private seller to repair items for you and with a bank, you have to handle these issues on your own. Finally, private sellers are usually easier to work with if you need to make any changes or do anything creative with the deal. However, the main reason so many buyers purchase bank owned properties is that the price discount offered by the bank outweighs all the uncertainty and difficulties. For a big enough savings, many buyers will deal with a tough process and taking care of issues on their own to get that deal.

Next time, we will look at short sales, which are another type of distressed property that present a good opportunity for certain buyers.

Justin Landis
Keller Williams Realty
404-803-0471
justin.landis@kw.com

First Time Homebuyer Series - Part 4: House Hunting - What to Expect

It's time to grab a coffee, load up into the Toyota Highlander (that's what I drive), and hit the streets! The day has finally come when you get to live out HGTV's show House Hunters.

In Part 4 of our First Time Home Buyer Series, we will talk about what to expect when you start seeing houses in person, and a few tips to make your time more productive.

What to Expect

1. Compromise

Compromise! That's not a fun way to start! I know you want your first home to be your dream home - the best location, the best street, flat back yard, huge kitchen, spa-like master bath, and every paint color exactly what you would have selected. Sorry. Unless your first home is a multi-million dollar custom home, it's not going to be like that. You will see features that you like and dislike in each home. One of the fun things of going to see houses is that you may not even know that you like some features or dislike others until you start to see them. Making notes on these features helps us find other homes that will be good fits.

2. Location, Location, Location

There is a reason that this is the most recognizable saying in real estate. You have to pay for prime location. I am a big fan of buying in the best neighborhood that you can afford. However, what you can afford in different neighborhoods will vary widely. If you've seen an amazing house in a less expensive neighborhood, be prepared that the equivalent house in a more expensive neighborhood will be much pricier.

3. Staging Helps Sell

I guess we are going through HGTV's lineup today, and next up is Design to Sell. There is a big difference going in a cold and empty house versus one that looks like it came out of a Pottery Barn catalog. Don't be fooled by the furniture! I see lots of buyers focus on the seller's possessions - furniture, decorations, pictures, and personal items. That doesn't come with the house! If you are having a hard time envisioning an empty room, talk through it. Your agent has seen 1000's of houses and can help you decide if there truly is an issue with space.

Tips

1. Prioritize

In Part 3 of our Series, you made a list of what you wanted in a home. As you start looking at houses in person, you may find that no house has everything on your list. Now is the time to start prioritizing. What are the most important items on your list? Is it location? If so, you may have to give up some size and finishes. Is it space? If so, you may need to focus in a less expensive neighborhood. Until you decide what is most important to you, it is really difficult to compare your options. For example, is a small bungalow in a great neighborhood close to your office more attractive than a huge home with a basement that is 30 minutes away? It all depends what is on the top of your list. If you don't know the answer, your agent won't either!

2. Some Changes are Easier than Others

Everyone wants to put their own individual stamp on their first home. That can be anything from painting a few rooms, to renovating a kitchen, to finishing a basement. You have to keep in mind that some changes are much easier to accomplish than others. I see a lot of first time buyers focus on having to make those easy changes when the other factors are really more important.

Let's go through the things that are hard to change - location, square footage, layout, the lot, your neighbors. Your house isn't going to move. That means that your location, neighbors, and lot are not changing. You better like them! It is possible to add on to your house or change the layout, but it is much easier to finish a basement versus adding an addition or to update a kitchen versus knocking out walls and changing the kitchen layout.

You also have some things that are relatively easy to change - paint color, flooring, fixtures, appliances, and landscaping. It is easy to focus on the style, finishes, and decorations in a home. However, these are really the easiest changes. Anything that can be done in one day by one vendor (appliances, new carpet, countertops, new light fixtures) is pretty straight forward. For example, does the kitchen have plenty of space and a great layout but is stuck in 1989? If so, replacing the appliances and countertops are some of the easiest and quickest improvements. On the flip side, if it has top of the line appliances, but is small and non-functional, expanding the kitchen is usually a much harder fix.

3. Good Deals Go Fast

Everyone wants to get a deal. For some buyers, that is on the top of their wish list. It is a buyer's market, but when the price is right, there are buyers who will snatch it up. In 2010, houses that sold without a price drop (meaning they sold without the seller dropping the original list price), sold on average in less than 30 days. In 2010 alone, my clients were in dozens of multiple offer situations, which means that more than one buyer is bidding on a house at the same time. If it is truly a good deal, you have to act quickly. This is one of the biggest things with which your agent can help. He or she should be an expert who knows when a house is priced right. It may take you some time in the market to feel comfortable making a quick decision, but if you are still getting comfortable, be aware that one or two houses could get snatched up while you are making up your mind.

In the next part, we will talk about what happens once we've found the right house and are ready to buy it!

Justin Landis
Keller Williams Realty
404-803-0471
justin.landis@kw.com

First Time Homebuyer Series - Part 3: House Hunting - Where to Start

In the first two parts of this series, Personal Budget and Loan Prequalification, we examined your finances to help you determine if you can afford to purchase a home and if so, how much home you can afford.

Now the fun begins! For most home buyers, looking for the right house is the best part of the process. You get to go into a variety of properties and try to envision yourself walking through the front door every day. It's a really exciting time for buyers and sharing in that process is one of the best parts of my job.

You may have seen the billboard along I-85 in Atlanta that shows how many houses are currently for sale. Over the last 5 years, I can remember it ranging from 50,000 to 125,000. With that many homes to pick from, where do you start?

What's important to you in a home?

Many buyers like to list out the possible criteria and decide if certain features are "must haves", "must not haves", or "like to have". Below is a basic list with which to start:

Location, Location, Location
How Many Bedrooms
How Many Bathrooms
How Many Square Feet
Which School District
Is a Basement Required
Is a Garage Required
Need an Updated Kitchen or willing to do some work
Single Family Home or Condo / Townhouse
Need a Fenced in Yard

One could obviously make a much longer list, but when first starting out, I like to keep the list relatively short. I find that most first time buyers are not 100% sure of what they "must have" or "must not have" until they actually start seeing houses. The internet has made online home searching super easy. We can see pictures, tours, overhead views, and street views. However, there is no substitute for going into houses. Nonetheless, online is the place to start.

Where do I search online?

There are hundred's of online real estate search engines. In general, they all pull from the same database, so the homes you see on one site, you should see on all of the others. The three biggest differences between sites are the user interface, how often the listings are updated, and how much information is provided. Let's examine each of these.

1. User Interface - this is simply how you can search and how the data is displayed. Is there a map, what search options exist, how many listings pull up at a time, etc. This is really all about personal preference.

2. Up to Date Listings - most sites do not pull the data in real time. They take a snapshot of the data at a certain point and that is what the user sees. Some websites still show listings that are under contract. When real estate people use the term, "under contract" they mean that a buyer and seller entered into a a contractual agreement on the home, and it is now off the market for other buyers. This can be really frustrating to online home shoppers.

How can you know for sure if you are seeing up to date information? Luckily a new service called Listingbook was just launched to help Buyers search the same information as agents. You can click on this Listingbook link and create your own account. It allows you to see the exact data that agents see - what is available, what is under contract, and even what sold!

3. Information on each listing - Some search sites make agents pay to show extra pictures or have a custom description. That allows some agents to make their properties stand out, but it doesn't give the buyer full information. Our search engine on RichHomesAtlanta and on Listingbook allow you to see the full listing.

How do I keep track of my favorite listings?

Once you start searching, some properties will jump out at you. You want to keep track of those properties so that you can share them with your agent. You could always just keep a spreadsheet of the address, and that will work just fine. However, some websites, including RichHomesAtlanta and Listingbook, allow you to create an account and save your favorites to your profile.

Can we go see some houses, please!?!

Definitely! Like I said earlier, online is just a place to start. I will usually send my clients some houses, they will send me some, and we will share our initial thoughts. At that point, I'll put together a list, and we will hit the road.

Next time, we will talk about what to expect as we go look at houses. And in case you missed the 5 other links, you can now search just like an agent by signing up for a Listingbook account!

Justin Landis
Keller Williams Realty Peachtree Road
404-803-0471
justin.landis@kw.com