Looking Out From the Garage

The October issue of Realtor Magazine (our industry magazine) had an interesting article about dispelling myths while educating first time home buyers.  The third point was about the realities of "bargains".

There are absolutely some bargains in the market...  But, often those properties that are the real bargains are NOT the ones that have rock-bottom prices. 

The HECK you say...

Really...  I have been in some pretty cheap properties in the last few months.  It seems that a house priced at $25,000 in a neighborhood or $150,000 homes would be a slam-dunk, right?  That deal starts to look WAY less attractive when the issues get added up... 

• roof
• mold
• floor coverings
• appliances
• plumbing fixtures
• electical fixtures
• copper wire
• copper plumbing
• landscaping (not to make it pretty, but to stop water from washing away the foundation)
• HVAC
• driveway paving

Seriously, I looked at a house that needed all of that.  It would be faster, easier and probably cheaper to bulldoze the house and start over.  Since the lot would be worth about $10,000... and it would take about $15,000 to clear the lot and get it ready for a new building... This wasn't a deal.

Of course, most aren't that severe...

However, there are a lot of times where one house will be significantly cheaper than another for sale, but after correcting its issues, it actually ends up costing more.  It might be simple things like carpet and appliances, or maybe something more involved, like a roof or HVAC. 

This often ties back to "I need to see all of the options", presented earlier.  In this case, we just want to get a look to make sure that it really is in that bad of shape. 

I have looked at a lot of "bargain" properties and have a pretty good feel for them.  There are some great deals, but they are usually not the first ones to present themselves...  They are generally in much better shape and slightly more expensive. 

Finally...

Remember that the deal properties often still need work.  And it is probable that the buyer will have to come up with cash for that work, in addition to downpayment and other closing costs... it isn't something to bootstrap.

The October issue of Realtor Magazine (our industry magazine) had an interesting article about dispelling myths while educating first time home buyers.  The second point was about excessive caution, and buyer, especially new buyers, wanting to see "everything on the market".

I have to admit... the writer at Realtor Magazine got another solid base hit.  I have worked with buyers that wanted to see a LOT of houses... even houses that really didn't suit their purposes... even houses that they KNEW didn't suit their purposes prior to wanting to see them.  And there are a LOT of houses on the market. 

While inventories are down around 25% from last year, there are still about 80,000 homes on the market in the Atlanta Metro area.  Generally, in ANY given price range and area there are scores of homes.  Even Lilburn, GA has several dozen homes priced under $150,000.  And by the time a buyer makes his or her way through all of them, there are new ones to see.  It just isn't practical.  Tighten the search criteria...

It isn't just a matter of spending a lot of time looking at houses... it is losing out on houses because of spending time looking at other houses...  It goes like this...  A buyer goes out and looks at 5-10 properties.  They find a couple that they like and one that they REALLY like.  Instead of deciding to write an offer, they feel that there is time to look (after all, the market is weak, right?).  So, they schedule more time to look at homes.  In the mean time, the home that they REALLY liked goes under contract to another buyer.  When they have looked at more homes and decide that the home that they REALLY liked is the one that they want to buy... that home is no longer available. 

We call it analysis paralysis.  Another type of analysis paralysis comes after the buyer decides to write an offer.  They spend days and days trying to figure out what to offer.  While they are doing that, another buyer puts the house under contract. 

Don't get me wrong... these are important decisions.  Buying a home is a BIG deal... ESPECIALLY for first time home buyers.  You want the right home and you want it at the right price.  I understand.  But, I also don't want you to regret a lack of action.  Right now, if you see the right home, be ready to make the offer.  We'll check the comps and craft the offer... but YOU need to be ready. 

Being ready means getting prequalified with a lender.  Getting ready means knowing how much money you'll have available to close.  Being ready means knowing that you have the down payment.  Being ready means being prepared to break a lease or being out of the lease in an appropriate time frame. 

But, being ready may mean getting the right house at a great price.

I held an open house today in Lilburn, on 590 Baltimore Ave.  During the open house I had the opportunity to speak with several first time home buyers.  The conversations with first time home buyers in Lilburn, GA, were certainly enlightening... 

Keep in mind that the home I as holding open was priced at nearly $400,000.  In this area, that isn't the normal territory for first time home buyers.  And these folks were no exception... looking primarily in the $150k-$200k range. 

Of course we talked about properties that were available in their price range, and Lilburn has some really nice properties for sale in that range, but we talked about something else.  The something else was the tax credits that are currently available. 

Basically, there are two tax credit propgrams currently available:

• the Federal First Time Home Buyer Tax Credit of (up to) $8000 that expires after November 30th
• the Georgia Home Buyer Tax Credit of (up to) $1800 that is slated to expire at the same time

All of them were well aware for the federal incentives... but none knew about the state incentives.  I know that a lot of us real estate agents are writing about it, and I also know that we are talking about it to our clients... but the word still isn't out to everyone. 

I should also mention that the Georgia Tax Credit is NOT limited to just First Time Home Buyers...

On the other hand, all of them were quite aware of the deadline for the Federal First Time Home Buyer Tax Credit.  In fact, they had all started their search to specifically make sure that they had time to get everything together before the deadline.  Some were also not considering short sales because of the timeline... and the emotional rollercoaster of waiting for third-party approval. 

Each of these First Time Home Buyers had also chosen the Lilburn, GA, area for specific reasons... and cost wasn't the primary motivator.  Convenience was...  Only a few years ago the primary motivator of location for many was how far out they would have to go to get the house and yard they wanted.  Now more buyers are taking into consideration things like commute time, commuting costs, taxes, schools (none of them had kids yet, but schools were a consideration) and convenience to services and amenities. 

Finally, of note, is that the majority were not aware that the buyer's agent was generally paid by the seller and that the buyer's agent's comensation wasn't likely to affect the seller's fees.  One thought that if they didn't have an agent they would be in a better negotiation position. 

It was both fun and educational to spend the time primarily listening to their impressions and opinions.  Working with First Time Home Buyers in the Lilburn, GA, area is both fun and rewarding.  After all, I am placing new neighbors, not just random buyers.  I live where I prefer to work.