I stood my ground on an earlier blog titled Will the Tax Credit be extended again? In that posting I knew that a second “home buying” extension would not be granted past April 30, 2010 and I was correct. What this newly passed legislation (today June 16, 2010) means is that if your home has a binding contract on or before April 30 you can now close up to September 30 to obtain your tax credit.
Kudos to the Senator Issakson (former Realtor) who saw the nightmares we were experiencing out in the field. There was such a rush in the spring to take advantage of the tax credit that many buyers and Real Estate Agents took advantage of the great deals on distressed properties like foreclosures and short sales. What we all found out is that the same approval timeframes we were accustomed to pre-tax rush (such as Wells Fargo short sale approvals coming in under 45 days) did not necessarily apply this Spring and Summer. Actual numbers won’t be out for months but I have a very strong feeling that the already overwhelmed departments of distressed lenders found themselves devastated once the avalanche of offers came pouring through in 2010. For the past few weeks buyers and agents have been scrambling, stressing over the impending deadline and thanks to a few Senators, we have a little breathing room to continue working towards our goal.
So if you have a contract on a short sale, foreclosure, new construction or resale that went binding on or before April 30, take a breath a relax. You now have until September 30, 2010 to close on the home to receive your tax credit.
Occasionally I get a call from a seller looking to sell their property however said property is currently occupied with tenants or a future ex. No matter whether it is a normal resale or distressed short sale, I have a strict no tenant policy in place. This means if you have a home you want to sell and someone other than the owner is occupying it, call me when they move out!
Let’s face it, I am an aggressive Realtor. My combination of traditional and online marketing blitz is really unparalleled which results in showing traffic and offers. It is a frustrating experience to get the momentum ball rolling only to have it crash at the front door of an uncooperative tenant.
If I have learned one thing in real estate over the years, that lesson is that exes and tenants really do not care about a seller selling their house. Sorry but it is true. I have had sellers tell me that tenants have promised, even in writing, that they will comply with all showings with 24 hours advance notice however what I have experienced is nothing less than the opposite. House is left unkept ranging from as little as unmade beds and dirty dishes to hoarder type filth. Tenants avoid phone calls, refuse to open the door, sometimes even abusive to the agents calling. Once I had a tenant add an extra lock so even though the key in the lockbox opened 2 locks, the tenant installed a third so we could not enter.
Let’s face it, if the house sells that means one thing to the tenant or ex wife/husband – It is time to move out in 30 days or less! The longer they can prolong the expense of movers and finding a new place to live then they will! There is no motivation for them to keep the house spotless much less sell the house. I have even had buyers avoid looking at tenant occupied homes in fear of facing the eviction process in the event they do not move in time. The only instance where tenants occupying the property is a plus is for investor purchases but the pool of landlord investors has dwindled in this market.
I am positive that there are wonderful tenants out there who do comply with showings however it is my personal choice that I do not take those listings. Good luck and let me know when the property is vacant!
I love marketing real estate. I am always on the prowl looking for new and exciting ways to market my listings to the masses and while my 21st century marketing blitz is on the cutting edge for local realtors, there is one basic step that will always remain CRUCIAL when selling real estate. The most basic marketing concept that (in my opinion) separates the amazing Realtors from the lackluster and differentiates the homes that sell from the homes that sit stagnant on the market. PHOTOGRAPHS!
No matter how high my website is ranked in the search engines or how many e-flyers I send out per month, nothing sells a house more than photos! With that being said, I am still shocked at the quality that are uploaded into the MLS on a daily basis. Let’s not even talk about the listings that completely lack a photo in the first place (gasp!), or properties that only host one exterior shot but what about the photos of dirty kitchens, unmade master beds, blurry or crooked shots, low res with the date burnt into the image. Not only do I want all rooms cleaned for photos, I even remove the little things that clutter a photo like refrigerator magnets or TV remotes.
I take property photography seriously! Unlike most Realtors using a point and click pocket camera, I use a professional digital SLR camera for my shots complete with wide angle lens. I normally average between 150-400 photos (depending on size of property) and then spend hours going through them to select the absolute best for cleanup and/or slight photoshop. Nothing but the best for my Georgia sellers!
Not long ago I was in a listing appointment when the potential sellers asked if a reduced commission could be negotiated if they used me on their subsequent home purchase. I am always happy to accommodate clients who are selling a home to buy another so I responded with “yes, what area are you looking in”?
Alpharetta.
I paused for a moment and spoke with honesty. “I am always happy to assist you wherever you purchase. While I am familiar somewhat with Alpharetta and North Fulton county (I have taken quite a few clients there), I feel compelled to tell you that I am not the subject matter expert there as I am here in Cobb, East Paulding and North Douglas counties. Obviously I can take you to see the listings and be your expert negotiator however if you are looking for someone who specializes specifically in that area, I may not be the fit for you. You will not hurt my feelings at all. I feel confident I can sell your home here in Mableton, why don’t you think about it and once your home goes under contract, we can discuss then.”
I am pleased to report I did land the listing, a stucco beauty loaded with upgrades just waiting for the perfect Mableton home buyer.
While I do have multiple buyers agents on staff who handle different areas in and around metro Atlanta GA, as a listing agent I specialize in the selling homes in the following real estate areas:
Acworth, Austell, Dallas, Douglasville, Hiram, Kennesaw, Lithia Springs, Mableton, Marietta, Powder Springs, Roswell, Smyrna, Villa Rica and Vinings.
While many buyers are disappointed with the tax credit deadline and failure to extend, there is one exception according to the IRS. Any Federal employee or member of military who served outside of the United States for 90+ days between December 2008 and May 2010 will be granted a one year extension to the home buyer credit.
According to the IRS:
Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010
Don’t let the tax credit get away, contact a Realtor today to get started!
Historically peak market in metro Atlanta runs from 3rd week of January through Memorial Day weekend. People are very surprised to find that the summer months (June and early July) are very slow. Your typical American tends to think of the summer months as the real estate boom time, when kids are out of school and families are scurrying around trying to locate, close and unpack a home before the kids start back the next school fall. While that may be true in other markets, Atlanta (at least the western suburbs that my team specializes in: Cobb, Douglas, Paulding, Cherokee and Fulton counties) tends to get things under contract in the spring with closing no later than June 30.
So the million dollar question is now with the April 30 tax credit expiration, has the market prematurely ended? While it is only the beginning of the second week of May, all indicators tend to point that way. Although I keep a positive outlook on all things real estate and beyond, I had estimated that the spring housing rush would peak in April with a loud crescendo at month’s end leaving May with nothing but crickets chirping. So far I am correct. What the tax credit did was push some buyers off the fence and other buyers to rush to get under contract a month earlier.
Unfortunately in the melee of last minute scurrying buyers, a lot of things were rushed: buyers choosing properties they didn’t necessarily love but wanted the tax credit, lenders not taking full loan apps or fully qualifying buyers. The first week of May saw a lot of contracts falling apart much to the dismay of sellers who received multiple offers in last minute bidding scenarios with no buyers to fall back on now.
But never fear, although June tends to be one of the slower months of new activity (kids getting out of school, settling into summer routines, family vacations), historically the market picks back up a bit in July and more in August. It has been my experience that September – November are also very strong months.
Now I realize I may be just a local Realtor but I stand strong that the worst is behind us. The market has stabilized, data now shows the market hit bottom last summer/early fall 2009. If we can all be a bit more patience, I see beautiful blue skies ahead!
I have answered this question a multiple times on this site between my short sale FAQs and countless blogs (see links below) but it is still the #1 question asked about short sales.
YES, a short sale contract IS a binding contract once buyer and seller agree to terms and both sign off. The home is still owned by the homeowner, the homeowner can and will sign the contract if it meets the desired terms. The bank does NOT need to sign the contract to make it binding.
It is very important to understand that the National Association of Realtors states that a short sale contract is no different than any other real estate contract. A short sale contract is written contingent upon 3rd party final approval and that contingency carries the same amount of weight as a financing, appraisal or inspection contingency. During the term of the contract the seller and listing agent will work with lender to procure short sale approval.
REALTORS® received guidance today from the Internal Revenue Service on what constitutes a “binding” contract by May 1, 2010 for home buyers to be able to take advantage of the federal tax credit.
The IRS stated: “A binding contract is a contract that is enforceable under state law. A contract may be enforceable under state law even if it contains certain contingencies, such as for home inspection, financing, appraisal, and short-sale lender approval. Taxpayers who enter into a binding contract to purchase a home before May 1, 2010, and close on the contract before July 1, 2010, can take the credit if they qualify as a first-time homebuyer or long-time resident of the same main home.”
For all the short sale info you could ever want read:
10. WHAT IS/WAS FOR DINNER?!? *Insert best caveman voice here* candle, incense, fragrant oils GOOD! Curry, crockpot roast BAD! Unless you are baking apple pie, keep the cooking smells to a minimum especially if you know for certain a showing is scheduled! Sellers should avoid any and all fish, fried or distinct ethnic foods that may leave a lingering scent. I have heard many a buyer discount a home over smells.
9. PETS – No one loves animals more than I do however to the buyers out there that are not animal friendly, nothing will kill a home sale quicker than the family dog or cat roaming around. While I understand that coordinating a showing around animals is very difficult (especially for last minute calls) but sellers should make every effort. Instead of a sign on the front door saying “Do not let cat out” why not put the sign on the laundry room door and leave cat in there? True Story: I once had a client that had a phobia of cats and refused to see any home that had one. When showing, sellers should remove all evidence of animals (toys, water/food bowls, kennels, etc) and most importantly remove all SMELLS and vacuum pet hair regularly.
8. LIGHT BULBS – Nothing looks worse to a buyer when they walk into the master bathroom and see that most of the lights at the master vanity are burnt out. Same goes with kitchen, dining or any other room in the house! Sellers should do a weekly inventory of every light in the house and replace as needed. Which leads me to my next point…
7. DARK ROOMS – While not every showing is scheduled in advance, when possible the seller should turn on all overhead lights and lamps. Also equally (if not more) important is to open all blinds and curtains so natural light floods the rooms. Never underestimate the power of light!
6. TEMPERATURE – whew, this is a tough one especially in the era of vacant bank owned foreclosures and seller deserted pre-foreclosure short sales where most properties do not have power turned on. What I can say from my experience is anytime there are extreme temperatures (freezing cold in winter and blazing hot in summer) buyers are in and out in a flash! Kind of hard to get a buyer interested in a property when they won’t stay in it longer than a few minutes. When possible keep temperatures at a reasonable and comfortable level.
5. FAMILY PHOTOS AS DÉCOR – I have always stood firm that sellers should not remove every photo from their walls however that statement is only reserved for the seller who uses photos sparingly. For the seller who uses family photos as décor on every wall in every room then I recant that statement. Buyers should be looking at the home not counting how many kids the seller has! Removing personal excess keeps the buyer focused.
4. COLORS / WALLPAPER – There is no secret that I have a strict “no wallpaper policy” in place. This is 2010 people, mullets and bellbottoms are gone, so should the wallpaper. I love it when sellers tell me that it is too time consuming and/or expensive to remove and I kindly remind them that the buyer is thinking the exact same thing. I once had a seller adamant against removing her aged yellow wallpaper from the 1970’s and she told me that a home was not a home without flowered wallpaper in the kitchen. I told her I was glad she loved the wallpaper and I would be happy to sell her back her own home for a reduced commission. She didn’t get the joke! I share the same sentiments about paint color. I am so glad that you loved your red family room, yellow dining room, orange kitchen but when it is time to sell it’s time to PAINT! Never go white, it looks too institutional. Behr has an amazing color called “Indulgent Mocha” that is light and bright with just a touch of taupe.
3. SMOKING – If you are a smoker then it is time to take the smoking outside FULL TIME until the home has closed. If you have smoked in the home for 30 years then I will probably turn down your listing. Majority of buyers turn around in the foyer to leave when they smell the remnants of cigarette or cigar smoke. Nothing kills a home sell faster than smoking!
2. CLEAN YOUR HOUSE! – I do not live in a perfect model home but then again I am not trying to sell my house either. Every day you should make your bed, clean your kitchen, hide dirty clothes in laundry room. Every day you should leave for work as if you had an important showing scheduled that same day. A couple years ago I had some buyers up from Florida for a packed house hunting weekend, we had 20 viewings scheduled for the Saturday in Powder Springs and planned to submit an offer on the top pick. The first home of the day was unkept (dirty dishes in sink, pile of dirty laundry on floor, kids toys strewn around the house and seller walking around in his boxer shorts) not to mention every room was painted a different color. My buyers walked out of the home and said “gross”. Nineteen homes later we had made a complete circle and close to where we began our search. My buyers walked in, threw their hands up in the air and said “THIS IS IT! We love this home!” Ironically enough it was the same floorplan, probably from the same builder as the first home. The difference was it was cleaned, neutral and move in ready.
1. SELLER GIVES THE NICKEL TOUR – Nothing is more uncomfortable for a buyer or a buyer’s agent when the seller feels the need to guide us through their home highlighting every change, upgrade and special moment that has happened for the 20 years they have lived there. A buyer on a mission knows within a few minutes if they like the home however if the seller is there now we feel obligated to talk back and walk through observing every room even though the home was discounted as soon as we smelled cigarette smoke. I do not necessarily feel that sellers should always leave the property. Although it is more preferable, it is not always convenient for a seller to leave especially when buyer’s agent has given a wide timeframe of showing window. With that being said, I recommend to my clients that they should take a walk around the block, even just step outside on the deck to give the buyer some privacy to look at the home in peace. It’s also crucial for the buyer’s Realtor to get a good feel of what their client likes and dislikes about the home. It is very difficult to be honest about the home with your Realtor if the seller is standing right there.
Every state has different real estate laws and procedures and this blog is written for Georgia’s procedures of purchasing AS IS short sale and foreclosure properties.
In the GAR (Georgia Association of Realtors) standard contracts, there are two ways to purchase real estate: Due Diligence and AS IS. Since the bulk of real estate transactions currently are some form of distressed properties (REO Bank Foreclosures, Short Sales, Pre-Foreclosures) it is very important to understand the difference especially when the contract instructions state that property is sold AS IS.
First allow me to define the differences:
DUE DILIGENCE – means the purchaser would have a mutually agreed upon period of days to inspect the property and its surroundings. This includes the actual inspection of the home structure, systems, roof, etc. It also includes any additional tests the purchaser may want to perform during this time period: termite inspections, radon gas, soil tests and inspecting the neighborhood and surroundings. The later would include research for any landfills, high voltage power lines, registered sex offenders, etc. The costs and work of these are the sole responsibility of the buyer.
AS IS – means the purchaser is forgoing all inspections purchasing the property AS IS with any and all faults whether known or unknown. The Seller will not perform repairs of any defects.
What becomes confusing is when the Bank/Seller advertises the property AS IS. This does not mean that the Seller will not allow inspections to take place as it is the right of the purchaser to inspect the premises. What this means is that after the inspections have been completed, the purchaser understands that no matter the outcome, the seller is stating they will not make any repairs. In distressed sales (foreclosures and short sales) purchasers should always choose the “due diligence” route and perform inspections knowing that within the timeframe they can either accept the property “as is” OR terminate the contract and receive their earnest money back (within the due diligence time frame).
Now with that being said, if a purchaser submits an offer on a bank owned foreclosed property and inspection finds issues that would not allow purchaser to move forward with the property through their VA or FHA appraisal, I have seen instances where banks did in fact complete repairs. You may be saying that this is in direct conflict of what is written above and you are correct! Since the end of 100% financing in 2008, the two most popular financing options have become FHA and VA loans due to their lower required levels of down payment. As of 2010, VA still offers 100% financing and FHA offers 96.5% financing. Since the majority of current buyers are using these two types of loans, if the home does not pass FHA or VA minimal inspection guidelines then the bank realizes it will take longer to sell therefore the required repairs must take place to get these homes off their books. There are two common solutions to this problem:
Some banks will pay for the repair costs out of their own budget
Some banks will repair however roll the repair costs back on top of the sales price
It is important for the purchaser or purchaser’s agent to inquire before submitting an offer whether the property will pass FHA or VA inspection.
You have been out scouring the area you want to be in, walked through dozens of homes in search of the right one. Finally you find it, your dream home! You submit an offer and are looking forward to an acceptance or a counteroffer but instead you are hit with a “Multiple Bid Scenario – Please submit Best and Final Offer”.
What?!?
What this means is that other buyers have stumbled across your prized home and fell in love just like you did! Sometimes it is a foreclosure property, sometimes a short sale and sometimes it is a regular resale listing. Many buyers become very stressed out asking me how to handle it and my answer is always the same. “Best and Final” is actually what it means. The seller is looking for your absolute best and final offer, there will be no counteroffer, the seller will move forward with the best net offer on the table by the offer deadline. The offers of others will always be held confidential (sometimes so will the number of offers on the table).
In these scenerios it is crucial to know the comps of other properties in the neighborhood. In the event of a foreclosure, the property could be priced well below fair market value and the bidding could significantly increase the final sales price. For instance, not long ago a foreclosure hit my client’s radar hours priced at $114,000. After reviewing the comps I found that sales in that Powder Springs subdivision ranged from $189,000 – $260,000 and this particular foreclosure was the largest floorplan in the subdivision. We submitted an offer for $135,000 which was $21,000 OVER ASKING PRICE. Unfortunately we lost the bidding war. We found out later that the property sold for $164,000 – Fifty thousand over asking price. While that is not the norm, it is an example of how important comps are when bidding.
Normally, as detailed in a previous blog “The Skinny on Foreclosure Bidding”, multiple bid scenerios usually result in a final sales price at or above list price. With that being said, how do you know which number makes best sense for you?
I always tell my client to think about the number that they can sleep well at night knowing that they wouldn’t have paid 1 penny more for in the event they lost it. Nothing worse than a client coming back to me and saying “I know I bid $150,000 but I really would have gone up to $154,900”. In best and final scenarios, your absolute highest bid is what you should submit. If your submit best and final is truly that, there is nothing more you can do. Good Luck out there!
