Hound Dog Real Estate

Atlanta Real Estate Data – 4th Qtr ’11 Review

2012-02-23T21:18:01Z

Over the last year, two sub markets in the City of Atlanta saw median home values increase over 10% and NE Cherokee County sales increased by 121.7%. Last quarter, Sandy Springs (inside 285) sat with the highest home inventory at 13.8 months (twice as much as many areas) and saw only 35.5% of listings sell, Eastern Gwinnett County led the region with 63.1% of all sales noted as distressed. Many surprises in the data, some with clear explanations, others result in head scratching. What’s the story behind the data in charts below and the stats as a whole?

The 4^th Quarter ’11 Atlanta real estate market data review is out. A few surprises and a clear delineation between areas and markets showing stability and others continuing to be smothered by inventory, distressed homes and economic duress. As always – remember that this is data broken out by MLS section; this is good data but we can go deeper still with Smart Data or our other resources. We can help answer the “What’s my home worth?” question.

The images below allow for an easy look at how the different areas of Metro Atlanta did last quarter and how they did this quarter as compared to the same quarter last year. A few key points:

An increase in median sale price is of course welcome but apply perspective. The top two areas showing an increase of 10% or more also have median sale prices at the bottom of the metro range. As low as they were, there was nowhere else to go but up.
Pay attention to distressed inventory, there shouldn’t be any major surprises here. You can easily see how the fringe areas continue to struggle with all of the homes built during the boom.
Percent change in number sold is also heavily influenced by distressed homes. Foreclosures sitting empty in areas with high distressed inventory must be aggressively pushed to sell. A foreclosure in Lithonia can be had at a much better price than one in East Cobb. You’ll see a parallel between distressed inventory levels, numbers sold and median prices.

More detailed info is available for review. We invite you to sign up for free weekly Altos Data reports below or drop us an email for more research on whatever area you’re interested in. Of course, don’t forget to visit and bookmark the Atlanta Real Estate Market conditions page – updated weekly. And as always, feel free to call or email with any questions or concerns. Thanks to Chartmasters for another great collection of quarterly Atlanta real estate data.

Click here to view the embedded video.

Loans Still Due Despite Foreclosure – Deficiency Judgments

2012-02-21T20:59:46Z

Hey Piasano - Let's Talk Deficiency Judgment...whatever that means

Sweating out a distressed sale or foreclosure may not absolve an owner from the long arm of those due money. Banks can employ what is called a deficiency judgment (the difference between the outstanding mortgage balance and the sale price) to collect the debt, requiring a defaulting borrower to pay the balance of a loan and any fees, minus what the bank recovers when it sells the home. In a worst-case scenario for borrowers, banks could garnishee wages to pay off the loan balance. Lenders traditionally have not pursued such debts because there has been little money to collect. But lenders are under pressure to minimize their foreclosure losses, especially from borrowers who walk away from the debt.

In June 2010, the government mortgage giant Fannie Mae authorized servicers who handle their loans to pursue such collections. Fannie Mae spokeswoman Keosha Burns said the agency does not release data on how often deficiency judgments have been pursued but said they are used only for certain borrowers. “We focus our deficiency collection efforts on situations in which the borrower has a reasonable ability to pay all or a portion of the remaining unpaid loan balance,” she said.

Deficiency Judgments in Georgia

Ginsberg Law Offices @ Atlanta Bankruptcy Lawyer summarizes deficiency judgements in GA:

Because Georgia foreclosure is non-judicial and because the process is so fast, the legislature (so we thought) built in a layer of protection for Georgia homeowners. Georgia Code Section 44-14-161 provides that before a lender can pursue a deficiency claim against a homeowner, that lender must file a special kind of lawsuit called a “Confirmation” demand and appear before a Superior Court judge to present evidence that the foreclosure sale price was the highest possible price and convince the judge to issue a judgment for any foreclosure deficiency. Home values have gone down over the last several years and it is not uncommon at all to see a foreclosure case where the fair market value of the home is tens of thousands of dollars less than the outstanding mortgage balance. As a result, Confirmation suits have become slightly more common, although they are still rare.

The Georgia Supreme Court and Court of Appeals decisions in the River Farm, LLC vs. Suntrust case, however, changes the conventional wisdom. In this case, the Georgia courts held that the lender (in this case, Suntrust) could sue the property owner on the promissory note prior to any foreclosure to get a judgment on the entire outstanding balance. By not foreclosing first, the lender is able to bypass the Confirmation hearing requirement. The lender could then buy the property at foreclosure to get the property back at whatever price it chose (no one but the lender would buy a property at foreclosure that is encumbered by a debt exceeding the value) and then pursue the former owner for a deficiency based on the judgment obtained earlier.

Deficiency Judgments May Increase

Anyone going through a short sale or foreclosure should try to get the lender to waive their right to pursue the debt. While the number of deficiency judgements may not be high now, many in the industry expect them to increase as banks and the federal government attempt to stem their losses. (Fannie Mae lost $5.1 billion in the most recent quarter alone.) Some banks have sold their debt to collection agencies, which are more likely to pursue deficiency judgments.

Guy Cecala, chief executive and publisher of Inside Mortgage Finance, a Maryland-based trade publication, said government loan holders Fannie Mae and Freddie Mac traditionally haven’t pursued deficiency judgments because there wasn’t enough money to collect. But he also expects such collections to rise. “I expect this to pick up over time,” he said. “They’re under a huge amount of pressure to pay taxpayers back, and one of the tools at their disposal is to go after these debts.” As former owners regain financial stability, they may hear a knock on the door from a well dressed gent with a noticeable New York accent representing a third party “collection agency”. If you’re going through a short sale, foreclosure or an other situation where you might be on the financial hook at some point in the future, it would be very wise to seek counsel.

And although this should be self evident, nothing in this post should be regarded as legal advice – if you’re in this situation you better speak with a knowledgeable attorney!

Why Getting Married and Buying a Home are Alike

2012-02-21T14:14:19Z

I often compare buying a home to getting married; there are many parallels if you take a second to think about it. This comment often raises eyebrows and once a few of the obvious one are pointed out, I get to the one that buyers miss.

If buying a home is likely to be the single most financially important thing that you’ll do, getting married has to be the single most socially important thing you’ll do (with a big foot in the financial camp). A few of the more obvious similarities:

- Both are significant social milestones
- Both are significant financial milestones
- Both require a connection that enhances your life, if not then what’s the point
- Both require extensive forethought; due diligence if you will
- Both have an option period; engagements and due diligence periods

There are many others, but the one that I go right to has a “Godfather” connection; Both are easy to get into and each can be very difficult to get out of.

I have many buyers that come to me with visions of grandeur when they begin the home buying process; almost always these are first time buyers and often, newly married couples. Wide eyed and bushy tailed, they are learning as they go and regularly have expectations that are diametrically opposed to the real world. Early in the conversations, I’ll drop the analogy…”Buying a home is like getting married, easy to get into but it can be a bear to get out of.” As they try to digest that off the wall comment, I elaborate and explain….”What if you need to sell that home sooner than expected? Six months or a year?” I then continue….

My job isn’t to tell you what type of home you will like, where you want to live or how much you want to spend. You handle the emotional side of this; I’ll handle the data and transaction. Once you find “that house” my job is to ensure that you fully understand the process; achieve the best possible purchase scenario; understand the data trends in the area; understand where the market may be over the next 6-12 months and that when you sign at the closing table that you do so with confidence. In short; I am expected to cover all of the “what if’s” and worst case scenarios.

The siren song of a “good looking home deal” can cause as many headaches as that of the “eye candy spouse”…we all know sellers and spouses that wish they had a do over (or two…three). The best compliment I’ve received was given a few weeks ago at the closing table….”Hank, you remind us of the Mayhem Guy from those Allstate commercials. Every time we see those we yell “Hank!” I loved that analogy and the two referrals they’ve since sent to me.

“Hot Babe” Mayhem commercial…

Atlanta Foreclosure Stripped Clean…including the wires in the walls

2012-02-12T01:40:35Z

Here’s a foreclosure home in the East Point area of Atlanta that has been picked clean – including into the walls. This is an example of one of the challenges faced by owners of vacant homes in Atlanta; vandalism is rampant and is costing owners – including lenders – big money. For years, vacant homes have sat minus appliances and HVAC systems as those would disappear almost as quickly as they arrived, in some cases within a day. It’s common in this market to have a stipulation that these will be installed the day prior to closing…and the seller will sit with fingers crossed to make it to the table intact.

Investors will always be drawn to the REO and foreclosure inventory but we’re seeing a demonstrated shift away for the “primary residence buyer”. These buyers expect a bargain because they keep hearing Case-Shiller or some other media outlet reporting on crashing housing prices in Atlanta. The Atlanta housing market is not accurately reflected in those reports and we’re seeing clear signs that many buyers in Atlanta are rapidly losing interest in foreclosures due to the nonsense. The lenders know where values are stabilizing, they’re not giving anything away….

Buyers Rapidly Losing Interest in Foreclosures

2012-02-22T14:23:29Z

It took a while but it seems that home buyers are finally beginning to tire of the real estate owned (REO)/foreclosure nonsense. Here in Atlanta, lender or “corporate” owned (the industry desired more appealing term than foreclosure) homes are a major part of the inventory. Statistics on this issue can vary widely but suffice it to say that REO’s and short sale properties will continue to impact metro Atlanta for years. Investors and speculators make up the majority of distressed property purchasers, focusing mainly on the under 200K price point – close to 50% of sales in 3rd quarter ’11 were considered distressed. But the wise primary residence buyers are learning stop wasting time and to steer clear of distressed and foreclosure property.

We’re seeing buyers finally understand that these REO properties are not usually worth the aggravation. The reasons are many and it’s taken a while for the realization to sink in due to the media making it appear that banks and FNMA are all but giving them away. They’re not – at least not where most folks want to be. The list below hits some of the main reasons and it assumes that we’re talking about homes in the desirable Atlanta real estate markets.

Why foreclosures aren’t the bargain everyone thinks they are – in no order:

Many times there are other parties involved that need to approve a price/sale (mainly mortgage insurance companies).
These homes are appraised and broker price opinions are prepared. Appraisals are targeted at 90-120 days out so typically these homes are listed with the expectation of being reduced.
Reductions are a scheduled process. At regular intervals, price will be reduced. This often is done independent of actual market trends.
There is always going to be a narrow range that will be considered acceptable for offers. If a home is 100K, there may be a 3%-5% variance off of that. If the offer doesn’t fit, it’s rejected.
Asset managers rarely concern themselves with current comps, trends or anything else – if it’s not something that fits into the charts, they move on.
Many asset managers carry over a hundred properties, are usually remotely located and don’t regularly communicate with listing agents. Almost everything is done via the web so quality interaction is minimal
REO agents deal with a myriad of requirements when listing these homes, this is a pure business. They are paid to move homes, get more homes based upon performance so don’t expect them to limit availability to avoid wasting time.
Many of the REO homes don’t follow “typical” protocol. While you can have inspections, not all will complete repairs; some will not move if appraisals come in low; most will mandate terms of the contract and most important, you buy it – you own it.
Speaking of owning it – you have no idea of what that home looked like before acquisition. There might be fresh paint and carpet, but what’s inside the walls, HVAC vents and in other areas that you can’t see. And homes sitting, buttoned up, in the hot humid Atlanta area…MOLD. Several foreclosure videos that you might find helpful.
Since these are sold “as is-where is” and you are required to sign a blanket release of seller liability, if you have issues down the road, you own them.
Speaking of owning, consider potential title issues (remember the robo-signing?) and the fact that most of these homes transfer with deeds below the quality of a warranty deed. Remember, the seller has no knowledge of anything before they took possession. In some cases, getting title insurance has proven to be a challenge or ridiculously expensive.
And what happens when it’s time for you to sell that home? Will the next buyer be accepting of the potential for a “zombie” title or deed issue?

This list is based upon my experience both inside the “system” and from outside occasionally trying to get a deal done. The bottom line? Why are you buying a home? If it’s to live in, then buy the home that you like in the area that you like. Once you find it, deal with the circumstances that present themselves – better deals are often made with owners than with banks. As always, successful buyers are prepared, work with skilled agents, have a clear objective and act decisively when opportunity presents itself.

Updated Unit, Great Views, Black Teddy & Fishnets – $509K

2012-02-10T02:22:24Z

How funny is this…

Let’s see…updated kitchen, new carpets, view of the river, black teddy worn extremely well, fresh paint…..Here’s a twist on the obvious , quality photos sell homes. Trulia posted this attractive 2BR Pittsburgh condo with an asking price of $509,900 and it’s likely that there may be adjustments to the pics very, very soon. And if this was indeed a mistake, there’s no doubt some poor guy will be groveling in the doghouse until hell freezes over.

But it certainly is getting views….where’s the virtual tour?

*hit Realtors Say Video – All Too Accurate

2012-02-09T04:07:29Z

Here’s a great look at the world of real estate agents and one of the “Sheeot ______ Say” You Tube series. This one is “Sheeot Real Estate Agents Say”. This is funny but also alarming because while it’s tongue in cheek, this is exactly the stuff robot agents are trained to spew. Talking points and scripts are very much alive in the current environment. If you think what is said in this video is all made up banter…think again. You might want to check for more agent nonsense with Selecting a Realtor.

Keep a running tab on the lines you’ve heard….the only one missing is “I want to be your REEEEEL TOOOOOR for life”. Is anything dumber than that?

Real Estate Agents Sweating out the Slump

2012-02-09T02:13:23Z

This really shouldn’t come as a surprise…grab Smokey Robinson….”Now if there’s a smile on my face, it’s only there trying to fool the public…” Real estate agents keep smiling behind the tears generated by the depressed market. Housingwire magazine reports on the results of a recent agent survey, and the impact that the market is having on many. Some clients are also feeling the impact as agents invest less into client services.

The next time you see a well-dressed, smiling real estate agent glaring at you from an advertising board, remember the carefree persona these days is likely only a mirage. Look deeper and you will find agents and brokers facing a tsunami of negative economic factors, including low housing demand, uncertainty over the regulatory landscape, reluctant young buyers, buyers who can’t qualify for mortgages, homeowners who are underwater and a general sense that the housing bust left them bruised and battered with nowhere to turn.

A recent survey of 800 real estate agents and brokers found professionals in the space deeply frustrated over the current state of housing. The survey, which was conducted by title insurer Entitle Direct, discovered that 9% of those interviewed had to sell their own homes to make ends meet. Another 9% lost their homes to foreclosure. Eighty-eight percent lost significant amounts of money in the past 4 years. Another 10% had to downsize their own homes to afford housing. And like Americans in other business categories, 78% of agents and brokers are now worried about retirement with the housing meltdown throwing their personal finances off course.

“The reason we conducted this survey was to find out how the recession has specifically impacted the personal situations and finances of agents and brokers directly, and to tell their stories,” said Paula DeLaurentis, CMO of Entitle Direct. “Everyone asks them questions about the real estate industry, but nobody has asked them about their own personal economic situations. Our survey shows that both personally and professionally, they have had to make significant sacrifices to adapt to the new environment.” Still, the public perception of brokers and agents is based on their smiley, go-getter image. While they maintain that front on the real estate scene, they are more pessimistic off-the-record.

When the survey questionnaires asked agents and brokers about the outlook for real estate, a whopping 47% said things will only get worse. On the flip side, 11% reported a market upswing. Either way, agents and brokers are maintaining their poster board faces, but the reality underneath appears to be more grim than glossy.

Atlanta Tops in National REO Inventory, Georgia #3

2012-02-04T02:24:06Z

Atlanta Top Metro Area for REO Inventory

On Wednesday, the Federal Housing Finance Agency began taking investor applications to participate in their new bulk REO program. The agency is finally deciding who has the financial wherewithal to manage these properties and rent them out. Well that’s been tried in the past and the results? uh…not good.

So where exactly are these REO homes? Look around because metro Atlanta has the highest number of any national metro area and Georgia is in the top 3 states. But….as has been often repeated here, the Atlanta foreclosure mess is highly concentrated in certain parts of the city. Atlanta is also at the top of the mortgage fraud arena, but again, highly concentrated. Candidly speaking, take these areas out of the mix and the metro Atlanta market is no worse than many others.

As noted in The Wall Street Journal:

The goal is to help stabilize the troubled housing market by turning properties into rental units. Similar programs are expected to be launched by Fannie Mae’s sibling company, Freddie Mac, and the Federal Housing Administration, the government-controlled mortgage insurer. That pilot program would be limited to properties that Fannie has already leased through a program that allows tenants to rent homes when their landlords go into foreclosure. It involves real estate with an estimated value of at least $250 million in six areas: Southern California, Las Vegas, Chicago, Phoenix, Atlanta, and parts of Florida.

There are many more foreclosures that could be pooled into packages and sold to investors. More than 83,000 foreclosures were listed for sale by Fannie, Freddie or the Federal Housing Administration as of late December, with the largest concentrations in California, Georgia, Michigan and Florida. (View map.) The idea of packaging these properties and selling them to investors has been kicking around in policy circles for quite a while now and has been seriously discussed by Obama administration, Federal Reserve officials and regulators since at least last summer.

“We’re working to turn more foreclosed homes into rental housing, because as we know and a lot of families know, that empty house or ‘for sale’ sign down the block can bring down the price of homes across the neighborhood,” President Barack Obama said in a speech Wednesday in Virginia.

There’s really nothing much to say….except it’s uncanny how history repeats itself; I think we already know how this “innovative idea” will end. I can’t think about that right now as I have a foreclosure appraisal to write. It’s a fourplex in the city that looks like it took a few tomahawk missile strikes, not much left. The odd thing is the 300K mortgage taken less than a year ago – when it undoubtedly looked just like it does today. Mortgage fraud?

Atlanta Home Values are…a Mess

2012-02-01T13:34:27Z

Atlanta can finally raise a championship banner, and it’s one no one wants. But toss the challenge flag because the devil is in the data reviewed. In November, prices of single-family homes were down close to 12 percent compared with a year earlier, the largest decline among major metropolitan areas, according to data released on Tuesday in the Standard & Poor’s/Case-Shiller Home Price Index. Home prices regionally are now below their levels of 2000, making Atlanta one of only four metro areas to have experienced such a slide. The price of entry-level housing in the area — the lowest tier of the market, valued at just under $96,600 — fell by close to a third last year.

So maybe just as that picture doesn’t necessarily reflect the city, this data might not accurately reflect the market. It’s a mess to be certain, but most don’t understand that Atlanta is just a huge sprawling market with no natural boundaries; it’s also an exceptionally compartmentalized city when it comes to home prices, trends and activity. I’ve written about Case-Shiller; great for a look at 50,000 feet but not for close in, personal work. We have tools for that. You cannot include the fraud ridden areas of metro Atlanta with the stabilizing areas outside the perimeter.

Atlanta’s housing market as noted in the NY Times:

The reasons for Atlanta’s housing woes are both representative of the nation’s troubles and special to this former boomtown, where housing appreciated handsomely, though not to the lofty heights of Las Vegas, Miami and New York. Where the region once attracted thousands of prospective home buyers drawn by plentiful jobs and more affordable living, that influx has dwindled. Local unemployment, at 9.2 percent, is slightly higher than the national rate, in part because one in every four jobs lost was connected to real estate, a much higher rate than in the rest of the country. Those jobs have yet to return, while even people with work are having trouble qualifying for loans. The region, plagued by mortgage fraud and developers who dotted the exurban landscape with large luxury homes that never sold, is inundated with foreclosed properties.In fact, Atlanta has the most government-owned foreclosed properties for sale of any large city, according to the Federal Reserve.

Again – so very true, especially the mortgage fraud – but also localized. I’ve written about mortgage fraud in Atlanta and the difficulty of appraising homes in many areas as the fraud and flipping make it impossible to segregate the fraud from the actual sales. Atlanta is tops in the nation with fraud and the banks and fed handing out more money (Wells Fargo just announced another “program”) only exacerbate and continue the issue.

We’re largely past the foreclosures of people that used homes as ATMs, now we’re seeing folks losing homes due directly to the economy:

Such distressed sales are putting pressure on traditional sellers to slash their prices, too. In an upscale subdivision nearby, Christina West waited four years before giving in to the reality of the housing downturn. She and her husband bought a four-bedroom home on a manmade lake in 1999 for $374,000. They spent $100,000 installing a pool, a hot tub, a basement bar and home theater. When her husband lost his job as a sales executive at a consumer products company in 2007, the couple moved into a house that Ms. West had inherited from her mother in St. Augustine, Fla. They put the Dacula house on the market for $599,900.

They rejected several offers that they considered lowballs. “Everybody kept saying ‘Oh, it’s a great house, it will sell,’ ” Ms. West recalled. A contract for $447,000 fell through when the buyer could not secure a loan. Last month, the couple signed a contract for $360,000, effectively erasing previous gains and their large investment in improvements. Other owners have simply been forced to give up their homes. In the third quarter of last year, the most recent period for which figures are available, foreclosed homes represented 24 percent of all sales in Atlanta, compared with a national rate of 12 percent, according to RealtyTrac, a data provider. Georgia is one of 30 states where a lender can foreclose on a home without appearing before a judge, which suggests that many more homes may be at risk of foreclosure in states where proceedings require court approval.

Note the location of this example – Dacula was one of several outlying areas that blew up positively then blew up negatively. That area is one of many all around the Atlanta region that will struggle for years to gain a foothold.

The bottom line on all of this is that it really shouldn’t come as a surprise, but keep this in context. Buyers and sellers in the tested areas are seeing stability, in fact I have a good half dozen buyers having a hard time finding a home that works due to low inventory. Sellers with well presented homes price accurately will sell – many under 90 days.

Viewed from 50,000 as one region, Atlanta real estate is a train wreck. Get in close like we do every day and you’ll find several pockets of stability, you just need to know how and where to look. We do.

See the complete article here.