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Atlanta Pending Home Sales - The Truth Behind the Numbers!

If you are interested in the health of Atlanta real estate... this insight is a must to read!  The national and local news media has inundated us with he news that 'Pending home sales' are rising dramatically! Well they are, but it is only half the story!  My wife Ellen pointed out something to me today that I overlooked.  Atlanta area Pending home sales are way up!  At first when you look at the numbers you are flabbergasted that there could be so many pending sales in such a lackluster market.  You feel as though you missed the boat when those sales are not yours. However at a closer look the sales are pretty much bogus.  The 'Pending home sales' are mostly all lease purchase sales with postponed closing dates of:
  • 5/30/2011
  • 6/29/2012
  • 7/1/2010
  • 4/30/2010
  • 6/1/2011
So it seems from the sampling I did a large portion of sales are really "Lease purchases!"  In all the years I've been in Atlanta real estate...I do not do lease purchase sales!  Why?  Because over 95% of them never close. Bad credit now, shaky credit, and promises of sales of the purchaser's home on the other side never occur.  Desperate Atlanta homes sellers are listening to advice from agents that have absolutely no track record of sales.  I am sure the facts and known risks about lease purchases have never been properly explained to to the home sellers.  The seller in effect have taken their home off the market for several years and they mistakenly believe they sold their home.  They haven't!  The good thing for the rest of the informed sellers?  There is a lost less inventory to compete with!

Jim Crawford REMAX

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14 Comments on Atlanta Pending Home Sales - The Truth Behind the Numbers!

AUG
06
2009
800,524 Points 72 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

Ouch Jim, The news media seldom digs into the facts. Headline; PENDING HOME SALES ARE UP!
9:00am • #1
581,820 Points 11 Featured Posts Outside Blog Hit Router Attended Rain Camp Called Shot Master

Hi Jim...Doom and Gloom Press is one thing, misleading facts, shall we say Twisting the facts is normal for the press, but not the real world. Pending sales are up here, but prices are holding, sometimes Sellers perceive an increase in sales as an increase in Prices, be sure to show your Sellers the True story behind your pending sales .

Cheers, Have a better last half of the year in 2009, May You Have Many Of Your Favorite SOLD Signs on your Listings !
9:19am • #2

Hey Jim:

Thanks for the info!  However, in this case the numbers did not tell the whole truth.  You are also so correct on the lease purchase situation....most of these deals do not close! 

These agents are gettingowners to do these type of deal probably because some are in more desperate situations and others because of the promise that if they do not close they are able to keep the earnest monies.  Really a small pittance considering.  Most EM I have seen on these deals are in the $4,000 to $5,000 range. 

The owners do not seem to be able to see through to the fact that this is a huge risk.  Yes, they are taking their homes off the market for a year or more.  Can they assume that if the deal goes south that the value will still be the same or more in this economy?  Also, what happens if the folks buying can't purchase at end of lease period and cause damage to the home? 
9:25am • #3
811,199 Points 91 Featured Posts Outside Blog Called Shot Master

Paul Henderson, Realtor ® Lacey & Dupont Washington homes (RE/MAX Professionals & Four Seasons Inc.) Paul you are right!  There is always another story behind the headlines.
9:47am • #4
811,199 Points 91 Featured Posts Outside Blog Called Shot Master

Victoria Oak Bay Realtor Fred Carver 250-598-2963 for Victoria Oak Bay Homes (Re/Max Camosun Oak Bay & Surrounding Area Real Estate)  Fred, I always like to paint an accurate picture for my sellers.
9:48am • #5
811,199 Points 91 Featured Posts Outside Blog Called Shot Master

Greg Saunders (RE/MAX Around Atlanta)  Greg you are so right there are so many angles to this.  Another item is trying to get them to move out of the home after the deal does not consummate, the damage incurred, the risk, liability,a nd just what if those payments stop coming in?  What can the seller do or the buyer do?  A recent call to us was from a lease purchase buyer that put up big money!  Guess what happened?  The home was foreclosed on and he and his family was placed on the street!
9:51am • #6
6 Featured Posts

Jim:  Respectfully, I think you are missing an opportunity here.

These times call for creative approaches to real estate.     

CONSIDER:  A lease purchase IS A SALE (that closes later).  

BENEFITS FOR THE AGENT:
Agents can help a seller and a buyer so that both win.  The agent can earn either a full commission on these when a seller accepts a buyer offer!  All that is needed is for the buyer to have a down payment.  I used to accept 50% upon seller receipt of down payment, and 50% upon eventual closing.

BENEFITS FOR THE SELLER: 
In many cases, the seller may not need the lump sum sale but may more DESPERATELY need the monthly cash flow drain to stop.   Typical Lease Purchase arrangements allow the sale at a higher than market price (because the buyer has issues and cannot buy at market).

BENEFITS FOR THE BUYER: 
Even buyers with bruised credit need a place to live.  Besides, not all people with credit problems are deadbeats.  And not all are cashless or broke.  Some simply have too many medical bills, or ???  Some have just completed a bankruptcy, wherein their equity in their home was exempt.  Bankruptcy first, then sale of home...     

EVERYBODY WINS:
If solving a cash flow problem for a seller, and a credit availability problem for a buyer can solve problems in living for both, and put money in a realtors pocket, then it's worth looking into.

WHAT IF IT NEVER CLOSES?
Done right, the seller will evict the non-buyer, and use the retained down payment to repair any damage - pay mortgage payments while the house goes back on the market.  The seller has a chance to sell again, in a better market.  And the agent may even collect another commission.  

 
9:53am • #7
220,736 Points Hit Router Attended Rain Camp

Hello Jim, that's a heck of a misleading statistic.  Seems that a separate item should be shown for deferred purchases.  I know when we look at the stats for "Pending Sales" that some of those homes have been pending for more than a month owing to the length of time required to close some short-sales. 

I'd also note for purchasers or lease-option homes -- what is being done to ensure the seller does not lose the home to foreclosure or bankruptcy?  I've met a good number of buyers that have "lost" their lease-option arrangement because the seller could not or did not pay the underlying mortgage!  Thanks!   John
10:22am • #8
811,199 Points 91 Featured Posts Outside Blog Called Shot Master

Lonn Dugan (BIG Marketing Solutions)  Lonn I agree with your reasoning, however in my market they do not close.  They may be a big part of your market but in Atlanta...less than 10% will ever close.  I am not interested in them.
2:31pm • #9
811,199 Points 91 Featured Posts Outside Blog Called Shot Master

Alexander-Slocum REMAX Team - Vancouver WA Real Estate (RE/MAX equity group, inc. - Vancouver Washington) You are correct and this explains the large disparity between 'pending sales' and 'sold' homes.
2:33pm • #10
781,924 Points 71 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Wow we don't have many of those type of sales here at all! A lease purchase would not get reported that way here.
3:25pm • #11
811,199 Points 91 Featured Posts Outside Blog Called Shot Master

Bill Gassett Metrowest Massachusetts Real Estate (RE/MAX Executive Realty)   They are not really sales.  Many are getting into these deals without placing much upfront monies.  It is a very scary scenario, and something I would not advise my clients to do.
8:52pm • #12
179,006 Points 13 Featured Posts

Wow.

Jim, great insight, I was not aware of this.

I will admit that there has clearly been an up-tick in demand for real estate over the past couple of months.  That being said, there has been a disconnect between pending home sales and sold properties.  And there has been a further disconnect between mortgage purchase applications and pending home sales.

Mortgage purchase applications continue to remain weak despite record housing affordability levels.

 
10:11pm • #13
811,199 Points 91 Featured Posts Outside Blog Called Shot Master

Mark MacKenzie Real Estate Planning  Mark this one my wife Ellen noticed.  Sales in our area are way off, and all of a sudden they are pending sale, but the closing dates an a major chunk of the sales are all a few years away!
10:25pm • #14

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Jim Crawford ~ Atlanta Real Estate-ABR E-PRO

Atlanta, GA

More about me…

RE/MAX Paramount Properties

Address: REMAX Paramount Properties, 1605 Mansell Road Suite C, Alpharetta, GA, 30009

Office Phone: (888) 940-0074

Cell Phone: (678) 595-5283

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Atlanta real estate broker associate, real estate columnist for www.RealtyTimes.com, real estate speaker. Real estate marketing, Internet marketing for real estate, real estate coaching Feedjit Live Website Statistics


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