Are you suffering from Doom Overload? Has it gotten to the point you would like to turn off the news and hear nothing but silence while your mind tries to assimilate the overload of information you are constantly being bombarded with?
Specifically I want to help you understand what is REALLY happening in the real estate market, and more specifically, the market in our LOCAL area.
The first thing to understand is that Real Estate is LOCAL. What happens in Atlanta, stays in Atlanta!
I want to educate you so that you can easily understand the real market, and help dispel the doom as well. I want to define for you what a foreclosure, pre-foreclosure, and short sale listing is. Then, saving the best for last, I will tell you how these properties may or may not affect the Dawson & Lumpkin County area.
A home “in” foreclosure is a home that the seller has not been able to pay the mortgage payment and it has been scheduled for an actual foreclosure date. These dates are always the first Tuesday of every month. In Georgia, it is not a court hearing. In Georgia, the bank can actually file notice to foreclose, set the date, and the home is sold on the courthouse steps on that date. In most cases, the bank (the mortgage holder) will send a representative to actually purchase back the home. No matter what you hear on television, homes are not being sold for pennies on the dollar to whomever shows up with the money. Once the bank purchases back the home, it is now a “foreclosed” property and OWNED by the bank. The bank will turn these properties (sometimes called REO properties) over to a Realtor who will list the home for sale and enter that listing in the multiple listing service. This service makes the home available to hundreds and thousands of agents , and thus to people searching to buy a home. If you have an agent representing you in your home search, your agent would prepare a normal purchase and sale offer and present it to the agent who listed the property, who will then present the offer to purchase to the bank that owns the property. The entire transaction is handled exactly like a “normal” purchase and sale would be, with the exception of a few requirements the bank may have to accept offers.
There are terrible rumors that you can purchase these homes for pennies on the dollar. However, once the bank has taken back possession of the property they are even less likely to consider ‘low-ball’offers to purchase. Why? Because they not only have the balance of the loan owed on the property, they have spent thousands of dollars to hire attorneys and assumed all the costs of the legal proceeding to have the home foreclosed and re-purchased. If you would like to purchase a home listed and owned by a bank, the best advice is to offer as close to the asking price as possible, assuring a more receptive response to your offer, and more serious consideration.
You are searching the internet and you find a listing that says “pre-foreclosure”. What does this mean? It means that the home is still actually owned and may be occupied by someone who is in danger of foreclosure because they cannot pay their mortgage. The home has not yet been sold back to the bank at a foreclosure sale.
Offers to purchase will be presented by the agent who represents you to the listing agent, who will present the offer to the actual seller/owner of the property. The bank is not involved in this negotiation.
These properties could be the most likely candidates for the “good deal” because the sellers are desperate not to have a foreclosure on their credit. Assuming that there is enough equity to pay for the sale and pay off their mortgage note, they will most likely accept thousands less than in a normal market to avoid the loss of their home and their credit altogether.
In some cases however, sellers do not have enough equity to cover the expenses of selling and paying off their mortgage note. It could be that in their neighborhood prices have dropped, or they haven’t owned the home long enough to build up equity. What can a seller do when they owe more on the home than it can be sold for? The answer is a Short Sale.
Short Sale Listings
A short sale is one in which the bank having knowledge of the seller’s distress and the current market conditions of this particular property, will actually accept a lesser payoff so that the home can be sold and they can avoid the costly foreclosure process. It is an offer to purchase a home, BEFORE it is scheduled for foreclosure, for much LESS than the actual mortgage balance on the home.
How does this work?
Imagine you are the bank. You already have thousands of homes and you do not want to foreclose on any more homes. The home in question is in a very slow market, or the value has dropped for whatever reason. The homeowner has not paid the mortgage note for several months. You now have to spend money to hire an attorney to proceed to legally foreclose on the property. Then you will have yet another home to put back on the market. You already know that the value has decreased. You already know that the market is slow. You realize it may take months to sell the home, and that it will have to be sold for far less than what you have spent on the home considering the mortgage balance, and the expenses of the foreclosure. In addition, you now have to pay an agency to market and sell the home, costing you even more money. To accept an offer to purchase this home, for even thousands below the mortgage balance owed, is a smart and acceptable deal for the bank. In doing so, they avoid the extra costs involved in the foreclosure process.
These can also be attractive deals to the buyers looking for a “good deal”. However, I must warn you that this is a long and bumpy road that requires patience and flexibility. This is not the opportunity for the home buyer who needs to locate and close on a home in 30-45 days. In some cases, the deal can fall apart mid-stream and you would have to walk away and begin your search all over again. If you are determined, patient and flexible this could be worth the effort and the wait.
Now, how does all of this pertain to the Dawson/Lumpkin County area?
I said earlier, What happens in Atlanta, stays in Atlanta!”. What I mean by that is that real estate is local. While it is true that in many markets across our nation the foreclosure rate is astounding, it is not the case here in our beautiful North Georgia Mountains!
Atlanta- metro, does have significant losses. There are areas that will take many years to recover from the devastating effects of the foreclosures. Dawson & Lumpkin Counties were not affected in this way. While it is true there are some foreclosed properties available, the numbers are very low. Today in a search for HUD homes in Dahlonega, there is only one listing which is currently pending sale. In a search for homes between $80,000 and $150,000 in Dahlonega, only ONE foreclosed property listing is available in the multiple listing service.
Don’t believe everything you hear. There are no “secret” listings that are only available to agents, or those who are willing to pay for information on. Believe me, if there’s a property owned by a bank in our area it is LISTED and available for sale to any agent with a buyer.
Bottom Line..what is the BEST way to get a great deal?
You Should Be Pre-Qualified. Before you begin your home search, find a lender and get a pre-qualification letter. This not only helps you decide the correct price range for your search, it assists your ability to have your offer seriously considered by a seller. An offer with a letter of pre-qualification could very well be accepted over a higher offer which does not have a letter.
You Should Have A Buyers Agent. You need to have someone representing you in your search and to assist you in the negotiations. This agent would represent you and look out for your best interest. As a buyers agent, I sign all my clients up on Client Gateway. This is a service that will automatically email you with available listings that fit your criteria on a daily basis. It’s an immediate notification of a listing that fits your search criteria. This eliminates the problem of finding out about the listing too late to make an offer.
You shouldn't expect a good agent to write a LOW BALL offer for you. Do expect your agent to research the property you are interested in and make sure the home’s asking price is within an acceptable parameter. If the price is fair, expect to offer as close to the listing price as possible. Most of the time, a real low ball offer is an insult to a seller. Then rather than sending a counter offer, they just reject the offer completely and refuse to negotiate.
You Shouldn't Expect People To Wait On You While there may be some real desperate sellers out there, and some once in awhile “steals”, they are few and far between. The best deals are moved upon very quickly. So don’t expect the real “steal of a deal” to wait for you for a week while you decide if you want to make an offer or not. Too many times I have shown properties to buyers who wanted to “take the weekend and think about it”, only to be told on Monday morning that the seller accepted an offer over the weekend. It’s always hard to break that news to buyers who finally decided that this was the home for them, and then have to start all over again.
You Should Be Open-Minded Any home for sale may be the best deal for you. Whether it’s a foreclosure, pre-foreclosure, short sale listing, or just a homeowner looking to relocate. If you find the home you love, the price is reasonable, and the terms are acceptable, make an offer!
Call Kimberly Wilson, Your Available Dawsonville Real Estate Specialist!
Broker Associate, Power Realty Partners
404-543-5384 Cell 770-888-7653 Office