Distressed Sales
{ Monday, February 20th, 2012 }
Advice On Buying A Foreclosure
I receive dozens of email newsletters each day. Many don’t seem to deliver anything of actual value- they’re essentially thinly veiled sales pitches. Others, like the one that I receive from Atlanta closing attorneys Neel & Robinson, are chuck full of good real estate information.
Here’s some advice that they just sent out regarding the purchase of a foreclosures (or as banks often times refer to them as, REO properties). For those of you thinking about buying a foreclosure in a community with a homeowners assocation (townhomes, condominiums, etc.), this is a pretty important read:
When an REO (“Real Estate Owned”) property is being sold, there are several additional steps, considerations, and possible delays if the property is a condo or in any kind of HOA (Homeowners Association). Each of these steps can add days to the pre-closing period, due to the difficulty in getting information and getting the seller’s approval.
Here are the steps involved with every REO property that has mandatory dues:
- The closing attorney must have a copy of the recorded DUP (Deed Under Power = foreclosure deed) to order the HOA letter. The HOA dues prior to the foreclosure date are wiped out, but the HOA must see the actual recorded DUP before providing a status letter.
- Need contact name, phone, email for the HOA – the foreclosing bank has never had any contact with the HOA, so the listing agent needs to investigate and then provide this info to the closing attorney.
- Many HOA management companies now require prepayment (by credit card) from the seller or listing agent to release the HOA status letter. These fees can run as high as $175. The closing attorney can order the letter, but the HOA will not release the letter without the payment prior to closing.
- The seller’s attorneys usually require a longer review time if there is an HOA, sometimes up to a week, once the HOA letter is prepaid, prepared, and received. This is in addition to the standard 72 hours the seller’s attorneys require to review the final HUD-1.
Edit Credit: Neel & Robinson (note that all hyperlinks were added by A is for Atlanta)
{ Monday, February 13th, 2012 }
Getting Paid To Short Sell Your Home?
Occupy Glen Iris!
In an effort to cut their losses, banks are paying some struggling homeowners as much as $35,000 to sell their homes before they end up in foreclosure. The deals are aimed at incentivizing homeowners who owe more on their home than it is worth and who are seriously delinquent on their payments to sell their homes in a short sale.
While I don’t expect to see a stampede of home sellers deciding to stop paying their mortgages because of an article that they read on the interweb, it is an interesting turn of events for a number of reasons. Banks are essentially acknowledging what they’ve known for a very long time: foreclosures cost them more than short sales. From the same article:
Homeowners not only stop paying their mortgages but they stop paying property taxes and conducting normal maintenance as well. Roofs, siding, plumbing and other parts of the home deteriorate and the property loses value. By the time banks take possession, they’re out tens of thousands of dollars.
Perhaps more importantly, it suggests that there’s some order being applied to the morass of housing distress. Short sales are by no means a walk in the park, but I’ll take any sign of lender “enthusiasm” for them as a sign that we’re moving in the right direction when it comes to distressed property.
Edit Credit: CNN.com (Hat Tip: Kevin Jones)
{ Tuesday, January 24th, 2012 }
Private Remarks Hall of Fame
If you’ve ever browsed real estate online, you’re probably very familiar with “Public Remarks”. It’s the area where you typically learn about the “Chef’s Kitchen”, “Spa-like” master bathroom, and spacious recreation/play room. It’s the meat ‘n potatoes of the listing.
What you may not be familiar with is what’s called “Private Remarks”. This is where real estate agents communicate showing instructions, pet warnings and additional information that they think might be pertinent for other agents to communicate to their clients. As you might expect, private remarks are typically pretty boring. Today, however, I ran across some private remarks that I just couldn’t help but share:
PLEASE BE AWARE THAT OWNERS HAD CATS AND THERE IS A STRONG CAT URINE SMELL SINCE THE HOUSE HAS BEEN SITTING VACANT WITH LITTLE AIR CIRCULATION
These remarks were attached to a home that has already been sold, so clearly they didn’t scare the eventual buyer too much. On some level, they’re quite appropriate- imagine walking into that home without the cat urine warning? Definitely something I’d like to know before showing a home.
Of course, on the other hand, it’s definitely information that might lead me to skip the house entirely. I can’t speak for my buyer clients, but the stench of cat urine is usually an unspoken deal killer.
Never a dull moment, folks. Never a dull moment…
{ Tuesday, November 8th, 2011 }
Vacant Condos Gone Wild
It’s no secret that Atlanta is oversupplied with condominiums, nor is there a shortage of finger pointing as to who’s responsible for the glut. The question now facing current residents, developers (and their lenders) is how to deal with the remaining vacant supply.
I’m not an expert in such matters, but I can tell you this: finding out that one of your vacant, unsold units is being used as storage depot for 122 pounds of marijuana is probably not the “spark” in the market that you were looking for. Such was the case a few weeks ago at Sky Lofts, a condominium development in the West End. From WSB-TV:
An Atlanta police narcotics team got called to the complex after a real estate agent made an unusual discovery in a vacant condo owned by the developer.
“Once officers got inside the third floor, they found an AK-47 assault rifle, a pistol and bales of marijuana, in total, 122 pounds of it,” resident Zaven O’Bryant said.
I can’t imagine what the real estate agent’s reaction was when he or she walked in on the AK and “bales” of marijuana. I’ve definitely been distracted by some pretty strange odors and objects when viewing homes, but I’m usually pretty good at keeping myself and my clients on point, so that we can judge the home itself on its own merits. In this case, probably not possible.
The real shame is the impact on those who currently own units in Sky Lofts. The development has been on the market, according to FMLS, for nearly four and a half years. Developer owned units have seen their prices slashed upwards of 30%, despite significant down payment assistance programs in place and jumbo agent commission promotions. And yet, there’s still plenty of inventory available. Only Kreskin can tell you how much of an impact that this latest bout of bad publicity will have on sales volume… but it’s hard to imagine that this will be viewed as an additional amenity.
Yet another reason why home vacancies matter. Nothing good comes of it, not on a balance sheet, not in a community.
{ Monday, August 22nd, 2011 }
A Tale of Two Cities
Spent some time last week looking at townhouses in Sandy Springs. Inevitably, I hit up a few developments that were conceived pre-bust. A few of them haven’t seemed to get their mojo back yet:
These are two separate developments, probably less than two miles from one another. Not easy on the eyes, especially for those of us that are rooting so heartily for a real estate recovery. To protect the innocent, I’m going to keep the name of the developments and developer to myself. Think you know where these pictures were taken? Email me your guess- if you’re right, you’ll win an AisForAtlanta prize pack.
To the southwest a couple of miles in Vinings, a radically different picture:
Yes, that’s an active construction site! Not only that, but a staffed sales center, where I was told that the units under construction have already been pre-sold, and that additional construction will begin soon on the remaining available units.
The difference between the two developments? Exhibit A is still owned by the original developer. They’re sitting on dozens of lots that were purchased, developed and financed pre-bust… which means that the townhomes are priced accordingly.
Exhibit B, on the other hand, was purchased post-bust. The current builder bought the lots from bank at a steep discount, allowing them to build and price their townhomes accordingly.
The market, obviously, appreciates the difference.
