A Most Extreme Makeover Equals An Even More Extreme Foreclosure

Posted by Doug Quance on July 28th, 2008

Unfortunately, No Good Deed Ever Goes Unpunished

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In January 2005, Beazer Homes spearheaded the most intensive makeover in ABC’s Extreme Makeovers history at that time - completely demolishing the Harper family’s modest home in Lake City, GA - and building a 5385 sq. ft. mansion in its stead.

This ambitious project was completed in an unbelievable six days, using the talents of more than 1800 people - and the finished product was a beautiful four bedroom, four and a half bath home that included a home office, solarium and music room.

In addition to the construction of this new home - valued at $450,000 - Beazer Home’s employees and company partners raised an additional $250,000 in other contributions for the family including scholarships for their three children and a home maintenance fund.

That was 2005. Times were good for the Harpers. They were handed a mansion worth hundreds of thousands of dollars more than the home they were paying for… the home they bought for $120,000 back in 1999. Wouldn’t you like to live in a $450,000 home while paying a $120,000 mortgage?

Fast forward to July 2005 - the Harpers refinanced their FHA mortgage, adding another $10,000 to their mortgage balance. Not much of a cash-out refi, there. But in Sep 2006, they did do a cash-out refi for $300,000. Then another cash-out refi in May 2007 for $450,000. The couple reported to WSB-TV that the loan was for a construction business that failed.

Now the home is scheduled for auction on the Clayton County courthouse steps on August 5th - where I predict no one will step up with an offer anywhere near the $450,000 price tag. Why? Because it’s nowhere near a home worth half that price.

Just look at the difference in size with the neighbors.

Now, all the Internet is a buzz about how this family is a victim of the foreclosure crisis. May I submit another take on this? The only victims in this story are all the volunteers who helped with money, sweat and tears giving this family a home they would otherwise never had… JP Morgan Chase who foolishly loaned this much money using this property as collateral… and the U.S. taxpayer - who, one way or another, will wind up paying for this.

The Harpers are NOT the victims, here.

Hat tip to the Phoenix Real Estate Guy for the heads up.


As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

Is Your Granite Countertop Radioactive?

Posted by Doug Quance on July 28th, 2008

Radioactivity Is The Latest Worry For Homeowners

This just in from the Department of I Can’t Make This Stuff Up:

HOUSTON — A physics professor at Rice University is warning of a radioactive threat found in some kitchen countertops.

Some granite countertops contain levels of uranium high enough to be dangerous to humans, said Rice professor W.J. Llope.

Using a spectrometer, Llope tested 25 varieties of granite bought from Houston-area dealers. In some cases, he said, he found countertops that could expose homeowners to 100 millirems of radiation in just a few months — the annual exposure limit set by the Department of Energy for visitors to nuclear labs.

"There should be some oversight in this," Llope said in a story Saturday in the Houston Chronicle. "This isn’t something customers should have to do, not something they should have to lay awake worrying themselves to death about."

Llope’s findings remain unpublished, although he said he plans to seek publication in a peer-reviewed journal.

"I’m not claiming that people necessarily will get very sick or die of cancer within months," Llope said. "But if you spend 10 years in that kitchen there is a risk you may end up with cancer. It might or might not be attributed to granite. Who would know?"

A spokesman for the Marble Institute of America, a trade group that represents the granite industry, warned of "junk science." Jim Martinez also cited a University of Akron study that found granite varieties used in 85 percent of countertops were safe.

Still, Martinez said, the trade group is assembling scientists to develop a protocol for testing granite for radioactivity.

"There’s been a lot of junk science passed off as real science," said the spokesman, Jim Martinez. "We want to establish scientific standards and protocol that would allow consistent testing in a logical way."

As many as 1,600 varieties of granite from 64 countries are sold for household use in the United States. None of them is routinely tested for radioactivity.

I am waiting for the day they tell us EVERYTHING causes cancer.


As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

Time To Buy Real Estate In Atlanta?

Posted by Doug Quance on July 25th, 2008

Many Buyers Are Confused As They Try To Time The Market

There has been a great deal of discussion lately about whether or not someone should purchase real estate in these turbulent times. Most real estate agents say yes… while others say no.

Is it time to buy? The truth is - it depends… upon the buyer.

Buying real estate is not unlike buying stocks. If you are buying for the long term - then it makes perfectly good sense to buy… even when the market is falling. Why? Because you are buying long term. If you will not be holding the property for at least five years, then you should not buy. - unless it is a property of which you can not only add a good amount of value - but you have the intention and ability to do so. This is no different than the advice you would receive regarding the stocks - you should not invest money in the stock market that you will need within five years.

If you desire to move up into a more expensive home, this is a good time - if you have adequate equity or cash reserves. Why? Because if you are able to price your property at a price for which it will sell - you can take advantage of some very attractively priced opportunities. Many homes are currently selling for their pre-2004 prices. That’s great news for newlyweds - or at least recently-weds - who need to sell two homes to purchase a home together.

However, if you are moving down to a less expensive property - you should consider waiting, if at all possible. I have counseled many potential sellers to do just that - wait for a rebound in the market. There are circumstances whereby moving down can make economic sense, but that is the exception - not the rule.

First-time home buyers are especially confused. I know of several buyers who have passed up incredible opportunities - all because they felt the market might continue to decline. One buyer who was trying to live near the lake passed up the opportunity to live ON the lake because of the fear of declining prices. This buyer is not likely to get this opportunity again in his desired price range. Fear is a powerful emotion.

Many of the least qualified buyers who waited too long can no longer get financed, as many loan programs are no longer available -  and the underwriting guidelines for the remaining programs are now more restrictive. It could be a long time before these buyers will be qualified, again. FHA loan programs, which traditionally have not been credit score driven, now require the buyer to meet minimum credit requirements.

With the new housing bill making its way through Congress and soon on to the President, it appears that first-time home buyers will get a nice tax credit for 10% of their purchase - up to $7500… which might be enough of a stimulus to help the market bottom out. Top it off with the  relatively new HUD 100 loan program which allows buyers to pick up HUD properties with only $100 down, and we might start to get some needed relief in the Atlanta real estate market.

After prices start to rise, sellers will not be as negotiable as they are now… and this cycle will start all over again. My advice? If you are thinking of buying a home there’s no time like the present to get educated and familiar with the market so that you can decide for yourself if it is the right time for you.


As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.
 

Will Your Agent Sell You Down The River In A Heartbeat?

Posted by Doug Quance on July 20th, 2008

There Are Ways To Increase Your Odds For A Loyal Agent

I was recently talking with some investors about real estate. A few of them insist on using a buyer’s agent when making a purchase… but one of them was firmly against it. Of course, I had to inquire as to why.

"Are you kidding me?" he said, "Those greedy listing agents will do anything to get both ends of a deal… including pushng a low offer on the seller!"

Of course, I asked him if he was comfortable with the seller’s agent handling the transaction… and denying himself any representation.

"I wouldn’t be very comfortable as a novice… but after twenty deals, I know as much as most buyer’s agents." he replied.

So yesterday, while analyzing the market, I started to pay closer attention to how many agents are selling their own listings… and I was surprised at how low the list price / sales price ratios were in some instances. One of them had the sales price at a measly 61% of list price!

This is a complicated issue - and I am not going to pass blanket judgment regarding these types of sales, as I am simply not in possession of all the facts. I will state that many of the transactions that I saw were suspicious, to say the least.

How does a seller protect themselves from a disloyal agent?

Simply remove most of the incentive for an agent to be disloyal. Instead of allowing your listing agent to keep 100% of the total commission for selling the property without the assistance of a buyer’s agent - reduce it.

Let’s take a full service broker who offers his/her services for a brokerage fee of 6% of the sales price. This fee is usually shared equally between the listing agent and the buyer’s agent. But if there is no buyer’s agent - most brokers will earn the full 6%.

Many brokers offer a reduction in their brokerage fee when they procure the buyer without a buyer’s agent. Since listings ARE negotiable, you can require your prospective agent to agree to these terms - or move on to the next broker.

While your temptation to remove ALL of the incentive is understandable - don’t go there. There is always more work for the listing agent to do when  there is no buyer’s agent… so your broker should be compensated for this extra work.


As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

It Will Take Higher Gas Prices For Residents To Vote YES

As a long-time Gwinnett resident, I understand why the residents have avoided mass transit in the county. Gwinnetians want good and adequate roads - not trains. That’s the way it’s been for the last 18 years that MARTA has been trying to make inroads into Gwinnett.

Fellow broker Jeff Cape from Lavista Associates put it this way:

Gwinnett residents have declined MARTA’s advances for the last 18 years.

On Tuesday, we’ll likely turn MARTA away again.

Rising fuel prices seem to form the primary argument to bring MARTA to Gwinnett. The environmental aspect scores points, too.

But there are a few reasons that MARTA won’t sway us this time, either.

> We like our cars and our roads. We like our cars so much that even with gas at $4 per gallon, MARTA won’t be enough to get us out of them. We like our roads so much that we name them after the people who build them or in memory of people we admire.

> We won’t necessarily save money with MARTA. It costs $1.75 to make a one-way trip on MARTA. How far away you work from home could determine how cost-effective MARTA is.

I live in Norcross and work 10 minutes from home. If a station was built near Jimmy Carter Boulevard and I-85, I would have to drive to the station. I don’t think it would be worth a drive and a $1.75 ticket each way, or a monthly pass. If you work downtown, it might be worth the costs. Maybe.

> We like control of who rides with us. Most of us have seen the infamous YouTube video of "Soulja Girl" berating an elderly MARTA passenger who was minding her own business. The girl decided to give the older lady an impromptu performance that involved shouting profanities in her face.

Perform a simple search on YouTube for "crazy public transportation" and you will find many videos of various unfortunate passengers across the country. Who knows when you’ll find yourself riding along with someone who forgot to take their meds that day, or just got laid off and decides to take it out on fellow passengers. What if someone prefers not to wear clothes, as seen in a classic "Seinfeld" episode?

I’m not saying MARTA isn’t the right thing to do. It would make sense for one of the largest counties in the state to have some mode of public transportation. I just don’t think people are going to be that gung-ho to ride it. For that reason, MARTA won’t get a positive response on Tuesday.

Personally, I prefer to be in control of who gets naked in my immediate vicinity.

I think that pretty much says it all.



As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

The Declaration Of Independence Of The Thirteen Colonies

Posted by Doug Quance on July 4th, 2008

The unanimous Declaration of the thirteen united States of America,

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. –That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. —Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain [George III] is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.

He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.

He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.

He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.

He has kept among us, in times of peace, Standing Armies without the consent of our legislatures.

He has affected to render the Military independent of and superior to the Civil power.

He has combined with others to subject us to a jurisdiction foreign to our constitution and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:

For Quartering large bodies of armed troops among us:

For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:

For cutting off our Trade with all parts of the world:

For imposing Taxes on us without our Consent:

For depriving us, in many cases, of the benefits of Trial by Jury:

For transporting us beyond Seas to be tried for pretended offences:

For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:

For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:

For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.

He has abdicated Government here, by declaring us out of his Protection and waging War against us.

He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty and perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.

He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.

He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.

We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by the Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

The signers of the Declaration represented the new states as follows:

New Hampshire

Josiah Bartlett, William Whipple, Matthew Thornton

Massachusetts

John Hancock, Samuel Adams, John Adams, Robert Treat Paine, Elbridge Gerry

Rhode Island

Stephen Hopkins, William Ellery

Connecticut

Roger Sherman, Samuel Huntington, William Williams, Oliver Wolcott

New York

William Floyd, Philip Livingston, Francis Lewis, Lewis Morris

New Jersey

Richard Stockton, John Witherspoon, Francis Hopkinson, John Hart, Abraham Clark

Pennsylvania

Robert Morris, Benjamin Rush, Benjamin Franklin, John Morton, George Clymer, James Smith, George Taylor, James Wilson, George Ross

Delaware

Caesar Rodney, George Read, Thomas McKean

Maryland

Samuel Chase, William Paca, Thomas Stone, Charles Carroll of Carrollton

Virginia

George Wythe, Richard Henry Lee, Thomas Jefferson, Benjamin Harrison, Thomas Nelson, Jr., Francis Lightfoot Lee, Carter Braxton

North Carolina

William Hooper, Joseph Hewes, John Penn

South Carolina

Edward Rutledge, Thomas Heyward, Jr., Thomas Lynch, Jr., Arthur Middleton

Georgia

Button Gwinnett, Lyman Hall, George Walton

 

courtesy of Indiana University School of Law

 


As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

Remember: It’s Not What You Pay - It’s What You Get

Posted by Doug Quance on July 2nd, 2008

Don’t Trip Over A Dollar To Pick Up A Dime

Recently, I wrote about a good deal that got away because the buyer did not respond quickly to an opportunity. In a nutshell, a foreclosure went up for sale in the Sugarloaf Country Club for $829,900 which had recently sold for $1.45 million. My client did not respond quickly enough - and the home, as I predicted, went under contract.

I revisited that transaction today to see what I could learn.

Interestingly enough, the home sold for $841,000 with the seller paying $1997 towards closing costs… or roughly $9000 over the asking price.

Why did the buyer offer MORE than the asking price?

My guess is that the buyer’s agent knew that other offers on this desirable property were very likely… but that most people will submit low offers in the hope of stealing a property. His offer - above asking price - would obviously be viewed as superior to the offers of others.

Some properties are simply priced to move - and as a buyer, you need to realize a good deal when you see one. If you insist on making offers that are well-below the asking price - you’re likely to miss out on some good values… and more likely to never make a purchase.

Another way of looking at this - the buyer in this particular case spent an extra 1% to ensure he would get the home of his dreams. Just a measly 1% - for a home worth at least 20% more than the asking price.

Always be on the lookout for a good deal - but don’t blow it when you find one. 


As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

Many Former Sellers Have Become Reluctant Landlords

For the last few years, I usually ask my potential seller clients about whether or not they would consider leasing their property. In a buyer’s market, it is one way to stop the red ink on a vacant property… and it is my responsibility to advise my client as to their options.

Although tenants aren’t usually as demanding as a buyer might be, they do want a fresh, clean place to live - so new paint and carpet is always helpful. The more desirable the home is - the easier it will be to find a good tenant.

Many