A review of the 1st qtr ’12 stats shows interesting developments in the Atlanta real estate market that home sellers need to be aware of. A combination of factors seems to be acting in unison, specifically impacting distressed properties. The low rates along with rising rents have brought fence sitters into the market, large and small investors have returned and REO asset managers and lenders appear to be acting a bit faster. The inventory of distressed properties is dropping across all price points, most noteably in the under 200K group. In fact, data shows that under 200K homes in Atlanta are now in a “seller’s market”, the advantage buyer’s enjoyed is over.
So what does this mean to the “average” home seller in Atlanta? A lot.

So the data shows that the overall inventory of listings has dropped over the last year. It also shows that distressed homes are in a “seller’s market” across all price points; buyers are still looking at them as much as conventional listings. Conventional listings have many advantages over distressed listings however unless accurately priced, buyers are unlikely to pay attention. The chart below highlights the importance of accurate pricing and the advantages that brings.

The market is always changing so understanding current market conditions is critical. Accurate pricing is also key and it’s what we do best, so when you want to know what your house is worth, contact us. We’ll look at it from both the sales side and the appraisal side.

Selection of a real estate agent in Atlanta remains perhaps the single most important aspect of a real estate transaction. Yet many buyers and sellers continue to not adequately qualify their representative in what is likely to be the largest financial transaction of their lives. We’re curious and would appreciate input from both Atlanta home buyers and sellers, a few minutes of your time answering these poll questions is greatly appreciated.

Selection of a real estate agent in Atlanta remains perhaps the single most important aspect of a real estate transaction. Yet many buyers and sellers continue to not adequately qualify their representative in what is likely to be the largest financial transaction of their lives. We’re curious and would appreciate input from both Atlanta home buyers and sellers, a few minutes of your time answering these poll questions is greatly appreciated.

With 42.5% of all Atlanta home sales in the 1st qtr of ’12 distressed, the impact of distressed homes on the greater Atlanta housing market is a significant one. They are present in force and their impact influences every aspect of the Atlanta real estate market, they are expected to be around for the foreseeable future.

The charts below illustrate just how significant an impact distressed homes have on Atlanta real estate market conditions. While Atlanta is too large an area to be considered as one, the charts below (courtesy of Chartmasters) illustrate that while some areas are climbing out of the mud, others remain deeply mired.

A few key points:

• Statistics show that the Atlanta real estate market bottomed out in January 2010. To some extent it has been a prolonged bottom from ’08 on
• 42.5% of homes sales in Atlanta were distressed in 1^st qtr 2012
• Over the last year, distressed home sales in Atlanta ranged between 38.9% and 42.5% of all sales
• 57.9% of sales under 100K, 41.8% of sales between 100K-200K and 20% of sales over 1M were distressed in the 1^st qtr 2012
• It is a seller’s market for distressed properties in Atlanta across all price points with a very low overall  “months of supply” of 2.7
• It is a buyer’s market for non-distressed properties in Atlanta above 100K with an 8.1 “months of supply” volume. Under 100K is a seller’s market for non-distressed homes
• The Dunwoody area had the lowest percentage of distressed property sales for 1^st qtr 2012 at 8.1%
• Eastern Gwinnett County had the highest percentage of distressed property sales for 1^st qtr 2012 at 66.1%

The charts below reflect the stats from the Atlanta real estate market for the 1^st quarter of 2012. These are great indicators of the overall health of the market and of sub markets within the greater Atlanta real estate market. However, we see differences even within the submarkets, often even to school district so keep this in perspective. If you have specific questions as to what the housing trends in your area are, just contact us and sign up below the charts for the free Altos weekly updates for your zip code.

Find your MLS area by clicking here to see the MLS area map.

A review of Atlanta housing trends from 1^st quarter ’11 to 1^st quarter ’12 shows that parts of three counties in the greater Atlanta real estate market saw the largest percentage increase in home sales.  Inventory continues to drop all over, however the percentage of distressed sales (short sales and foreclosures) remains over 50% in 12 of the 41 MLS areas and over 40% in another 7 areas considered “metro Atlanta”. In an area of Gwinnett County, distressed inventory is over 66%. Yet many of these same areas have low months of supply of inventory. Buyers in many areas can’t find a home but the data shows ample inventory and dropping values; what gives?

The “what” is the influence of distressed inventory. This cannot be overstated or ignored; while Atlanta didn’t have the same bubble as other areas did, the area is heavily impacted by distressed homes. Atlanta sprawled like a spilled beer and saw unbridled and unsustainable new construction, speculation and the continuing problem of mortgage fraud. Short sales also remain a significant factor, many eventually foreclosing and going back to the lender. The reality is that distressed homes impact all facets of this market and will for several years.

Consider the overall picture:

• Distressed homes were 57.9% of sales under 100K in 1^st qtr ’12
• Distressed homes were 41.8% of sales 100K-199K in 1st qtr ’12
• Distressed homes were 42.5% of all sales in 1st qtr ’12

Their impact is felt across every aspect of Atlanta real estate; appraisal issues, underwriting issues, buyer attitudes, seller attitudes, list prices…all areas of real estate are affected. But this is the market and successful buyers and sellers educate themselves, adapt and overcome. Quality homes in areas with demonstrated appeal will sell; buyers continue to enjoy ridiculously low rates and those properly prepared will find what they like. Caution and prudence remain the key buzz words.

More detailed info is available for review. We invite you to sign up below for free weekly Altos Data reports on over 100 area zips 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.

So word is just getting out about “reverse staging”? The idea that this is a developing fraud trick is very old news to those of us in the field. Instead of stripping and destroying the home on the way out, the idea is just to do “light damage”, sell the home and flip for a profit.

The methods by which banks and other lending institutions value property never ceases to amaze me, it seems whatever is cheapest is the route taken. It makes no sense not to complete appraisals on distressed assets. How is soliciting a BPO from a broker that is making virtually nothing for the work productive?  If the broker is rendering an opinion shouldn’t they be held to USPAP? And an agent is obviously going to work to secure the listing, is that not a conflict of interest? It’s also great to see the Appraisal Institute doing its usually nothing with regard to issues with BPOs.

From Appraisal Buzz:

Reverse staging is designed to make a house look less valuable than it actually is. The goal is to accentuate the negative features of a home in order to change the perceived value of the property.

It involves a short sale where a Broker Price Opinion (BPO) is all that is required to determine the value of a property. It is often done by real estate agents or investors who are in collusion with a buyer who plans to then flip the house for a much higher price, said Ann Fulmer, Vice President of Industry Relations at Interthinx. Fulmer, an attorney, has represented lenders in mortgage fraud cases and prosecuted mortgage fraud as an assistant district attorney during her career.

It can involve anything from simply not fixing broken windows, or not taking care of the grass, to actually breaking things, or punching holes in the walls. She says there are real estate “gurus” all over the Internet who offer advice on how to do this.  The worst case I’ve heard about is someone who went out and bought possum urine and spread it all over the house and turned on the heat and let it marinate for a few days,” Fulmer said. “It looked like a Hazmat situation it was so foul,” she said. “Certainly, if you walk in there and it smells like that, it’s going to have a negative effect on your opinion of value.”

If these same folks put half the energy they commit to trying to scam the word into something productive things would be a lot better.

Short sales occur when lenders allow homeowners to sell their properties for less than what they owe the bank. It is often done to avoid foreclosure which can cost both the lender and the homeowner additional fees. A BPO is ordered by the lender in a short sale to determine how much they should expect to recoup from the sale of the property.

“That’s part of the problem,” Fulmer said. “With BPOs it can literally be a drive by, or even just looking at MLS listings. One of the problems with a BPO is you don’t have USPAP and you’d don’t have appraisers who have been trained in how to develop a market opinion. It’s just their best guess for a fire sale price. The BPOs pay so little. It’s supposed to be a Broker’s opinion, but a lot of times that’s not what is happening because it just doesn’t pay.”

Several states are moving to make BPO’s illegal – and I think North Carolina has already. With as much meddling as Washington has done to “help” the real estate market, how can they not be on this? Oh that’s right, we’re talking about Washington and “too big to fail” banks…enough said.

Fulton County Assessor and Appraiser accused of incompetence refuses to resign

Appraisal issues have been at the center of the real estate boom and bust. In the current environment, appraisal issues continue to be front and center when contracts go bad. Much of problem can be attributed to the “help” provided by Washington but just as much blame belongs on the industry itself; incompetent, lazy and dishonest appraisers remain in the field contributing to the problems.  Well perhaps in Atlanta, some positive movement is starting.

The AJC broke a story that yet another member of the Fulton County Assessor’s Board faces an investigation by the Georgia Real Estate Commission and Appraisers Board.

Embattled Fulton County assessors board member Donald Johnson is refusing to resign, even though the county commissioner who appointed him has asked him to step down.  Johnson, a self-employed professional appraiser based in south Fulton, has been accused by the state of incompetence, negligence and falsifying documents in several appraisals for private clients, which The Atlanta Journal-Constitution first reported last week. The Georgia Real Estate Commission and Appraisers Board (GREAB) has moved to revoke his license to appraise residential real estate in Georgia.

Johnson is accused of overvaluing three Atlanta quadruplexes and a townhouse, all in areas rife with mortgage fraud, between 2005 and 2007 during the height of the housing bubble. Through his attorney, he has denied taking part in fraud. In one case, the state contends, he set a quadruplex’s value at $345,000, ignoring nearby sales of $162,500 and using data provided by the mortgage loan originator and a closing attorney. In another case, he reported that a property hadn’t been sold within the past year, even though a new owner had bought it 14 days earlier and was already trying to refinance.

In 2007, the state charges, Johnson and his daughter valued a Moreland Avenue townhouse at $240,000 and, rather than referencing sales on the same street which ranged from $150,000 to $179,000, they used three properties more than a mile away.

The accusations have come to light just as the assessor’s office prepares to mail out hundreds of thousands of tax assessment notices, starting May 5, informing homeowners what their properties are worth. Johnson’s case has invited more criticism from taxpayer advocates who contend Fulton systematically inflates values. “Pressure needs to be brought to bear,” Fulton County Taxpayers Foundation Executive Director Barbara Payne said. “We need people at the head of this department, that is completely dysfunctional, to be able to appraise properties fairly.”

This isn’t an isolated incident and Johnson isn’t the only one that has been investigated over the years. But just how did these clearly suspect appraisals get through the underwriting process and the review process? And isn’t this type of position supposed to be one that sets the standards? They are after all, setting the assessed values and establishing what your home is worth for tax purposes.

GREAB has also been busy checking into approximately 200 reports of inaccurate appraisals, almost all lower than the owners expected. The only question here is are the owners cognizant of what the current appraisal standards are? If they’re filing because they are angry about a low value, then it’s pointless. If appraiser malfeasance is present – take licenses and clean up this industry.

“Sovereign citizens”; brothers in arms with the “taxes are illegal” folks are at it again in Atlanta. The scammers are busy exploiting opportunities in real estate, from “helping” with troubled mortgages, investments, adverse possessions…to illegal occupation of vacant homes, these roaches will scam anyone, anywhere, anytime. The buffet of BS that these miscreants serve up is offered those in the most difficult of circumstances with only one objective; separate them from any remaining assets.

Recently Received Email from an HOA President in North Atlanta

…For the past four years 3XX2 XXXX CXXX Court has been vacant. Off and on over the years we have seen various For Sale signs but nothing that lasted longer than a few weeks. There was never a clear understanding who was putting the house up for sale, as our understanding was the prior occupant was allowing it to go in to foreclosure.

On Thursday, February 22nd we noticed some activity at the house and naturally became curious if the house was being shown again. Because the house had been vacant for so long, a resident of the neighborhood was storing his boat along the side of the yard – this is something the other residents were aware of and often looked out for. Because of this, the neighboring house to 3XX2 XXXX CX Court went and introduced himself to this gentleman indicating that he knew the owner of the boat and would have it moved ASAP. At this time, the gentleman identified himself as the purchaser of the house. Without incident, the boat was moved at which time the “purchaser” of the home proceeded to place NO TRESPASSING signs along the fence. This prompted some concern and some investigative work by those in our small neighborhood.

After contacting the bank, we learned that the house had not been sold but was in fact going in to foreclosure (being placed in auction in XXXXX, 2012). They proceeded to say that the situation did not look good and that we should be aware that the occupants may be “squatters”. Upon hearing this we immediately contacted local authorities. This was on Wednesday, February 29th. The authorities arrived and were able to communicate with a woman at the residence – she introduced herself as a SOVEREIGN CITITZEN and provided the officer with a Quit Claim Deed to that location. The officers advised that they were unable to evict at this time however, we should contact the bank and advise them of the situation and that we were holding them liable for any damages done by these tenants.

On Thursday, March 1st the bank was contacted. At that time they advised that there were not responsible for the home and wanted nothing to do with the situation…complete email

As much as I’d like to impugn the lender, legally, the bank is correct; if it’s not their home then it’s not their responsibility…yet. That’s the main reason so many homes are vandalized and stripped prior to foreclosure, and something that these foreclosure appraisal videos show just a small sample of.

Some recent activity of Sovereign Citizens in Atlanta as well as just good old vile scoundrels:

House squatters arrested in Atlanta and here

Man Gave Tours of Stolen Homes in Atlanta

These issues are not unique to Atlanta, we need to ensure that folks that we cross paths with that are in trouble are properly educated and understand their options. The necessity to work with verified, reputable organizations cannot be overstated.

I think the two most overused current real estate terms are “green” and “investor”. The “green” nonsense is a fabulous industry fabrication and “investor” has taken on a completely different definition over the last few years. I am barraged by buyers that want to “buy investment homes in Atlanta”; when I ask why, I’m usually met with silence. There’s an inability to answer questions like:

• What is the source of funds
• Where do you want to buy
• What price point, detached or attached
• Are you buying to rent or flip
• Do you have a reliable contractor
• Tell me what constitutes success

The silence is often deafening. In cases like this, I’m more than happy to throw a wet blanket on a financial disaster in the making. But not every call or email is a novice; working with pros….that’s a pleasure. So here’s my thumbnail of Atlanta real estate investors:

Rookies
The infomercial nonsense makes investing and flipping look easy and naive pie eyed novices take it hook line and sinker. Problems tend to be many and include initially overpaying for property, underestimating repairs, overestimating value after repair and not adequately securing and understanding financing. Oh…and then that other thing – arranging for, managing and keeping budgets level with contractors.

Double AA
Atlanta investors that make it out of rookie ball usually do so with a few bumps, bruises and financial hits; but none fatal. Success at this level typically means a  quality agent has been found to handle purchases and sales, quality and trustworthy contractors to estimate and do the work and a reliable, reasonable source of funds secured. This investor understands that this is a business and he treats it as such, all of the time. Goals are set, plans made and followed.

Pros
We have skilled professional real estate investors in Atlanta, even international ones. With the recent announcement that the feds will sell REOs in bulk to investors, we’ll have more. The professional investor keeps it “all business” and typically has either their own dedicated staff of needed personnel or has a few of each readily available. This is a pure business operation, it’s all about numbers and profit as often private financing demands return on investment.

Here’s the takeaway – investing in real estate is not an HGTV weekend adventure. In fact, many of the REO homes out there were taken from “investors”. Many of the foreclosure appraisals that I do are incomplete debacles; partially rehabbed (often poorly) with little to no forethought. There remain unscrupulous real estate agents, appraisers, lenders; contractors….that will eviscerate an inexperienced “investor”.

The Atlanta housing market is in the top tier of the nation when it comes to distressed homes; it’s also in the top tier of mortgage fraud. If those few simple questions above can’t be answered immediately, stay on the bench and off the field as it won’t end pretty.

Very Hot and Successful Atlanta Real Estate Agent

I was way ahead of the hotness curve on this one. Back in 2/11 we revealed studies that indicated that Good Looking Agents Sell More Homes and now the industry is playing catch up. I was moved by the article titled “ I Wasn’t Going To Buy This House Until I Saw The Realtor’s Headshot On The Sign” and after reviewing that, I knew this was a topic that we had to comment upon. And now the rest of the pack finally gets wise to what we already know….as reported by Business Insider:

A recent study in Applied Financial Economics explores the relationship between how beautiful an agent is and how quickly he/she sells a property and for what price.

Thankfully, the econ blog Big Think broke down the hellishly scholastic-sounding “Broker beauty and boon: a study of physical attractiveness and its effect on real estate brokers’ income and productivity” into comprehensible language, and turns out the research contains a few interesting quasi-facts.

Of course, the points below are either believable or guffaw-able, depending on, say, personal experience, price point, and geographic market. Have an opinion of your own? Leave it in the comments. Here goes:

1  Male agents (representing both buyer and seller) tend to rep houses with lower prices.

2  Beautiful agents tend to yield higher closing prices.

3  Good news for those trying to sell your home: “the effect on house prices of having an attractive listing agent is about twice as large as that of an attractive selling agent.”

4  Just because your selling agent is attractive doesn’t mean that your property will sell faster; in fact, it’s quite the opposite. You might learn to be patient and soak up all that extra time spent in the presence of hotness.

5  In terms of commissions, pretty agents tend to sell at higher price points but sell fewer properties than their, ah, uglier colleagues.

Racial bonus round: “The study also finds that non-white listing agents are associated with lower final prices and both non-white listing agents and selling agents are associated with longer times on the market.”