Some Atlanta Home Prices are at Record Lows
One of the most active parts of the market in Atlanta GA is the very bottom of the price point. There are literally thousands of homes that are for sale or that have recently sold under 30K. It’s a great time to become a landlord or to buy your first home. There is a problem though, and that is they aren’t so easy to get.
It’s not easy to get a Low Priced House!
There are several reasons why this is true:
The first time home buyers are out in force. Many foreclosures have a waiting period during which they will only sell to owner occupants. Most of the time the homes which are in basically livable condition which are priced below $50,000, have multiple offers from owner occupant buyers. There are sometimes upwards of 20 offers on a single property. There is not a set formula you can use to guarantee that you win the bid. Typically the listing agent notifies everyone that there are multiple bids and they call for “highest and best” by a certain date and time. You can then revise your offer to reflect your best offer. Sometimes they go way over, and sometimes they sell close to the list price. Usually the homes that are really obviously underpriced, in good condition and great neighborhoods have the greatest chance of going over, but they do not always go over list.
The second problem is once the owner occupant period passes, and then there are many investors out snapping up these homes. Cash is king in that world, and wins over financing almost every time. There are investors making all cash, as is offers and they are making it difficult for investors who want to get loans and do inspections. It is difficult but it is not impossible (persistence is key).
How it looks from the agent’s perspective:
I have had buyers who made offers on 18 properties before they finally got one. In 2009 I worked with an investor who bought 45 houses. We made 607 offers in order to successfully get 45 houses. When you look at it from my prospective, it really wasn’t worth it. Why not? Well the commissions are different on each listing. In this market they range from 5%, 4% or 3% of the sales price to the selling broker, some pay 2.5% some pay 2% and the ones that go to the auction pay 1%. So if the house is priced at 19,000, that means the commission could range from $190-$570. Now if I was just showing one house, $190- $570 wouldn’t be bad, but if you look at between 3 and 10 houses for each one you bid on, and then bid on ten before you get one…. well you can see that it barely covers the gas. There are some sellers who pay a flat rate to the selling broker of $1000-$1500 but most don’t. In order to be ethical, I can’t just show the houses that benefit my bottom line.
What is the solution?
I have instituted a plan for how I can help people take advantage of this incredible opportunity and buy a really low priced home. If you want to hire me to help you find and purchase property at the bottom of the market, my compensation schedule works like this. I have to make a minimum of $3,000 commission per house that you buy. This will cover me for the time it takes to find the homes, and look at them and prepare and submit the offers. This lets me relax and really work to find you the best house not just the first halfway decent option. We sign a buyer’s agency agreement, but it is not exclusive. You can buy property without me, just not one that I have shown you. The agreement states that if I show you a property and you buy it, you agree to pay me. I will then continue to find and show properties and help you make the bids. Then we take the commission that the seller pays and the buyer agrees to make up the difference between that and the $3,000.00 at closing.
Why would you do this?
Well first of all I have been a full time Realtor licensed in the Atlanta market for 26 years. I have always sold property at the entry level and I am very familiar with the neighborhoods and the values. I am also hands on with the house. I have been known to go into the crawl spaces with the clients and I do not hesitate to talk you OUT of buying a house if I think there is something very wrong with the house or the area. When you think about it, $3000.00 is approximately what the commission could be when someone buys a house in the range of $100,000. Of course commissions are negotiable and there is not a standard commission charged. Believe it or not, it takes much more work to buy a house in the 25-35K range than to buy one in the $100,000 range. There is not so much competition and the buyer doesn’t necessarily have to bid on ten to get one. Think of it like this, your total cost in acquiring the property may be $22,000 for the house. Depending on the commission paid by the listing agent, your balance due at closing might range from $1,500-$2,780 and the closing costs would be around $1,000. Your total cost might be in the range of $24,500-$26,000 for a house that you could live in with a very low payment or you may rent out for $850-1000 per month. That would be bringing in rent of 33-48% of the price of the house per year.
I think if you have tried to find a Realtor to help you with the process you may have found it was difficult to find someone to help you. The low compensation in the current system is the reason you may have trouble getting someone to assist you in the process. For the last couple of years I have been telling callers to simply contact the listing agent because for me it was not cost effective to try to help. I think the buyers at this end of the market need the help and benefit from the advice of an experienced agent. At the same time it could be helpful to realize that the process is typically very time consuming and involves a lot of effort to get to a successful conclusion. If you are interested in the program, please call me at 404-229-7848, or send me an email here to get started.