for my new book, I have been interviewing real estate industry experts. This interview is with Atlanta Realtor, Mike Eastman. His contact information is at the end of this post. Sign up for the newsletter, to the right of the blog, for book updates and other information.
1. HHow would you describe the market in Atlanta on January 28, 2009.
Mike Eastman, Atlanta Realtor, www.TheIvyRealtor.com, says, "This is the year of the Hot Deals for my clients.” He recently negotiated a contract during the last week of December on a brand-new home in a new development by Decatur, which was finalized at $200,000 below the original list price. At the closing, the builder (who had gone belly up, as had the bank financing the deal) was counting his blessings - his health and his family, while letting my client know he was broke. There would be no opportunity to get any more work done on the house after closing as builders will traditionally do. My client was very respectful of his position and situation, as was I. She got the home for $575,000 with an all-cash offer (a very powerful bargaining chip) even though the builder was assuming a material loss for anything below $650,000 on a home originally listed at close to $800,000. He was essentially paying her to buy his house. Understand that builders like this one make tons of money some years and have years like 2008, its part of the game. Still, we felt his pain. The positive side of that is that the market is so soft right now that some very striking deals are available. They are not everywhere and going into this, even I had no idea how much this builder would come down in price. But this turned into a dramatic example of what is possible in this market. There is actually still one brand-new home by this builder left in this new development where my client bought."
By the way," this buyer actually didn't approach her search looking for bargains. She looked for an entire year with a very critical eye towards the type of house she was willing to buy. Once she found the house she could love, she switched gears and negotiated hard for the best price and was supported by the strength of an all-cash offer. We did have some clue that a bargain might be had with this home, however, as the builder had turned off the home's utilities - to save money."
"This is an excellent case study of someone who truly got a sizzling hot deal. She plans to live in the home long-term and is likely to profit from the deal by well over the $200,000 she saved by making her move in 2008 - the best climate for buyers that we will ever see in our lifetimes, which is continuing into 2009."
Mike says, "This is the best market buyers will ever see. Sellers looking to move up are likely to have to sell at a marginal loss. I found a home in Huntcliff this week that resold after less than two years at a $75,000 loss, but that buyer is likely to more than make up for it on the purchase of a new home. Huntcliff is otherwise a very stagnant market."
2. What is the average length of time a house sits on the market before it is sold? Mike: “It depends entirely on the price. I just submitted an offer for a client on a home that was in foreclosure, priced $200,000 below its actual value ($600,000-plus) and the home received seven other offers at the same time. My client offered $40,000 above the asking price – and still didn’t get the home. I’m taking on a listing for another client, which has been on the market for over 18 months. This is an executive home she bought for around $394,000 and renovated, hoped to make a profit on, with a starting price around $714,000. She’s a seasoned investor and three to four years ago this may have worked very well for her. But not in this market.”
3. What percent of the homes are being sold that are either in foreclosure or bank owned versus sold by owner? Question 3 to 7: Mike covers the metro Atlanta market so this would be a hard generalization to make, but there are a tremendous number of homes in foreclosure right now. Here are some examples of what we are seeing:
There is a $1.125 million home (zillow estimate) on the market for $585,000 - near Collier Hills – a coveted, expensive area in metro Atlanta. The home has an unfinished renovation that will require $30,000 to $40,000 to complete.
There is a gorgeous home in the Rivermont subdivision in North Fulton, which was in foreclosure last winter for $290,000. The home remains on the market and is now a steal at $220,000. The home has a gorgeous, renovated kitchen and shows extremely well.
There is a “Street of Dreams” in Atlanta steps from Morehouse College and The Atlanta Beltline, where homes sold for $200,000 and up two, and five years ago and are now going for $50,000, $40,000, $30,000 and even as little as $12,000. The Beltline is predicted to spark a dramatic rise in properties bordering it, which makes this such a sweet deal.
4. What is average cost of a home in your area? See above
5. What was average cost of home 3 years ago? See above
6. How does that compare to 5 years ago? See above
7. How does that compare to 10 years ago? See above
8. What is the average price paid for a home over or under the asking price? Under the asking price
9. When you list a home, do you make suggestions to seller on things they can do to improve home to sell it? Rarely, Mike works with clients in the executive-home market ($400,000s and up), and they tend to be very on top of landscaping, interior decorating, power washing and painting their homes. Atlanta is really into fancy interior design and this is the norm for most homes.
10. If so, what are common recommendations that you make?
The first place to start with any project is to clean, remove clutter and depersonalize the home. A property must be appealing before potential buyers will visually place themselves in the home and this begins with the outside. Trim bushes and plants, remove dead plants, branches and greenery, roll up hoses, add a welcoming doormat, consider adding a planter with seasonal color, and power wash and freshen paint as necessary. Consider painting the front door a welcoming color, like red.
Donna Mathis of DMD Studios suggests the following techniques: “Upon entering the home, study what the first impression will be. Where space does your eye travel to? Remove the clutter so that the buyers mentally visualize the room with their own belongings. If the room seems stuffed or overcrowded, remove the larger pieces of furniture to visually open up the space. Short-term rental furniture is often a fix for oversized or outdated furniture. Several short-term leasing options are available that can help to transform a space for a relatively small cost. Updating the look of your home broadens the appeal to potential buyers and helps occupied or older properties compete with newer homes.”
In kitchens and bathrooms, remove the clutter of everyday living and leave open space for the eye to visually take in. Make sure that the walls are freshly painted and inviting. In the bathrooms, consider adding some appealing items like scented soaps, candles, fresh fluffy towels tied with ribbons and yummy facial creams and lotions – the type you might see at the spa. In the kitchen, consider buying flowers – either fresh or a beautiful silk flower arrangement. Gravitate towards bright and cheerful colors – oranges, reds and yellows. Add a bowl of lemons and oranges. Consider an essential oil diffuser and choose scents by the season. Set your dining room table using your finest linens.
Personal expression tends to be emphasized in the bedrooms, especially kids’ rooms; consider painting them neutral; this low-cost item that is more labor intensive but is worth it. Look at furniture placement in the rooms and remember to remove any pieces that overcrowd the room. Let the potential buyer visualize the space in the manner that they would use it. Again, consider flower arrangements (for color) and essential oil diffusers. Everything should look and smell clean, bright and fresh. Make sure the window treatments don’t obstruct light or view. If they do, consider taking them down - and make sure the windows are clean!
11. What are some of the biggest mistakes people make when putting their home on the market? Overpricing the home. Also trying to go it alone (for sale by owner), it’s very hard for homeowners to be objective in terms of the relative value of their homes.
12. Are buyers asking about green features in homes? (Solar panels, Energy Star rated appliances, programmable thermostats, sustainable wood floors, etc.) Yes, there is keen interest in this in Atlanta. Our government policy when it comes to “green” ranks among the worst in the nation, however, the consumer interest in green ranks extremely high.
13. Do homes with green features sell for more? Yes, we included the following information from McGraw Hill Construction in “Green Matters” –
The major findings of the 2008 survey, which is co-sponsored by the
National Association of Home Builders (NAHB), include:
- The residential green building market is expected to be worth $12 billion
to $20 billion (6 percent to 10 percent of the market) this year.
- In five years (2012), the market is expected to double to 12 percent to
20 percent market share, or $40 billion to $70 billion.
- 40 percent of builders think green building helps them market their homes in
a down market.
Quality has emerged in this down market as the most important reason for building green. Previously, builders were motivated by energy cost savings of green homes and doing the right
thing, which still came in #2 this year. This is likely due to green home
marketing and how it improves quality of life.
“We have hit the tipping point for builders going green,” said Harvey M. Bernstein, McGraw-Hill Construction vice president of Industry Analytics, Alliances and Strategic Initiatives. “This year, the number
of builders who are moderately green -- those with 30 percent green projects -- has surpassed those with a low share of green -- those who are green in less than 15 percent of their projects. Next year, we will
see even greater growth, with highly green builders -- those with 60 percent green projects -- surpassing those with a low share of green. This year has seen an 8 percent jump over last year, and we expect
another 10 percent increase next year.”
“It’s official. Green has gone mainstream,” said Ray Tonjes, chair of the Green Building Subcommittee for NAHB. “And now, the NAHB National Green Building Program is making it easier for home builders to provide sustainable, environmentally friendly homes for their customers. We’re ready for the market transformation that McGraw-Hill Construction estimates.”
As a realtor, do you point out green features (or are they written on the sell sheet)? Yes, green is a hot issue in Atlanta.
What are the most popular features people are looking for in homes today? Updated kitchens, hardwoods, open floor plans, green features, and generous natural light.
What are the most unpopular features? Open floor plans continue to be highly popular in Atlanta so boxy floor plans with poor lighting are very unpopular.
Do people prefer carpet or wood flooring? Wood flooring
What is the favored type of flooring? Hardwoods, cork is also becoming increasingly popular and is considered green.
What green renovations would you suggest? Better insulation (you can drill right into the walls and apply spray foam over fiberglass), compact fluorescent lights, dual-flush toilets, plumbing for gray water (easy and affordable), sealing ductwork (not with duct tape but a paste called Mastic), sealing crawl spaces, solar hot water, low-E windows, tank-less hot water heater, geothermal heat pump.
Do you have any numbers for money saved or percentages for specific renovations? (Windows, insulation, etc.) A home renovated to the max when it comes to green can expect energy savings of 50 percent or more.
Can you add a geothermal system to an already built home? Costs? That’s a good question. Yes, we interviewed someone for our book who was considering adding a geothermal system to an existing home. The average cost is $7,500.
Costs for solar panels? For solar hot water heating, $3000; to power the entire home, around $40,000. The former is practical to do today; the latter is not there yet, from a cost-savings perspective. People tend not to go all the way with solar power and only invest $10,000 to $20,000 in solar panels. Expect a revolution, here, in five to ten years.
Would a house with solar panels/geothermal be worth more? How much more? That’s very debatable right now and you could argue it either way.