Real Estate For Atlanta Blog

What does it mean if a home is in the flood plane?  In most cases, not much at all.  In certain areas of the country (i.e. New Orleans), this can be a more serious problem.  In the metro Atlanta area where I work, it is not a big problem.  Of course, there are different levels of flood plains.  In most cases, a home would never be built on land that is prone to excessive flooding.  However, often homes are built on lots that back to lakes, creeks, etc. that have not flooded in recent history and have an extremely low probability of flooding.  However, if the probability is anything greater than zero, your lender will likely require you to carry flood insurance on the home.  The cost of this will vary depending on the probability of the home flooding.  On average, it is usually around $500/year; which is by itself an indication of how unlikely a scenario actual flooding is.  If you owned an insurance company and had to rebuild all homes that get flooded, would you charge $500/year if the homes were flooding frequently?  If you did, you’d be out of business pretty fast.  The reason they can charge so little is that it is so unlikely to happen that there is a 99% probability that they will make $500 for nothing and once in 1,000 years; they may have to pay out a claim.

Some other things to consider about homes on flood plain lots:

1.  You can look in your local tax records to see if a particular home is recorded in the flood plain.

2.  Many homes are recorded as flood plain lots and really shouldn’t be.  I recently had a listing that was in the flood plain according to the tax records; but both the seller and I questioned the validity of that.  We ordered an elevation study on the lot from FEMA and sure enough, we got the home removed from the flood plain status.

3.  There is a plus side to it.  If the home is in a flood plain, it likely backs to a creek or some water nearby and often that goes hand in hand with a private lot that cannot be built on behind the house; so you can be assured your back yard trees will never be taken down in favor of a new subdivision or roadway; thereby guaranteeing your privacy for as long as you own the home.

 So, before you eliminate a home just because it’s in the flood plain, know the facts.  Find out what the flood insurance will cost.  In all likelihood, it should not be a significant enough consideration to sway you from buying a home that you otherwise like.

No Sale - Cash Register

It is easy to blame a lack of a home sale on the market. Afterall, the news is making us all believe on a daily basis that there are no buyers out there and that nobody can get loans. Don’t believe the hype or it can cost you a lot of money. 

The truth is that there are buyers and people are still able to get loans. Yes, the lending requirements have tightened to ridiculous levels and, yes, there are much fewer qualified buyers than there were in the past. However, in most areas, there are at least some qualified buyers and if you want your home to sell you simply need to make sure that you are presenting the best value in the area and doing all you can to make sure everyone knows about it.

I recommend that you revisit pricing every 30 days. If the home didn’t sell, look at what did sell in the area during that 30 day period. If you see that absolutely no homes in your price range in your entire area have sold then it could just be that there literally are no buyers; but I doubt that is what you will find. Most likely, you’ll see that there were a few sold homes. If that is the case, then it means there were buyers; but they didn’t choose your home. Look at what they chose instead and that will give you a clue as to what price adjustments and/or modifications to the home are necessary to make sure that it is the next one to sell.

Worse yet, we are still in a declining market; so the longer it takes for you to get it right, the lower the market price will become. Therefore, getting it right in terms of price and condition to make sure your home is the best value for the few buyers is more important than ever.

We also have a tendency to feel that our home is the nicest on the street because we picked it out. However, consumers view homes in a much more commoditized fashion. As hard as it is to justify spending any money or time fixing up a home that you are about to sell - especially when the market is forcing you to sell so low, it is imperative that you do what needs to be done. If you fix the house up and price it right, it will likely sell - even today. If you absolutely have to sell now then you will need to deal with this and the faster you do the better off you will be. If you have the luxury of waiting then this is not the market for you to sell in. On the bright side, you will be on the other side of the fence as a buyer once you get your home sold and will get a bargain to offset your loss.

As an agent in the trenches daily, I am often exposed to the most up to the minute data that can help me predict where I think the local housing market is headed in the near future. For example, when I see more hits on my web site, it is usually a good leading indicator that more buyers are out there with an interest in buying homes. The opposite is also true. What I’ve noticed lately has been rather surprising. 

Lately it seems like we were finally getting to a point where buyers were realizing that this is the opportunity to buy and perhaps the fence is not the correct place to be. Just as the traffic started to increase on my listings and web site, speculative announcements began to circulate in the media about potential upcoming legislation that is designed to stimulate the housing market. Buyers who were just about ready to write offers on properties began to put things on hold. Afterall, who wants to buy now when they are told that they might be able to get 4% interest rates or a $15,000 tax credit if they wait another month. The pre-announcement of this possible legislation has actually had the opposite effect on the market as it was designed to do.

I think that getting closure on what the stimulus bill(s) are going to be is more powerful than the bills themselves. Now that we seem to have gotten some closure on this, I am hopeful that this will begin to get things moving once again. The worst thing the government can do right now is announce possible legislation that might come to fruition as this will once again make everyone put everything on hold. I also believe that the currently approved legislation has too long of a timeline on it. What we need is legislation that will take buyers off the fence today - not by the end of the year.

Quart Of Milk

Many home sellers have the perception that more marketing from their agent will compensate completely for the wrong price. Others think the opposite: low price will always compensate for lack of marketing. 

The truth is that both need to work together to make the sale. The home has to be priced correctly AND marketed correctly. Selling a home is not much different than selling anything else. The 4 P’s of marketing apply (Product, Price, Place, Promotion). The product is the house itself and the way it is staged, the place is the location of the property, promotion is the marketing. All of these work together to make a sale. For example, if your local supermarket takes out a full page ad in the newspaper to advertise a quart of milk for $50.00, nobody will buy it because it’s overpriced and all the advertising in the world won’t compensate for being so overpriced. On the other side of the coin, they can lower their price to 10 cents a quart for milk and with no advertising, nobody will know about it and they will miss the opportunity to maximize their sales volume by effectively telling the public about this great product at a great price.

If you want to know if your home will sell in this market, pretend you are a buyer looking in that area and price range and see if you can honestly say that your home presents the best value for potential buyers. Then, make sure you do everything possible to tell the public that yours is the best value.

Home Price Surprise

Many home sellers are facing sticker shock these days when they ask an agent what they should list their home for. Unfortunately, this does not necessarily have to be bad news and a lack of ability to deal objectively and make sound business decisions about a home that one is emotionally attached to often leads to a missed opportunity or financial loss.

The following chart showing historical home prices in the United States is a good indication that, although there are some minor dips in values periodically, this is the first time in most of our adult lifetimes that an extreme loss in value has taken place.

home price history chart

Because home value declines such as this happen so infrequently, many home sellers (and even agents) have extreme difficulty accepting the realities of the market.

But before you break out the alka-seltzer and tissues to deal with the sticker shock that you might face as a home seller in today’s market, consider the following and it might help to put your mind at ease:

1. The only thing that really matters for most is not what their home is worth; but rather what their home is worth in comparison to what a replacement property would cost. If my home were to drop in value while everyone else’s remained the same, then I would have something to cry about. However, if everyone’s houses are falling at the same time, then it is simply deflation across the board and my buying power has remained the same.
2. Market conditions vary significantly from one area to another - even within the same city. This can actually present an opportunity to benefit from a declining market. If you are selling a home in a market that hasn’t declined as much as the market that you wish to buy into, then a “down” market might actually be the best time to make the move.
3. If you are moving up to a larger (or more upscale) home in the same area, then a down market is the best time to do so. For example, if you live in a home that would have sold for $400,000 when the market was good and you wish to buy a home that would have sold for $600,000 when the market was good and home prices in your area are down 10% then you will have to deal with the sticker shock of facing that your $400,000 home is now only worth $360,000 (a $40,000 loss)which may be a hard pill to swallow; but you will buy your new home which would have been $600,000 for only $540,000 (a $60,000 savings). Therefore, it is actually financially better to make the move now. If you wait for the market to recover, you’ll be effectively $20,000 worse off even though psychologically it may be difficult to realize this.
4. When prices are rising, you can get away with overpricing your home a little bit above market value and eventually the market will catch up to it. In a declining market, it’s important to do the opposite: price below market so that you are ahead of the curve.

All-in-all, there is no such thing as a “bad” market. There are buyer’s markets and seller’s markets. If you are both a buyer and a seller, then fluctuations in the market will always be cancelled out. So, when your agent tells you that your home is worth a certain price, try to look past your emotional attachment to your home and objectively look at your whole situation. Price your home to sell so that you can quickly take advantage of the buying side of the equation and you’ll be glad you did.