After Much Delay, Homeownership

Today’s Courier Herald Column:

The long housing nightmare is finally over.  Congratulations are in order for Congressman Phil Gingrey, State Senator Judson Hill, and State Representative Sharon Cooper.

Sadly, we’re not talking about the post-bubble national housing market.  That nightmare has a few more scenes left to play out unfortunately. We’re talking about my year long attempt to purchase a home in a “market” that is no longer left to invisible hands to clear itself.  One would think with the continued supply imbalance available to purchase that this would be a “buyer’s market”.  It is anything but.

Given the “recent unpleasantness” I experienced with my own companies just before the bubble burst one would have thought that getting mortgage financing lined up would have been the greatest challenge.  It was by far the easiest part of this process.  There’s a special place in heaven waiting for Julie Heckman of Regions Mortgage to have demonstrated the patience for putting up with me for more than a year after my pre-approval and through multiple contracts before I found a seller with a house I wanted that could actually close their sale.

Things are, however, getting better.  One of the biggest problems with housing markets such as Atlanta is the number of homes that require a short sale process.  This is where the seller owes more than the home is worth and thus needs the bank to agree to accept less than is owed at the time of sale.  In the metro Atlanta market more than 60% of homes are estimated to be under water.

The “bank” that has to agree to accept a loss isn’t really a bank, and in many cases the actual owner of the note remains unclear due to the way the loans are sold to bond holders.  As such, many mortgage servicers have been reluctant to complete a short sale and sign off on a loss.  Buyers like me and the realtors who represent them are reluctant to take these listings and/or make offers because one can waste months only to find out the bank won’t approve the transaction.  Many sellers eventually get frustrated with the process as well, allowing the home to go into foreclosure to get out from under the debt.

New regulations have been proposed for banks that will require a short sale offer to receive a response and/or counter offer within 30 days of receipt.  This alone may be one of the biggest changes to assist hard hit housing markets such as Atlanta in returning efficiency to the marketplace.  Removing the unknown timeframe from the transaction will allow short sale homes to receive a wider section of the potential buyers’ consideration, and hopefully cut down on the number of foreclosures as well.

Buying a foreclosure would seem to be an easier process.  It is and it isn’t.  I found there are usually two main groups of foreclosure listings:  Those priced too high, and those priced too low.

Those priced too high follow a similar pattern.  They sit for 30 days without much activity and the bank then cuts the price roughly 10%.  If still not sold within another 30 days, the price is cut another 10%.  After 60 days on the market, offers of a wide range will be considered.

The problem with this is that if you know what a home should sell for in this market which appears to be priced by Ouija board, you also know you need to wait 45 days or so before even beginning negotiations on one of these homes.  More time wasted means more inefficiency for the market.

Those priced too low are even more frustrating.  The home I still regret not buying was priced extremely low for the current market.  It received multiple offers the first day it was listed including mine where I offered full price, sight unseen.  The realtor held the offer period open for two weeks, generating 27 total offers.  Another week went buy for a “highest and best” counter offer window.  Then it was a couple of weeks before I was notified that despite offering $57,000 over the asking price, I still was not the accepted offer.  And another month of the housing search was wasted.

The amount of time I invested to buy this house cannot be recovered.  The market is inefficient and  broken, though showing signs of healing.  The new HARP program which allows refinances without regard to new appraisals is also lowering the payments of thousands of homeowners putting more spendable money back into consumer’s pockets.  Things are improving.

And now, the time I spent on this endeavor can mercifully be spent elsewhere.  As for the congrats in the first paragraph, that’s my new Congressman, State Senator, and State Rep.  They’re likely to get some of that time from me, so they’ll need to let you know if that’s a good thing or not.  In the mean time, there’s some unpacking that must commence.  Happy Friday.

14 comments

  1. Calypso says:

    Congratulations to you, Charlie, but I fear it’s condolences to the politicians you mention. 😉 Enjoy your move!

  2. Lawton Sack says:

    Congratulations, Icarus. And since I can’t help myself:

    1. I have some nice Georgia Tech items that you can display in the new house.

    2. Neighborhood watch does not mean that you sit on the porch and watch female joggers or watch what kind of liquid refreshments your neighbors bring home.

  3. saltycracker says:

    Until the Feds start raising the interest levels they charge the banks there will be little incentive to short a property.

    Well, unless they get something out of it from a third party or are heavily pressured by the politically connected.

    Congrats, a buyer must leverage where he can or loose out.

  4. The Last Democrat in Georgia says:

    Charlie, congratulations on buying a house.

    You’ll like having Sharon Cooper as your state representative, as I’m sure that you are well-aware, you could most certainly do worse.

    You know now that you’re in Cobb County you’ll be expected to weigh-in on a consistent basis on one of the issues that everyone has gone stark, raving mad about in Cobb, which is the upcoming T-SPLOST vote on July 31st, particularly on just what “transit” option will be funded by the $689 million designated for “Enhanced Premium Transit Service” in the I-75/US 41 Corridor will actually be spent.

    You’ll also have fun keeping up with the day-to-day inanity and insanity of the Cobb County School Board.

    • Dave Bearse says:

      Among your favorites, I-75 toll lanes of course. $500M ought to provide a nice kick start (allowing $189M for a few new buses plus whatever Cobb can get away with in off-loading CCT operating expenses onto the region via the project).

      • saltycracker says:

        I’d thank a legislator after they have sponsored a bill to get this back on course and expect a bank to do their job, loan money to the credit worthy. Beholding constituents ?

      • you says:

        It is hard to find a resale that can compete with foreclosures. The few that can are forfeiting all the money they put into it. These are the true victims; the owners who put down 20% + and now need to sell but can not even get what they owe for the home. Unlike the 100% borrowers who lost nothing, this group has actually lost money.

        • saltycracker says:

          Maybe they got Isakson’s $8,000 handout and a 4 or 5% mortgage….
          How about the ones that paid cash ?
          The further up the ladder of responsible citizen you go, the more you get screwed…..

          • you says:

            I just sold a house I paid cash for. I sold it for half price because that was the going price and I needed to sell it. I was screwed.

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