Stabilizing Metro Atlanta Areas

Scott Murphy, Atlanta Apprasier

I recently consulted with Scott Murphy, appraiser with D.S. Murphy & Associates, as I have clients relocating here that are looking for newer construction in a family friendly neighborhood with amenities and superb public schools. I knew that Scott would know of any areas outside of North Fulton and South Forsyth, where we had already been hunting. Scott shared the information below with me:

Andrea,

Always a pleasure to be in your office and thanks for  your questions!

You are right on point. The only areas we are seeing steady stabilization is north Fulton and south Forsyth. We do a lot of foreclosure appraisal and pre-foreclosure appraisals – 30-40% are in Stone Mountain/Lithonia; 20% in south Fulton; 10% in Gwinnett. These areas are still very unstable and will continue to see far more foreclosures. We see very few pre-foreclosure orders in North Fulton and South Forsyth.

Most new construction in areas other than North Fulton and South Forsyth is existing inventory. Very few of the new construction neighborhoods in these area are moving forward. In contrast, North Fulton and South Forsyth have seen more building permits than any other areas.  Perfect example is Ashton Woods Madison Park – they sold out in a matter of months – selling 20+/month.

Just look at the map of where Ashton Woods is building – there is good reason why they are not building east, west or south of Atlanta.

http://www.ashtonwoodshomes.com/georgia/atlanta/homes-for-sale-in-atlanta.php#

This may sound a little drastic but people from outside Georgia moving in need to realize how bad schools are in Georgia compared to other states. Schools in North Fulton and South Forsyth are excellent and compare favorably with schools around the country but some schools are at bottom of the barrel across the country – look at Clayton County who lost their accreditation a few years ago.

Hope this helps.

Thanks,

Scott

In all, Scott’s information confirmed my thoughts about the stabilizing market, particularly in North Fulton. Education, affordable housing, and job opportunities help drive this stabilization and the increase in new construction.

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Low appraisals on arm’s length purchases (Part 4)

Scott Murphy, Atlanta Appraiser

This is the fourth post in my series on metro Atlanta appraisals in 2011.  Please click here to see posts on:  market stabilization in Atlanta, consultation appraisals, and appraisal regulations. Click here to find out what to expect during a home appraisal.

In my final post about the state of real estate appraisals in metro Atlanta, I would like to talk honest about a phenomenon I’m seeing…..low appraisals on good arm’s length purchases that have skyrocketed over the past 12-18 months.

One reason for these low appraisals is due to the new regulations which sever contact between loan officer and appraiser – many appraisers now use this as a shield to allow themselves to be conservative.

But why would they want to be conservative? The number of lawsuits by lenders of appraisers has risen at a staggering rate. Furthermore, underwriters are feeling the pressure of the mortgage meltdown and are scrutinizing every appraisal.It is much easier for me to come in low – less work and less grief from the underwriter.

Professionally speaking, appraisers should never have an effect on the market. Our job is not to DETERMINE market value but to INTERPRET market value.

Are appraisals getting in the way of solid arm's length real estate purchase agreements?

If there is a true arm’s length purchase agreement between a willing and knowledgeable buyer and a willing and knowledgeable seller – that is market value! That does not mean that we can always produce an appraisal which will justify it to the lender but the appraiser should make every attempt to let the market move on its own accord.

Appraisers are not allowed to revise their appraisal reports – even if I get them to agree that they were wrong – unless the underwriter gives them permission.

My ultimate goal as an appraiser is to help the market recover on its own in every way I can. If a low appraisal is not resolved everyone loses – the buyer, the seller, the agents and most importantly the market – because either the deal dies or the seller reluctantly reduces the sales price and that neighborhood just took two steps backwards!

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Consider a Consultation Appraisal Before Putting Your Home on the Market (Part 3)

Scott Murphy, Atlanta Appraiser

This is the third post in my series on metro Atlanta appraisals in 2011.  Please click here to see posts on:  market stabilization in Atlanta, low appraisals on arm’s length purchases, appraisal regulations, and what to expect in a home appraisal.

The best way to protect yourself while selling your home may be to have a prelisting or a consultation appraisal.

The best way to protect yourself when listing your home is to consult with your agent and hire the most competent appraiser in the area to perform a pre-listing or what we call a consultation appraisal.

Our firm offers a product where we will come to the house and perform a thorough appraisal inspection. We will offer recommendations on repairs which may be required by a lender as well as optional improvements which would provide a significant positive return. We will complete our appraisal report and review it with you and your agent.

A consultation appraisal will allow you and your agent to choose the most appropriate list price for your home. And we continue to be your consultant all the way through closing:

• When you receive an offer, call us and we will consult with you and your agent about the best counter offer.
• We will also give you a list of items to give to the bank appraiser when he/she comes to your home.
• Then most importantly, we will be there to defend our appraisal and help you in the event that the bank appraisal comes in low. We will write the letter of rebuttal to the lender – doing it in such as way as to outline all the deficiencies in the bank appraisal and offering concrete evidence and additional sales to support our value.

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Appraisal regulations and the real estate market: change is good (Part 2)

Scott Murphy, Atlanta Appraiser

This is the second post in my series on metro Atlanta appraisals in 2011.  Please click here to see the first post on:  market stabilization in Atlanta. More posts coming soon: low appraisals on arm’s length purchases, and consultation appraisals.

Appraisal regulations are easing a bit as we transition from HVCC rules to the Dodd Frank Act. Appraisers will be more fairly treated and receive “reasonable compensation”.

One of the challenges for the appraisal business was the rise of the Appraisal Management Companies (AMC’s) which sought the appraiser who would do the job the fastest and the cheapest. This was most often not in the best interest of the real estate market.

Appraisers were rushing through assignments and justifying it based on the extremely low fees they were paid. This led to sloppy work and inaccurate appraisals. With the help of this recent legislation, appraisers are now given the time to accurately analyze the market and complete a competent appraisal.

The problem still remains however, that too many appraisal management companies do not have sophisticated assigning software to get the job to the appraiser with the most “geographical competence”.

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Metro Atlanta real estate appraisals: good news for market stabilization (Part 1)

Scott Murphy, Atlanta Apprasier

This is the first post in my four-part series on metro Atlanta real estate appraisals in 2011. Please check back soon to see posts on:  changing regulations, low appraisals on arm’s length purchases, and consultation appraisals.

Valuing real estate has never been an easy task for an appraiser. In the past it was difficult keeping up with steadily increasing value and today it is staying on top of every sale, dissecting it to determine if it is arms length, weeding through REO, Short Sales and other various distressed properties.

Since sales seem to be fewer than in the “glory days” of 2006 and 2007,  (and so many sales are from homes in a “situation”) it is often impossible to arrive at a truly meaningful and supportable value. Adding to the current market conditions, federal appraisal guidelines have changed a lot and the appraisal process is more challenging than ever.

Scott Murphy, appraiser, is seeing a housing stabilization in inventory and foreclosure levels in Atlanta.

The good news is that we are seeing some stabilization in the Metro Atlanta real estate market. The inventory of homes for sale has dropped and the number of foreclosed properties has leveled off a bit. New home construction is happening again.

Atlanta’s real estate market stabilization is due to the huge drop in existing inventory of new homes and the unprecedented decline in the value of vacant land and developed lots. (It is not uncommon to see lots selling for $5,000-10,000 which just 2-3 years ago where selling for $60,000 – 80,000. This drop is just enough to allow a builder to be profitable when building a new home.)

The new homes we are seeing going up are somewhat more modest than those of recent past. Builders are reluctant to build enormous houses on speculation and buyers have had a dose of reality and are looking for smaller, less flashy homes. I feel this sector of the market, new home construction, will grow the quickest over the next 12 months. This should increase jobs which will bolster the economy as well as the real estate market.

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