Buyers expand home options

An increasing number of prospective home buyers in the Atlanta area are including foreclosures on their list of homes they are willing to consider. And that represents a major change in the way both buyers and their agents do business.

In the past, many buyers wanted to look only at homes that were in “move-in” condition.

But things have changed. About half of today’s sales activity is in the area of distressed property or bank-owned homes that have been through the foreclosure process. These homes are some of the most popular in the metro area. As recently as five or six years ago, bank-owned homes represented such a small segment of the resale market that it was not even a specific subset in the multiple listing computer. But today, the MLS recognizes this category. In fact, most of the larger real estate firms have agents who specialize in the sale of these homes.

There are several reasons that have prompted this reaction:

» The number of bank-owned homes has exploded in direct proportion to the number of homes advertised as going into foreclosure. In one recent month, Equisystems foreclosure trackers reported more than 10,000 houses listed in foreclosure ads, in the 13-county metro area alone.

» These homes aren’t just in undesirable neighborhoods. Instead, they are scattered all over metro Atlanta, distributed largely in line with the population as a whole. They are the homes that sold to buyers on exotic or sub-prime adjustable loans three and five years ago, and the payment amounts are now adjusting to unmanageable levels.

» The financial incentives for buying a foreclosed home are compelling, provided you meet the requirements. The federal government offers a Federal Housing Tax Credit of $8,000 for most who buy and occupy a home this year, provided they haven’t owned a residence in at least three years. The credit can be applied against any current tax liability and can be taken this year and does not have to be repaid.

Also, the Georgia Department of Community Affairs offers the Georgia Dream Loan downpayment assistance package of up to $14,000 for any qualifying first-time buyer who buys a foreclosed home from a bank or government agency. Known as the Georgia Dream Loan, the cash is in the form of a zero-interest second mortgage, which is forgiven over a period of six years.

» The real icing on the cake is price. Agents tell me that today’s best Atlanta-area bargains are to be found in bank-owned homes in good neighborhoods. These homes often need a $10,000 face-lift (paint, carpet, some repairs), but not a major rehab project.

If you think you might be in the market for such an opportunity, seek an agent with experience in the foreclosure sector of the market. In addition, I would recommend buyers select a broker with an active foreclosure department.

John Adams is a broker and investor. For more real estate information or to make a comment, visit Money 99. Find previous articles by John Adams and more home buying advice on the ajchomefinder mortgage center.