Deals that feel like steals require effort

The housing downturn and recession have left Atlanta full of homes now priced near 1997 levels, The Atlanta Journal-Constitution's annual Home Sales Report has found. Often, these homes represent the heartbreak of others, properties that were foreclosed on by banks when homeowners couldn't meet ballooning mortgages or lost jobs. Other homes were built on spec but couldn't be sold by developers.

But that pain of others has left a market of opportunities for those gutsy enough to go after them as well as for those willing to take a loss on one home to move up to another.

Making such a deal can take months and guarantees lots of near misses. Many of these “deals of the century” often come with issues, such as poorly wired electrical systems, holes where $5,000 Viking ovens used to be, torn up floors and even missing sod.

Take Nicole and Charles Cook.

They had been hunting for months for a deal near Piedmont Park and when their realtor got wind of a bank-owned home that just hit the market, the Cooks were there just hours later.

They went at dusk and had to use a flashlight to inspect the Morningside (ZIP: 30306) home because the power was shut off. The clock was ticking. They knew there would be other buyers and they couldn’t take a chance. They dashed to Kinko’s that night and faxed off an offer to the bank.

Forty-eight hours later, the Cooks had their dream house under contract. Less than 30 days later, they owned it.

“It was very dramatic,” said Nicole Cook, 32.

The Cooks now own a new four-bedroom, 4 1/2-bath, three-level home with a two-car garage and two balconies that cost $510,000. The developer, who lived in the house before it went back to the bank, had once listed the house for more than $800,000. The Cooks credit their eagle-eyed realtor, who got them to the deal as soon as it hit the market.

To be sure, all was not perfect.

“The 48-inch Viking oven was ripped out and costly to replace,” said Cook. “Towel holders were gone. They took the grass, the fence, the blinds and the appliances. We had to spend some time doing that stuff. But the house is just a fantastic house.”

Tamieka Gesse, 28, went through her own excruciating process before settling on a home in south Fulton for just $21,000 in cash.

She visited at least 100 homes and lost bids on seven of them. But finally, she prevailed on a four-bedroom, 2 1/2-bath home with a family room, sun room and formal living room (ZIP: 30349).

The home had no appliances. And she had interior work to do; she tore out carpets, painted walls and added tile and hardwood floors.

While pockets of deeply discounted homes exist, experts say buyers’ expectations are out of whack. Plenty of buyers expect “move-in ready” homes in trendy areas with great schools for under $50,000.

“There is no such thing as a steal-of-a-deal, move-in ready home for under $50,000,” said Michael Neville, with Keller Williams Realty, who was the Cooks’ agent. “There are people buying them, but they are not move-in ready.”

But what about a ready-to-go $80,000 condo? Yes, Neville and other realtors concur. But some of the best deals are in the upper ranges, not the bargain basement.

Mary Anne Walser, an agent with Keller Williams, said the greatest percentage discounts are on more expensive homes.

“If people are downsizing, they are taking huge hit on a big expensive house and not getting as big a discount on the smaller home,” said Walser.

Lisa Simmons, 46, and husband Steve Weibel, 60, feel like they got a great deal on a home in Roswell. They paid $525,000 for a 7,000-square-foot home that once appraised at $849,000. They did extensive research before plunking down their earnest money. The home was not in distress and the neighborhood is stable, Simmons said.

Mariusz Sobanski traded up. He bought a $495,000 home from a bank in Johns Creek, but believes it’s already worth more, with homes nearby going for $700,000. Meanwhile, he’s watched prices “dropping like a rock” in his old neighborhood in Lilburn. He probably will take a $30,000 hit on the home there he had hoped to sell for $180,000.

“You can’t win all the battles, but you win the big ones and lose little a bit on the small ones,” he said. “Hopefully we bought at the bottom of the market.”

Some neighborhoods can't go much lower. In a sweeping AJC analysis of housing sales in nine counties using data from Marietta-based SmartNumbers, six ZIP codes emerged where the median price on existing homes in 2010 was less than $30,000. All were located in Fulton and Clayton. One Fulton ZIP (30314), which includes Bankhead and Vine City, had a median price under $20,000. The analysis included the 130 ZIPs where 75 or more new or existing homes sold in 2010.

The depressed prices have skewed expectations, experts said.

"Some people want steals,” said Wight Mixson, a realtor with Beacham & Co., and president of the Atlanta Board of Realtors. She believes some buyers lose sight of the fact that they are buying a home instead of playing "The Price Is Right."

“It’s a place to raise their family or begin a new life in a new city,” said Mixson. “Homeownership is much more than just getting the best deal.”

But with bargain hunters on the prowl, closing deals has also become harder.

“We go through a lot more contracts before you actually make a sale,” Walser said. “Buyers, even though it’s the bottom of the market, they are still afraid they aren’t getting a good enough deal. And sellers see the headlines, but think they don’t apply to them. So they are digging in their heels. It makes every deal a lot harder to come to fruition.”

Those willing to take a stab at a distressed property on the low end need cash, patience and a work ethic. Many buyers, like Gesse, will see dozens of house-huntersget outbid on the same half a dozen homes, often facing investors paying cash.

Neville says cash-carrying buyers have the advantage because they can close quickly. Some don’t even look at the home before bidding on it.

Bradford North, 33, loves so much the $39,950 home he bought in the 30314 ZIP area with cash and a bank loan, that he’s considering buying a distressed house nearby as a rental.

Buyers and agents say flexibility and research are the secrets to snagging a deal in any price range. The Cooks, for example, didn’t have to sell another home and were renting monthly, said Neville. They had months to look and saw 30 to 40 homes before buying.

Same for Gesse, who got much more house for the money than she expected.

When her agent, Danielle Alleyne with Prudential Atlanta Realty-Midtown, found it, “I almost cried and I wanted to hug her,” Gesse said.

Good fortune can come out of anywhere. Charles Whitehead, 52, first faced foreclosure on his old home before bought a new one. He gave his house off Metropolitan Avenue back to the bank, he said, because “the neighborhood was shot.” He then found a home near Campbellton Road that he bought for $32,000 in cash. He replaced one window and eventually repainted the rooms, but other than that, he says it was in "great condition."

His favorite features aren't even in his three-bedroom, 2 1/2- bath-home built in 1990 (ZIP: 30331). It’s the lake across the street and the quiet and professional neighbors.

When asked if he could believe the deal he got, Whitehead answered, "I know this is going to sound out of proportion. But if it’s God’s will, I can believe the deal.”

Here’s a closer look at homes some metro Atlantans have bought, from high-end bargains over $500,000 to steals under $50,000.

High end:

1.

Who: Lisa Simmons, 46 and husband, Steve Weibel, 60

Where: Roswell (ZIP 30076)

The good: They paid $525,000 for a 14-year-old, custom-built 7,000-square-foot, five-bedroom, four-bath home with sweeping staircase on a half-acre wooded lot that last sold for $530,000 in 1998.

The bad: They put down $200,000 and had great credit, but still had difficulty getting a loan.

What it took to land it: A ton of research. “We had a written list of criteria we followed to find the right home,” said Simmons. “You’ve got to look at the health of the neighborhood, the homeowners association and the comparables. The whole notion that real estate will go up in value has been shattered forever.”

2.

Who: Nicole, 32, and Charles Cook, 38

Where: Atlanta (ZIP: 30306)

The good: They bought a four-bedroom, 4 1/2-bath, newly built home with a two-car garage for $510,000. The home once listed for more than $800,000.

The bad: Appliances, including a 48-inch Viking oven, had been taken out of the house and were costly to replace.

What it took to land it: Rushing to the house at dusk and viewing it with a flashlight was part of the hustle they needed to land the house. They had already seen 30 to 40 houses, but their realtor kept advising them to bide their time.

3.

Who: Mariusz Sobanski and family

Where: Johns Creek (ZIP: 30022)

The good: He traded up to a $495,000, six-bedroom, five-bathroom home in Johns Creek near the Country Club of the South and in a great school district. “Now we have one of cheapest homes in the subdivision with $700,000 homes,” he said. The home last sold for $530,000 in 2005.

The Bad: He will take a loss on his $180,000 home in Lilburn (ZIP: 30047). The Johns Creek home needed $50,000 worth of fixes.

What it took to land it: He bought the Johns Creek home directly from a bank in what he described as a slow, red-tape laden process. A jumbo loan was also hard to arrange for the business owner, even when he put 20 percent down.

Low end:

1.

Who: Charles Whitehead, 52

Where: Atlanta (ZIP: 30331)

The good: He paid $32,000 cash for a home in “great condition” near Campbellton Road. The three-bedroom, 2 1/2-bath home was built in 1990 and is across the street from a lake. The home last sold for $144,000 in 2002.

The bad: He needed to replace one window and repainted the rooms. He ceded ownership of his previous home off Metropolitan Avenue back to the bank after the area’s falling home prices and crime had irreparably hurt home values there, he said.

What it took to land it: He looked at 20 other places in his price range before buying this one.

2.

Who: Bradford North, 33

Where: Atlanta (ZIP: 30314)

The good: He bought a “sturdy,” $39,950 home built in 2004 with five bedrooms, three bathrooms and a two-car garage. The home last sold for $263,811 in 2009. North believes the home already is worth more than $100,000. “It’s absolutely, without a doubt, the most phenomenal thing ever," he said "My mom and dad saw it few weeks ago. I was so proud to drive them up to it.”

The bad: Not much. It needed inside carpets, a fresh coat of paint and some lawn trimming.

What it took to land it: “It was kind of difficult to get the credit. I had only lived here a year and a half,” the welder said. “I had $20,000 and asked a bank to lend me another $20,000. The bank initially said yes, then it said no. So I had to go to another bank. But I understand it’s because I hadn’t been here very long at all.”

3.

Who: Tamieka Gesse, 28

Where: South Fulton (ZIP: 30349)

The good: The Army wife and new mother paid cash for two homes: $19,900 for a house for her family in south Fulton and $9,000 for a duplex rental property near Clark Atlanta University. The family home, which sold for $125,189 in 2009, has four bedrooms and three bathrooms and went far beyond her expectations at that price. “People should pay attention," she said. "I have a big walk-in closet and a huge bonus room. My master bedroom has two closets. I even have a sun room and a back porch.”

The bad: The home had no appliances. She also tore out the carpets, painted the walls and added tile and hard wood floors.

What it took to land it: Patience. She visited at least 100 homes and lost bids on seven of them before snagging this house.