1120 Dell Avenue SE
Smyrna, GA 30080
$199,000
Features
- 3 bd/2 ba
- Master on main
- Large private yard
- Walking distance to Jonquil Plaza, Smyrna Village, and Belmont Hills
- Short drive Braves Stadium and the Battery
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Ranch on large, private lot with a one car carport This home has a great open floor plan, spacious bedrooms, and in a great location. Just 10 minutes from Smyrna Village, Marietta Square, and the Battery.
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Fantastic move in ready home. This home sits on a wonderful mature lot with fenced level yard. Open floor plan, high ceilings, tons of light - partially finished basement Master on main - Great location and schools.
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If you are looking for a move in ready home on a basement, this is it. This home boasts a renovated kitchen and baths, newer roof, new HVAC, exterior paint March 2018, over-sized pantry and laundry room, and a wonderful floor plan. It has a stunning panoramic view from the great room. Minutes to downtown Smyrna, all the great restaurants, and close to Atlanta Battery, I75 and I285. In a great school district as well.
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Are Knock, Open Door, and Offer Pad really the wave of the future? I have heard a lot about these three companies over the last six months. There was an article about all three in Inman called ICNY18: The iBuyers are Coming for Real Estate. This article talks about how these three companies are going to be the wave of the future. I do feel they have a market, not to the degree that is being reported.
All three are very similar and have similar process. The idea is that a buyer fills out the information about their house. Then Knock, Opendoor, and Offerpad do research based on comps and tax records. Then they offer the buyer a price to buy the home and includes all their fees. If the seller agrees to sell their home, a closing date is set. This is essentially the basics. There are more details which I will talk about later. One thing to remember, they are for profit companies. This means they are going to offer you a lower price for you home, Then will relist it at a higher price and sell it to make that profit. Let’s break down the three companies.
I chose to use my house as a test house. My house was a ranch build in the late 1950’s. We renovated it in July of 2015. We gutted it and rebuilt it. It is essentially a new home. We only kept three existing walls and the foundation. The house was originally 1198 sq feet with an approximate 505 square foot exterior entrance basement. When finished, it was a 3071 sq ft house with a 505 sq ft unfinished basement. We had an appraisal completed in December 2017 and it was valued at $495,000.
I went onto all three sites and put my information about my house. They asked all the relevant information and wanted pictures. I then received offers from all three. The breakdown is as follows.
Their initial offer was a price range from $323,000-409,000. I asked a Knock representative how they came up with the evaluation. They said it was through the tax records and comps. When I looked at the comps they chose, they picked homes outside of my subdivision and then adjusted them. All the homes they compared to my house were smaller and had less upgrades. At the bottom of the offer there is a way to rate the offer. I rated it as a poor evaluation. I got a call from a representative, at Knock, and we had a long talk about the house. They decided to send someone out to take pictures. I had also mentioned that I had an appraisal done two months earlier at $495,000. Below is the final offer from Knock.
Their final offer was $373,000, which is $122,000 lower than the appraisal. They gave me a suggested list price and a guaranteed sale price which was $24,500 lower. The guaranteed price is approximately 6.6% lower. These are not the final numbers. There was approximately $22,000 in fees which includes the Realtor fee for Knock buying your home, holding costs while they resell your home, and a fee for the “Knock” experience. After the seller signs the purchase contract with Knock, they send out an inspector to inspect the home. Knock will send you a repair list of items they feel need to be fixed. The difference is that in a traditional sale repairs are negotiated, not with Knock. Knock gives you the list and prices and either you can fix the items, or they will take it off the price of the house. There is no negotiating. The repairs will add more to the overall fees paid by the seller. When you look at the overall sale of the house, the true number is $351,000 not including repairs.
Knock
Purchase price - $373,000
Fees - ~$22,000
Total - $351,000 – not including repairs
Difference from appraisal and final price - $122,000
Traditional Realtor
Purchase price - $495,000
Fees – 6% commission - $29,700
Total - $465,300 – not including repairs
Difference from appraisal and final Price - $29,700
Difference between the Knock offer and a traditional Realtor - $114,300
Knock also has a trade in program. How it works, is a buyer will get the offer on their house and then identify another property they want to buy. Knock will buy the new home and make improvements, move the buyer in, and they then sell the buyers home. It sounds great, but it is not all it is cracked up to be. I gave Knock a luxury home, that I wanted to buy, for the trade in program. Here is how it works:
The subject home was an $800,000 home. Knock will purchase that home and then sell the home to you and charge you fees. The fees are below – These are typical types of fees but some of them are high.
Fees from Knock
Knock Origination Fee (1% of loan amount) - $6,080.00
Interest ((8% of Loan Amount/365) X 60 days) - $9,994.52
Estimated Knock Closing Costs - $4,757.00
Other Cost Assumptions (Insurance, utilities, etc that you have to pay on your home that you are selling - $2,115.40
Total Acquisition and Hold Costs during Temporary Occupancy - $22,946.92
If you notice, Knock charges an 8% interest rate for at least 60 days. That is almost double what the current interest rate is. This fee could be higher if you home takes longer to sell. They also charge closing costs that the buyer must pay. In a traditional sale closing fees are negotiated. So, you take the fees from the sale and add them to the fees for the purchase it would be 44,946.92. That is a ton of fees. The three fees that stand out the most are:
Total Acquisition and Hold Costs during Temporary Occupancy - $22,946.92
If you notice, Knock charges an 8% interest rate for at least 60 days. That is almost double what the current interest rate is. This fee could be higher if you home takes longer to sell. They also charge closing costs that the buyer must pay. In a traditional sale closing fees are negotiated. So, you take the fees from the sale and add them to the fees for the purchase it would be 44,946.92. That is a ton of fees. The three fees that stand out the most are:
OfferPad is very similar to Knock. The big difference is that they will not come to your house if there is a valuation issue. I submitted all my information on their website, pictures, and a detailed description of the renovations we did on our home. The initial offer I received is below.
They were way off. When asked how they determine a pricing, the Offer Pad representative said they look at tax records and comps. The problem is, my tax records are not 100% accurate since I renovated my home. Also, they pulled lower comparable properties inside and outside of my subdivision. I did let them know I had an appraisal that was done two months earlier, and that has the value at $495,000. The asked me to send it to them and I did. This is what their final offer price was and their response.
“Ok, we’ve sent an updated offer over. They were able to increase the offer by $45,000 based on the additional information. Comp wise, it looks like one of the primary ones they looked at was 3655 Hickory Circle. It has no garage like yours, it is a little smaller w/ 3/2, but it is the same age. It sold for 275k in 72 days. Based on that, we feel like we could sell your home for about the 290K mark, the difference being a factor of our costs to get the home “list ready” (honestly not much), but then our carrying and marketing costs as we work to sell it.”
Features | Hickory Circle | My house |
Year built | 1962 | 1958- complete reno - 2016 |
Bedrooms/bathrooms | 3bed/2ba | 4bd/2.5 bath |
Square footage | 1581 | 3071 |
Basement | Crawl | 505 unfinished |
Layout | Original layout | Open floor plan |
Garage/ Carport | 2-car carport | Driveway |
Ceiling Height | 8ft | 9ft |
Patio/Deck | Deck | Patio |
Updates | Granite over older cabinets | Everything in the house- taken down to the studs rebuilt with new floor plan and addition |
Laundry | Kitchen | Laundry room |
Sales price | $275,000 | Offerpad offer - $265,000 |
are pictures for comparison. The house on the left is 3655 Hickory Circle and my house is on the right. Do you see any comparison? I don’t.
Offerpad sent me an offer $10,000 lower than the sales price of Hickory Circle. Hickory Circle is half the size and has no updates, compared to our house, which is essentially a new house. Everything was replaced and rebuilt. How can Offerpad make such a low offer when they were given pictures of my house, a recent appraisal, and a detailed description of all the renovation? After all that information, OfferPad still felt they could sell it for $295,000 and offered me $265,000. Not only was the offer ridiculous, they were going to charge me an additional $15,400 in fees. These fees include commissions, their holding fee to sell the property, and the Offerpad experience fee of $2,200. So, lets breakdown their offer.
Offerpad vs. Traditional Realtor
Offer Pad
Purchase price - $265,000
Fees - ~$15,400
Total - $249,600
Difference from Appraisal and Final Price - $245,400
Traditonal Realtor
Purchase price - $495,000
Fees – 6% commission - $29,700
Total - $465,300 – not including repairs
Difference from Appraisal and Final Price - $29,700
Difference between Offerpad and Traditional Realtor - $219,900
The final company is Opendoor. Opendoor does not buy older homes, so I used a friend’s house. How Opendoor works is like the other two. They base their pricing on comparable properties and tax records. They make a cash offer on the house and if all parties agree they buy the home. Let’s look at the property that I used.
My Friend's House
I filled out the paperwork for Opendoor and submitted it to them. This is the response I received.
Net Offer Details
Additional cost to seller to close:
Opendoor will have inspections performed by a licensed, independent home inspector and will submit a repair request like a traditional Buyer. For the repair request, Opendoor will itemize the requested repairs with their cost to have the repair completed and will provide the Seller a credit in-lieu of repairs option.
Larger repair asks may result from roof, HVAC, foundation and/or pool issues.
The offered price is low. The last two homes that sold in my friend’s subdivision sold for $335,000 and $337,500. The $335,000 house is 2733 square feet with similar upgrades. The second home is 3,135 square feet with similar upgrades. Both homes are on a slab. The sold homes are between 1720 - 2,122 square feet smaller than my friend’s house. That is a huge difference is square footage. If I were to sell my friend’s home I would price it closer to 375,000. In additional to a lower offer, they are charging $18,755 in fees. These fees include a customer experience fee and risk free (Holding cost they charge while they are selling your home). The fees don’t include closing costs and repairs. So, the fee could be $5,000-$10,000 or more depending on the repairs. Just like the other two, there is no negotiating on repairs. They will give you a repairs list and then ask you for a price reduction.
Break down Opendoor vs Traditional Realtor
Opendoor
Purchase price - $341,000
Fees - ~$18,755
Commission, repairs, and closing costs - ~10,000 (an estimate)
Total - $306,245
Traditional Realtor
Purchase price - $375,000
Fees – 6% commission - $220,500
Closing costs- average of current sales in neighborhood - $1,219
Total - $351,281 – not including repairs
Difference from Appraisal and final Price - $23,719
Difference between Opendoor and Traditional Realtor - $45,036
This is the best of the three by far. Still, $45,036 is a lot of money to lose.
Summary of All Three
See below for a summary of all three companies and what a traditional Realtor does.
Program Features | Traditional Realtor | Knock | Offerpad | Opendoor |
How they Price | Based on comps and experience | Tax records and comps | Tax records and comps | Tax records and comps |
Accuracy of pricing | Very accurate | Very Low | Very Low | Very Low |
Fees | 6% | 6% | 6% | 6% |
Included in fees | Listing and selling agent commission | Buyer commission only, holding costs to sell home and “customer experience” fee | Buyer commission only, holding costs to sell home and “customer experience” fee | Buyer commission only, holding costs to sell home and “customer experience” fee |
Repairs | Negotiated by Realtors between buyer and seller | Not negotiable -are not included in fees – this is additional costs | Not negotiable - are not included in fees – this is additional costs | Not negotiable - are not included in fees – this is additional costs |
Advantage for each | Experience, pricing, and negotiating | No hassle selling | No hassle selling | No hassle selling |
Place in market | Work with all sellers | See below | See below | See below |
There is a market for these companies. The markets would include:
The concerns that I have with all three companies
There always need to be a human element (non-biased) when selling a home.
Hope this helps. If you have any questions or need anything let me know.
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This has been a huge topic, as of late, because interest rates are rising and it does affect how much buying power you have. So what does an increase in interest rates mean?
Imagine this, you wake up one morning and decide that you want to buy a home. You start to look on the internet and call a mortgage broker. The mortgage broker gets you qualified for $250,000 at 4%. That is fantastic. You went and hired a Realtor to help. So, you are going to go out the next morning and start looking at houses. You wake up and the sun is shining and it is a very nice 60 degrees. You are all dressed and ready to go. The mortgage broker calls and tells you the interest rates are at 5% now. What does that mean? It means, the the $250,000 home that you wanted to buy will cost you more. For every one percent increase in the interest rate, you lose 10% of your buying power. To keep the same mortgage payment, the $250,000 purchase price becomes a $225,000 purchase price.
Lets look at an example to show the difference:
Lets use the $250,000 purchase price in the story above.
4% Interest Rate
Purchase price - $250,000
Interest rate - 4.0%
Monthly Mortgage Payment (Principal + Interest) - $1,194
5% Interest Rate
Purchase price - $250,000
Interest Rate – 5.0%
Monthly Mortage payment (Principal + Interest) - $1,342
Difference
Payment Increase of $148
That does not seem too bad, but that $148 is actually costing you $17,760 over a 10 years or $52,280 over 30 years. To use it in the real world, $148 is about four to five tanks of gas a month. That adds up.
To keep the same $1194 payment at a five percent interest rate you will need to buy a home around the $225,000 price point. Knowing Atlanta and how the housing market has become so price driven, the decrease in buying power could affect the size, upgrades, schools, and the area you want to live in.
The interest rates have gone up over a half a point since September 2017. That is already a 5% drop in buying power. It also does not factor in appreciation of home. If that $250,000 home becomes $255,000 then you have lost 5,000 more.
Take a look at the six month chart for interest rates. You can see an upward trend. This trend will continue. Different projections, that I have read, say that interest rates could be above 5% by the end of this year.
US 30 Year Mortgage Rate data by YCharts
I know the inventory is low, but the longer you wait the more it will cost you. If you need to sell, take advantage of more buyers in the market, low inventory, higher sales prices, and better terms. Use that extra money for another house. Interest rates at five percent are still low. When I bought my house is 2006, I had an interest rate at seven percent. All I am saying, is that if you have a certain mortgage payment that you want to stay around, the longer you wait the less buying power you will have, the type of home you want and the features and location could change.
Spacious 6 bedroom custom built, two story craftsman on a finished basement. This home features, open floor plan, a resort style heated salt water pool, screened porch, master on main, dedicated office, media room, game room with a potential for bar area, workshop, and more.
Fantastic Cobb County Schools - Harrison High School, Lost Mountain Middle School, and Vaughan Elementary School.
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The Atlanta Market Report for November 2017 is out. This has been a crazy year. Inventory is incredibly low and we are seeing a slight adjustment in the higher price points. In January of this year, the $500-$600,000 price point had an average of 5.1 months supply. Now the average is 5.8 which means we are seeing the 500+ starting to slow down. The months supply of inventory is starting to creep into the 400-500,000 range. It is only up slightly from the beginning of the year but this trend will continue as it moves to lower price points. It will be quite a while before we see any form of a balanced market. So for now it is a great market for both buyers and sellers. For sellers, it is the lack of inventory. For buyers, it is the interest rates remaining low.
The attached homes are still really strong but the market is the same as the detached homes. The higher price point months of supply is starting to increase as well.
The under 300,000 market is still the sweet spot – most of the sales occur between the 100-300,000 range and that is why the inventory continues to remain low. Properties are being snatched up as soon as they hit the market.
I have clients asking about foreclosure or short sales. The distressed market ship has sailed, as the overall distressed sales is 1.5% of the market. To give you a perspective, January 2012 the distressed property sales were 40% of the market.
Overall the market is still low on inventory especially in the $300,000 and below. It is going to be that way for a while. Buyers it is still a good time to take advantage of the low interest rates. Seller do need to be careful we are seeing higher failed listing in the certain price points. This means that the sellers are not adjusting their sales prices based on what the market is showing. It is still a sellers market in most price points.
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What makes a bedroom? Can a room without a closet be a bedroom? Both excellent questions that I get asked a lot. It is one of the most misunderstood places in a house. Buyers, sellers, and many Realtors do not know the criteria for a bedroom. This needs clarification. What the actual criteria for what a bedroom is and what the buyers or sellers might call a bedroom might differ a bit. There are four criteria that a room has to meet to be called a bedroom.
Should a bedroom have a closet, I would say yes because most buyers expect it. The International Residential Code does not require or mandate a closet in a bedroom. Many times you see a bedroom without a closet in older homes. In the metro Atlanta market, I see homes that were built before 1970 , the brick ranches, old Victorians, etc. to have a bedroom without a closet. Even though it is not a mandate, we have to think about the local real estate market and how they perceive what a bedroom is.
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