Archive for the ‘Developers’ Category

logo_serenbecomm.gifA couple of weeks ago, my wife and I went to visit my parents in Atlanta.  As with anyone who works in residential real estate, I always have to explore the housing market.  There was one development that I discovered that I believe has got to be one of the most interesting and promising concepts I have ever seen.  I normally have great disdain for tract developments, but this one was anything but tract homes.  In fact, I liked it so much we are mulling purchasing a second home there.

The development is called Serenbe.  It is located about 30 minutes outside of Atlanta.  The concept of Serenbe is to create a sustainable community centered around the land and the residents.  Serenbe consist of 900 acres of actual farmland.  However, development is restricted to only 30% of the green space.  In addition, the homes are built around several town centers that house small local businesses.  The developer has basically created a small farm town.  There is also a lake, public community space, working farmlands, a bed and breakfast, and restaurant.  The end result is one of the most peaceful places I have ever visited.  Check out the photos.  You will truly be amazed!

We explored all the various areas of the community and took a walk along its country road where we mingled with farm animals and enjoyed the views of the open pastures.  The first phase is centered around a small town area with a few art galleries and a bake shop called the Blue Eyed Daisy.  This place was really good – sandwiches as big as your head and coffee with enough caffeine to make you fly.  It is also becoming the community center as everyone seemed to know each other and was a hang out for the residents.

Talking with the Realtors at the sales center, there will be two other phases of development.  The second will be centered around the working farmland.  Many of the homes in this phase will abutt against the farms.  The residents can work the land themselves or simply play farmer and have the HOA manage it for them.  Along with the farms, there are plans for five additional restaurants which ultimately will get much of their produce from the farms.  The third phase of development will be a health and wellness theme with spas and alternative medicine practioners.  There are also plans for sports fields, an arts center, and other community gathering areas.  This place is truly self contained.

Unlike most large residential developments, I believe Serenbe has got it right.  First, they preserved the green space.  Trees and open farmland is everywhere.  Second, the architecture is varied and unique.  No two homes are exactly alike.  You can have a modernist masterpiece next to a craftsman bungalow.  Third, the theme is real.  Serenbe is a working farm with cows, horses, and produce.  This isn’t a fake theme development like you normally see in the suburbs.  Fourth, the development encourages community and walking.  All of the homes are clustered together, have front porches, and sidewalks (gasp!).  There are also bike paths and other community centers.

It is really difficult to put into words how special Serenbe is in words.  You really have to see it to believe it.  Hopefully, other developers will catch on.


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Buying a home is a complicated financial transaction. Unlike any other purchase you make, there are a host of other parties that will be involved each with their own responsibilities and agendas. It is important that each one of the parties listed are experienced and professional because any mistakes by one individual can cause the whole transaction to come to a halt. Here is a list of the people you need to know and what their general responsibilities are in the transaction.

Real Estate Agents: It is the real estate agents job to facilitate the transaction action between the buyer and the seller. The agents sell the property. Their role varies from marketing a particular property for a seller to finding homes for buyers. Generally, there are usually two real estate agents involved in a purchase transaction. It is important you know which one you are dealing with.

1. Listing Agents: These are the agents that are hired by the seller to sell their home. It is this agent’s job to market the home to other agents and interested properties. Their goal is to get the highest price for the seller.

2. Selling Agent (Buyer’s Agent): This agent represents the buyer in the transaction. It is this agent’s job to find a buyer a home. This agent will help the buyer negotiate an acceptable price from the seller, structure the offer, and guide their buyers through the transaction.

Loan Officer/Mortgage Broker/Banker: The loan officer is the person that brings the music to the dance. Unless you are rich, you will need to get a mortgage when purchasing a home. Your loan officer’s job is to educate you on the various mortgages available to you and counsel you on the appropriate financing for your purchase. They ensure that on the day of closing, you will have financing available to purchase the home.

Seller’s Attorney: This attorney represents the seller in all legal matters in the transaction. The seller’s attorney reviews contracts and makes sure that the terms are favorable to the seller.

Buyer’s Attorney: This attorney represent the buyer in all legal matters in the transaction. The buyer’s attorney reviews contracts and makes sure that the terms are favorable to the buyer.

Title Company: The title company coordinates the closing between the buyer and the seller. They also provide title insurance coverage which ensures that the home being purchased has no other claims of ownership or liens against the property.

Inspector: Hired by the buyer, the inspector’s job is to point out all of the warts on a particular home. If there are any issues with the property, they will need to be fixed by the seller or the new home owner should be made aware of potential future repairs.

Appraiser: Hired by the lender, it is the appraisers job to place a value on the home. The lender wants to ensure that the home you are buying is in fact worth what you are paying since it is the home that is securing the money they are lending.

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It seems like everyone and their grandma wants to open a mortgage company nowadays. Anyone that has looked at most major residential developments or gone into a large real estate office probably is aware that the company’s have “in house lenders.” They can not only show you houses, but can finance it as well. Or the developer tells you I will give you $1000 towards closing costs, but only if you use my in house lender.

So what gives? What you are experiencing is known in the business as Affiliated Business Arrangements or ABA’s for short. Basically, the realtor office or the developer create separate legal entity or joint venture with a large bank that allows them to also profit from your mortgage on the home. ABA’s work because many consumers are lazy. The convenience factor of having everything at one place is appealing. Also, the marketing is slick. Developers routinely will use freebies to convince you to use their in house mortgage company. Of course, this convenience and “freebies” come at a cost.

The first thing you should know is that under the Real Estate Settlement Procedures Act (RESPA) it is highly illegal for banks and brokerages to pay for business referrals. In addition, developers or realtors cannot force you to use their in house services. In other words, I cannot pay or give anything of value to a realtor for a client referral, nor can the developer try to charge you more for the house because you will not use the developer’s mortgage company. The ABA’s use legal technicality to avoid breaking the law, but the spirit is violated in every sense. Additionally, the government enforcer of this law, The Department of Housing and Urban Development (HUD), doesn’t do a very good job of making the law unambiguous. For instance, HUD says that a builder cannot charge you more for the home, but may provide “incentives” if you use the preferred lender. The incentives are usually things like free hardwood floors, granite countertops, appliance packages, etc. Some of these incentives can add tens of thousands of dollars to the price of a home. However, the builder can’t say, “The house is $250k if you use our lender, but it is $275k if you don’t.” But when they won’t agree to pay for the upgrades, this is essentially what they are doing. A nice little way to skirt the spirit of the law.

Typically, the mortgage deals offered by these arrangements are worse than you could do on your own with an independent banker or broker. But you are so focused on the free upgrades or closing costs credits, you don’t really run the numbers. You are called a captured audience.

For instance, I had a deal come across my desk where a major builder was offering $5000 towards closing costs if they used the in house lender. I get a look at the details of the offer; the rate was nearly .5% higher than I would have quoted at one of my worst wholesale lenders, not to mention they were charging a 1% origination fee on a $400,000 loan. The bottom line was I was able to significantly beat the rate, plus because of they were willing to pay a 1% origination fee, I could easily give them a $5000 credit towards their closing costs. Again, at first glance these deals sound good, but you really have to break them down to find out the truth. Remember, offering mortgages, title insurance, home warranties is just another way for these companies to make a little extra off of you.

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