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Bargain basements in the housing market
Home prices great for buyers, weak for sellers
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Signs like this one at The Falls of Braselton, a subdivision in Braselton, are becoming more prevalent. - photo by SARA GUEVARA

BRASELTON During better times, homes in the fashionable area around Chateau Elan had a price and that was it. Negotiation was almost out of the question.

Today, one subdivision has homes with neon colored banner proclaiming savings of $100,000. Another has a sign offering savings of $50,000.

They're not exactly giving homes away, but it is clearly a buyer's market.

"We're seeing some situations where builders are dropping all profit out of a house, and in some cases they've gone to the bank to negotiate a short sale rather than going through foreclosure," said Frank Norton Jr., a Gainesville real estate executive.

A short sale is where the price of the property is lower than the balance due on the loan.
Not only are builders selling properties, banks are using innovative marketing techniques to unload foreclosed properties.

United Community Bank now has a complete listing on its Web site of bank-owned residential properties. The site allows potential buyers to browse by price and community. The bank is offering financing at 4 percent interest for 35 months on undeveloped lots and rates of 3.95 to 4.95 percent interest on homes.

But the builder and bank-owned property discounts are causing problems for residents needing to sell a home.

Betsy Clausen, an agent with Prudential Georgia Realty, said it is hard to compete with cut-rate prices.
"For the person who is selling their house because they're having to move, its a tough time," Clausen said. "They're trying to get what their house was worth six months ago. Now they can't get it. When you're selling against a foreclosure, the foreclosure wins every time."

But for buyers, the news is good.

"This summer I was looking at a house with a couple in Riverstone Park and the price was $375,000," Clausen said. "Now, it's $275,000. Throughout the subdivision, they've come down between $50,000 and $100,000. "Unfortunately, the number of foreclosed properties is likely to rise. This month, The Times listed legal notices for 226 foreclosures, 43 of them properties belonging to builders. The number is down slightly from October, when 236 foreclosures were listed, including 58 builder properties.

William Blanton, chairman of First Century Bank in Gainesville said his bank did not have much exposure in the land acquisition, land development and home construction market.

However, Blanton said bank regulators were not putting pressure on banks to sell properties unless they appraise at less than the loan value.

"If you have a property financed at $1 million and the appraised value is $800,000, there is pressure to push it on out the door so you can put new assets on the books that are performing," Blanton said.

Foreclosed properties are listed in bank accounting as Other Real Estate Owned or OREO. Norton has formed a division of his firm that specialized in selling stressed properties for both banks and the Federal Deposit Insurance Corp. The firm had about $1 million in foreclosed properties for sale 18 months ago. Today, that number is $135 million.

In this area, Forsyth and Jackson counties have the most builder or bank-owned properties on the market.

"Forsyth and Jackson have some of the best bargains we've seen anywhere," Norton said, adding that the situation was due to a higher amount of speculative construction prior to the burst of the housing bubble.

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