May 15, 2019

Is it a Good Time to Buy? or Sell?

How’s the market, is it a good time to buy or sell a home? This is a question that I am constantly asked when speaking to almost anyone about the current state of the real estate market, and if I am being honest – I would prefer not to give a straight answer.  The reason being is that, I can in good conscious give you a reasonable argument in any direction.

“Of course it’s a good time to buy.  Interest rates are at historic lows and borrowing money is cheap.  You should buy now and lock in a low interest rate!”  On the other hand, interest rates and asset prices have an inverse relationship.  Consequently, (among other factors), home prices are so high because interest rates are so low.  “If you wait until rates go up a little, then asset prices will drop and you can purchase your home at a cheaper price.”

Well what about selling, is it a good time to sell? Again, it can go either way.  “Yes! You should absolutely sell now.  We have been in a 10 year bull market and a period of economic expansion since the 2008 mortgage crisis.  If you look back at history, the economy goes through cycles of expansion and contraction to one extent or another every 5-7 years.  Therefore, if history is any indicator then we are due for some degree of a correction and you should cash out now while we are at the peak!”

But wait…What about the other side of the coin? Well new constructions are selling like hotcakes, however if you have a home that is older and outdated, then maybe you shouldn’t sell now.  For the most part the overwhelming majority of today’s buyers want a home that is new or newly renovated - turnkey, with the white kitchen, quartzite counter tops, the light neutral paint colors, new or refinished hardwood floors, and fresh moldings throughout.  So, if you have an older home then buyers are going to want a very steep discount.  First, they will take into account the cost of the work to be done.  Which unfortunately, labor and material costs are very high right now.  Second, in today’s world where usually both spouses/parents are working, many buyers simply don’t want to deal with the hassle of renovating a home.  As a result, you can take an extra chunk off the purchase price simply because a buyer doesn’t want to deal with a “fixer upper”.  It is an inconvenience for them, and time is money so if they can’t get it at a steep discount then they will most likely pass.  In conclusion, if you have an outdated home, unless you’re willing to sell it at a discount then maybe you should wait, or consider renovating first. 

The point I am trying to make here is that there are so many variables that come into play when deciding if now is the right time to buy or sell a home, that it’s really not a question that can be given a straight answer.  Yes, there are a few truths that are undeniable and have a big impact on the decision.  Inventory is relatively low, interest rates are as well, and it is more of a seller’s market.  Yet, the fact remains that no one has a crystal ball and we are in a time where there is so much economic and political uncertainty that who knows what the future holds.  Trying to time the purchase or sale or your home is like trying to time the stock market.  No one knows what the future holds and there are too many variables to accurately assess, analyze and understand the cause and effect relationship between that it’s simply not practical for the majority of consumers to be able to consistently time a residential purchase correctly.  For instance, one minute trade talks with China are going very well, and the market is up.  The next day trade talks are deteriorating and the market is down.  One day the fed is going to hike rates, the next there will be not rate hikes for all of 2019, and the next day there is a good chance of a rate reduction before the end of the year. 

Thus, how do you correctly answer the question – is it the right time to buy or sell?

Well, if someone wants a generic answer then I would say, generally speaking it is a good time to sell.  Interest rates are historically low, housing inventory is also relatively low - while buyer demand remains strong, we have been in a period of economic expansion for 10 years, and based on history we should soon be due for some type of correction, contraction, or even recession.  However, that of course is not a 100% guarantee and our economy could remain strong for the next 6 years.  Conversely, if you want to buy, then for all of the reasons just mentioned you may benefit from sitting on the sidelines for a while longer, seeing if “history repeats itself”, and then swoop in to buy at a significantly reduced price.  Once again however, there remains the possibility that the economy remains strong for another 6 years and you’ve now pushed off your purchase (and potentially your’ life) for an unreasonable amount of time, while continuing to throw money away on rent.

…And so, all of this brings me to the point I have been wanting to make all along.  My preferred way to answer the question of, “is it a good time to buy or sell a home?” is to ask more questions; because like most things in life, the answer is not black and white.  It is gray and situational.  The reason being is that most times a home purchase or sale is due to a life event – you just got married, you are having your first kid, you are having your third kid, you got a divorce, all of your kids have now moved out, you are re-locating for work, etc.  The right way to answer this question, is to understand the motivation for buying/selling, discussing the persons finances, talking through the alternative options, and knowing how long a person would plan on staying in there next place.  Only until you get a full scope of the picture can you accurately advise someone on whether or not a home purchase or sale would be a wise move at a particular point in time.

April 12, 2019

Turbulent Mortgage Rates

Mortgage rates in the last 5-6 months have seen some turbulent changes with reactions from Federal Reserve policy.  Mortgage rates have a direct correlation to home valuations.  As interest rates go up, and the cost of borrowing money increases – asset prices go down.  The reason behind this is that incomes don’t change very quickly over time (for most people).  So, people have a finite dollar amount in mind that they’re able to afford every month in a mortgage payment – and whether that lump sum includes more interest, more principal, more taxes, or more insurances doesn’t matter to them, so long as it fits in their budget.

Late last year in the November we saw interest rates pass the 5% mark, which historically is still low but relative to the last ten years is very high.  In the new year, the Fed announced it would stop tightening and wouldn’t be raising rates this year at all.  In fact, mortgage rates actually fell to the low 4’s from over 5%.  This sparked a little refinance boom for lenders on borrowers who had closed on loans late last year.  So, what do we think is going to happen going forward?

Its important to note that the Federal Reserve Chairman is an elected official by the President of the United States.  While the chairman is elected by the president, it is important to note that the Fed is not supposed to conduct monetary policy as a result of any political influence.  Kind of interesting that the president, who gives you this big-time role, is not allowed to have any influence over you… wink wink…  In any case, there isn’t supposed to be any political influence because our monetary policy decisions are supposed to be made in the best interest of the American economy – not in any one person’s interest.  As the Fed raised rates leading up to the end of last year, we saw the stock market start to crash.  Once we saw the markets start to crash, Donald Trump started to speak out about the Fed’s role in that.  He has said on numerous occasions during rally’s and speeches that what the Fed was doing was going to crash the markets.  What he was saying was true, as raising interest rates too fast would slow any economy, but he’s doing it for political reasons.  Donald wants to get a second term, and he won’t get that second term if the economy is not doing well because of high rates and quantitative tightening.  So, he went after Powell, who reversed policy as a result.

Moving forward, with Donald having a clear influence on the Fed, I think we’re going to see low rates for as long as he’s in office.  In fact, I wouldn’t be surprised if they went back to quantitative easing again.  For the next two years at the very least, we think there is going to be low interest rates/rising asset prices/and strong housing markets.  If Donald gets re-elected, we’ll probably see more of the same until he passes the baton to the next guy or gal. 

March 13, 2019

Neighborhood Realtor? Or The Realtor who has Reach?

This is the great debate for sellers in today’s fast changing world.  We’re caught in this age of time where we have these extremely powerful technologically based tools, but real estate is still very much a local business.  In todays world, most sellers have the choice to hire either the broker who only does business in one or two zip codes or the agent who covers huge geographies.  So, who’s better? What’s the difference between the two? In this blog we will answer these questions and discuss where we think things are headed.

Once upon a time there was an MLS truck that used to deliver what looked like a phone book every morning to every real estate office.  Agents used to flip through these phone books every day to see all the new properties to hit the market.  They would memorize the inventory and study what went into contract and what sold.  Consumers used to have to actually go to those real estate offices and meet with agents who had these books, just to see what was new on the market.  This was a time when realtors held all the cards.  They held all the data with regards to what was actually on the MLS, because it was not available direct to consumer on the internet.  This is how your “neighborhood realtor” came to be.  At this time, agents could only know and consume the data that existed in their town because it was in their head by memory, and the book was as thick as the yellow pages.

A neighborhood realtor certainly has some advantages.  They know all of the little nuances of the neighborhood.  They know every block, every park, every school, nearby shopping locations, etc.  Their business model is to list as much property in a specific neighborhood as possible and try to corner the market.  If they can list a good majority of homes in that market, then they’ll also get a chance at representing buyers in that market who came to see their listings unrepresented.  They also try and move those buyers into the inventory that they hold as a way for them to be able to sell off their own listings.  While this method of selling homes works, some would consider it passive.  The basis of this entire method of selling property is that your listings are the “bait” for buyers.  Most agents that run this model are leveraging their listings to generate more business, without carrying any marketing expenses (other than the content they generated for the listing itself). 

There is this new breed of listing agents, that are technologically inclined.  They understand digital marketing, and are leveraging it to cover wider geographic areas and get their sellers more exposure.  People today are spending a disproportionate amount of time on our digital devices.  Whether it be your iPad, iPhone, Samsung galaxy, etc. – the world is at your fingertips with these devices.  Need a stock quote? An answer to any question in the world? Need to tell a friend you miss them?  Want to congratulate someone on a job well done?  Listen to your favorite song?  All of these things can be done instantaneously on these devices.  This is why our world relies on them so heavily, they’re your one stop shop to everything – including shopping for homes. 

So how are these new age agents leveraging this technology?  In the world of marketing, nothing is more powerful than the digital strategies that exist today.  Social platforms such as Facebook, Instagram, Snapchat, Linkedin, etc – are mining our data everywhere you go on that device.  With that being said, they know when you’re in the market to buy or sell a home.  So, these agents are tapping into this technology to build profiles of people who they think will be a fit for their listings – and then they’re marketing their listings directly to these consumers.  With this strategy, you can reach people all over the geography of your choice that fit the criteria for someone who’s interested in buying the house your selling.  You can get outside of the town the house is in, and market to people coming from the city and moving to the suburbs.  Your reach expands to a much broader demographic, and you can pinpoint people who are specifically looking to search for homes like yours.  The one caveat that exists with this form of marketing is that it costs money.  Most agents are cautious about investing a significant amount of money into running these ads, with the fear that the house may not sell.  This is why the more successful agents are using this method, because they sell the volume needed to be able to have a significant marketing budget for a home.

Furthermore – a realtor who does business in multiple places may be a member of multiple real estate boards.  There is an NAR statistic that 90% of buyers are represented by a realtor.  In a geography like Long Island, we know that a lot of our buyers are coming from the city.  The city is a completely different real estate board from Long Island.  If you’re an agent who is actively involved in multiple real estate boards where the buyers are moving between these two places, then you have a higher chance of finding a buyer through the other boards.  An email to 30,000+ realtors in the city for a property that’s for sale in a commuter town on Long Island will 100% garner their attention and possibly a response with an interested buyer.    

In the future, I believe that you’ll only see teams of agents who cover huge geographies.  Its already happening now, as the highest performing teams are covering multiple cities in different corners of the county.  The neighborhood realtor still has a significant place in todays market, but as people start to understand this technology things are going to change.  People will prefer that their home have its own marketing budget that drives ads in front of viable buyers across a 50-mile geography leaving no stone un-turned.  For now, some people are still concerned about being able to sell a neighborhood – but quite frankly that’s something that can be done after a quick conversation with the seller.  The ability to cast a wide net, push as much traffic through the door as possible, and generate offers through technology will soon supersede the local knowledge of the neighborhood realtor.

March 6, 2019

5 Questions for Sellers Interviewing Real Estate Agents

How to Interview a Real Estate Agent:

 

Smart consumers interview potential real estate agents before they decide which agent they want to hire. Just as you're sizing up the potential for a good fit, the real estate agent will likely be interviewing you, too. Be wary of agents who don't ask you questions and probe for your motivation. You wouldn't work with just any agent off the street, and good agents are selective about their clients, too.

Here are 5 questions you must ask when you start your interview process:

1)    What Is Your Best Marketing Plan or Strategy for My Needs?

As a seller, you'll want to know exactly how the agent will sell your home. Is a direct mail campaign appropriate? Why or why not? Where and how often does he/she advertise? What kind of photography does he/she offer? Does he/she market online? What steps will he/she take to prepare your home for sale? Most importantly, ask if there's anything about your home that he/she thinks might detract from its potential for sale.

2)    How do you arrive at the listing price?

I always recommend a homeowner doing their due diligence when it comes to the price of their home. Many agents tend to over promise on the listing price in hopes that it will result in getting the listing.  A home that is priced too high will languish, eventually turning off potential buyers; but a home priced too low might leave money on the table. Make sure your agent is knowledgeable about the market and what other similar homes have recently sold for to help you arrive at the right price.

3)    Can you provide references?

Past performance and years of experience are all valuable indicators of an agent’s competence. But you’ll also want to talk with someone who has used their services before to know what it’s really like to work with them. Perhaps you’re interviewing an agent in the first place because they were recommended by a trusted friend or family member, but you’ll still want to get a variety of opinions from different sources. It’s unlikely that a listing agent will send you to a client who didn’t have a good experience, which is where a little internet sleuthing can come in handy. When reading through online reviews, however, always keep the source in mind. If you stumble on anything negative three or four pages deep in the search results, it’s always a good idea to give the agent a chance to explain if he or she seems otherwise well-suited to your needs. This can be a great way to see how he or she handles criticism before getting past the point of no return.

4)    What questions do you have for me?

Although you are paying them to perform a service for you, your relationship with your agent should be a true partnership that goes both ways. Look for an agent who has a genuine interest in understanding your plans and goals, and who will take all of your requests and requirements seriously.

5)    Can You Explain the Home Selling Process from Start to Finish?

Most homeowners may only experience selling a home once in a lifetime. The process can seem long and complicated. Feel comfortable understanding the key points along the way—preparing the home, showings, how to manage offers, home inspections, what happens post-accepting an offer, timelines, etc. A realtor should make you comfortable along the way, though always expect the unexpected.

Feb. 28, 2019

Nassau County's Reassessment Nightmare

There are only two things that are absolute and certain in life, and that’s death and taxes… Here on Long island, we residents pay way more than our fair share in property taxes as compared to the rest of the nation.  Nassau County ranks #5 in the country with regards to property taxes, and Suffolk is #16.  Nassau county has recently declared that it will be reassessing every property in the county, thereby changing what everyone pays in taxes.  All in, that’s about 400,000 properties in total.  It is said that 52% of the properties in the county will have higher property taxes, and 48% will get property tax reductions when this is all said and done. 

 

To understand why our taxes are so high to begin with, I think it’s important to know where most of our tax dollars are going. 

 

Most of those property taxes go towards the schools, which to be frank is a great reason to pay taxes (if we were searching for reasons to pay taxes, that is).  Most of Long island is an end user real estate market, meaning that people come here to lay down roots and raise families.  One of the most important things to consider when raising children is where those kids are going to go to school. Here in Nassau county, we have the number one rated public high school in the county, Jericho.  Our public schools rival most top private schools around the country.  It’s not until you reach The Hamptons where you’ll see property taxes drop to almost nothing.  You can buy a multimillion-dollar home in the Hamptons with property taxes of under $10,000.  The reason for that is simple, the public-school system is very small.  That market is a secondary home market, and most people just are not sending their kids to school out there.  So outside of clean towns, paved roads, garbage pick-up, and anything else you can think of that your taxes should be paying for – our school systems are the main driver of that national statistic.

 

So, what’s Laura Curran and her administration up to in Nassau County?  To understand why she’s doing what she’s doing you first have to understand how things worked previously.  Since the freeze of the tax roll in 2011, homeowners would grieve their taxes every year to pull them down.  Most homeowners who practiced this with a tax grievance lawyer every year, ended up paying far less than others in their neighborhood who weren’t doing this.  So, within a given neighborhood, you could have two people that live right next to each other with the same house.  Let’s say one neighbor grieved every year and the other never grieved.  The neighbor who was grieving every year could be paying five, ten, fifteen thousand less – depending on the neighborhood.  Is that a fair system? I don’t believe it is.  So what Laura is trying to do, is to make everyone pay their fair and equal share.  Makes sense, but it comes at a terrible time.

 

With the recent tax plan change I believe this is going to be a problem – Specifically in the higher end of the market.  It is my belief that the higher end homes were likely the ones that were grieving.  The reason being is that people with more money are typically more efficient with their money.  They have better accountants and lawyers that make them more efficient.  They’re just more likely to be paying attention to something like this rather than not knowing about it at all.  So, if they’re the ones who were paying lower property taxes because they knew how to play the system, then they’re going to be the ones who are going to see the highest jumps in assessments.  If they have the higher jump in assessment, then it’s likely they’ll have greater property tax bill increases. 

 

The luxury market on Long Island has been hurting for a little while now.  There are many different reasons people have proposed as to why this may be the case.  One of the most common reasons for believing that the luxury market is where it is; is because of the $10,000 Cap on SALT deductions.  Like I mentioned earlier, people who have money are very strategic about where they put their money.  If there is no more tax benefit to owning highly taxed luxury property, then the result is that people just won’t buy high end property (unless there is an emotional or personal reason to do so).  Their money will flow into a different asset class that has tax benefits. 

 

Taxes in our luxury market can get to be insanely high.  I’ve personally seen taxes of $50,000 all the way up to $250,000 for certain very high-end properties on the island.  In a town like Garden City, if taxes go from 25k to 30k or 30k to 40k, that’s a problem.  This is going to drive the prices of these assets down, over time.  Taxes are a fixed cost to owning a home – and what buyers can afford or what they’re willing to pay is usually a fixed number.  If the taxes add $500-$1,000/month to someone’s monthly carrying costs, that’s going to be factored into buyers offering prices. 

 

What Nassau County Legislation is doing is the right thing.  I believe they’re trying to hit the reset button so that everyone pays their fair share.  What they’re not considering is that it’s being done at a bad time when we no longer can deduct our taxes.  Will it influence home values? I think it’s very likely.  Politicians may be able to balance their county budget through this reassessment, but they’re ultimately going to devalue the mid-higher end range homes in the near term. 

 

Feb. 26, 2019

Mortgage Rates Hit 12 Month Low

The punch bowl has been given back to the housing market in the form of low interest rates.  Mortgage rates are the lowest that they’ve been in 12 months, which is going to have a great effect on this spring selling season.  This past week, interest rates on 30-year fixed rate mortgages averaged 4.35%.  Towards the end of last year, we were just under 5% on a 30-year fixed.  But why is this so significant?

Interest rates are defined as the cost of borrowing money.  The American economy heavily depends on financed assets.  Cars, Houses, Boats, etc. – Are for the most part, financed.  When people can afford to borrow more because interest rates are lower, they have more buying power.  If interest rates are low a buyer can afford a bigger/better home in a better neighborhood.  Low interest rates also give buyers the confidence that they’re buying a home in a market where prices will either remain to same or grow in the short term.  Had the situation been the opposite, where people felt a rise in rates was something that we’d be seeing in the short term, they would hold off on buying a home – because the price of their asset would likely decline in the short term.  Rising interest rates are not good for asset prices, because incomes typically don’t change very quickly. In a market where interest rates rise too fast somethings got to give for people to be able to afford what they’re trying to buy.  Usually, in that case, the price of the asset is where a concession needs to be made for potential buyers to be able to afford the asset.  So, the flow of credit and price at which money costs to borrow (The Interest Rates) – are the most important factor in housing.

Mortgage rates move in tandem with the 10-year U.S. Treasury note.  Bond Yields, which decline as the price of bonds rise, were caught in the volatility that we saw at the end of last year.  The yields have declined as the Federal Reserve keeps talking in favor of changing the pace at which they reduce the bonds they hold on their balance sheet.  The acceleration of debt from Trumps new policies are being financed by the issuance of these bonds.  Due to the massive issuance of this significant debt, the excess supply of these bonds could erode the price & demand of these products.  However, for now there is more buying than selling of these asset types.

So, to draw this blog to a close, I’d like you to reference the graph below that shows how mortgage applications rise when interest rates fall.  This spring we are seeing an extremely favorable market with regards to real estate.  Sellers are going to be able to sell their houses for numbers that they desire, and buyers will be able to afford more.  Everybody wins.  However, we don’t know how long this will last.  Remember, just two months ago most people thought we were headed for an economic disaster.  Seize the market when market conditions allow you to, and right now it’s looking really good.

Feb. 21, 2019

SALT Deductions & Long Island Real Estate

Here we are in the first year of Donald Trump’s new tax plan, and Americans are starting to digest all the changes that have taken place with this new policy.  The new tax plan certainly has its benefits.  The new corporate tax rate is 21%, the revised tax brackets are all putting more money in the pockets of workers, and there’s been a hike in the standard deductions to $12,000 for an individual and $24,000 if your married filing jointly.  All these things are great, but what about the new SALT deduction laws and how does it affect us in Nassau & Suffolk County?

The new tax plan has limited the SALT deductions to $10,000 in property taxes against your income.  As we know, here on long island and in most democratic states like NY/California – our property taxes are very high.  Its not uncommon for people in middle class neighborhoods to have property taxes of $25,000 per year.  In the more high-end neighborhoods, we see $55,000-$65,000/year in property taxes as being a common number paid by homeowners.  Nassau County ranks 6th and Suffolk County ranks 15th in the percentage of homeowners that are paying more than$10,000/year in property taxes throughout the country. Nearly half the homes in Nassau and one third of the homes in Suffolk fall into that statistic.  Nassau County has about 26,000 residents paying $20,000/year or more in property taxes, and Nearly 9,000 residents paying $30,000/year or more in property taxes.  Suffolk has 15,000 residents that pay more than $20,000/year in property taxes.

Just based on the above numbers, it’s obvious that Long Island is going to feel pain with regards to real estate, as a result of this law change.  The change effects too many people that reside here for it not to.  The question is, what will the changes look like?

The tax change has a bigger effect on your finances with the higher your property taxes are.  It is my belief that people who are well to do are very strategic with all their finances.  They themselves, or their money managers, understand the tax plans inside and out.  They arrange their affairs around those tax laws so that they can maximize every dollar they can.  If the wealthy Long Island residents begin to see that by re-arranging their affairs, they can keep a significant amount of money in their pocket – they will likely do it.  We keep seeing articles in the news regarding New Yorkers fleeing to states that have better tax benefits.  I don’t know if any of these claims have been confirmed, but its certainly not out of the realm of possibility.  The Real Deal cited a report where moving to a state like Florida can add up to 12% to your bottom line.  When your talking about big numbers, 12% can be significant to a wealthy person.

In the last year and a half, the luxury market on Long Island has consistently declined over time.  Whether you can attribute that specifically to SALT is not conclusive.  There are a lot of different things happening in our very fast changing world that can all be contributing factors.  One thing that we know, is that it doesn’t help.

In the middle-class price points, we likely won’t see any disruption.  We expect the $400,00 - $600,000 price points to remain unscathed from this tax plan.  In fact, like most other parts of the country, it may even help if a married couple takes the standard deduction of $24,000. 

On the flip side of the coin, not everyone is here for the tax benefits.  Nassau and Suffolk county are end-user real estate markets.  Most of us are here because our ancestors laid down roots, and we plan to be here for generations to come.  furthermore, we are in one of the greatest places in the world to live.  We have 4 seasons – white winters, a colorful spring & fall, and warm summers with some of the best beaches in the world.  We’ve got some of the best school systems in the country, the greatest city in the world a quick train ride to the west, and the Hamptons to the east.  When you think about it like that, paying a little extra in taxes really isn’t so bad.

Feb. 21, 2019

A Few Quick Tips for Selling Your Home in the Spring

Even though it’s the middle of the winter season, before you know it, spring will be here. Typically in most real estate markets, the spring is when it really begins to heat up. The spring real estate market generally yields the highest prices for those selling their home. This is only possible though if the proper preparations are taken before spring is upon us!

 

If you’re thinking of selling your home in the spring, you must know that even though you may receive top dollar for your home, the competition will also be the strongest. This means it’s absolutely critical that you’re prepared for the spring real estate market so you can knock out your competition.

1)      Get listed before the Spring inventory rush

If you’re thinking of selling your home in the spring, you must know that even though you may receive top dollar for your home, the competition will also be the strongest. What’s the best way to beat out the fierce competition that will be at hand? Make sure you are listed before everyone else. Getting your house on the market first is the most efficient way to get the absolute best price for your house.  Being a “big fish in a small pond” by being on the market when everyone else isn’t, will always result in more interest, and therefore a higher sales price.

2)      Start consulting with a realtor NOW

Homeowners tend to wait until they are 100% ready sell to start their interviewing process with potential agents. This is one of the worst things you could do. I always tell my clients that we should have a pre-listing meeting 2-4 weeks before they are actually ready to bring it to market. In those meetings we discuss the price of the home and anything I believe that needs to be changed prior to the listing that will optimize the price.

3)      Know what your plan is

One huge mistake sellers make is not knowing what their plan is once they sell their home. Are you planning on buying another home once your home sells? Do you have the option to move in with family? Can you rent, if need be? These are things you should think about and know the answers to before the spring real estate market hits. It’s a great idea to discuss your financing options with a local lender before you list your home for sale. If you can get pre-approved to purchase a home non-contingent, if need be, it can give you a huge advantage over any seller who is selling their home subject to finding a suitable property to purchase.

4)      Clean & Organize

I know it’s cliché but it’s imperative to give your home a thorough “spring cleaning.” This doesn’t mean wait until spring, though. Be proactive and start cleaning now; you’ll be glad you didn’t wait. A huge turnoff for prospective buyers are foul odors. Things such as smoke odors and pet odors can kill home sales.

 

Here are just a few things to make sure you clean before listing your home:

  • Wash your windows
  • Dust your blinds
  • Dust baseboard trims
  • Clean appliances
  • Clean shower(s) & toilet(s)
  • Clean inside cabinets

 

When selling a home, it’s important that you de-clutter and organize your home, too. A great way to achieve this is by packing. It may sound silly seeing as you haven’t listed your home for sale yet, but you will need to pack at some point anyways, so why not do it now! Clean out closets and pack away anything that you don’t have a necessity for. It is incredible how much better a home will show and how much quicker it will sell if it’s organized and de-cluttered.

5)      Consider having a Pre-List Inspection

One of the biggest reasons a home sale gets derailed is due to the home inspection. Most buyers will opt to have their offer contingent on an acceptable home inspection. Some buyers can even get alarmed and scared by the smallest home inspection finding and can use this to renegotiate the offering price. It can be easy to avoid this possibility and have your home inspected by a professional before listing it.

Feb. 19, 2019

The Highest Offer is the Best Offer... Right?

The Highest offer is the best offer… Right?

NOPE!  Contrary to what most people think, the highest offer is not always the best offer.  It’s hard for most people to understand that sometimes taking the most money is not always the best decision, especially when you’re talking about their home.  When someone classifies a house as their ‘home’ and they have emotional ties to it, they immediately believe that it’s the most expensive house in the neighborhood.  Now try telling them to take the deal from the buyer who’s offering them $10,000-$20,000 less strictly because the terms are more favorable.  But why would you do that?  Why would anyone take a significantly less amount of money when selling one of their biggest assets?  Let’s look at some reasons why…

TIME KILLS ALL DEALS!  This past summer, we did a deal in which a buyer wanted to wait a full six months to close on a property.  We had two buyers at the table: one that was offering more money and wanted to close in six months, and another who was offering a little less but was ready to close in 30 days.  We begged our seller to take the deal in which the buyer was ready to close in 30 days, and we explained that 6 months is an eternity in real estate, and anything can happen to make the deal go sideways in that length of time.  Unfortunately, all our seller saw was the dollar signs and the convenience of not having to rush to move out of the apartment and organize their affairs.  This property went into contract last summer and was set to close November 1st.  In the summer of last year, the market looked great – But in the last quarter of last year, it looked like the financial markets were all going to melt down.  As a result, the buyer tried everything in his power to back out of the deal.  The seller had already moved out and headed down to Florida for retirement.  Thankfully, we had a little bit of meat on the stick… which leads me to my next point…

CASH DOWN ON CONTRACT IS HUGE!  The buyer from the example above put $50,000 down at contract with no contingencies in the contract at all.  Had he walked away from the purchase, the seller was entitled to keep that deposit.  The buyer had even offered the seller $20,000 to walk away from the deal, but the seller did not grant him the ability to walk away without losing the full 50k. 

CONTINGENCIES…  Had the buyer built any contingencies into the deal, he probably would have gotten that money back and been able to walk away with his deposit.  Luckily for our seller, we came to an agreement in the summer to remove the mortgage contingency from the contract.  What’s a mortgage contingency?  A mortgage contingency is when a buyer is going to buy a house, but if for some reason they can’t secure a loan – they can walk away from the deal and keep their deposit.  Some people also buy houses with the sale of their existing house being a contingency.  So, in that case, if the sale of their current home falls apart for any reason – they can walk away from the purchase of their new home.  In short, when negotiating a contract of sale in the world of real estate – no contingencies is the best position for the seller.

CASH IS KING!  We live in a very fast-moving world, and what moves faster than cash? Nothing.  We previously discussed why time is so important to keeping a deal together, and cash expedites the sales process significantly.  The mortgage process is a long one and can slow a deal down if the buyer isn’t squeaky clean with an 800-credit score.  These banks create a file for buyers and that file gets submitted to an underwriter.  That underwriter reviews the file with a fine-tooth comb – and if anything at all in that file is a red flag, you can be sure that the ‘clear to close’ won’t be coming anytime soon.  However, all cash buyers don’t have to deal with that process – which is why cash is king.

Lastly, if your buyer has no choice but to finance, THE MORE MONEY DOWN THE BETTER – In a rising real estate market, you have to sell the home twice.  Once to the buyer, and next to the appraiser from the bank.  When market prices are trending upward, prices out pace closed sales.  The past 12 months of closed sales are what banks typically go by when appraising homes.  So, in this scenario, its not uncommon for an appraisal to come back short.  With most conventional loans, the loan is based on 80% of the appraised value of the home.  If the buyer is only putting down 20% and the house doesn’t appraise, then they can walk away from the deal.  However, if they’re putting down 30%, they can’t because the cash down covers the difference.

So, to sum it all up – the highest offer is NOT ALWAYS THE BEST OFFER!  Though we’d like to think that it is, there are too many negotiable variables in a real-estate transaction for it to be that simple.  You have to look at the whole deal from a bird’s eye view and look at where the buyer has possible outs.  The more you can minimize those scenarios, the more rock solid a deal is. 

Feb. 18, 2019

The 2019 Real Estate Market Outlook

Here we are, its February 18th and we’re just about a month and a half into 2019 and things are looking a lot better now than they did at the end of last year.  In the last quarter of 2018, it almost seemed like we were headed towards a financial crisis.  The Federal Reserve had been raising rates at a pace that the markets just couldn’t handle, we saw the Dow Jones lose 5,000 points, Trump’s new tax plan was a significant change that most people didn’t understand yet, and we’ve had a lot of political divide in our country.

 The Fed is really the most important player in this game of real estate, because they essentially control the flow of credit.  They control interest rates and the money supply.  It is said that there is somewhere around 53 trillion American dollars in circulation and 50 trillion of it is credit.  So, when the Federal Reserve started tightening the money supply and raising rates, the markets didn’t have a good reaction to it.  Since the 08-09 crisis, we’ve been living in the second longest economic expansion in the country’s history.  The reason we’ve had this expansion is because interest rates were held at historically low numbers, and the government had been issuing & selling bonds to expand the money supply.  When this is the case, people borrow money and transact in business and building.  It’s the best possible economic scenario, specifically for real estate.  This is why when you go to New York City you see 50+ cranes and construction sites where they’re building a new tower or renovating a new town house.  This is also why you’re seeing builders coming into Long Island Neighborhoods, knocking houses down, building new constructions, and selling them for crazy high prices.  This has all been happening because rates have been at historic lows.  Borrowing money is cheap, and cheap money creates economic stimulus.  Builders are borrowing and building at low rates, and buyers are buying houses at low rates – the scenario couldn’t cater to a better real estate market.

At the tail end of last year, we saw the reversal of all this stimulus.  The Fed’s tightening had finally caught up to them.  The markets lost over 5,000 points, we saw interest rates hit 5% on a 30-year mortgage, mortgage applications were down 20+ percent nationally, and inventory started to build.  Things looked bleak for a moment there.  But shortly after the new year, The Fed announced that its going to put a hold on raising rates and stop the tightening.  Almost immediately we saw a shift back to optimism in the markets with the Dow now sitting just below 26,000 and houses started to move again.  The uncertainty that was keeping money on the sidelines was no longer there.  All that being said, this reversal in policy will likely lead to another strong selling season with healthy prices and low inventory. 

One note to add with regards to the optimism in the short term is that I personally don’t believe that this will last much longer.  At best, we’ve probably got another two to three years of a strong market with credit flowing nicely.  At some point though, we will see a downturn in the economy as its just an inevitable part of these cycles.  With that said, if you plan on selling your home because of some life change that will be occurring in the next 3-5 years – My best guess is that you may never get as much money for your home than you will now (at least in the short term, a long-term play is a different discussion entirely).  So, good luck and here’s to a great selling season in 2019!