The Westchester View » Current Issues in Real Estate

Would you so “no” to winning the lottery?

Ruthmarie Hicks — Mon, 12 Dec 2011 22:50:18 +0000

Back in the 1980s there was a commercial for NY State Lotto. At then end of the commercial there was the tag line “But you’ve got to be in it to win it!” Now, I’m not suggesting that we all go out and buy $50 worth of lottery tickets each week – but I do think the line “you’ve got to be in it to win it!” applies to real estate.

Now, If you bought at the height of the boom, chances are you are hurting right now and would firmly believe that anyone who would suggest that you go out there and buy real estate needs a lobotomy.

However, if you are a thinking of buying a home in Westchester NY – and you have the means to purchase – then CONGRATULATIONS! you have won the real estate lottery!

Real estate is on SALE right now….

Prices are down from about 20-35% across lower Westchester. That’s a SALE folks! If this were a BMW, some Jimmy Choo shoes, a new flat screen or an iPad, you would have everyone crawling all over each other like a re-run of Black Friday. With the low interest rates that we now enjoy, affordability is at highs not seen in over a generation. Further, much of the lower Westchester housing market is flat or increasing in price. Pockets that are declining are pretty much bouncing along the bottom. The big dramatic downward moves have morphed into very slow, slight declines, flat lines or a gentle increases. The market is flat – not tanking.

The rental roller-coaster & sky-high rents….

The recession of 2008 gave renters and newly dislocated homeowners a temporary reprieve. Many weren’t aware of what a roller coaster renting can be financially, but they are now finding out. The reprieve is OVER as demand has soared creating a rental “bubble” similar to the housing bubble.

Our market experienced double digit increases in rental rates this year and there is no end in site. Its nasty out there. Long – time renters are now being dislocated. Kids are being yanked out of school systems. Adults face longer and longer commutes as the high rates push them further and further away from places they’ve called home for years. I’m not sure of much but I’m pretty sure that the rental situation will only get uglier. To see how difficult this has become in some areas read the NYTimes article “In apartment hunt, looking isn’t free”. It describes the situation in San Francisco – but it is not far from the reality in New York.

Purchasing does one thing renting can’t do. It stabilizes your outlay. Certainly taxes will increase as will maintenance fees if you live in a condo or coop. But, the biggest bite which is generally your mortgage, is stabilized to TODAY’S ABSURDLY-LOW interest rates.

Buy Low: Sell High!

If you follow the crowd you are unlikely to make significant gains. Housing can be a bit like the stock market. . When the main topic of conversation at every cocktail party becomes “How much did you make in the housing market this year?” and people are snapping up real estate like they are playing a game of Monopoly, you should be running the other way. But when housing is beaten to a pulp and people are talking about how “chic” it is to rent – that’s when getting into the game is a good idea. Sadly, it is human nature to do just the opposite. Greed drives us in at the wrong time and fear keeps us out at the right time.

Trying to catch “the bottom” of the market ensures that you will never catch it:

Until they invent time machines, you will never know where the bottom of a market is until we are well past it. By that time the market has morphed into a bull and the advantages of buying into a bear market are gone. The best you can do is buy after a significant correction – or when housing is “on sale”. If you catch the 20% off sale but miss the 25% off sale are you really losing out? Not likely. Eventually the market will recover and buying at 20% down is better than buying at 10% up because you waited too long to pull the trigger.

For example, the people who bought during the tax credit did not catch the bottom. But, in my opinion, most of them did not “lose out”. The bought after the big knife had fallen. The declines since then (with the exception of a couple of niche markets) have not been compelling. They caught the 20% sale, but missed the 25% sale. However, no one in that group was trying to “flip” a property. They were in it for the long haul. Further, they got an $8000 tax credit to boot. By the time these buyers sell – the market will have come back and they will have made a profit. For a while it looked like that was the bottom!!!

Waiting is gambling:

It always seems that by waiting, we are not taking a chance…it just seems “safer.” But it isn’t.

Do you think prices will never go up? Do you truly believe that ridiculously low interest rates are here to stay? Both will eventually move up – and affordability will go down. People who are fence-sitting are gambling that both of the above factors will continue to move in their favor. At this point that’s a pretty big risk. The longer the downturn, the bigger the probability that buyers will miss the train.

There is one overriding upward pressure on housing prices already in the mix. The sky-high rents are going to push qualified buyers into purchasing sooner rather than later. That will shift demand and prices will rise. Its only a question of when not if.

“You’e got to be in it to win it!”

The question that I have been having for a flock of buyers who have been turning their noses up at what are truly incredible deals – is: What are you waiting for? The it’s chic to rent is soooooo 2008. Right now you seem to be waiting until everyone is in a buying frenzy. But the winning ticket is in the here and now. It doesn’t get much better than this. You have the opportunity to win the real estate lottery – but you still have to be in it to win it!

Commoditizing the real estate industry – are all listing agents created equal?

Ruthmarie Hicks — Tue, 06 Dec 2011 21:43:56 +0000

A few days ago, I wrote a post “Meet the new real estate agent… same as the old agent.” The article was posted on here in The Westchester View and on Active Rain which caters to the real estate industry. Based on the lively comment thread on Active Rain, some agents misunderstood what I was trying to say. The article was not meant to imply that all listing agents were the same and that it didn’t matter at all who the homeowner picked. That is most certainly not true.

What I was emphasizing in that first post was that an agent can not defy market forces. If prices are down and the market is a bear which is the case for most of Westchester homes for sale, then even the most stellar agent will NOT be able to get you a 2006 price in 2011. The notion that the “right agent” will get the seller “their price” is a fallacy which dies a slow hard death for many sellers.

The Expired Listing Gold Rush:

The real estate industry created this urban legend in many ways. Let’s take expired listings as an example. If you are a home owner who had a listing expire – you know what I mean. The minute your listing expired, seemingly thousands of agents came out of the woodwork trying to convince you that they could do a better job. They descend upon sellers like sharks in a feeding frenzy. Sellers don’t like to think about their homes a chum – but sadly, that’s the reality.

Many claim that they have a “new approach” that will work its magic. They will not only sell the home for top dollar, they will do it above market value in record time. They have created a secret formula that the others are too cheap or lazy to execute and their hyped up marketing will be a gold mine for the seller. If you believe that – then I’ve got a bridge in Brooklyn I’d like to sell….

Making unrealistic claims does our industry a disservice. It creates mistrust – and with good reason. The public then comes to think of us as a commodity. If one doesn’t work try another…. but a good agent is worth their weight in gold. So before you change agents – let’s make sure you aren’t discarding gold for coal. You need to know whether or not your agent was doing their job! The problem is that the public really doesn’t understand what our job is…So here are some tips….

Has your listing agent offered advice even though it may not be what you want to here?

Certainly this applies to pricing. Taking an overpriced listing almost guarantees failure. An agent who said “sure, I can sell your home for that” when three other agents said that they could not is a warning sign. If that agent took the listing and immediately started asking for price reductions – you may have an agent who” bought” the listing to bait buyers. This is not to say that markets can’t change suddenly and viciously. They can – and I have lost listings when the market was a falling knife. The sellers must of thought I was full of it. But if your agent is telling you to lower the price a week after they told you that price was “no problem” there may be an issue.

Other bones of contention can be with regard to necessary repairs and primping as well as staging. These things cost money – but in this market they are no longer optional. A good agent will tell sellers the truth. Whether or not the seller takes the advice is up to them. Much of an agents value is showing the seller what will and will not fly in the current market.

Does your listing agent KNOW this market?

Ideally the agent should have know your market. They need to have to have knowledge of what has closed and for how much and how long listings are taking to sell. They should know the general direction of your market and markets immediately surrounding and have knowledge of where the market is trending. The agent should be close enough to service the listing but they don’t have to live in the same town to be effective (that’s another urban legend). One big exception to this rule is if you are a short-sale – local is less important than someone experienced in negotiating with banks. Then I don’t care how far away they are. If you are selling short, a person skilled at negotiating a short sale is pure gold. (I do not do short sales but know people who specialize in it. )

Did the listing agent put together a well-thought-out listing on the MLS?

This would seem a ridiculously obvious thing to do, but I am convinced that many sellers have NO IDEA how poorly their property is represented on the MLS. And for all the hype about marketing the property well, the MLS is still the biggest arrow in an agent’s quiver. The MLS presentation is the meat and potatoes of a listing. The rest is the gravy.

Of particular importance is accurate information. If the home is listed in the wrong town (Yes, I’ve seen this!) it might be hard for agents and buyers to find it. Inaccurate information such as taxes can come back to haunt you later in the process…so agents need to get it right the first time.

Good photos are not optional. I can’t emphasize this enough. Some of the worst photos I have ever seen in my life are on the MLS. Pet peeves include photos of furnishings and window treatments and not ROOMS. Poor lighting, blurry photos and photos that have tons of clutter in plain view. When inventories are high, buyers narrow the list down by looking at the photos. If they don’t like what they see – they simply say ” “NEXT!” Agents often use the same method. Some agents can’t take good photos. If they can’t, they should hire a good photographer. Photos are eye candy and eye candy drives traffic and traffic gets you closer to a sale.

Did your listing agent give you the basics?

The basics include the sign in the yard and brochures. Sometimes I put these outside, but if they start to get scattered to the wind littering the neighborhood, they go inside. Yard signs and brochures should include something to lead the buyer to further information. Personally, I’m starting use QR codes that lead buyers to a page that can load onto their smart phones as well as a domain name that leads to a web page I created for the listing. This is literally the least that can be done.

Did your agent have a slide show, video or virtual tour prepared?

A slide show or video are other MUST-HAVES in this market. In the Westchester-Putnam MLS and Realtor.com, the video can be linked directly to the listing page for easy consumer access. So this can now be an integral part of the listing and is no longer optional in my opinion. Once again – its eye candy. All of this effort drives traffic to the listing and traffic sells the home.

Everything else is gravy – and it can be very expensive gravy with limited returns:

Don’t get me wrong – there should STILL be a marketing plan in place. But recognize that these offerings do not have the teeth of all of the above. In Westchester homes for sale, print ads are probably the most expensive and least effective form of advertising for a listing that there is. Second to last are post cards. Both are very expensive, but its the limited effectiveness that has made agents more reluctant to use these venues. Note: different local markets may have varying results with these venues.

Home sellers need to learn the difference between smoke and substance and the limits of marketing:

Are all listing agents equal? The above shows that the answer is a firm “NO!” But there are many pieces of the puzzle that agents don’t control. Sellers need to understand the difference between smoke and substance. We can help you sell your home – by showing you the appropriate price range, helping you with staging and de-cluttering, painting and repairs ( also not optional). The list goes on and on. Along with all of that agents need to market your home to its best advantage. But marketing has its limits.

The bottom line for agent performance is this: Did your home get traffic?

If you are thinking of replacing your agent because you got few or no offers or no sale, you might want to ask whether the listing got traffic from agents in the MLS as well as through open houses or other means. If your home had 50 showings and you didn’t get a sale, that has something to do with the price, condition, location, current market conditions or some other factor that had nothing to do with the agent. If the traffic was strong – your agent did their job. In that case you need to look at WHY there has been no sale and adjust the conditions or/and the price. Firing an agent that has secured that much traffic makes no sense. Just think of what they could accomplish if you fixed the real issue that is holding up the sale!

Cake & Ice Cream vs Meat & Potatoes

Ruthmarie Hicks — Wed, 16 Nov 2011 22:40:59 +0000

A few months ago an agent responded to blog I wrote about first time buyers. Her comment was that “First time buyers today don’t know what is good for them. They want their cake and ice cream before they’ve had their main meal. “ I wish I could remember the blogger’s name – but I forgot the post and only remember the quote. I had understood what she was saying, but at the time, felt the judgment was more than a little severe. However, recently I’ve recently had a cooperative for sale in a very lovely building and sometimes selling something small in a complex where everything is easily compared brings buyer behavior into sharper focus. Having observed the sales in that building – such as they are because volume was very low until just a few weeks ago – the agent is largely correct…wanting the glitz without the substance IS impacting the decision making process of first time buyers – and I predict that it will come back to haunt them when they sell.

The coop that I have listed is a very large 1 BR unit with a large bathroom and separate shower (unique for a pre-war building) It has high ceilings, wonderful moldings. The layout is nothing short of ideal. It is newly painted, the plaster has been repaired, the floors totally refinished and it sports a brand new bath. Great closet space wonderful views….but….but…its got a very dated kitchen. There are several other 1 BR units in the building and some of them have renovated kitchens and baths – while the listing I have has only a renovated bath.

For many first-time buyers – its all about bright and shiny things:

The bulk of buyers in the market for a 1 BR cooperative near the train station are first timers. These buyers are making a beeline for the units where everything is new, new, NEW!!! They want to be blown away and they certainly don’t want to lift a finger to deal with a kitchen or even painting in some cases. In my opinion, this is a mistake. Since everything else in the unit is up to snuff – I find this difficult to understand. The unit as it sits has better views, a better layout, better closet space, an eat-in kitchen (which most of the others don’t) and significantly more square footage. Yet people are willing to pay a premium for a smaller unit with less closet space as long as its all tricked out.

Although I understand that renovating a kitchen is a pretty big deal, and for some people it is out of the question, what I’m not getting is why no one is willing to put in one iota of elbow grease into as large of a purchase as a home - particularly in this economy. Elbow grease is instant equity. Its certainly way better than paying more for a home (or coop) with less square footage, poor layout and an inferior location just to get a nice kitchen. When you pay a premium for that type of home or unit just because it has a shiny new kitchen and ignore other factors you are leaving money on the table. After all – a dated kitchen CAN be changed. Just ask any contractor – they do it every day. But the location, square footage and layout are forever.

Cake & ice cream vs. meat and potatoes:

Issues like layout, square footage and location (or in the case of a condo or coop – the nature of the building) put a permanent ceiling on what you could ever hope to make when the time comes to sell the home. These issues are the meat and potatoes of real estate and the smart money knows that these issues should be first and foremost.

A new kitchen is the cake and ice cream – or really its the cherry on top of the sundae. It is nice to have but shouldn’t be the be-all and end-all of a transaction. The same goes for tumbled marble in the bathroom and master bath suites for those who are just starting out. Your first home is not going to be your last home. It is the first step in a process that will lead to the home of your dreams. Although you should really love your first house….it should be for the right reasons. Buyers who go after bright and shiny things pay a premium and often shoot themselves in the foot when it comes to resale. Accepting a home that is solid in the meat and potatoes department but may need some help in the cake and ice cream area is money in the bank. Because in the end, doing so allows you to have your cake and eat it.

Local is as local does – are agents overdoing it with the “local expert” mantra?

Ruthmarie Hicks — Sat, 12 Nov 2011 18:32:08 +0000

This is a tough topic for me to address objectively. However, I have seen many blogs recently from agents touting their expertise as “local experts”. Meanwhile, I’m also seeing quite a number of other agents bragging about the number of listings that they have. Most of these agents can not possibly accumulate the raw numbers by being local. Many of these agents have listings that are scattered far and wide – sometimes in more than one state or at least in several counties.

**Real estate agents that expand their territories generally have more transactions under their belts:**

When you think about it, each model has its own set of benefits and red flags for the consumer. In this slow market an agent that covers a lot of ground has more closings under their belt and is used to dealing with everything that that could possibly be thrown at them. These days, transactions are fraught with peril from the negotiating the price and terms, to dealing with lenders and the bank in the event of a short sale. Agents that have stayed very local and are doing fewer deals have less experience with this market. Bottom line, unless a very, very local agent is in the top 1-2% in terms of sales volume – they are NOT closing a significant number of transactions these days. Truth be told, even top producers in this market are having a very tough time making ends meet. If an agent in this situation is NOT trying to expand their territory, then I would be concerned that they aren’t truly professional and are actually “doing” real estate as a sideline.

**Agents who focus locally generally have more local knowledge and better insight into specific neighborhoods:**

The statement above is the flip side of the coin. This may seem obvious to some, but in a world of Zillow and Trulia the public doesn’t always see it that way. This is particularly true of young people. Be warned if you think “just anyone will do” even if they live 50 miles away. The public needs to rethink how much Trulia, Zillow and all of the other so called national “real estate portals” can possibly know about a particular area. The fact is that both of these portals are so far off the mark with respect to their “zestimates” or “guesstimates” that it is truly pathetic. Further, many of the so-called local experts featured on this site know nothing about the area in question. Most are paying big bucks to these portals to try to put themselves out there as an area specialist. But the ability to flex the plastic does not a local expert make. It does take “boots on the ground” to determine value. Real estate IS a local business. Its a question of HOW local.

Further, not knowing the details of an area intimately can be a big problem. What about that nice golf course that abuts the property? If the agent doesn’t know that the property was recently sold to a developer who is trying to build a huge school on what was bucolic open space – it can mean their buyer will overpay and not get what they thought they were getting. Instead of peace and quiet – they could find themselves with a playground or ball field literally in their back yard. (This is actually happening in one neighborhood that I cover.) Will an agent covering several counties have enough knowledge of a very local neighborhood to KNOW that type of detailed information? Probably not. Those who are expanding beyond their ability to drink in the local issues including zoning disputes may find themselves without sufficient knowledge to properly represent the interests of their clients.

Personally – I’m suspicious of both extremes – and have plotted a course straight down the middle:

An agent that is spread too thin can have difficulty managing their inventory (if they are listing agents) and may not have enough specific knowledge of an area to guide their buyers. This can have serious consequences if they are unaware of plans to build a major highway through an area, or of a builders plans to build track housing in what is currently an exclusive and quite area. If an agent is marketing large quantities of listings over a wide geography – how much can they “put into” a given listing? Having the ability to focus advertising to a relatively narrow geographic range has benefits – particularly online. Some are throwing stuff up against a wall and whatever sticks, sticks. That’s fine for the agent, but what about the client?

On the other hand, agents who chronically harp on being “local experts” have often used and abused that statement and beaten it to a pulp because they really don’t have that much else to offer. Some are trying to keep competition OUT so they can have the lions share of what may be one of the more lucrative pockets in the immediate area. Since sales are on the rocks in some locations and doing well in others – the pockets with decent volume will find themselves under increasing pressure from area agents a town or two away who will want and need to partake in part of the action of an active area. The bottom line for the consumer is whether or not that “local agent” is truly offering “more”. If they keep harping on the “local expert” mantra over and over again – there may not be that much “out-of-the-box” thinking going on. To my mind – the competition is a good thing as sellers and buyers alike should have more options than one or two main brokerages that offer the same-old, same-old because they haven’t been pushed to do more.

For me – it was a matter of survival. My area has had very little movement and even the tippy top of the top producers are breaking into new territory. I’ve done so in a deliberate and viable way that offers sellers an alternative with some out of the box ideas and buyers one-stop shopping if they are examining more than one municipality. I certainly don’t cover 10 counties, but I do cover several towns, villages and cities.

For the latest on sales stats and current listings - feel free to contact me by phone – (914-374-5529) or email – (Ruthmarie.Hicks@gmail.com) or you can simply fill out the form below – whichever method you prefer. Don’t worry – I do not sell, spam, or otherwise abuse your information!

The Renting Bubble – You think its smarter to rent than to buy? The numbers say you are wrong!

Ruthmarie Hicks — Mon, 24 Oct 2011 07:24:51 +0000

Right now we’ve got a renting bubble. At this point it is almost as irrational as the housing bubble of 2005. Just as scarfing up McMansions with no money down loans was irrational – now many potential buyers are obsessed with renting to a point where they are hurting their own self- interest.

Right now home prices are bouncing along the bottom and there is very little – if any – air left in these price points. Thanks to these super-low prices and record low interest rates – owning a home hasn’t been this affordable since the dark ages. Well – OK – that’s an exaggeration – but we are near 50 year affordability levels – making this a once in a generation opportunity to purchase a home. Meanwhile rents are rising faster than I can blink. Yet buyers that are perfectly capable of purchasing in today’s market are STILL sitting on the fence thinking that if they are smart they can swoop in at the bottom point of the market and steal a house. At this point, such a victory might be a bit hollow. If a buyer could manage this, they might have some bragging rights, but it wouldn’t save them much – if any money. The reason is that they are throwing away substantial sums every month that they continue to rent and that situation is going to get worse, not better.

So – if you think that somehow you are saving money by renting – take a look at these numbers on a $210k listing:

Let’s say you take out a standard loan of $190,000.
At 4.2% interest – your monthly payment is $880/month
In my example your taxes and maintenance combined is $779/month.
Your total GROSS outlay is $1659/ month.
A comparable rental ranges from $1800-1900 a month.

Even without calculating tax deductions – a buyer is saving $141-$241 a month or ($1692 to $2892 a year)

We didn’t even factor in the tax advantages and amortization…

The savings don’t end there because There is more – much more.

Mortgage interest deduction and property tax deductions combine to save the buyer an additional $284 a month in my example. (I am assuming the 28% marginal rate on this).

This bring the net outlay to $1375 a month.
That’s a savings of $ $425-525 a month in savings…or…cha, cha, cha, ching…$5100-$6300 a year.

But we are not finished yet…what about amortization…the amount of money that a home owner pays to pay down the principal owed on the loan? …In this scenario that is about $3061 a year.

So a buyer is roughly $8161 to $9361 ahead of a renter over the course of a year.
This is not exactly chump change. Who wouldn’t want to save that kind of money? So I have to ask buyers who sit endlessly on the fence: what on earth are you waiting for?

The only person getting rich if you rent is your Landlord!

Downsizing in Larchmont NY – Is now a good time to scale back?

Ruthmarie Hicks — Fri, 14 Oct 2011 06:19:54 +0000

Recently, I’ve had several inquiries from would be home sellers about whether now is the time to consider downsizing their home. Scaling back is never easy and should not be undertaken lightly as it means a significant change in your lifestyle, but from a financial standpoint, I would have to say that the answer would be a very strong “YES!” if you are a Larchmont homeowner.

In the midst of a national housing crisis many would-be sellers are sitting on the fence asking whether now is a good time to scale back into something smaller. This is particularly true of empty nesters or soon-to-be empty nesters. With real estate – as with all large ticket items – it is best to buy low and sell high.

Of course the devil is in the details. If someone is looking to scale-up or scale-back they usually end up on the losing end of one transaction and the winning end of the other. So it is small wonder that many would-be sellers are stalled in this market, afraid to put their toe in the water.

Larchmont single- family homeowners have enjoyed steady appreciation since the crash of 2008…

But in Larchmont NY – there is a unique opportunity for sellers who wish to stay local by downsizing into the Larchmont condo or coop market. In this unique time Larchmont homes have enjoyed brisk appreciation since the 2008 crash. A home seller in Larchmont may not be able to get what they got at the peak of the market – but some of the prices are very, very bullish. Median sales price for the 10538 zip code was $1,068,000 in Q3 of 2011 up about 6% from the previous year. Just look at the sales data from the MLS for homes in Larchmont Village and the Larchmont P.O. Prices are recovering nicely. Just look at the pricing history from 2006 to the end of September 2011…The red bars represent years before the crash and the green bars represent the years following the crash. The current year is in purple: There are two charts below. The Larchmont P.O. (10538) and Larchmont Village.

The Larchmont condo and coop market has continued to languish in spite of robust sales in single family homes…

But just as important are the drops for cooperatives. 1 and 2 BR coops have really struggled over the past year. This market is still a buyers market. Just look at the sales price history. It’s hard to believe this is in the same location. The condo market is similar -but too small to offer up reliable statistics. Once again, the red bars represent years before the crash and the green bars represent the years following the crash. The current year is in purple.

Buy low and sell high….

So right now there is a rare win-win opportunity for home owners who would like to exchange their large single family home for something more manageable. Its hard to determine just how long this type of a trend will last, but if you are thinking that the house is just a bit much to keep up and that it is time to think seriously about scaling back – this is truly a unique and rare opportunity to create a win-win on both sides of the buying/selling equation.

If you are thinking about making a change, I can help by giving you a reliable and free market analysis of your home while showing you what your money can buy on the purchasing side. I also offer a discounted commission on those who choose to complete both transactions through me.

You can contact me by phone – (914) 374-5529 or by email Ruthmarie.Hicks@gmail.com. Or you can simply fill out the form below.

Defining a real estate “local expert”

Ruthmarie Hicks — Wed, 28 Sep 2011 03:54:56 +0000

There is a lot of hype circulating in the real estate industry about local experts. A recent post about the topic was posted by an agent on Long Island…Paula Hathaway “Chaff….Schmaff! A bad attitude or just a better way of doing business.” With all due respect to the author – I felt that the emphasis on being a “local expert” implied that agents who were not already established in the area were merely chaff – while the established area agents were actually the “wheat.” We all start out as chaff – and chaff has no opportunity to become wheat if they aren’t given a chance. That appears to be a bit too convenient for the very local agents in any area. Because it implies that they are the only game in town…

Real Estate is Surprisingly Competitive:

There is a saying within our industry that you can’t swing a cat without hitting a real estate agent. It is also paired with “you can’t throw a rock without hitting a real estate agent”….Well you get the idea. There are a lot of agents out there. Many good, many not so good and separating the wheat from the chaff is a tough task for the average consumer. Many think we are all created equal and anyone who can stick a sign in the ground or unlock a door will do.

That is as far from the truth as it gets – but it gets to the heart of this blog – and that is that the real estate industry manufactures agents on a conveyor belt with little regard to quality. Its all about quantity. As a result – the confused public that is supposed to do the wheat vs. chaff determination is totally confused and disappointed in the quality of agent they encounter. Agents, for their part, try to separate themselves from the crowd by indicating that they are “special.”

“But I am a ‘special’ agent!

One way we do this is by becoming “local experts.” What on earth does that mean? Well, and agent does have to have knowledge of the local market in order to be truly effective in listing and selling. However, taken to an extreme – some agents use the fact that they live or work for a brokerage in a specific town or village as evidence that they are a “local expert.” Seriously???? Seriously???? I don’t think so. This is an incredibly weak argument for differentiating yourself from the crowd. In many ways its a straw man argument.

Personally, I cover on small city in depth, sections of another city and about 10 towns/ villages. I tend to focus on areas that are commutable to Manhattan – so I do have a niche – but that type of niche extends my geography somewhat. I know the inventory, I understand the pricing in all of these areas, I know about the local politics, if there are any large changes brewing in zoning, taxes, subdivisions and other relevant issues. This is necessary information and any agent working in a given town should have decent local knowledge that goes well beyond the MLS. But implying that an agent has to be hyperlocal to be a valuable asset is over the top.

Abusing the “local expert” label.

Some agents – particularly in small towns and villages – use their storefront brokerages and the fact that they live/work within the town as leverage against agents who they deem as outsiders. This is merely stifling healthy competition that may be more innovative and a breath of fresh are in a market dominated by locals. Still they have a point that I do agree with – to a point. I say local knowledge is essential – but being local is optional. Sometimes the breadth is an advantage. If a buyer wants to go beyond one town into another, I can continue to help them. My broader knowledge helps me see trends in the general market before other agents might that can help my buyers and sellers alike.

I’m not talking about “Nomad Agents”

Don’t get me wrong… I don’t think agents should be practicing in 20 counties with a radius so large that covering their territory results in a gasoline bill resembles the national debt . Some agents with large footprints built up their territories over 20-30 years – so it is difficult to generalize – but the need for up-to-date local knowledge does place limits on us all. If you find an agent that is selling farmland upstate and lofts in Brooklyn – I would have to question whether they can possibly cover all their bases adequately.

Is it time to downsize to a smaller home?

Ruthmarie Hicks — Sat, 24 Sep 2011 03:53:11 +0000

Westchester Homes have always been expensive. They are expensive to buy and expensive to maintain. Taxes are high here and any home that is less than an hour to midtown Manhattan by Metro-North is going to be expensive. As I say to buyers, who think the housing recession means that they can buy a palace for pennies – there is no free lunch. But for those would-be sellers who have been hunkering down – hoping that the housing recession would pass and the market would roar back to 2006 levels – it may be time to consider downsizing.

In the past couple of weeks, I’ve had a couple of prospective sellers come to me with the question – should I consider downsizing?

For Many the Westchester housing market has made quite a recovery:

If you are lucky enough to live in one the more affluent areas of our county – you may be very much in luck. Prices have been recouping much of their lost ground. We aren’t back to 2006 levels – but these markets are sturdy and very resistant to recession.

Meanwhile, while prices have recovered the cost of living in these communities is quite high. So for those for whom living on a fixed income or those whose job has been downsized or are unemployed, now might be a good time to consider a move. The condo and cooperative markets have seen a major adjustment over the past year. So, on the buying side you can get a great deal and on the selling side, you will still do well.

Other communities are flat or still trending down:

For those not fortunate enough to live in a community where prices are recouping lost ground, the issue is more complex. For people who want to downsize from a house to something more modest – you will find that your home is worth a whole lot less than you would like. You may need to make upgrades to your property in order for it to sell. So all of this has to be calculated against the cost of living and the lifestyle changes in order to come up with a solution that makes sense for you. On the bright side, the condo and coop market has gone down significantly over the past year, so if you are downsizing from a house to a condo you will do better this year than in previous years.

There is no right or wrong answer:

This is not a one-size-fits-all situation. The answers will be as different as each client’s lifestyle and tolerance for risk. I will say that if you are waking up in a cold sweat every night wondering how you will pay your bills, that the time has probably come to move on – no matter how painful the decision may be. If you have lost a job and it looks as though you will be unemployed for some time to come, then again, a move is likely to be in order. If you see your overhead soaring with no end in sight – it might be time to downsize before it gets beyond you. If things are going well, but you are worried about a falling knife – unless you are in one of those municipalities that is going up in value, I don’t know that downsizing makes sense. Prices appear to be bouncing a long the bottom in many communities – and prices are more likely to rise than fall over the next five years. But for those who have a high overhead – I’m not expecting the market to boom over that period – so selling and downsizing may well be the better decision.

Bottom Line – You need to crunch the numbers:

Look at where you might go after you sell and take a careful look at what the cost of living will be in your new home. Think mortgage, taxes, maintenance fees (if you are buying a condo) energy costs, parking fees, transportation to work. Put all the numbers together and compare it to what you’ve got now. Open your mind to several locations and homes and crunch the numbers for each of them. Different living situations can have dramatically different costs. Some homes may cost more but have a much lower overhead. Your real estate agent can help you think through the different scenarios.

If you want to talk about your options feel free to contact me by phone (914-374-5529) or email – (Ruthmarie.Hicks@gmail.com) or you can simply fill out the form below – whichever method you prefer. Don’t worry – I do not sell, spam, or otherwise abuse your information!

What do 40 years of mortgage interest rate history and the affordability factor tell us?

Ruthmarie Hicks — Sun, 11 Sep 2011 02:02:46 +0000

Waiting to buy a home could be an expensive mistake….

That’s what! Plain and simple. Ever since the knife dropped in on real estate – buyers have been alternately flooding into the market and holding back. Don’t get me wrong…these are difficult times. I understand the hesitancy – however, for those who have a stable job and a stable income with good credit, I have to think that a little green monster called greed is entering the picture. We all see the little green monster in ourselves from time to time – but we need to watch that monster and to tame it. For as Jim Crammer of “Mad Money” fame often says – “Bulls make money, bears make money, but hogs get slaughtered.”

Hogs may be setting themselves up for the slaughter….

Right now qualified buyers who are sitting on their hands waiting for things to get sweeter are pushing well into hog territory. This does NOT apply to those who are afraid of losing a job, or who don’t have sterling credit. This observation is strictly geared for those who think that if they continue to rent the deals will keep getting better and better. You passed the point of diminishing returns a while ago. Perhaps as long as a year ago.

Interest rates – and the affordability factor…

Interest rates are simply ridiculous at this point. Younger people do not have a memory of the last 40 years. Heck even I don’t. But I am old enough (barely) to remember the high interest rates of the early 1980s. And you don’t have to be that old to realize that super low interest rates are an anomoly – that won’t last forever. Remember this – for every 1% interest rates increase – buyers lose 10% of their purchasing power. You ignore these super-low rates at your peril because they play a critical role in affordability. Affordability is how much you pay to live in your home. Right now affordability hasn’t been this good since Eisenhower was president – over 50 years ago…..

Let’s take a fairly typical 30 year fixed-rate loan amount of $450,000. This is fairly typical for our area:

@4.25% – $2,214/month -
@ 5.0% – $2,416/month – up $202/month
@ 6.0% – $2,697/month – up $483/month
@ 7.0% – $2,994/month – up $780/month
@ 8.0% – $3,302/month – up $1,088/month
@ 9.0% – $3,621/month – up $1,407/month

Think such high rates are just not possible? Look at the last 40 years of interest rates….

An historical look at mortgage interest rates:

The graph below represents 40 years of interest rates courtesy of Freddie Mac. Right now interest rates are hovering around 4.25-4.3% and many in the under 35 crowd are looking at these rates as something of a God-given right. But history tells a different story. Interest rates hit a 40 -year low when they dropped below 5% in 2010. In all 40 years interest rates have averaged below 5% for only two years, 2010, and 2011. They have been under 5.5% for only three years and under 6% for only 6 years. In fact – interest rates were above 10% for 12 years which means historically you are twice as likely to see interest rates above 10% than below 7%. The year interest rates hit their peak was 1981 at 16.6%. Between 1973 and 1983 interest rates did not see levels south of 8%. Interest rates for mortgages were stubbornly in double digit territory for 12 years from 1979 – 1990.

Even when you look at the last 20 years – after the period of stagflation had passed us by – the current interest rates are unprecedented. The green bars indicate rates that are so low they are entering historic territory.

Playing with interest rates this low – counting on them to stay that way or get even sweeter is like juggling with hand grenades …eventually someone is going to get hurt. Like Crammer says - “Bulls make money, bears make money, but hogs get slaughtered.”

Free Short Sale and Foreclosure Seminar – Tonight Sept. 7 in White Plains

Ruthmarie Hicks — Wed, 07 Sep 2011 16:37:46 +0000

Crystal Hawkins-Syska is a short-sale specialist who has the answers for people who need the help.

Seven out of Ten Homeowners go into foreclosure with out any visible sign intervention or call for assistance.

Why is that the case? It could be because they don’t know where to turn for help and accurate information. On September 7^th we will be discussing the process of foreclosure and foreclosure alternatives. 1 in 6 homeowners are delinquent in their payments. Do you know someone at work, your place of worship, on in your family who:

Has lost a job?
Had an illness or death in their family?
Will be retiring in 1 year or less?
Refinanced their house in the last 5 years?
Purchased their house in the last 5 years?
Their Employer is downsizing?
Their business is struggling?

They may be in trouble. Help them get the right information or educate yourself. Please join me and find out why December 31, 2012 may be your last chance to take advantage of a government program for distressed homeowners.

WHEN: Wed. Sept 7, 2011 6:30-8:00 PM

WHERE: Keller Williams NY Realty Office

120 Bloomingdale Rd. Suite 101 – White Plains NY

Hope to see you there!!!