You have a friend who just got licensed.…and he/she acts as if she already owns your listing….so why not?

Watch out here…your friend may be very competent – but  competence and excellence are things that are often learned on-the-job in this field.   Does your friend know the market well?  Have they marketed a home for sale before?   If prices are depreciating and your friend doesn’t know how to market and price your home, you are losing money every week you have this person as your agent.   This should not be a decision based on friendship.  A lot of money is at stake.  But take heart – I do offer a possible solution to this dilemma later on.

You look for someone who is a top producer:

This can be done in various ways.  You can look for an agent who has fliers out saying they are #1. You can count yard signs or you can try to find out who has made the most in gross commission or who has the highest sales volume in your area.  This is all well and good.  But you need to know what you are getting.  Being #1 in listings is meaningless unless they sell.  In fact everyone can be #1 for something if they think about it long enough.  Many top producers built their businesses on trust and did it the old-fashioned way – they earned it.  But others, not so much.

You Go to Zillow, Trulia  or some other “trusted site” to pick an agent:

People trust these sites far more than they should.  Ask yourselves just how trustworthy any site that features  “Zestimates” that  have a 25% margin of error can be? Picking an agent this way is a crap shoot.  Don’t do it.   We all seem to have a child-like trust of high ranking websites. They found it on the web, so it must be true.  The public seems to have a vision of some nice person at Zillow or Trulia hand picking and vetting agents in every location in the country. Not so.  Agents PAY for these spots.  If they have the green – no questions are asked.  This is not a good way to pick an agent.

These are issues that are often overlooked by sellers, but they can shed light on who is best suited to list and sell your home.

Ask to look at previous or current MLS listings:

In my previous post about what rocks and what flops in terms of marketing – I put the MLS at the top of the list.  So ask to see some examples of MLS listings.   PHOTOS sell homes. Is it full of great photos of the home and even the neighborhood? Is there a slide show?  Buyers want pictures, pictures, pictures!   Is the copy decent?  Remember that they have very few words for a description – but look to see if it is informative and not filled with cliches like “won’t last long” or “a must see.”  If this is well done, then it is a sign that your home will be well-marketed.

Look at production – but get the full picture:

On questions of production – let’s get back to basics.  You are calling an agent to help you sell your home not just list it.  Looking at raw sales is only half the picture. Ask to see expired  listings as well.  This will give you an idea of the listing to sales ratio.   Some agents with lower sales volume actually have excellent, if not superlative, track records when it comes to actually getting what they listed sold.  Sometimes they leave top producers in the dust. Anyone can take a listing. If you have a “name” the chances are greater that you will have a lot of opportunities to list.  Throw enough things up against a wall and something will stick eventually.  But that doesn’t help you if 75% of what they list fails to sell.  Agents can get overextended.

A caveat is needed here.  Know that where this agent lists and what they list impacts those values.  An agent who is taking on a lot of distressed property is going to have a higher failure ratio.  Do not hold that against them. Ask for clarification and why the numbers are what they are. Listen carefully to what the agent says.  You are not trying to create the Spanish Inquisition, but you are asking for clarity.

Look at the ratio of list to sales price:

Ask for listing histories.  Did this agent promise one thing and then jawbone the price down inch by inch? This is particularly important when you find an agent that promises the moon and the stars.  Remember, agents don’t have the power to create or make a market.  We can only respond to what the current market conditions are. We all make mistakes.  What you are looking for is a pattern not an individual instance.  If you see rapid price drops at the beginning of a listing, that’s a clue that the agent was honest with the seller, but the seller needed to see the reality of the market for themselves.   They probably agreed to a rapid price reduction if they didn’t get showings and offers.  If some one is listing things 20-30% above the final sales price on a routine basis for months – that’s a problem.  Ask agents to clarify what happened.  Once again, you want to understand the pattern not be accusatory.

If you have a friend who really needs business…

I understand the desire to work with them – and offer a possible solution.   If you feel you want to give your friend a break, suggest a co-listing with an experienced agent.   If they will agree to that – then you can help your friend and rest easy that the listing is in the hands of someone who knows what they are doing.  Remember that new agents are trained to cling to their friends who might be selling like crazy glue.   So don’t let that put you off.  One of the problems in our industry is that there are far  too many agents for the business available and getting started is treacherously difficult.

© 2012 – Ruthmarie G. Hicks – http://thewestchesterview.com – All rights reserved.

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.

© 2011 – Ruthmarie G. Hicks – http://thewestchesterview.com – All rights reserved.

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!

© 2011 – Ruthmarie G. Hicks – http://thewestchesterview.com – All rights reserved.

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.

© 2011 – Ruthmarie G. Hicks – http://thewestchesterview.com – All rights reserved.

Quote from Inna’s Blog:

Dear Future Client….
Upon a successful closing, I will be sending you cards, making phone calls or otherwise contacting you about 33 times a year, as it is my hope to become your Agent for LIFE!  I may also friend you on FB and follow you on Twitter, to keep in touch…
And please remember that I LOVE referrals.
Sincerely, Your Agent for LIFE!

Which begs the question….Why are real estate agents so pushy?

This is an issue that I have wrestled with as we are always encouraged to “touch” clients and prospective clients 33 times a year.  One of my problems I have with this notion is that I don’t want to be touched that much by anyone except the closest of friends and family.  Why on earth would I consider that an appropriate thing to  do to a former client?

Further, if I perform flawlessly for that client – I should be remembered when they have a friend who is looking to buy or sell and when the time finally comes for them to move? Right?  Well……the reality is not so much and that’s the problem.

Our business is high-touch, labor intensive and low volume.  So each referral is very, very important.  Repeat business is vital for our success – so if we don’t get it- we are out of business.

But I think that this brings to mind one unfortunate fact about the industry.   You see, in an industry  where  all you have to do is throw a rock to hit your competition – you’ve got a built in problem.  There are too many bloody agents to assume that past performance will yield repeat business.

For example – I had a buyer that I performed flawlessly for.  She was thrilled with what I did, but when the time came to sell her home – her friend who had just gotten he license got the listing.

THAT’S the problem.  There are so many agents ready willing and able to snatch the client you worked blood, sweat and tears for   that  keeping  said client becomes a massive undertaking.  Further  the sheer volume of agents breeds enough contempt within the public so that they see us all as pretty much interchangeable.  After all, if we make it look EASY, the public will think it IS easy.  So easy in fact that playing arm-chair Realtor® is a favorite indoor sport.  So easy even a cave man can do it….

The Vicious Circle….

We do our job, make it look too easy, which makes people feel we are  interchangeable, this increases contempt for what we do, so the repeat business goes to the client’s best friend,  this forces agents to market themselves like maven, which increases contempt for what we do, so the business goes to anyone who can scream the loudest……so we do more marketing…..well – you get the picture….

I can shout anything LOUDER than you…..

© 2011 – Ruthmarie G. Hicks – http://thewestchesterview.com

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.”

©2011 – Ruthmarie G. Hicks – http://thewestchesterview.com  – All rights reserved.

Is Sales Volume the best way to measure how “good” an agent is?

Granted this is one way to measure success – by how much you made as a agent and it is kind of perverse reflection on our mindset as a society.  But is this what really matters to the consumer?  SHOULD this be the way the consumer measures an agent?  How about overall customer service?  What about the listing agent that supervises two renovations holds 10 open houses, markets the home to the hilt, thinks outside the box in getting home “out there” to the public.  Then negotiates the best possible terms for their client and closes the transaction with as little drama and turmoil as is possible in this challenging market.  Isn’t that worth some brownie points?  Why do we just look at raw dollars like they are the crown jewel of legitimacy in real estate?

Why looking at sales volume can be very misleading.

Let’s face it – there are agents and there are agents….some agents throw anything they can up against the wall to see what sticks.  They may have volume – but if they sold 25 properties but had 50 more that had terrible photos, no marketing and no attention – what does that mean.  Did they need 75 deals to get 25 to stick?  That’s scary.   Granted, in this market  – there is no shame in having a lot of expireds and losing some listings to other agents as sellers get frustrated with the process. It often has nothing to do with the agent.  However if there is a pattern of taking on too much – even in good times – the overall sales volume of an agent can be very misleading.
Take our friend “Peggy” from the Discover Card fame….It looks like “Peggy” has plenty of sales volume  – only trouble is that him….uh HER customers don’t seem all that happy….

© 2011 – Ruthmarie G. Hicks – http://thewestchesterview.com – All rights reserved.

However, there are signs of push-back.  Buyers who are “working the system” by insisting on seeing literally every home under the sun are finding that they are wearing out their welcome as their agents are no longer enabling their addiction to to an endless  search.

Of course some agents will not fire a client directly…If your agent has made themselves scarce or is inexplicably  unavailable because they they are suddenly having root canal every day  for the next three weeks – you may have been dumped.  Here are some reasons why you may have been given your walking papers.

1. You told your agent that  you were “in no hurry to buy”.

Some buyers think this “motivates” their agent to work harder.   Freely translated this says  “I’m going to be very demanding, I’m going to take tons of your time, I’m totally unmotivated, but someday – 3-5 years from now I might buy…and if you jump through all my hoops – you might be lucky enough to close with me.”  Please explain to me what is “motivating” about that?

2. You mentioned that you ” can always renew my lease for another year.”  

Please see #1 for the explanation.  If you used #1 & #2 together on the same day it is a clear sign that you are not a buyer.

3. You sent your buyers agent  a showing request that requires a torturous  zig-zag route  across more than half a county that will consume  an entire day and  at least one tank of gasoline to complete?  

People who do this are seldom true buyers unless it is very early in the search process.  Being rudderless may sound like fun, but the fact is that this tells the agent you have no idea what you are looking for and worse still – you are unwilling to do the necessary research that would  eliminate entire towns.  This in turn indicates a lack of commitment to the home buying process.  How serious can a buyer like this possibly be?

4.  You request multiple showings   that have nothing to do with any of your primary criteria apart from the fact that they all contain granite kitchens and tumbled marble baths?    

There are a lot of homes out there with these features.   They can be found in many towns and cities all over the continental US.   Many buyers go ga-ga over  granite and marble – but these are just finishes.  Location should be your meat and potatoes issue.  And  yes – these features  sometimes exist in a very inexpensive house  But chances are fair to near metaphysical certitude that there is a huge catch…like the roof is missing – or some similar triviality.

5. Did you complain that the last home you saw was in a higher crime area and then send your agent six listings that you MUST see even though they happen to be across from a meth lab?

Well…the price is probably right.   But just  how seriously is your agent going to take you if you keep running pell mell into the county’s worst neighborhoods – while complaining about the crime rate?  We are not allowed to discuss such things as crime – so this can be particularly frustrating.  Most people who do this are bottom feeding – and hoping to steal home.

6. Do you have a low to moderate price range but then complain to your broker that without a master suite with double sinks, granite  and marble you feel like you are settling?

Champagne taste on a beer budget + no urgency = NO SALE.    Serious buyers understand that there are tradeoffs.  There is no perfect home – so at the end of the day we ALL settle. If you aren’t willing to deal with trade offs involved in purchasing a home – chances are you are not a buyer.
7. Are you coming up with impossible criteria.  For example – you want an old -world pre-war charmer of a condo  with   laundry in the unit, 3 full baths,  central air, a fully equipped gym and a pool onsite  all  of which are must-haves?  

Sometimes criteria are mutually exclusive.  I had a potential buyer waste about a day of my time once with crazy criteria that was physically impossible to reconcile.  I couldn’t get it through her head that you were not going to get central AC and laundry in the unit in a  building built before 1940. You see – these things hadn’t been invented back then.  And no – no one is going to gut an entire pre-war building to install these amenities.

8. Has seeing yet more homes become almost an obsession or an addiction for you?

Be honest about this one.  For some would-be buyers seeing home after home becomes the buyers equivalent of smoking crack.  Agents shouldn’t enable addictions in their clients – no matter what they are and clients  who are obsessed with seeing “just one more home” seldom buy.

All in all – we want to accommodate a ready, willing and able buyer.  Although we have objective criteria for determining the ability to buy -  we sometimes have to feel out whether the buyer is ready and willing.   Sometimes buyers think the are ready and willing when they aren’t.  If you recognize yourself in the above scenario – you may have to ask whether indeed you are ready to buy a home.   If a buyer isn’t ready or willing – we can’t spend a lot of prime showing time on them.  There are only so many Saturdays, Sundays and early evenings in a given year and if we spend the bulk of that time with people who won’t pull the trigger our business goes belly up.  Respecting our time and expertise will get you more of the help that you need when you truly are ready, willing and able to purchase a home.

©2011 – Ruthmarie G. Hicks – http://thewestchesterview.com – All rights reserved.

Lately I have given several buyer clients offers so sweet they are literally dripping and sticky sweet with  goo – only to have them turn up their noses and walk away OR come back with extra demands that  have  left absurd behind and are now bordering on surreal.  Sure, if you don’t ask, you don’t get, but there comes a point where, like Alice – we pass through the looking glass into an alternative reality.

There are several explanations for such  a disconnect…they run the gamut between fear and greed then you  add a dash (or a dump truck full)  of inflated expectations and you have a recipe for  one stalemate after another.

But this really IS a good deal!

The fact remains that all too many consumers are not recognizing a good deal when they see it.   They don’t understand that these are literally scrumptious prices and interest rates is a combo that would have left many 2010 buyers on their knees crying with joy.  These buyers haven’t got the vantage point of the real estate professional who watches the market daily and has seen the declines.  We know that this almost magical combination of bottom of the barrel prices combined with ridiculously low interest rate creates an affordability that will probably not be seen for a generation once it ends, but our buyers are awfully complacent and even smug.   They think that if they wait – it can only get better.  Hubris and greed are a potent drugs  – and they are actually causing  many buyers to miss the train…

The knife has already fallen:

A lot of buyers are acting as if a knife is falling on housing – but that’s so  2009.  In some cases prices are down since the ending of the tax credit, but the main gains have been in affordability due to low interest rates.  Some prices are trending down, others are flat, and some sectors are on the uptick.   Even when trending down, we are looking at losses from 2-5% – that’s not the stuff of panic selling. Here are a couple of charts that I prepared for other blogs.  Both or on single family homes and both  illustrate in their own way  that prices are either bouncing along the bottom or are increasing slightly.

The falling knife isn’t part of this current market.  Buyers need to understand that deep discounts can only be had when risk is high.  Sellers aren’t entertaining crazy low offers because they don’t have to.  Crazy low offers are accepted when the knife is in motion – not after it has fallen.  Both charts show that the knife fell in 2009.  The Scarsdale market  is well in recovery mode while White Plains is bouncing along the bottom.  Granted,  the big 50%+ drops seen in some parts of the country hasn’t  happened here – and there are plenty of underlying reasons why it hasn’t.  And buyers are disappointed!   The area has always been expensive – and that was never likely to change.

Trying to stare down a seller into giving more and more concessions including their first born child to sweeten the pot only invites rancor and competing bids from more motivated buyers.  There is a point at which a seller will give a buyer their walking papers and not look back or entertain other offers.    In most parts of lower Westchester, prices are stable – bouncing along on the bottom.  In some markets such as Scarsdale – prices are edging up.

So the good news is that you can say “YES” to the good – even great deals that are being offered.  Remember – you won’t know that we’ve hit the bottom until prices are rising again.

© 2011 – Ruthmarie G. Hicks – http://thewestchesterview.com – All rights reserved.

First some bad news – rents in our area are headed north – in a big way:

In recent years, renting has become the new thing to do.  Sort of a post-modern version of “shabby chic”  that was so popular in the 80s  that I remember in high school and college.    Since the beginning of the recession in 2008, rents have been low which has been a wonderful  gift to  former home owners who had sold their homes by doing the unthinkable….bringing money to the closing table.  They needed a break – and ironically, just about the only break this terrible recession gave anyone was in the form cheap rent.

But all good things come to an end.  Over the past two months or so, I have been getting rather harried calls from tenants either looking to buy or asking about affordable rentals.  I don’t do all that much in the rental market, but I have a good feel for the prices – so I would fire up the MLS  – pull up the usual suspects – and my eyes would literally pop out of my head.  Surely these are typos?????  Ahhhhh…..noooooo…..rents have taken a major turn northward and inventory is almost nonexistent. If its been on the market for more than a week- chances are  there is a problem – like you need a Hazmat suit to enter safely.

People who have fallen in love with renting won’t want to hear this:

For those newly enamored with renting – I am about to break your heart…..Renting has always been a double-edged sword.  Apart from the obvious  – that there is no build up in equity and no tax advantage – renting tends to be a roller coaster ride for two major reasons…

1. Your landlord may choose to sell out – making you homeless in very short order unless you want to buy the unit of the home yourself.
2. Rents  have a nasty habit of being volatile. They can spike up suddenly when you least expect it – making what was once comfortably affordable – very unaffordable almost overnight.

Rent increases seldom occur in a vacuum.   They are  simply a product of supply and demand.  If one landlord is raising rents , its because they can,  which means that this is probably happening across the board.  So finding anything comparable in the immediate area will probably mean an automatic downgrade in living standards.  As a tenant you have three choices:  live with the higher rates, stay local and move into less desirable digs or move to  another location with all that that implies…including losing your community, changing your commute and if you have children, dislocating them from their school.

The weak economy had created something of a sweet spot for tenants. Many had become complacent  – rentals were plentiful and relatively cheap – why roll the dice on a precarious housing market?  However, just like the housing boom was bound to come to an end – the days of easy rentals are now numbered and tenants are being reminded as to why in past years – people made a conscious choice to buy.

Why buy when you can rent? 

One of the reasons people bought condos and coops in the past was because they understood that as  long as they are renting – the residence you reside in will never truly be your “home” because as  a renter – you can not call your own shots.  You are not even in control of whether you will  stay or leave.   A tenant may love his rental, but his or her ability to stay there is at the pleasure of the landlord.

Another reason is that purchasing – even at an inflated “bubble price” did one thing – it created a home owner who was finally free of the price  gyrations of the rental market.  Purchasing stabilizes costs because your mortgage is fixed – and generally comprises over 50 % of your overall costs.  In the case of condos and coops the rest of the fees comprise taxes and maintenance.  Maintenance fees do increase over time, but they tend to reflect inflation and the same can be said for property taxes.   In a bad year taxes and and maintenance might jump about 6% – but that comprises about half your outlay – so your overall increase is a modest 3%.  Rental markets are another animal altogether.  Recently, rents have jumped over 10% in less than a year in a  couple of popular condo complexes.  Yet a cooperative that I have listed has had a more modest 3.7% increase in maintenance fees.  Now assuming that the owner holds an 80% mortgage and they buy at list price – that would translate into 1.7% increase in their cost of living.  Obviously ownership has its benefits.
The question should really be – Why rent when you can buy?

Granted, it is hard to get a loan.  But if you have great credit and can afford a downpayment you are now better off buying.  The cost of living is less.  I currently have a cooperative on the market for $230,000.  Assuming you pay full price and  that you have a down payment of  20% and thanks to near record low interest rates – your gross outlay is $1711 a month.  The average price for a comparable rental was $1875 a month.  That’s  a savings of $164 a month – or $1968 a YEAR.  You can’t beat that – well – yes you can if you take into consideration the tax advantages.

So what do the tax deductions do?

Once you pay the rent – it is gone.  You are’t paying down a loan, you are not getting any tax benefits.  So here is a rough idea of the net outlay after factoring in tax savings.  Once again I’m assuming a fixed rate loan and a low interest rate.  Assuming that the buyer is in the 28% marginal rate – the net outlay would be about $1411 a month.  Now – I’m not an accountant and I don’t even play one on TV – so this is rough and dirty.  But it amounts to an overall savings.  That’s a savings of $464 a month or $5568 a year.  Now you are talking real money.

But we aren’t finished  yet…

The portion of you loan that is not interest is amortized – or a payment of principle. This amounts to over $3200 the first year of equity that you give to yourself.

The cooperative unit used in this example is….

21 North Chatsworth Ave. #3C in the Larchmont PO.   If you want to see the breakdown of the numbers and for more information on this unit – CLICK HERE.  It’s a walk to all – steps from town and train doorman building.  Check it out.   There is an open house this Sunday – August 7 -  from 1-4 PM.

So here is the GOOD NEWS – if you have good credit and a downpayment  buying a cooperative or condo is an ideal way to stabilize your outlay in a  rental market that seems to be headed northwards at a very rapid clip.

©2011 – Ruthmarie G. Hicks – http://thewestchesterview.com  – All rights reserved.