Enjoy the reblogged article and check out Debbie’s blog The Flooring Girl

Ruthmarie Hicks

What types of flooring provide the best ROI? 

Often, customers ask me which types of flooring are the best investments, or which provide the best ROI (return on investment) for your home in Westchester County?  I also have many real estate agents and home stagers asking me this same question, so I know it’s an important question, especially if you intend to sell your home now or in the next 2-3 yrs.  I work with a lot of new homeowners right after they close on a home, so I see all the changes they make + I work with a lot of customers and stagers who are putting their homes on the market.

Also, more and more, I’m seeing a trend to fixing up the home 2-3 years before homeowners intend to sell.  I think this is really smart as you get to enjoy the improvements you make + sell at a higher value.  It also helps you balance out your expenses over a longer time period.

Of course everything needs to be evaluated in the context of the condition of the home and it’s neighborhood.  The “standards” are different based on what you are comparing against, but here are some general guidelines.

1.  Sanding and refinishing existing hardwood floors is almost always your best investment.  If you have hardwood floors, you are in good shape – hardwood sells and it helps define the value of your home.  If you have hardwood floors, and they are beaten up, your first consideration should be to refinish the floors.  Most real estate agents anecdotally tell me that you will get your investment back three fold on this…and, it makes sense.

First, refinishing your hardwood floor is not that expensive…and usually costs less than people think.  It is amazing how much better your home will look if you refinish the floors.  You have the option of changing the color or leaving the same color.  Lighter colors make the space look larger and more airy and informal; darker colors are more dramatic and give the home a more formal and sophisticated look.  Satin finish is usually the preferred sheen (90-95% of my customers choose this) and it tends to show the scratches less than a semi gloss finish.

Second, if you have pet stains in the hardwood, they can usually be fixed by replacing these sections and weaving the hardwood in, and after they are refinished, you will never even notice the new pieces (assuming you hire a professional).

Third, if you have hardwood underneath your carpet, by all means, rip up those carpets and refinish the hardwood…you have just found a gold mine.  Hardwood sells; very few customers want carpet…not to mention that your carpets are probably dirty and may include your smell…and the buyer will want to rip those out anyway.  And, believe it or not, it is almost always less expensive to refinish your hardwood than to recarpet.  A potential buyer who sees carpet is wondering “how much will it cost to rip out the carpet and add hardwood.”  This factors into whether or not they even make an offer not to mention how much that offer is for.  So, if you have hardwood under the carpets, show it off…and you will automatically improve the value of your home and how many people are willing to make an offer. It is usually a no brainer.

Fourth, if your floors are beaten up and you don’t refinish them, many will assume that you don’t take good care of your home, and that they are likely to find other hidden issues during the inspection.

2.  Add hardwood flooring to key rooms, if you can afford it.  Most homeowners in Westchester NY strongly prefer hardwood for the main living space or common areas such as living room, dining room and family room.  Many prefer hardwood for the master bedroom, too.  If you have hardwood in those areas, you are set, if you don’t, you may want to consider investing in hardwood for those areas – provided you have the budget to do so.  You will definitely get back that return on investment – probably at least two fold.  I understand that many selling their home do not have this luxury, but if you can afford it, by all means invest in the hardwood flooring (rather than carpeting) for those areas.

3.  If your carpets are dirty and/or smelly, it’s usually best to replace them.  Please note that trading up to hardwood, will usually get you a great return on your investment (unless of course you live in an area where hardwood is not the norm), but replacing the carpeting will not improve your selling value.  Rather, it will allow you to capture the potential selling price of your home in good condition.  It will probably also enable you to sell your house sooner as it will appeal to more buyers…or said another way, prevent buyers from being turned off by your home.  My guess is that you will get back this investment and just break even.  (But, if you don’t do it, you will likely need to lower the price of your home and it may stay on the market longer resulting in another price reduction).

Always select a neutral color for carpets as that will appeal to the largest set of potential buyers, and generally lighter is better as it will make the space look larger and cheerier, and it gives you a sense that the home is clean.

4.  Kitchens are tricky and it’s best to consult your agent and/or a stager for opinions.    We have all heard that kitchens and bathrooms sell…and this seems to be very true.  But, usually kitchens are the most expensive area of the home and a full kitchen remodel will not give you a full return on investment.  I’ve read many reports on this, and most claim that you get 70% return on your investment.  And, this is why it’s usually better to invest in your kitchen if you are just moving in or planning to stay put for a while.

However, if your kitchen is rather out of date, and the agent is seeing this as a hindrance to the sale, you should consider your options.  Sometimes, the agent will recommend that it is not worth it to do anything because they believe the next homeowner will completely gut and redo the whole kitchen (so why invest more money if it’s like putting lipstick on a pig?).  Other times, it is worth it to make some minor enhancements to either eliminate an eye sore or bring it up to an acceptable level.  For example:

- If the there is vinyl flooring and it’s coming up, consider adding laminate on top…or potentially hardwood (tile flooring can work too, but it is more expensive and hence usually a lower return on investment).

- Add a simple subway tile backsplash – if there is no backsplash…or if your backsplash is very taste specific

- Add granite countertops, if you have laminate countertops and they are falling apart.

- Add new up to date energy efficient appliances

Most likely, you will break even on these minor upgrades…but more importantly, you will have a much more sellable asset, as you’ve been able to eliminate major eye sores that scream money money money to the buyer.  You want the buyer to feel that they can live with the kitchen as it is for a few years.

But, as I mentioned, kitchens are tricky business, and there is no one size fits all since there is a whole array of how the kitchen can look and this all needs to be in the context of the neighborhood.  Your real estate agent is the best judge of what is needed and what will sell.

If you do make changes, make sure that they a neutral and taste specific…remember, you are trying to appeal to the widest audience.

These are my top recommendations on flooring improvements if you are selling your home soon…or in 2-3 years.  Every situation is different, but these tend to be the items that usually tend to provide the best return on investment.

Feel free to call The Flooring Girl, if you have any questions about Flooring in Westchester County NY

Reprinted from “The Flooring Girl – What types of flooring provide the best ROI?

From Marie Graham:

In most any room, walls- all vertical surfaces, including windows-make up the largest  surface area, followed by floors.  Depending on the quality of the product and wear it’s received, 8 to 10 years is an expected life span for most broadloom.

WHYOHWHYOHWHY do sellers wring their hands, whine and gnash their teeth when the Realtor and Stager suggest replacing carpet from the last millenium?

Here are ten reasons there is no reason to keep old carpet:

-Old carpet-and old padding-retains odors and allergens from stains long dried, pets long gone, and former smokers.

-It can be so reasonable. Many carpet stores now stock rolls of nice, neutral carpet for just this purpose. This means quick delivery and a better price.

-

Old padding breaks down after a while, especially in high traffic spots-which makes that part of carpet wear faster.

-New padding of the the highest quality is a mere pittance (about $3.50 a square yard in our area). It is so  luxurious, and provides sound-deadening benefits to the rest of the house.

-Buyers will often over-estimate what it will take to replace icked-out old carpet, which sets the stage to arm-wrestle about an allowance…just what you’re looking for.

-It is the quickest and easiest way to deal with flooring issues-no dust/fumes/drying time…you will also know for sure what condition the wood floors are in.

-The crud that blows out of  HVAC vents just does not clean up, no matter what anyone tells you.  Really. Trust me.

-If you are decluttering and moving furniture around, traffic patterns, stains and fading become more apparent with less to look at.

-Even if it’s in good shape, outdated colors or styles suggest to buyers that other things in the house are outdated as well…perhaps they need to look harder??

-In New York State,  it’s allowed as a cost of selling the home, taken as a deduction against the profit when the house sells.

An 11 x 15 room will need about 20 square yards of carpet, even at a padded/measured/installed reasonable to generous price of $35.00 a yard, it’s less than $750.00 ..one fifth…of one percent…of the price of a $400K house.   What part of that does not sound like a great idea??

Let’s talk about your home.
914.607.2895
marie@therefreshedhome.com

©2011 The Refreshed Home

One of the more confusing aspects is towns vs. villages.  The town of Greenburgh NY is actually a rather large town that comprises various  villages and POs.

Greenburgh covers several river towns and also cuts a swath eastward to the central portion of the county.

The Greenburgh Central School District comprises three zip codes and two PO address.

A good portion of the White Plains NY PO is not part of the City of White Plains.  Although adjacent White Plains NY, these areas are not part of that municipality.  This causes a great deal of confusion for buyers.   A large portion of the 10603 zip code and all of the 10607 zip code  are in Greenburgh and are zoned of the Greenburgh Central School district.   The Hartsdale  P.O. is also part of the Greenburgh Central School district.

Edgemont NY:

The famous Edgemont schools are often mistakenly confused with Scarsdale.   This is not surprising since the  PO address is Scarsdale and it shares the famous Scarsdale zip code (10583).   However, Edgemont is another Greenburgh P.O.

Elmsford  NY:

Elmsford is also part of Greenburgh and has its own school district. The zip code for Elmsford is

10523

Ardsley NY:

A village within the town of Greenburgh with its own school district.  The zip code is 10502

Hastings-on-Hudson NY:

A river town on the southern tip of Greenburgh  which abuts Yonkers – has its own school district and a zip code of 10706.

Dobbs Ferry NY:

Dobbs Ferry  NY is a  river town just north of Hastings-on-Hudson with its own school district.  The zip code is 10522.

Irvington NY:

The next river town up the line is Irvington Ny – once again it has its own school district. The zip code is 10533.

Tarrytown NY

The northern most river town in Greenburgh  – it is pictured together in green on the map with Sleepy Hollow  its “sister village.”  Sleepy Hollow is actually in the town of Mt. Pleasant.  Nevertheless both Sleepy Hollow and Tarrytown share a school district.  They also share the 10591 zip code.

As if this isn’t confusing enough the boundaries are not black and white.  You need to know what you are buying.  For example, there are portions of Tarrytown NY that are actually in Elmsford – even though they have a Tarrytown address and the 10591 zip code.

Working with a good real estate agent can help you sort out all these differences and help with the ins and outs of all of these communities.

Happy house hunting….

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

We love this house!  It has all the amenities we want – but that neighborhood!  Why can’t we find this in the school district (or insert other criteria) that we want?

This is a question asked by many buyers who are frustrated that they are not able to find exactly what they are looking for at their price point.  Lenn Harley wrote a tremendous post on this topic and kind of beat me to the punch on this topic. “I’ll send you my criteria….” In that blog – Lenn aptly describes a situation very familiar to Westchester NY agents.  A  buyer who is  perfectly  capable of buying  has created criteria that is so tight it prices them out of the market.  It happens all the time and the way I answer that question depends on the circumstances.

Often the buyer has  has  selected an area exclusively based on the school district (as in Lenn’s blog)   I recognize and understand everyone’s  desire to give their children every advantage, but unfortunately everyone likes that town (zip code)  for the same reason. Since pricing is determined by supply and demand, how much you can buy often depends more on where you are looking.   Some areas are highly competitive while others have plenty of inventory.

The following amenities raise the price of buying a home in this market.

School District – People want only the “best” districts – or their definition of same (which I don’t agree with – but I digress) high scores mean big bucks.

Close to high end shopping and fine dining - The McMansion far from stores, shopping and dining is now passe. People want walkable neighborhoods where they can leave the car.  They want to walk to first class restaurants, be able to pop by stores like Anne Taylor, grab a coffee at Starbucks (or a local bistro) and stroll home. Any home with that amenity will be priced higher than those that are tucked further away.

Commute – In Westchester  NY – if it is not about the schools it is ALL about the commute!  Premium prices can be expected for anyone looking at homes within about 40 minutes of Grand Central Station NYC on any of the three  Metro-North train lines.  If the municipality lacks a stop on Metro-North the price goes down.  If you can walk to the train – the price tag goes up.  White Plains has the most peak hour trains of any stop on any of the three train lines.  This boosts prices in the downtown.

At the end of the day, creating criteria that can’t be met by the current market is self-defeating. Homes in desirable locations are resistant to major price shocks – so the correction that we had – though significant – has proven to be a disappointment for many buyers. But  hoping that affordability will increase is probably self-defeating at this point.  The areas where everyone seems to cast their lot are already edging up in price and interest rates are also starting their upward climb.  Prices may or may not adjust more, but affordability is not going to get much better.

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

Or at least miss out on that property you had your eye on….

Westchester NY homes for sale is a mixed market.  But some indicators are starting to point upward. Last weekend I was out with more than one buyer who was surprised when they found a couple of homes they had their eye on already had offers and were heading for contract.    I had warned them about the great bird in the hand on several occasions – but they didn’t listen.   Buyers feel that there is no hurry right now and that is where they are wrong.  The urgency is only felt after they lose out because they were overconfident of the strength of the buyers market.

The Irony of a Buyer’s Market:

When its a seller’s market – buyers wish that it were a buyer’s market – but they then proceed to snap up overpriced homes like they were hot pancakes. When its a buyer’s market – the buyer’s disappear or sit on their hands waiting for the deals to get “even better.”

Most buyers end up waiting until its too late and then we are back to a seller’s market….Where buyers once again complain that they wish they hadn’t missed the buyer’s market and snap up overpriced homes like they were hot pancakes.  The perpetual cycle continues!

Time is running out:

At this moment  buyers have a wonderful opportunity to buy within a relatively broad (but narrowing) inventory at interest rates that we will probably never see again.  Affordability hasn’t been this high in many years and interest rates and prices are not going to be held down forever.  But buyers are under the illusion that time is on their side and this is where they make a critical error:

Here are some of the objections I keep getting:

Home Values Could Drop!

Sure they could.  I don’t have a crystal ball -but  the New York area is very resilient and we are seeing marked improvement in the New York City market which will put upward pressure on Westchester NY homes.  For example, we are already we are seeing price pressure on homes for sale Larchmont,  Scarsdale  and other highly commuter friendly areas.

Interest Rates Could Go Even Lower!

Why people are willing to stand on the edge of a cliff on this one baffles me.   We have become very spoiled by low interest rates and people need to wake up and smell the coffee perking.  The Fed will eventually have to tighten – and that will have a major impact on your buying power.  On this one issue, reluctant buyers are truly  tempting fate.

Although most home buyers look at the sticker price above all else, they should be watching interest rates even more. NOTHING impacts affordability more than interest rates.  For example – a 1% increase on a $250k loan would mean that the borrower could only borrow $220k to achieve the same monthly payment.   That’s a 12% loss in buying power and traditionally interest rates  upwards of 2.5-3.5% higher then they are now.  That’s a lot of buying power that can be either lost or locked in now.

But I want a good DEAL!

Do you want a good deal or a nice steal?   The fact is that you are already getting a great deal.  Prices have tumbled 20-30% – depending on the location.   Waiting for a fire sale will either leave you with nothing or something  no one wanted in the first place.

But what is something better comes on the market?

That might happen, but depending on the criteria – it is rather unlikely that you will find something better or “more perfect” later on.  When a buyer first starts looking they find themselves with a seemingly endless supply of homes to pick from.  It leads them to  think that  the endless stream will continue while they wait.   But once they have exhausted the current inventory, the flow stops.  The pickings  get thinner because they have been shopping the same market for a while.  And while I am at it there is no such thing as the perfect house!

And the most tricky……

With this inventory the house will be there next month with a lower price –

A house that you like is more likely to sold out from under you than a home that you are neutral about.   Because if you like it – others will like it too  – for the same reasons.  Although buyers have the luxury of being picky right now – the difficulty is that they tend to be picky about the same things.

Must be on a quiet street.
Must be able to walk to train or have parking at train station.
Must be able to walk to town.
Must have a new kitchen and granite counters.
Must be move-in ready.
Must have a powder room on the ground floor.
Must  have a master bath upstairs.
Must have a minimum of three bedrooms upstairs.
Must have a private yard.

Sound familiar?  If you’re a buyer it should.  It probably describes your wants and needs list to a “T”.  The trouble is – everyone has the same list but very few homes meet all those criteria.  So even if the inventory is high – the selection is  limited  by the buyers very own criteria.  And that is why a home can get sold right out from under you even in a major buyers market.

So no – infinite time does not exist.  I think a lot of buyers may be kicking themselves later if they miss the opportunities that the 2009-2010 Westchester housing market had to offer.

© 2010 Ruthmarie G. Hicks – http:/thewestchesterview.com – All rights reserved.

For Q2 2010  prices for White Plains NY homes for sale were down from the previous year.   Single family homes – which took  the brunt of the housing decline last year – had less of a correction this year.  The good news here is that as far as single family homes in White Plains goes – we may be still trending down, but the steep declines apparent between 2008-2009 are not present.   The story is different and more discouraging for condos and coops.

Single Family Homes  in White Plains:

White Plains NY homes for sale declined 4% from Q2 of the previous year to and median price of $559,000 – (down from $583,000 in Q2 2009).  The price range went from $245,000 for a short sale to $1,300,000 for a high end home.   The prices – particularly at the higher end are still trending downwards.  Stiff competition from areas such as Scarsdale, Rye and Larchmont – which have had major price corrections are perhaps contributing to further declines in the higher end single family market of White Plains.  Previously out of reach for many, these other markets are back on the high end home-buyer’s radar.

Fueling the competition with other  communities are the property  tax hikes  that have taken away the tax advantage that White Plains homeowners could point to in previous years.    Property taxes have risen disproportionately in White Plains over the past several years and single family homes have been hit hard. The present trajectory of taxes on White Plains single family residents is unsustainable and must be reigned in or further declines in value directly associated to this issue are likely.  I hope some of the city officials are reading this…

There appears to be a bit more than 7 months of inventory overhang on the market – which puts it into the buyer’s market territory – but just barely.  This is a big improvement from past quarters and is a good sign.   Sales volume is up significantly from 2009 – but the effect of the tax credit may create a false sense of security.  The 3rd quarter numbers on volume will be informative.  But contracts and pendings indicate that the market has maintained momentum – with the caveat that price declines are continuing.

Condos in White Plains

Median Condo prices in White Plains NY are following the downward trend of Westchester condos generally.  Prices are off 10% from the previous year with a median price sitting at $355,000.   At  the lower end of the spectrum was a 1 BR condo with street  parking in the downtown area for $160,000, while the high end was $1,300,000 for a unit at the Ritz Carlton.    Volume was up over 2009 due to the tax credit, in fact it nearly doubled.  But contracts and pendings indicate that we are rapidly heading back to 2009 levels.  The inventory overhang is high if you look at current contracts and pendings as a measure of future activity.  If that’s the direction sales are heading – there is an 18 month inventory overhang.  The Q2 sales results indicate an 8 month inventory.  Reality probably lies somewhere in between with at least a year of inventory on the market.

Coops in White Plains

Westchester coops represent an important entry point to the housing market.  Even with the tax credit prices tumbled 22% over the previous year.  The median price for Q2 2010 was $185, 000 down from $238,000 the previous year.  Sales volume was up significantly – over 40% due to the tax credit,  but current contracts and pendings show a marked decrease in activity – back to 2009 levels.  The inventory overhang ranges from 10-18 months depending on whether you look at Q2 sales or current contracts/pendings.  Like White Plains condos – there appears to be well over a year of inventory on the market.

All in all, condos and coops throughout Westchester still have a way to decline. Single family homes which declined far further earlier in the correction could be poised to recover or at least stop declining. However,  much of that depends on White Plains getting its house in order and getting property and school taxes under some kind of control.

Further Reading:

Gedney Farms – White Plains NY

Jefferson Place – White Plains NY

Trump Tower – White Plains NY

The Broadlawn – White Plains NY

White Plains NY Housing Market Statistics Q1 2010

White Plains NY Housing Market Statistics Q4 2009

White Plains NY Housing Market Statistics Q3 2009

© 2010 – Ruthmarie G. Hicks – http://thewestchesterview.com – All rights reserved.

Scarsdale NY Single Family Homes  – Scarsdale Schools

The average price for Scarsdale homes for sale – saw an average price increase of about 14% to $1,437,000.  Although prices had not truly increased in such a dramatic way.  It points to health in the market because is shows that higher end homes are actually closing.  The banking crisis kept the larger homes out of the market place in Q1 of 2009.  So this increase reflects a broadening of the viable market and not a true price increase.  The price range of solds was far broader in 2010 than in Q1 of 2009.  Prices ranged from $558,000 to $3,625,000.

Looking at sold listings, the inventory on the market is considerable  over 15 months.  However, if you look at contracts and pendings – the picture is brighter with a little more than five months of inventory.  But that assumes that everything under contract will sell. The truth lies somewhere in between. This is still a buyer’s market – but it is definitely not a fire sale.

Edgemont Single Family Homes – Edgemont Schools – Scarsdale P.O.:

Average housing prices increased in Edgemont as did sales volume which was up 200%.  The average sales price at the end of the first quarter was $1,608,000 – up from $840,000 at the end of Q1 in 2009.  Interestingly, the price of lower end homes was static, but the price increase reflects the fact that higher end homes are now selling again.  For example the highest priced home that sold in Q1 of 2009 was $1.1 million. But in Q1 in 2010 the highest priced closing was $4.2 million.   So prices haven’t risen dramatically – but the price range closed sales has increased dramatically.   There is still considerable inventory on the market – so this is still very much a buyer’s market.  With respect to closed sales in Q1 there is a 15 month inventory.  But there are many contracts and pendings in the pipeline. If you use that as your benchmark – the inventory is a little over six months.

Scarsdale NY Cooperatives:

Cooperatives in Scarsdale – including Garth Road with a Scarsdale P.O. – showed moderate gains in prices – up 3.8% over Q1 in 2009.  The average sales price in Q1 of 201 was $246,000.  Sales volume was static from the previous year and inventory vs. closings indicates that there is a 9.7 month supply of active listings  if you look at closed sales from Q1 2010.  Looking at contracts and pendings that goes down to 6.5 months.

An Important Note About the Criteria for the Statistics:

I handle each type of housing in Scarsdale differently. I also include a special section for single family homes in “Edgemont” which is really in the town of Greenburgh with a Scarsdale post-office and zip code.
For condominiums and cooperatives, I use the Scarsdale post office and zip code as my criteria. Many of these complexes are actually located in Greenburgh and Eastchester.

This reflects the way most buyer’s shop for housing. Coop and condo buyers work by address whereas those looking for single-family homes are often shopping municipality and school districts.

Further Reading:

Scarsdale NY Housing Market Statistics – Fourth Quarter 2009:

Scarsdale NY – Housing and Market Statistics for Third Quarter 2009:

Housing and Market Statistics for Scarsdale NY – Second Quarter 2009:

Scarsdale Coops – Pet-Friendly Scarsdale Country Estates

Scarsdale Manor Cooperative – Garth Road -Scarsdale NY

The Chauteaux Cooperative – Scarsdale NY

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

Unfortunately, unrealistic expectations can set buyers  up for  unnecessary disappointment and frustration.   There are several flavors of unrealistic buyers out there.

The “I want to steal a house” investor:

This buyer is determined to find  a home for pennies on the dollar. They comb through listing after listing and call agent after agent to show them home after home that looks as though it is the bargain of the century.  The trouble is that once they see the home, they realize that this is beyond the simple fixer-upper.  A new coat of paint is not going to do the trick.   These  homes don’t just need TLC – they need to be gutted.

This type of buyer needs to realize that there is no free ride here.  Many of them have been  watching too many late-night TV shows that claim that banks want to get rid of these properties at “any price.”   After the way the banks have behaved over the past year – does anyone seriously think they are going to get the better end of any deal involving a bank?   Banks have shown  themselves to be more than  capable of looking after their own interests.

The “I’ve got champaign taste and a beer budget -but I’m not settling” buyer:

This buyer can appear in any market. Since affordability has improved, it might seem counterintuitive to observe an increase in this type of buyer right now.  Yet, that’s what I’m seeing.   They want far more than they can ever possibly afford and the buyer’s market media hype is giving them tacit permission to push for the impossible.   The sad thing is that this buyer is not looking at the increased affordability of the past year as the gift that it is – instead they are on a quest for even more.

This type of buyer has two choices: bite the bullet and buy what they can truly afford or roll the dice and hope that affordability increases still further.   The latter has true risks in this market. Although prices may decline further, affordability  is probably not going to increase because interest rates are almost certainly headed northward.   This may well more than offset any further price decreases.  For affordability to increase the buyer has to look to their own finances not the marketplace in order to afford “more.”

The buyer who will only put in offers 10-20% below asking price no matter what the comps say:

This type of buyer is of the mindset that “if you don’t ask, you don’t get.”  They want to “test” the seller with a lowball in the hopes that the seller is desperate enough or ignorant enough of the comparable solds  to accept.  As I said in my previous blog about sellers:  asking isn’t getting.

Not only does this rarely work, but it can really offend the seller to the point where the buyer could lose the sale.  Low-balling is not a good way to win friends – or negotiate a sale.  Offers should be based on the comparable sales – NOT the asking price.  Many seller’s have already priced their homes realistically.  A realistically priced home is more likely to be having multiple offers – so low-balling is a bad idea.

At the end of the day, buyers need to take a realistic look at the comparable sales.   Those numbers are not lying and placing realistic offers in that “sweet spot”  where they are consistent with recent sales – leads to success in the long haul.

In the end, the sale and purchase of a home should be a win-win for all concerned. It’s not about “beating the market” or “getting the better end of the deal.”  It’s about negotiating a transaction that works for all parties.

© 2010 Ruthmarie G. Hicks – http://thewestchesterview.com. All rights reserved.

There have been a lot of blogs written lately about who is to “blame” for the housing bubble and its disastrous aftermath. Some bloggers blame lenders, some blame agents, brokers, NAR, the Fed, home owners…the list goes on and on.
But one common thread I find very discouraging are blogs which lay blame on  the homeowner who was underwater.  They should have KNOWN better. They were GREEDY. They were IRRESPONSIBLE, they were this, they were that…

In truth, the housing debacle is as much a result of the decimation of the middle class as it is about a housing bubble itself.   Families have found the ground shifting under them faster than they could ever have imagined. Many homeowners have found  themselves into the horns of a dilemma.  This is the story of my generation.  As a forty-something I’ve felt the sands shifting under my feet ever faster.  I have found myself scrambling to earn those ever elusive extra dollars that will allow me to keep my own home – even as I help my clients sell theirs.

The middle class has been under assault for the past 30 years.
Elizabeth Warren outlined it the best in the presentation embedded below.  For those who don’t have 50 minutes to view the video – here is a brief synopsis:

Dr. Warren did a series of studies comparing  the income and expenses of a family of four living in 1970-1971 to a family living in 2005-2006.  The summary of her findings gives us eye-opening insight as to what has happened to the middle class.

Income & Savings:

• Overall income went up for COUPLES.
• Income for males decreased when adjusted for inflation.
• So the bump we got in overall income  came from having a second worker.
• Salaries have actually been flat or have been decreasing over this period.
• In 1970 savings was 11%
• In 2005 savings was under 0%  (debt had increased)
• Revolving Debt up from 1.4% to 15%  of income.

How did this happen?
Was it rampant materialism combined with childish irresponsibility?

Where did the money go?

• Clothing: Families are spending 32% LESS on clothing then they were in 1970.
• Food:  including eating out:  Families are spending 18% less on food than in 1970.
• Appliances: Families are spending 52% less than in 1970
• Car ownership:  Families spent 24% less on each automobile in 2005 then in 1970.
• Electronics – including internet and computers:  up $300 a year from 1970.

So it wasn’t traditional “luxury items” that got people into trouble.  The electronic craze, such as wide -screen TV’s play nominal role at best.

Here’s where prices went UP, UP and away….

• Home: There was a 76% increase in housing costs due to higher prices and taxes.  But the average size of  a home increased by an average of one room.
• Health Insurance: (via employer only)  Up 74% from 1970.
• Cars: Outlay up 52%  to account for the need for two cars once both husband and wife are working. Increased 52% – because most are now 2 car families because both parents employed.
• Childcare – up 100% (since the mother was mostly home in 1970)
• Taxes:  The tax rate is up 25% due to having a second earner and thus higher overall income.

Here is the trouble – the expenses that are down are the flexible expenses.  The expenses that are up are not flexible.  The expenses that are UP are what Elizabeth Warren calls “Fixed, relentless expenses.”

Increased Vulnerability:

• Families need BOTH incomes to make the mortgage.  There is no leeway if someone gets sick and no one to put in the workforce to replace the person that has died, become sick or incapacitated.

• The risk shift: Warren sites Jacob Hacker’s work -  on the risk shift.  Here they analyze the risk of a 20% drop in family income.  Income volatility is up nearly 20%.  This is in good part due to the fact that since both workers are needed to sustain income, the risk of incapacitation or layoff DOUBLES.

• Health Care is totally dysfunctional…Warren sites the tremendous vulnerability families have to health care.

1. Lack of insurance coverage. More and more middle class losing coverage.
2. Decreased health care – releasing patients quicker and sicker.  (I can attest to that with my father. The hospital is forever releasing him TOO SOON – dumping the burden of care on my shoulders. This has wrecked havoc with my business as it sits. But I was a 9-5 worker – it could  – probably would – cause me to LOSE my job.  Sending home sick people saves insurers money – but it foists what should be nursing care on the family who is already working full tilt to meet the bills. Warren calls this “just one more push” over the edge if there is a serious illness. She sites illness as a major and “direct income impact.”
3. Warren sites “faux insurance” – where people think they have good insurance until they get sick.

So, next time we see a family in trouble. Let’s not think ill of them. Let’s stop pointing fingers.  Remember if you point a finger and look in the mirror – you see a finger pointed back at you.

For those who ended up leveraged to the hilt – I can see how it could have happened.  As their income potential kept declining, they kept thinking “I am smart, I work hard, I have a good reputation in my field and I play by the rules – so things will get better – this is only temporary.”  In previous recessions this would have been the case.  But the last recovery was truly jobless.   The rich got richer, but the middle class went nowhere.  They never even recouped the ground they lost in the crash of 2000. So they borrowed on their homes which went up in value thinking “this will pass – its GOT to pass.”  Everyone felt that  eventually things would get back to normal and the jobs and money that went with them would flow freely once again.  But things didn’t get back to normal.  That was the “old normal.” Instead, we have a “new normal” which  is an unacceptable normal where the middle class are being pushed off the cliff and into the abyss.

Lets also remember that the bottom line here is jobs, jobs, JOBS.  We need to swing the doors wide open on well paying career opportunities.  We need to stop out-sourcing, downsizing, and importing cheap foreign labor and keep well-paying jobs HERE in America.

© 2010 Ruthmarie G. Hicks. http://thewestchesterview.com.  All rights reserved.

In the post, the details of the shake-up were described in detail – particularly with respect to Sotheby’s and Better Homes and Gardens Rand.  Many have been affected by the changes that have roiled our market.  I was briefly with Prudential Rand (before it became Better Homes & Gardens Rand) when they acquired Nelson-Vrooman GMAC in the spring of 2008. My initial brokerage at Century 21 Wolff was also acquired by Rand.  So agents have been reshuffled like playing cards in a very large deck.

This fall out from this may signal a changing of the guard away from the large franchise model to smaller independents  – or – it could consolidate the power of the few left standing.  Although I belong to a fairly large franchise, it is my hope that some of the smaller independents start to carve a nice niche for themselves where they can level the playing field and keep a lively competition going.  In general I have been quite hard on the large franchises because some (not all) have sat on the laurals of their name brand. All the while doing little or nothing in the way of customer service.  New agents were often “on their own” which also wrecked havoc with customer service.

But to those in our area that had a favorite brokerage that is now gone – I will offer the following advice.  Agents sell homes – not brokerages. If your brokerage of choice is gone, but you had an agent that you worked successfully with in the past, I suggest you track him or her down.  It is more than likely that the agent is still in business with another brokerage.He or she has not changed just because they are no longer with the same broker.  If they did well by you in the past, they will continue to do so.

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