J. Philip's Westchester Real Estate Blog: January 2010

I attended Marie Graham's home staging workshop this morning at the Ossining Public Library. It was outstanding. While I never disputed the value of stagers, I have gotten into my share of disagreements with them on matters probably not worth arguing about. One is about taking down personal photos. Marie made a good analogy about overdoing the family photo thing. Imagine, she said, you are seated at a crowded restaurant at a table that had not yet been cleared. As you sit, your expectations of a delicious meal are interrupted by a half-eaten fried egg on someone else's plate. You know that people eat at a table prior to your arrival; you just don't want to have to share the experience. 

It is a great metaphor, and it wasn't even her best line. 

Here is the best reason to hire a stager:

You should hire a stager because their fee is a small fraction of what your first price reduction would be if the home does not sell. 

To my mind, that is not something anyone can argue with. Not even me. 

To my way of thinking, few things make a house a home like a pet. We've rescued a few dogs in our time, and the latest is Max, pictured below. He is a purebred German Shepherd whom I rescued for a fraction of what it would have cost to buy a new puppy with papers. Westchester County has plenty of resources for pet adoption, and here are a few worth checking out:

• Elmsford Animal Shelter- We adopted Logan here in 2000. First class place. 
• SPCA of Westchester- walking distance from my office
• Pet Adoption League of Lower Westchester
• Westchester Shore Humane Society
• Yonkers Animal Shelter
• Little Orphan Animals in Cortlandt Manor
• New Rochelle Humane Society
• Petfinder.com has lots of local connections and is virtually the craigslist of animal recue
• Lastly, AnimalLink.org has some really good niche organizations, such as rabbits and Ferrets. 

This is an important clarification for all home buyers who want that tax credit: While everyone is talking about the April 30 deadline for qualification, there is another deadline to be aware of, and that is July 1, 2010. You have to be in contract to purchase by April 30, 2010 and close by July 1, 2010 to qualify for the tax credit. 

April 30 and July 1. Remember those dates. 

This is the link to the NAR brief on the 2010 home buyer tax credit. 

The important thing about this to buyers in my own market of Westchester and surrounding counties is because that gives you 60 days to close, which, in New York, should be enough time if there are no snags. 

Repeat: You do NOT have to CLOSE by April 30, you just have to be IN CONTRACT by April 30 and close by July 1 to meet the deadline for the home buyer tax credit. 

Do your homework, find the right place, get those contracts executed by April 30, and close by July 1 and it pays you $8000. Not a bad deal. 

Forewarned is forearmed! There is still time (about 90 days realistically) to find that home!

Get a head start on finding your home before April 30 with a FREE Listingbook account. Search the MLS database just like a broker. 

CNBC is reporting that some banks are being accused of, of all things, bank fraud in short sales. Those of us who sell short sales know that the hardest cases are often the ones with subordinate financing, or in layman's terms, a second mortgage. If you owe $500,000 on a house with a $425,000 1st loan and a $75,000 second mortgage, then a short sale for $400,000 cleans the 2nd loan out completely. If they are lucky, they will get $3000 from the first lender. They have little choice- if the house goes to foreclosure, they get nothing. 

ON some files, the 2nd mortgage will try and negotiate an unsecured amount to be paid back by the borrower after the closing in exchange for release of the lien. That is their prerogative. It is, after all, money they are owed. 

The fraud part comes when the 2nd lien wants cash paid to them that is not disclosed to the first mortgage holder. In other words, a "side deal" cash payment delivered at closing that is undocumented and not disclosed on the HUD-1 settlement statement. 

So instead of Tony Soprano conspiring to defraud the first bank, it is the second bank. Has it happened? I'd say yes. Is it widespread? Hard to tell, probably not, but once is too many times. Does this surprise me? No. These are the institutions that screwed everything up to begin with. Nothing they do surprises me. 

If you want to buy a short sale in Westchester or the Hudson Valley, or just get a good deal, sign up for a free ListingBook account. 

There is a new US treasury guideline that will, according to a report, mandate that banks make their decision on a short sale in 10 days. The new rule also proposes a $1500 allowance to the seller for moving expenses. I have said before that it shouldn't take a lender more time to decide on a short sale than it currently takes to underwrite a mortgage. The process is virtually the same. 

As enticing as 10 days sounds, I don't see how it could be enforced, nor do I see 10 days as particularly realistic. It takes a week for example, to get an appraisal done. The pendulum does not need to swing so far the either way from 4 and 6 month short sales to under 2 weeks. I'd be happy with 30 days, and, frankly, so would the buyers. The banks are overwhelmed as it is, and they don't have the staffing (or so they claim) to speed things up.

So how will they do it? Will this help or hurt? MY fear is that, pressed to make a decision, the lenders will issue denials on deals they might otherwise approve if given a reasonable amount of time. 

Please Uncle Sam, some sanity. I would happily take 30 days. 

I submitted an offer from a buyer client on a property listed with a very respected company this past Wednesday. It was a low offer to be sure, but that is not uncommon. The property has been listed for quite a while; 250 days as a matter of fact. It is vacant and needs updating everywhere. The listing agent never acknowledged receipt until I called her Friday. She was less than enthusiastic. I didn't care. Get me an answer. 

We spoke again today, and the answer was NO. 

No counter offer, no attempt to negotiate, just "too low, try again." This is extremely foolish. It is the nature of buyers to come in low in this market; to take that personally is ill advised. Even if you are angered at a low offer, you count to 10 and negotiate. So guess what? My buyer is now unhappy. 

It isn't terribly wise to antagonize buyers in this market when you haven't sold in 8 months. MLS records have this agent as having exactly 12 closings since January 1, 2007. It's no wonder. In speaking with her, I told her that I wished she had advised her people to make a counter offer. It would cost them nothing to do so. She said that it cost nothing to not make a counter either, but she seems to not grasp that it costs her client a possible sale.

I sent her an email of a listing I sold this past summer which had a lowball offer that my seller client wanted to outright deny. I told him to counter it and that I'd bring it home. A week later we had an accepted offer of $285,000 on a $299,000 listing when the initial offer was just 240. That's negotiation. We erred on the side of possibility. 

The smart thing to do with any low offer, even one of 50 cents on the dollar (ours, for the record, was far higher), is to make a counter offer. The name of the game is dispassionate, business-like negotiation. That is what makes minds meet. Never say NO. You can't sell the property when you say no. Make a counter offer, even if it galls you. You might be very glad you did. 

A common question I get from home sellers is when they should put their house up for sale once the winter holidays are over. My answer is always the same: in Westchester real estate, Spring starts January 2nd. Obviously, a February blizzard will present a temporary delay, but when you think about it, it makes sense. This is especially the case in 2010, because the homebuyer tax credit expires April 30. 

The "school year cycle" buyer is the bulk of buyers we deal with in Westchester. They want to be in their new home by the Summer. Given the fact that it can take 45-90 days to close (shockingly long to those elsewhere, but a fact of life in New York), if you start looking in January, you only have a month or two to find and get the right place for you before a June closing becomes realistic. Sellers operating on the same cycle need to be in their new places by the end of the Summer. They have less of a margin for error than a buyer with nothing to sell. 

Finding the right home in Westchester is only part of the battle in the Spring. Many homes in Westchester are likely to get multiple offers. I know this sounds like an agent come-on, but we are Westchester County, and the local market here is different from many other markets. Therefore, some first time buyers don't get the first house they like. It may not be that they are outbid necessarily, but that is for another post. The bottom line is this: the Spring market in Westchester real estate starts as soon as the holidays are over. There are motivated, qualified buyers out there on January 2nd, and they'll be in their new homes by April the earliest, some not until the summer. 

Many sellers want to close prior to June, because they want to find something in the Spring also so they can have the Summer to make their new home theirs before school begins. These things don't happen overnight, and if you want to be ahead of the curve, you start in January. 

If you don't take my word for it, check the records- I'll give you access to all MLS data- active, under contract, and sold properties with a free Listingbook account and you'll see for yourself. 

The other day a seller client told me that she showed her home to strangers off the street who knocked on her door and expressed interest in seeing the place without an appointment. She accommodated them. We don't know who they are, or even if they were qualified to buy. She just hoped they might be the ones. I told her to never do this again. Call me a suspicious New Yorker, but the risks outweigh the opportunity when you show you home to strangers with no appointment.  

Prior to scheduling a showing, we verify the credentials of showing agents, their contact information, and their licensure. Nobody gets an appointment without verification. If it is our own buyer, we verify their identity and their financial qualifications. Otherwise, I might as well have a hitchhiker in my car. To not take these measures I expose my firm to severe liability and clients to undue risk. 

What can go wrong by letting strangers into your home without a proper appointment? Plenty.

• Theft
• Violence
• Vandalism
• "Staking the place out" for future theft
• Identity theft

I have written about this previously, but pre-approval letter "games" are not worth playing. Here is what I mean: If you are interested in a listing priced at $500,000 and you want to make an offer of $450,000, you are shooting yourself in the foot if your pre approval letter only says you are approved for the 450k. If you are approved for 525k, your pre approval letter should at least say you are approved for asking price. Otherwise, you'll appear to be barely qualified for a low price. That might fly in other markets, but not in Westchester County. 

In the game of negotiation, seller confidence in the buyer's ability to perform is leverage; you'll do better getting your price coming from a position of strength that you will if your pre approval has you qualified by an eyelash for a lowball amount. That makes an otherwise well qualified buyer look like an unrealistic pipe dreamer

Don't be afraid of getting a counter offer for the amount that your are approved. Counter offers are fine. Counter back.  "No," on the other hand is not good. Show your strength! It will benefit you in the end, because without confidence in your approval, the seller will be harder to bargain with. I have been second-guessed on this by some loan officers, but I tell them to stick with the approval and leave the real estate brokerage to me. 

Again, it might be different with pre approvals in other markets, but in Westchester County, a stronger pre approval ensures the buyer a better deal than a low pre approval. 

Search for Westchester Homes like an agent and get a free Listing Book Account here. 

Marie Graham, in addition to being a friend, is the founder of the Refreshed Home. Her specialties include interior design and killer staging for getting your home sold. On Saturday, January 30th at 10 am, she'll be putting on a workshop on how to stage a home for sale optimally, and I will be in attendance. I am encouraging my seller clients to check it out. The event will be in the conference room of the Ossining Public Library at 53 Croton Ave.

What sellers need to understand is that buyers in this market are very choosy and the competition for their attention is brutal. A home that is not attractive or set up to it's full potential can have it's chances hurt for selling in a timely fashion for the most the market can bear. People buy with their eyes in many cases. 

If you are for sale or are considering it, you should make this event.