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

What qualifies as hardship in a short sale? I get this question fairly often, and it should be addressed. First, I'll tell you what does not qualify as hardship, and that is simply being underwater. If you owe more than you are worth, being upside down alone is not adequate hardship to get a short sale approved. That is only half the equation. There has to be a financial hardship. 

In every case of hardship I have ever seen, a loss of income has been involved. It could be unemployment, divorce, being laid off, the failure of a business, or any of a hundred other things, but a loss or decrease of income is absolutely hardship. When your expenses remain the same and your income goes down or disappears, you have a case for hardship. You could be a ditch digger paying a $500 per month mortgage or a brain surgeon paying $10,000 per month. If you lose income, hardship is not hard to prove. In rare cases, income has remained the same but the payment has adjusted up, but the mathematical outcome, namely a deficit, is the same. 

That is as basic a yardstick as I can find. I'd be surprised to find a more common or less complicated theme. 

Loss of income is almost always a case for hardship. 

• We Are Westchester County, NY Real Estate. Reach Phil at (914) 723-8900.
• J. Philip Faranda, Broker-owner, J. Philip Real Estate, LLC. 2010 Vice President, Westchester-Putnam Multiple Listing Service. 
• I am one of New York's premier short sale REALTORS. 
• J. Philip Serves Briarcliff Manor, Ossining, Croton, the River Towns, Westchester County, and the bedroom counties of New York City.
• Free MLS Search! Register for a Free Listingbook account and search the MLS like an agent. 
• I am hiring agents. 

All content/images, unless noted, are the property of J. Philip Faranda & may not be used without permission

I will be holding 109 Elk in New Rochelle open today from 1-3 pm. It is a 3500 square foot English Tudor with 6 bedrooms, 3.2 baths, and a carriage house garage. List price is $975,000 and annual taxes are $22,429. The lot is very large for the area-.39 acres. 

Here is the write up from the MLS, which is a good summary:

Magnificent English Tudor in prestigious Forest Heights, on the corner of a spacious .39 acre yard. Formal entrance & foyer, balcony off master suite, 6 bedrooms plus 3.2 baths. All electric is updated, sunroom has heated flooring. Two-story 3-car carriage house. Oak floors throughout, beamed ceilings, stained/leaded glass windows and wonderfully preserved original details throughout. Two gorgeous woodburning fireplaces, greenhouse, large eat in kitchen, and much more.

Come meet me if you don't carry anything written by JD Salinger. 

• We Are Westchester County, NY Real Estate. Reach Phil at (914) 723-8900.
• J. Philip Faranda, Broker-owner, J. Philip Real Estate, LLC. 2010 Vice President, Westchester-Putnam Multiple Listing Service. 
• I am one of New York's premier short sale REALTORS. 
• J. Philip Serves Briarcliff Manor, Ossining, Croton, the River Towns, Westchester County, and the bedroom counties of New York City.
• Free MLS Search! Register for a Free Listingbook account and search the MLS like an agent. 
• I am hiring agents. 

All content/images, unless noted, are the property of J. Philip Faranda & may not be used without permission

The latter half of April has been maniacally busy for me because of the stimulus deadline of April 30. I have been working nonstop for the past week, save for collapsing at home at days end. It takes every waking minute just to handle what is coming across my desk. Offers, inspections, contracts, and showings showings showings. 

I miss my kids. At least, I miss my awake kids. 

We are heading into the last realistic weekend for any area buyer to get into contract by the deadline, since we take some time to get contracts out (thank you lawyers). Consequently, I am at it each day until I drop. 

What will happen May 1st? Will the market go dead again? Will sellers lose what little leverage they had and get more desperate? Will casual buyers disappear from the market now that the $8,000 incentive is gone? Or will the Spring cycle continue through July 4 because of the pent up demand from the slowness of the prior crummy years? Questions loom. 

I know what I am doing May 1st. I am getting up in the morning and going to work. I'll return calls, follow up on leads, and blog. 4 kids know no off season. 

Make hay while the sun shines!

• We Are Westchester County, NY Real Estate. Reach Phil at (914) 723-8900.
• J. Philip Faranda, Broker-owner, J. Philip Real Estate, LLC. 2010 Vice President, Westchester-Putnam Multiple Listing Service. 
• I am one of New York's premier short sale REALTORS. 
• J. Philip Serves Briarcliff Manor, Ossining, Croton, the River Towns, Westchester County, and the bedroom counties of New York City.
• Free MLS Search! Register for a Free Listingbook account and search the MLS like an agent. 
• I am hiring agents. 

All content/images, unless noted, are the property of J. Philip Faranda & may not be used without permission

I am not a big staging guy. I simply don't have the eye for it, and it is best left to professional stagers. I know a few tricks- tidy up, clear off the table and counter tops, put the toilet lid down, that sort of thing. I don't care if people have their kids pictures on the fridge, or family photos on the stairway wall. That makes the place a home. Some disagree. That's just my feeling. 

There is one thing I saw today, however, that I am pretty sure is a no-no. 

I think that taping your bankruptcy papers to the wall next to your desk might be a bad move. Just a hunch. Especially if you are having the house held open from 1-5pm that day. 

Hopefully, the agent hosting the open walked through the house and caught this. We arrived early and did not walk through with her. But I'm pretty sure this might be a bad idea. 

So I propose adding a new rule to the lexicon of home selling. Choose a good agent. Price it right. Be accessible for showings. 

And hide the bankruptcy papers. 

• We Are Westchester County, NY Real Estate. Reach Phil at (914) 723-8900.
• J. Philip Faranda, Broker-owner, J. Philip Real Estate, LLC. 2010 Vice President, Westchester-Putnam Multiple Listing Service. 
• I am one of New York's premier short sale REALTORS. 
• J. Philip Serves Briarcliff Manor, Ossining, Croton, the River Towns, Westchester County, and the bedroom counties of New York City.
• Free MLS Search! Register for a Free Listingbook account and search the MLS like an agent. 
• I am hiring agents. 

All content/images, unless noted, are the property of J. Philip Faranda & may not be used without permission

I've noticed something lately. Even though sellers are getting less for their homes than years past, commissions are not down. I see more bonuses offered. I see strong cooperative commission offered in the MLS. Brokerage as an industry has not been decimated by the market downturn or the advance of technology the way other industries have. In spite of the naysayers and blabbermouths at the keyboard, the market is efficient, and it is proving the worth of brokerage.

Every company that was going to "change the industry" hasn't. 

Every trend predicted to supplant brokers with technology has not manifested itself. And it won't. 

The reasons is simple: Real estate doesn't sell itself. It takes people to sell it, and it is a rare skill to make huge amounts of money change hands. Moreover, those that possess the skill to make vast money change hands deserve to be well compensated. Don't bore me with the anecdote of the inept slob who stepped into a million dollar listing and made tens of thousands he didn't earn. He can't do it long term. As a matter of fact, the agents who work that niche successfully are, by and large, warriors. They have a skill the critics do not possess.

Full disclosure: Ann and I ran a side business for years where we assisted for sale by owners (FSBO) to sell themselves. Most were train wrecks. Even the sharpest civilians do better with a broker because they eventually have a weakness brokerage doesn't possess. Even if getting lots of showings were easy (and it isn't), FSBO sellers have one or more of the following weak links in their chain:

1. Overpriced Ogre. The picture of bias, this is the sort of seller who believes that it is still 2005, and that a new roof raises value by $10,000. They base price on selective perception, and they have the best house in the zip code-just ask them. 
2. Showing saboteur. This is why we even advise listed sellers to not be present. Most people either can't sell their way out of a paper bag, trip themselves up, badger or pelt with information overload, or ask a dumb question. I can name a half dozen times when I have seen a seller ask a buyer of a different nationality where they were from in an effort to show off where the Visigoths and Plutonians lived in the neighborhood. Bad move to offend your potential buyer, there, pal. 
3. Negotiation knucklehead. I have seen owners lucky enough to get an offer fall on their spear plenty of times as well. Negotiation is not something most people do daily; it is best left to the professionals. Most people don't know what questions to ask, how to ask them, or when. They get emotional. They let their ego affect their judgement. And they fail. 
4. Attorney Assisted Asshat. "I don't need an agent- an attorney will represent me." These people never heard of billable hours, and I never saw an attorney present at a home inspection. This mentality kills deals over a dishwasher. 
5. Agent Alienator. "No brokers!" In our area, most FSBOs are smart enough to know that cooperation with agents is wise; 85% of the buyers are working with one, and they are often the best qualified. They are just trying to save on half the commission. But others are hardcore, and to their detriment. 

For Sale by Owners have not gained market share. Alternative models have not gained market share. The same 10-20% of the market has been beating itself up for decades. And it will continue. You can't beat a good broker. And you wouldn't want to, unless you are the type that thinks that a guy who removes his own appendix should be congratulated for saving money.

The best in the business are paid the most because they are worth the most. Any business. That is why good brokers will never go the way of travel agents. 

• We Are Westchester County, NY Real Estate. Reach Phil at (914) 723-8900.
• J. Philip Faranda, Broker-owner, J. Philip Real Estate, LLC. 2010 Vice President, Westchester-Putnam Multiple Listing Service. 
• I am one of New York's premier short sale REALTORS. 
• J. Philip Serves Briarcliff Manor, Ossining, Croton, the River Towns, Westchester County, and the bedroom counties of New York City.
• Free MLS Search! Register for a Free Listingbook account and search the MLS like an agent. 
• I am hiring agents. 

All content/images, unless noted, are the property of J. Philip Faranda & may not be used without permission

I sold my first HUD home in the 90's sometime. A HUD home, if you don't already know, is a government-owned foreclosure that is administered by the department of Housing and Urban Development (HUD). There is a little bit of red tape involved in a HUD transaction, but they typically go well.  One rule HUD has on their homes is that they cannot be bid on by a non-owner occupant the first two weeks they are available. In other words, only owner occupants get the first shot at a HUD home for 2 weeks. If the owner occupants don't bite, investors are allowed to bid. It works, and it fosters ownership among people that might not otherwise afford a home, or would get elbowed out by institutional professionals. 

Of course, the government can't mandate what private enterprise can do. However, it would be good if the industry adopted this policy themselves. I have seen too many REOs slip through the fingers of qualified, perfectly good buyers and into the hands of cash investors to think otherwise. The investors then do a McRehab, resell the place at an inflated price, and the pattern continues, with affordable housing out of reach for qualified people.

As an aside, isn't it ironic that a lender would prefer to sell to a cash buyer only? Isn't that, from a "big picture" point of view, antithetical? If everyone paid cash, lenders would go out of business. I had Wells Fargo-approved buyers with a full price offer get rejected by a bank this week on a Well Fargo owned property because Wells wants CASH, not a 203k. Absurd and short sighted.

Banks should want owner occupants who qualify to buy their REOs for many reasons, but not the least of which is that these people will give those banks business. Moroever, it is good for neighborhoods to have owner occupants who can afford where they live. We should all want affordable home ownership supprted emphatically by lenders, not just where it is their last resort on their REOs. Too many qualified people have gotten rejected repeatedly and then discouraged from buying at a time in history when they are ready willing and able. Instead of them being comfortably in their own home with a $300,000 mortgage, some new slob is snookered into a $400,000 loan by the investor at resale and we now have another "at risk" property leveraged to the gills.

That is not a solution.

There is something wrong when the system favors cash investors to the exclusion of qualified owner occupants. It is like a Catholic telling me they don't want to sell to another Catholic. Illogical, short-sighted, and yes, hypocritical. It will never happen and is not a "free market" solution, especially coming from a free-market oriented guy, but I can dream.

• We Are Westchester County, NY Real Estate. Reach Phil at (914) 723-8900.
• J. Philip Faranda, Broker-owner, J. Philip Real Estate, LLC. 2010 Vice President, Westchester-Putnam Multiple Listing Service. 
• I am one of New York's premier short sale REALTORS. 
• J. Philip Serves Briarcliff Manor, Ossining, Croton, the River Towns, Westchester County, and the bedroom counties of New York City.
• Free MLS Search! Register for a Free Listingbook account and search the MLS like an agent. 
• I am hiring agents. 

All content/images, unless noted, are the property of J. Philip Faranda & may not be used without permission

Gregory is our 5-year old. He is on the spectrum for autism, and this is one of his mother's and my greatest challenges. Last year Gregory learned to climb the rear yard fence, which caused quite a scare the first time it happened. I found him in the park a block away, happily playing on the jungle gym. The moments between discovering he was missing and finding him were among the worst I have ever experienced. We therefore have to keep an eye on him 100% of the time. It comes with the territory. He has wanderlust, and no sense of boundaries yet. 

Max is our German Shepherd. He is a purebred I rescued in late 2008. The story was that the family that had him didn't think that a German Shepherd would mix with their new baby. Their loss, my gain. However, he was 9 months old when I brought him home, and didn't know his own strength. It took some getting used to, especially for Ann. I don't blame her. She has her hands full as the mother of 4, one on the spectrum, and helping me with the business. 

Since he came to us, there has been more of a tolerant detente than affection between Mommy and Max. I had a Shepherd as a child, and knew Max would be wonderful, but it has been a process. 

Yesterday we finally had the breakthrough. I was out, and Ann came into the kitchen to see the rear door ajar. It couldn't be; she locked it so Gregory would remain safe inside, but the stool next to the open door told the story. Our crafty son figured out the lock. Ann ran to the door, and, to her relief, saw Gregory contentedly playing in the dirt.

And next to him, like a sphinx, was Max, watching our son closely. As she described it, when Gregory got up and moved, Max moved with him. Max got some serious praise from Mommy right then, and then returned to Gregory's side, looking back at Ann, then Gregory, as if he were putting it all together.

The way to a Mother's heart is through her children. Now, a wet lick or tuft of hair is no big deal in our home. Max earned his stripes, and I am still getting used to my wife smiling at (and being mushy with) the dog. 

• We Are Westchester County, NY Real Estate. Reach Phil at (914) 723-8900.
• J. Philip Faranda, Broker-owner, J. Philip Real Estate, LLC. 2010 Vice President, Westchester-Putnam Multiple Listing Service. 
• I am one of New York's premier short sale REALTORS. 
• J. Philip Serves Briarcliff Manor, Ossining, Croton, the River Towns, Westchester County, and the bedroom counties of New York City.
• Free MLS Search! Register for a Free Listingbook account and search the MLS like an agent. 
• I am hiring agents. 

All content/images, unless noted, are the property of J. Philip Faranda & may not be used without permission

One of the things we all dread in a transaction is an 11th-hour problem that delays or cancels a closing until it is solved. It could be a certificate of occupancy for a deck or addition, an open permit, or an unknown lien. When these things are discovered, it causes mad scrambles to get the code inspector out to sign off, an expensive rate lock extension, or dicey living arrangements for people who have given notice to a landlord, just to name a few problems. However, the stakes are now even higher: it could cost the buyer their $8,000 tax credit.

If you are purchasing a home right now, you should make sure that the title report is run and that the building department file is checked. That way, you then have 75 days from today to handle any problems that may exist on the compliance or title of the property. Often, if there is an illegal deck or bath, you need time to apply, file applications, draw plans, get or close permits, or get the town inspector out without delaying the closing past June 30th. These things take time to address, and there may well be a glut of last minute issues all over your market area, with municipalities ill-equipped to handle a rush or spike in activity. 

In a perfect world, listing brokers would check compliance and title prior to listing a property, and buyer agents would double check assessor cards as part of their jobs as well. However, all too often they don't. And it could cause a delay that extends the transaction past June 30th. 

Forewarned in forearmed. Run title early. Check out that property card at the building department. Ensure there are no surprise liens, illegal improvements, or other costly problems. Don't assume! Smart work could save that $8,000 tax credit. 

• We Are Westchester County, NY Real Estate. Reach Phil at (914) 723-8900.
• J. Philip Faranda, Broker-owner, J. Philip Real Estate, LLC. 2010 Vice President, Westchester-Putnam Multiple Listing Service. 
• I am one of New York's premier short sale REALTORS. 
• J. Philip Serves Briarcliff Manor, Ossining, Croton, the River Towns, Westchester County, and the bedroom counties of New York City.
• Free MLS Search! Register for a Free Listingbook account and search the MLS like an agent. 
• I am hiring agents. 

All content/images, unless noted, are the property of J. Philip Faranda & may not be used without permission