J. Philip's Westchester Real Estate Blog

The New York suburbs are often funny about real estate signs. One town won't allow a sign with a company name, allowing only "For Sale By Broker" or "For Sale By Owner" on the panels. Another municipality prohibits anything bigger than 12" x 12". Some places ban signs altogether, while others have rules rendering them useless, such as one that will only allow them in a front window. On a set back home that does nothing. One local city is OK with "For Sale" signs but outlaws "Sold" signs. 

In every one of these municipalities, I have seen chintzy yard signs that remain up for weeks and sometimes months by home improvement companies, painters, fence installers, garage door technicians, and many other trades. I have never understood why they are permitted and my sign is not. Actually, I do understand, and it is not cool.

It amazes me that a municipality-the government- can abridge what I put on a sign or can restrict me from having a sign at all. It is absolutely contrary to the first amendment, and makes these towns more like patriarchal fiefdoms than governments that are out for the highest and best for the citizenry. Now, there may be a few who find real estate signs to be distasteful or clutter the view. But the constitution doesn't exist for them to have a good view or have environs that conform to their particular taste. It exists to protect my freedom of expression and ensure that commerce can be promulgated. 

Big companies with large market share in these areas have no desire from what I can see to change the law. It enables them to keep status quo. If I busted my hump and a few of my signs sprang up it might shift the balance of power. They can't have that. Homeowners probably like the law too, because yard signs can distract, or because their absence makes it appear that nobody wants to move from their idyllic 'burb. Gag me. That doesn't make it right. 

The right to self expression and to post my message without the state's interference is not something that can be voted on or zoned out. It is an inalienable right. The "tyranny of the mob" does not grant or deny rights. Rights are rights. And you can't bestow a right on a garage door guy and deny it to a real estate broker. I know of no sign restriction that ever held up in court. They exist because we are too busy earning a living to have our day in court. For now. 

Yes, some of the local towns are funny about signs. But I'm not laughing. 

• 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

Parts of the Bronx and Queens have been deemed by NY Secretary of State to be "cease and desist" zones where it is unlawful for real estate licensees to make phone calls, mail flyers or engage in any other activity soliciting business. This is far more wide a prohibition than a Do Not Call list. It is the government forbidding licensees to call, mail or otherwise contact homeowners. They can't call expired listings. They can't call For Sale By Owners. 

The justification of the move, which came after 3 public hearings, was "intense and repeated solicitation." People who want to be on the cease and desist list can register with the Department of State and licensees are then required to ensure that anyone they are contacting is not on the list. These zones are in force for 5 years. There was already one in Brooklyn. The exact geographic areas can be found on the Department of State website.  

• 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

New HAFA rules are forcing home sellers to negotiate directly with subordinate liens, or, in common terms, second mortgages, on their own, according to Bankrate.com. The way the rules are written, there is a financial incentive for the 2^nd mortgage  to settle and release the lien, but the onus of getting assurances that the bank will settle rests on the borrower, which seems incongruous with the intent of the law. If the law is that the bank gets $3,000 from the government to settle, then it is the government who should be getting written assurances that they will indeed settle, not the borrower. The article points out that distressed sellers are already beleaguered and beaten up and in no condition to play hardball with another bank.

I agree. Distressed home sellers ought not do this on their own. They need an advocate, and a third party with experience is very likely going to get a better result than a beaten up home owner. This is what we do, but rather than make this post a commercial I’ll also add that here in New York, the attorney should be on the front lines dealing with the 2^nd mortgage as well as the first. The attorneys that we have on our team are excellent; the sellers can rest assured that the arrangements they help negotiate are the very best that can be agreed to. They also read the “fine print” with a fine tooth comb. The devil is in the details in these things, especially in New York.

All short sale agreements from lenders should be in writing, and all short sale agreements from lender should specify that they will not go after the borrower for the difference after closing. Anyone can get a short sale with no assurances of financial security after the closing. It takes a professional to ensure that the seller’s obligations in a short sale end at closing with no residual debt. That is our job, and that is how we do our short sales.

Doing a short sale on your own invites peril. We have done dozens, and that puts you in good hands compared to the guy in the mirror

originally posted at NY Short Sale Blog

• 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 NY Times is reporting on a new Obama initiative to create a financial incentive for banks and home sellers alike to do short sales. A few highlights from the article:

• Program starts April 5, 2010
• Lenders will be "compelled" to accept short sales. We'll see about that.
• The administration wants to streamline the process. We'll see about that too. 
• Financial incentives are $1,500 to the home seller, $1,000 to the lender, and $1,000 to a subordinate lender.
• Agents will be used to valuate the properties, but lenders will not be forced to accept offers beneath the agent valuation. 

• 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 misconception regarding the desirability of cash buyers is that because there is no mortgage, no appraisal is needed. Anyone who has ever done a few cash transactions, however, knows that people who are writing a check often do as much or more due diligence than a lender. They have a right; it is their money. 

In 2006, when there was still plenty of irrational exuberance in the market, I had a cash buyer check for mineral rights prior to closing, much to the consternation of the seller. It still closed in 30 days, which is a heartbeat for New York, but those 30 days were intense. Even after 10 years in the business I felt as if I were being schooled firsthand in due diligence. 

While mineral rights are a stretch, an appraisal is not. The purpose for a lender appraisal is to ensure that the collateral they are loaning money on is worth what the terms dictate; an 80% "loan to value” mortgage of $400,000 requires a $500,000 home. Problems arise when that $500,000 home appraises for $475,000, knocking the ratios off kilter and causing a dilemma between buyer and seller. While this is unfortunate, the lender has to protect their interests. They are loaning the money.

So it goes with the cash buyer. There is no government program, no mortgage insurance, and no safety net if they misjudge the value. On several occasions, I have had cash clients buy unique homes which did not have many easy or obvious comparable sales. In each occasion, the homes were over-improved: phenomenal kitchens, amazing staging, knockout landscaping and other bells and whistles which obscured the fact that, hey, this is still a raised ranch, just with a $50,000 kitchen. Having an objective, unbiased 3rd party give a dispassionate, market activity based assessment of value brings a cooler head to the table than a proud, heavily invested seller and a buyer with stars in their eyes. 

If the appraisal indicates that the value is in line with similar homes, fine. If the appraised value is higher than the purchase price, mazel tov. If, however, the appraisal indicates a value lower than the purchase price, it is a sobering moment for all parties. The buyer is certainly not going to want to pay more than that number in all but rare cases. The seller has to grasp that they are selling real estate, not chattel. The key word is location location location, not viking stove viking stove viking stove, or finished basement finished basement finished basement. Should the seller "eat" the difference? Consider this; if they rebuff the cash buyer, the next buyer is probably getting a mortgage. Since mortgages require appraisals, history will repeat itself. 

In cases where a cash buyer's appraisal comes in low, the seller should get their own appraisal to ensure that the buyer's report is accurate. They then need to weigh their options, and, often, those options include renegotiating price to bring the real estate they are selling in line with the current market. . 

• 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

Not far from my home, adjacent to a popular shopping center and on a well traveled, visible street corner, there is the former home of Chase Bank. It is an all-brick building, with a parking lot and offices. It would be a turn key opportunity for another bank and a phenomenal location for any professional or retail business. If I had the means I'd move my company to that location in a heartbeat. Asking price when I inquired a 2 years ago was $1 million. Despite the great location and set up, it remains vacant for 2 years since Chase acquired Bank of New York and moved to the other side of the Chilmark Shopping Center. I am sure that when the economy recovers another business will be there. 

Across town, there is a medium sized private residence next to an industrial site on a less traveled road. It is a house; nothing about it would be turnkey for a business. However, it is located in an area zoned for general business, and is on the market for just under $1 million.

Question: If the building by the shopping center can't get a taker, why would the house get one?

Every so often, I get contacted by a potential client in the second scenario who believes that their ship has come in because of their zoning. No matter that the site would need to be redone for business, or at the very least, rehabilitated ( I don't mean knock down a few walls; I mean add a parking lot). Sometimes, in the right locale, a chain will make an offer to a private residence that is gigantic. Those people should consider themselves as lucky as Powerball winners. But, by and large, a drab old house next to a rock quarry or bus depot is worth just what a drab house next to a quarry is worth. The zoning isn't an automatic premium.

How do I know this? I have listed these people before. I've gotten them higher offers than they would have gotten, and in each case I can recall, they have rejected their offer because they wanted more. One former client I listed in September of 2005 is still selling by himself. Moreover, he is still zoned residential! Commercial use would require a variance! He just thinks he'd be a good commercial opportunity! You know what the guy would get today? $200,000 less than what I brought in in 2006. He's asking double what he's worth, and that is why he's selling by owner. The local brokers have written him off. 

Commercial zoning is not without challenges. It may not qualify for conventional financing if the buyer is a business. There could be appraisal issues because the appraiser's job is the evaluate the property for it's best use, not the potential. A restaurant,  salon or professional office might not want to be next to an unattractive industrial site. Moreover, buyers of commercial property are savvy and conscious of overhead. They will not overpay unless there is a strong payoff. These things have to be taken into account for property that is commercial in zoning only.

If the owner will not listen to the advice of their agent and is instead advised by their own self interest, the outcome is often long, drawn out, and unhappy.  

• 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

For Sale by Owner, or FSBO is not uncommon in Westchester County. I have sold quite a few of them. I had an interest in a FSBO assistance firm, and a number of selling gurus like Craig Proctor have systems for converting FSBOs to listings thorugh such programs. I have seen dozens of FSBOs sell their own homes, and I am firmly convinced after what I have seen that most people who sell on their own are doing themselves a disservice. 

First, let me say "most." If a guy puts an ad in the paper and sells his house in one weekend with no broker involvement and the buyer closes, he can consider himself lucky. I'd call that catching lightning in a bottle. But the vast majority of FSBOs don't have that sort of luck, and they actually shoot themselves in the foot. Here are a few myths of selling "by owner" that should be dispelled

1. FSBOs save money. Not really, no. The commission line item is certainly nice on the closing statement, but FSBOs do not net as much money as people who go through brokerage for a variety of reasons. One big reason is that the vast majority of buyers are already using an agent, so FSBOs have far fewer eyeballs, and therefore an anemic market, to showcase their property. In this market, good buyers hook up with an agent fast. And agents won't put a FSBO on the top of the list. 
2. Owners know their house better, so they can sell it more effectively. To be blunt, most owners already suck at selling anything, and that suckyness gets amplified when it is their own house. I have seen owners talk too much, annoy buyers, ask personal questions, say dumb things and shoot themselves in the foot, and disclose things they ought not disclose to buyers, all to the owner's peril. 
3. Who needs an agent's guidance? I have a lawyer. I have never seen a lawyer climb up into an attic with a home inspector. I could count on one hand the times I could reach a lawyer on an evening or weekend. Lawyers aren't brokers, and they don't want to do the running around or work that agents do. Moreover a law degree doesn't make someone good at selling or negotiating. Different skills. Watching a lawyer play broker is as unbecoming as watching a broker act like a lawyer. Embarrassing.  
4. Negotiation isn't a big deal. Buyer and seller both want the same thing. This is actually where choosing the wrong agent gives owners ammunition. If someone is going to screw up a deal, they'd rather do it them self and save the fee. I almost don't blame them, were it not for the fact that a good agent is worth their weight in gold. An expert negotiator knows when to push, when to pull back, when to "take it away," when to pursue, and what questions to ask. I have seen owners screw up a good deal in January and end up finally selling in August for $100,000 less. But they saved the commission! 

 There are a few other things a FSBO should consider:

• FSBOs don't know how to qualify a buyer or what questions to ask.
• FSBOs can't handle objections
• FSBOs seldom understand how to identify the buyer's wants and needs
• FSBOs often have BIG MOUTHS and buy their houses back with ill advised remarks. I have seen owners ask buyers about their nationality, marital or family status or equally unflattering questions to make the point that there are other Martians or Venutians on the same block.  
• FSBOs can be played like a fiddle if the buyer has an agent representing them. 
• FSBOs often don't price their house right, costing them in the long run.
• FSBOs are not objective. They can't be. 
• Many buyers don't want to deal directly with the owner. 
• Many buyers are suspicious of owners selling themselves. 
• FSBOs are often the target of the poorly qualified and bargain hunters who also buy into the myth that cutting the brokers out saves money. So who saves? The buyer or the seller? It can't be both. 
• FSBOs seldom grasp the liability they incur for lead paint, radon, property condition disclosure, code compliance, and plenty of other potentially expensive issues.
• FSBOs do not have access to the marketing resources a Realtor has, even if they pay a limited service company to put them on the MLS
• Bona fide buyers should be rightly aware of these facts prior to engaging a For Sale by Owner without a broker representing them.  

• 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

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. 

• 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

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. 

• 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 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. 

• 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