What's The Plan?

I had an interesting listing presentation last night. Everything went smoothly. I was well prepared with a ton of useful information for my prospective sellers, an empty nest couple in too much house. We all got along very well, the home was impeccable, we agreed on the fair market value for their lovely home, and then I asked the fatal question: where are you planning to move next?

They both looked at each other, and what ensued was the kindhearted quibble / debate / semi-argument that only married couples can have. I sat quietly for a few minutes while they discussed what they wanted to do and it was clear they couldn’t agree because they simply did not know themselves.

He wanted a backyard to grill and have alone time (but no yard maintenance, please), she wanted a big kitchen to entertain, and while they didn’t want five bedrooms anymore, they didn’t want too small either, and the list went on. They wanted to stay local, but further away was also OK. You get the idea, they were all over the place because they were just not ready.

We spent the next hour discussing possible alternatives and the couple was genuinely grateful that I could give them several options they hadn’t considered. We looked at rentals, sales, houses, garden apartments, condos, units. I pulled out my handy dandy spreadsheet and we did some calculations comparing rent vs. Buy based on how long they might stay in their next home. I gave this lovely couple a new perspective on their prospects and said my good nights.

This morning I sent them a quick note thanking them for their time. The next sentence is copied from my email: I would absolutely encourage you to have a set plan for where you are going next before moving away from your existing home. 

I was happy to give them that advice and I would be even happier to help them develop their plan. The old adage is true, it’s better to move toward something than to move away from something, specially if you don’t know where the next step ought to be.

Interest Rates Are On The Rise - Who more do you need to hear it from?

The Wall Street Journal has been saying it, the NY Times has been saying it, I’ve been saying it, and only a few consumers are hearing it.

Many self described ‘savvy’ buyers that are waiting for the spring market to get into full swing will be surprised to learn that their dream home just got much more expensive.

Just today interest rates in my local market crept to 5.375%, which is a 3/8% difference from two weeks ago. What does this mean? On a $400K mortgage for 30 years, that house just got $32,000 more expensive!

What will happen to those buyers that are on the fence? The cost of sitting will get costlier, and it that dream home will be much more difficult to afford. Some economists are predicting more than a 2% rise in interest rates. Personally, I think that’s a doomsday scenario for many markets which is unlikely. Not that anyone knows for sure, but rates over do 6% seem right around the corner.

What makes a sophisticated investor? One that recognizes trends just a bit sooner than everyone else that’s playing it safe. I just came back from a fabulous open house. This home is a steal in this area (no, it’s not my listing) and will go right away. I can think of two buyers specifically who would think this house is their dream home. Both will see it, both will fall in love with it, one will jump on it, and the other will wait.

One will call me in three months and tell me how happy they. The other will compare every home they see to the one that got away, and pay more when they do get off the fence.

A Guy Walks Into A Party…

We were at a fun New Year’s Eve party* last night where we started chatting with another guest and as soon as she found out we were realtors, proceeded to tell us her tale of real estate woe.

Several years ago she decided to find a bigger home for her family and was working with an agent; Agent Nice. Her agent handled the transaction smoothly and professionally. Agent Nice had not asked if her client was interested in selling her current home since she was looking for another home.

Our home owner thought the market was hot, so she decided to try selling her home on her own. Her plan was to run an ad for a public open house, and if the house didn’t sell within two weeks, she would then engage an agent.

We all know that one agent who sticks his or her nose in everyone’s business, and in this case this agent (agent Nosey) noticed that there was an ad for an open house from agent Nice’s client, and called agent Nice about it.

Agent Nice was surprised, humiliated, and horrified so she called our home owner and berated her for not telling her about her plans, embarrassing her, how could you do this to me, and on and on.

At first she was apologetic, “but she wouldn’t let me off the hook”, she said. After a minute or two of getting a telephone knuckle sandwich our home owner gave agent NotSoNice what she had coming to her.

We were completely stunned that this agent would speak to our home owner the way she described it, and couldn’t for the life of us think of a circumstance when we:

• Wouldn’t have asked about the sale of her current home, and
• Speak to a client that way.

We assured her that as the professional, it was her agent’s responsibly to have asked, and while sure, she could have called her agent about it, she really hadn’t done anything wrong.

I won’t tell you how this story turned out (did she sell her house?), but I can tell you that this home owner hasn’t spoken to NotSoNice or Nosey, and in her eyes, this is how the profession operates.

Resolution for new year: If you wished things were different, you be different yourself.

* It was a surprise birthday party hidden inside a New Year's Eve party. We thought it was a bit cooky, especially when the birthday girl called to invite us to her New Year’s Eve party, which we had to decline because he had already made other plans (with her husband!). Our host pulled it off and everyone had a great time.

Refinancing Window Closing?

Anyone that has been following the government’s involvement in buying out mortgage backed securities is aware of the impact this has had in keeping interest rates as low as they have been.

This program is set to expire in March 2010, and the glimmer that the economy has stabilized and growing ever so modestly, further suggests that the program will not be renewed.

Home owners that are staying put and are considering refinancing are not on the top of most people’s minds, however there is an opportunity that exists now, which is rapidly closing.

Most experts agree that interest rates will go up by half to a full percentage point when banks can no longer dump their bad mortgages. The backdrop to this is that several large lenders have closed many of their regional call centers creating a severe backlog. Some lenders have also started pulling back lines of credit for second mortgages.

Anyone interested in refinancing in the next several months should seriously consider doing so now rather than later as the backlog may create unforeseen delays and create an environment where considerable savings will be lost.

This also applies to those whose financial institutions provide for loan recasting (re-adjusting the balance of their loan to current rates). Check with your lender.

Where Do Resolutions Come From and How to Keep Them

Humans have been faithfully breaking new year's resolutions for 4,000 years since the ancient Babylonians resolved to return any borrowed farm equipment as the new year, then in March, coincided with the start of the farming season. Sometimes the equipment was returned, and sometimes the resolutions were feckless (sorry, couldn't help myself).

Ancient Romans (meaning Romans a long time ago, not really old ones) joined the party by counting the previous year's stock and setting goals to accomplish more the coming year. The Chinese are said to have had a special new year's resolution to clean their house squeaky clean. I myself avoid house cleaning for the new year, but I do enjoy visiting my Chinese friends right after they've cleaned.

Wikipedia tells us (therefore it must be true) that only 52% of participants in a resolution study were confident of success with their goals, and only 12% actually achieved their goals. Men achieved their goal 22% more often when they engaged in goal setting, a system where small measurable goals were used (lose a pound a week, instead of saying "lose weight"). Women succeeded 10% more when they made their goals public and got support from their friends. Guys, the gals score an extra 10% by talking to each other. Someone ask for directions and take note!

In the US, resolutions generally involve doing more of something or doing less of something:

Less of something:

• Lose weight
• Get out of debt
• Eat right, Drink less
• Quit smoking
• Reduce stress
• Be less grumpy.

More of Something:

• Get more organized
• Save money
• Improve grades
• Get a better job
• Exercise more
• Get a better education
• Take a trip
• Help others
• Be more independent
• Learn a foreign language or a musical instrument
• Get up earlier in the morning
• Help the poor.

Resolutions have the best chance of succeeding when one starts with realistic goals.

People often make ambitious resolutions with little hope of achieving them. Ambitious goals can be motivating and inspire you unless you are the kind of person that gets overwhelmed by the enormity of the goal. Many people give up because they think there’s no way to get there from here.

Resolutions must be broken down into bite sized chunks. If a goal is to lose 20 pounds in three months, then there ought to be twelve goals, one for each week where one loses 1-2 pounds. These 'bite sized chunks' must be accompanied by yellow stickies you put in your bathroom mirror so they're the first thing you see in the morning and the last thing you see at night. When you achieve that week's goal, take the sticky away. Any goal has to have a strategy to achieve that goal. Gym memberships and weight loss books examples of good intentions, not strategies.

If you can't bear the thought of staring at stickies as reminders of the decisions you make each and every day and each and at every meal (using the weight loss example), then save the paper and go have a hot dog; It ain't happening.

It's also key create a plan for setbacks. What will you do if you fall off the wagon, as we all do from time to time? The key is to rebound from setbacks, rather than letting them snowball into full-blown failures. Avoid all-or-none thinking that triggers the snowball effect. Then, create a “setback plan” that you will enact at the first sign of a slip. If you find you missed a week's goal for example, have a plan that you will take one item out of your lunch every day until you get back on track.

Great luck to everyone with his and her goals or the coming year and a very happy start of Kwanzaa!

Pursuit Mode or Attraction Mode: What’s a better website strategy?

Most agents are not particularly tech savvy, so when choosing a website for their business, the default choice is often one of the many turnkey systems that provide websites without requiring any technical expertise. Although it sounds good at first blush, not all systems are the same (although most look the same).

Agents can choose from systems that require registration before any real information is served up so they can follow up with visitors (pursuit mode). Agents can also choose systems that freely allow searches, providing items of value so that visitors regard them as sources of vital information and entice those visitors to come to them (attraction mode).

As a consumer, I happen to prefer not to register on websites because I know the avalanche of emails and phone calls that will ensue if I do, but that’s just me. As an agent, I prefer a custom website and allow anonymous searches for most things. If someone wishes to save a search or download some specific information, then I get that information but that’s the vast exception, not the rule.

Whenever I’ve tried to catch our puppy with a Sharpie in his mouth, I know my best bet is to get a juicy treat and entice him to come to me. Chasing the puppy around the room generally leads to zebra walls.

Websites that have timely information, original content, and create value tend to provide quality clients. Interestingly, websites that require registration wind up with many Donald Ducks with phone number: 1234567890.

As a consumer and as a provider, make sure you work with the system and people that best represents your style and needs.

Happy Holidays, or the word for the day: feckless

As the holiday season is well underway, I can think of no greater example of impersonal dribble as wishing someone ‘happy holidays’. What does that even mean?

If someone is Christian, shouldn’t they be wished a merry Christmas? If they are Jewish shouldn’t they have been wished a happy Hanukkah two weeks ago? Don’t even wish someone a happy Ramadan as it passed months ago and is not about happiness that way. Perhaps a happy Kwanzaa might be more appropriate for some this week.

What is this rant about? Get to know who you are talking to beyond the superficial fear of being politically incorrect. Wishing someone happy holidays is phoning it in (yes, I don’t like waiters singing happy birthday to me, either).

There are people I wish happy holidays to also, and that is my internal clue that I don’t know them well enough. When I know someone well enough to wish them a happy Setsubun, then good things tend to happen.

Feckless

1 ineffective; incompetent; futile.
2 having no sense of responsibility; indifferent; lazy.

www.greatnjproperties.com

Happy Holidays, or the word for the day: feckless

As the holiday season is well underway, I can think of no greater example of impersonal dribble as wishing someone ‘happy holidays’. What does that even mean?

If someone is Christian, shouldn’t they be wished a merry Christmas? If they are Jewish shouldn’t they have been wished a happy Hanukkah two weeks ago? Don’t even wish someone a happy Ramadan as it passed months ago and is not about happiness that way. Perhaps a happy Kwanzaa might be more appropriate for some this week.

What is this rant about? Get to know who you are talking to beyond the superficial fear of being politically incorrect. Wishing someone happy holidays is phoning it in (yes, I don’t like waiters singing happy birthday to me, either).

There are people I wish happy holidays to also, and that is my internal clue that I don’t know them well enough. When I know someone well enough to wish them a happy Setsubun, then good things tend to happen.

Feckless

1 ineffective; incompetent; futile.
2 having no sense of responsibility; indifferent; lazy.

Today's Great Deal: Bank Approved Short Sales

Most people are not stupid, and treating them as if they were leads to less than ideal results (euphemism for it's stupid to treat others as if they were stupid).
 
Lenders have reputations, and some are more deserved than others. Anyone who's attempted to buy a short sale would feel that negative reputations were earned. Banks have been notoriously slow to respond to the extent that purchases have been regularly in limbo for 9-12 months.
 
Lenders that are more proactive have begun working with home owners and realtors and have begun approving the sale price much earlier in the process. This has allowed agents to list the homes as bank approved. This is  huge difference to the purchase, making a 30 day close realistic as opposed to unheard of.
 
Today's recipe for a great real estate deal: Be well qualified and ask your agent (which should be me, by the way) for bank approved short sales!

Continuing Education and Brokers Offering Rebates?

Today, the New Jersey Senate Commerce Committee approved two bills, which could have a profound effect on our business.

The first creates a mandatory requirement for continuing education for real estate brokers, broker-salespersons and salespersons.

If signed into law, the bill will require up to 16 hours of continuing education before a real estate license can be renewed. This in and of itself cannot be bad unless the course work is irrelevant gimmes.

I’m a firm believer in a challenging continuing education system as a means of avoiding mental calcification and I can think of a realtor or two that could benefit from some computer skills, ethics, or simple manners, but I digress.

The second bill would allow brokers to offer rebates to home buyers and require those rebates to be documented in a contract at the beginning of a brokerage relationship or in a buyer agency agreement.

This one I’m much more on the fence over as it sets the stage for rebates to be offered for in-house listings only (and only sometimes). If a broker offers a home buyer a rebate because they have both sides of the transaction and don’t have to split the commission, would that create even more incentive to only show those homes? Does this further set the stage for unscrupulous agents to only show other office’s dogs and their very own darlings? While these incentives exist today, does this legislation ratchet them up even more? How are consumers protected if they don’t have full visibility to what is available?

These legislations must be approved by the full state senate before they go to the governor’s desk.

Love ‘em or hate them, call your legislators.

Continuing Education and Brokers Offering Rebates?

Today, the New Jersey Senate Commerce Committee approved two bills, which could have a profound effect on our business.

The first creates a mandatory requirement for continuing education for real estate brokers, broker-salespersons and salespersons.

If signed into law, the bill will require up to 16 hours of continuing education before a real estate license can be renewed. This in and of itself cannot be bad unless the course work is irrelevant gimmes.

I’m a firm believer in a challenging continuing education system as a means of avoiding mental calcification and I can think of a realtor or two that could benefit from some computer skills, ethics, or simple manners, but I digress.

The second bill would allow brokers to offer rebates to home buyers and require those rebates to be documented in a contract at the beginning of a brokerage relationship or in a buyer agency agreement.

This one I’m much more on the fence over as it sets the stage for rebates to be offered for in-house listings only (and only sometimes). If a broker offers a home buyer a rebate because they have both sides of the transaction and don’t have to split the commission, would that create even more incentive to only show those homes? Does this further set the stage for unscrupulous agents to only show other office’s dogs and their very own darlings? While these incentives exist today, does this legislation ratchet them up even more? How are consumers protected if they don’t have full visibility to what is available?

These legislations must be approved by the full state senate before they go to the governor’s desk.

Love ‘em or hate them, call your legislators.

November's Numbers Are Out!

As wise investors know, once a trend is obvious, the greatest opportunities are already past. We certainly are hearing that we’re in the throes of a mild recovery, however many buyers are still cautious about taking the plunge.

November’s numbers from Otteau confirm that our local market is rebounding ahead of the curve.




Essex, Morris, and Union Counties all hover between 7-8 months of inventory, which is the equilibrium point between a buyer and a seller’s market. This is in sharp contract to the same time last year where it was a strong buyer’s market.

Towns like Millburn, Maplewood, South Orange, Chatham, Madison, Berkeley Heights, New Providence and Summit are already well ahead of their respective counties availability. If we take the Summit numbers, we see that 37 homes are in the $1MM plus range. If we take out those, we find the under a million dollar price are closer to the other towns.

Buyers are not rolling into these towns, offering 20% less than asking, and walking away with the bargain of their lives. Check the arrogance and preconceptions at the door; It won’t get you a house.

There is even an article in Newsweek that goes as far as calling buyers that are able to buy but don’t as stupid.

Many prospective home buyers will jump in after TALF expires, after the tax credit expires, and after interest rates are higher than they are now, and kick themselves for not having acted sooner.

November's Numbers Are Out!

As wise investors know, once a trend is obvious, the greatest opportunities are already past. We certainly are hearing that we’re in the throes of a mild recovery, however many buyers are still cautious about taking the plunge.

November’s numbers from Otteau confirm that our local market is rebounding ahead of the curve.



Essex, Morris, and Union Counties all hover between 7-8 months of inventory, which is the equilibrium point between a buyer and a seller’s market. This is in sharp contract to the same time last year where it was a strong buyer’s market.

Towns like Millburn, Maplewood, South Orange, Chatham, Madison, Berkeley Heights, New Providence and Summit are already well ahead of their respective counties availability. If we take the Summit numbers, we see that 37 homes are in the $1MM plus range. If we take out those, we find the under a million dollar price are closer to the other towns.

Buyers are not rolling into these towns, offering 20% less than asking, and walking away with the bargain of their lives. Check the arrogance and preconceptions at the door; It won’t get you a house.

There is even an article in Newsweek that goes as far as calling buyers that are able to buy but don’t as stupid.

Many prospective home buyers will jump in after TALF expires, after the tax credit expires, and after interest rates are higher than they are now, and kick themselves for not having acted sooner.

Lenders Aren’t Lending, Real Estate Isn’t moving, And The World Is A Bad Bad Place

This is all true in some places, just not in my little corner of the universe (thankfully). I constantly see local articles on various versions of doom and gloom, and they make me wonder whether the authors know something I don’t, whether media hysteria is at play, or whether different realities coexist side by side. More on that later...

A local article yesterday bemoaned how buyers were struggling to get financing and even well qualified buyers needed a 20% downpayment because of the uber stringent requirements that banks have implemented.

Is it that that lenders are being more stringent or is it that they're brought back the standard lending practices they became lax on? Do some agents still think that a warm body is a qualified buyer (apologies to all warm bodies)?

Just the other day I came across a buyer, who while very nice, had no savings or income, making her very nice, but not a real buyer. Although frustrating, I would not say stiffer requirements were at play or that the sky was falling. I also have seen my share of 10% down with PMI loans recently. Are those good for the buyer? Certainly debatable either way, however their existence and availability are not debatable!

I have seen deals stumble because offers that financed through FHA or VA loans were discouraged by the seller’s agents, which had more to do with fearing a low appraisal killing the deal than anything else (see terms matter).

I have also seen large ‘name brand’ lenders delay the process significantly because they’ve gone from six call centers to one (as an example) so they are backlogged, overwhelmed, and bureaucratic.

It's very important to work with top brokers that have access to different lenders, both large and local.

Steve Lupton from ISB Mortgage, who I work with very closely, confirms my own experience, “We have never not been able to finance qualified buyers”.

In every market, in every area, there are experts that seem to thrive where others stumble. Do other folk know something that I don’t or do we have parallel realities that coexist side by side? Just in case you like my reality, Steve can be reached at 908-522-6500.

Lenders Aren’t Lending, Real Estate Isn’t moving, And The World Is A Bad Bad Place

This is all true in some places, just not in my little corner of the universe (thankfully). I constantly see local articles on various versions of doom and gloom, and they make me wonder whether the authors know something I don’t, whether media hysteria is at play, or whether different realities coexist side by side. More on that later...

A local article yesterday bemoaned how buyers were struggling to get financing and even well qualified buyers needed a 20% downpayment because of the uber stringent requirements that banks have implemented.

Is it that that lenders are being more stringent or is it that they're brought back the standard lending practices they became lax on? Do some agents still think that a warm body is a qualified buyer (apologies to all warm bodies)?

Just the other day I came across a buyer, who while very nice, had no savings or income, making her very nice, but not a real buyer. Although frustrating, I would not say stiffer requirements were at play or that the sky was falling. I also have seen my share of 10% down with PMI loans recently. Are those good for the buyer? Certainly debatable either way, however their existence and availability are not debatable!

I have seen deals stumble because offers that financed through FHA or VA loans were discouraged by the seller’s agents, which had more to do with fearing a low appraisal killing the deal than anything else (see terms matter).

I have also seen large ‘name brand’ lenders delay the process significantly because they’ve gone from six call centers to one (as an example) so they are backlogged, overwhelmed, and bureaucratic.

It's very important to work with top brokers that have access to different lenders, both large and local.

Steve Lupton from ISB Mortgage, who I work with very closely, confirms my own experience, “We have never not been able to finance qualified buyers”.

In every market, in every area, there are experts that seem to thrive where others stumble. Do other folk know something that I don’t or do we have parallel realities that coexist side by side? Just in case you like my reality, Steve can be reached at 908-522-6500.