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WHY SHOULD I HIRE A REAL ESTATE AGENT ?

Thu May 22

 Education & Experience

You don't need to know everything about buying and selling real estate if you hire a real estate professional who does. Henry Ford once said that when you hire people who are smarter than you are, it proves you are smarter than they are. The trick is to find the right person. For the most part, they all cost roughly the same. Why not hire a person with more education and experience than you? We're all looking for more precious time in our lives, and hiring pros gives us that time.

Agents are Buffers

Agents take the spam out of your property showings and visits. If you're a buyer of new homes, your agent will whip out her sword and keep the builder's agents at bay, preventing them from biting or nipping at your heels. If you're a seller, your agent will filter all those phone calls that lead to nowhere from lookie loos and try to induce serious buyers to immediately write an offer.

Negotiation Skills & Confidentiality

Top producing agents negotiate well because, unlike most buyers and sellers, they can remove themselves from the emotional aspects of the transaction and because they are skilled. It's part of their job description. Good agents are not messengers, delivering buyer's offers to sellers and vice versa. They are professionals who are trained to present their client's case in the best light and agree to hold client information confidential from competing interests.
 
 

 

Pet Friendly Homes

Thu May 22

If you are one of the many homeowners looking to list your home for sale, how do you stand out to the millions of pet parents searching for their dream home?

Whether a dog person, a cat person, or someone who prefers the company of another pet species, 99% of pet owners say that they consider their animal to be family. When finding a home, 95% of animal owners believe it is important that a housing community allows animals.

study by the National Association of Realtors (NAR) revealed that there are many aspects of the home buying, selling and owning experience that have been greatly impacted by our love for our pets.

This should come as no surprise, as $72 billion was spent on pets in the U.S in 2018. NAR’s PresidentWilliam E. Brown shed some light on the impact of pet owners and their home search.

“It is important to understand the unique needs and wants of animal owners when it comes to homeownership. REALTORS® understand that when someone buys a home, they are buying it with the needs of their whole family in mind; ask pet owners, and they will enthusiastically agree that their animals are part of their family.”

The Power of Pets When Choosing the Right Home

  • 89% of pet owners say they would not give up their pet due to a housing restriction
  • 81% of Americans say their pets play a role in their housing situation
  • 31% of animal owners have refused to put in an offer on a home because it wasn’t a good fit for their animals
  • 19% of Americans say they would consider moving for their pet
  • 12% percent have moved for their pet

New home builders have actually begun installing retractable pet gates that tuck away neatly inside door jams as a highly requested feature in new homes to attract pet-parents.

So, if you are a homeowner looking to sell in today’s pet-friendly environment, point out the features of your home that will attract pet owners:

  • Fully fenced in backyard – (91% of pet owners ranked this as the most important feature of a home to accommodate their pet)
  • Locations of dog parks/walking paths/pet-friendly beaches in the area (71% ranked this as the top feature of any neighborhood they would consider)
  • Proximity to veterinarians/groomers/pet supply stores (31%)

After a Two-Year Dip, Evictions Accelerate in New York

Mon May 22

In New York, where landlords typically move to evict more people than in any other city in the nation, the housing courts sat in an unusual stupor for some two years. But as pandemic restrictions ease, they are beginning to hum anew.

The roughly 2,000 eviction cases filed by landlords every week since March are roughly 40 percent more than the number filed in mid-January, after the state’s eviction moratorium expired. Tenants have been thrown out of homes in more than 500 cases since February, according to city data, about double the number in all of the 20 months prior.

Judges are increasingly asking tenants to appear in court after months of remote interactions. Lawyers representing landlords are exasperated cases are not moving faster, while lawyers who defend tenants cannot keep up with a rising caseload.

The courts bear little resemblance to the frenetic, prepandemic past, when lines of beleaguered tenants spilled around the block and crowded hallways featured raucous settlement talks.

The number of cases is still below prepandemic levels.

On a recent Thursday, the pews in a Brooklyn courtroom sat mostly empty, with only a few lawyers mingling in deserted hallways as tenants queued in a cramped waiting area at what was once one of the city’s busiest courts.

But after the pandemic pushed thousands of people to the brink of losing their homes, the uptick in activity is raising questions about how well the housing system can continue to avoid a wider crisis of dislocation, as soaring rents once again underscore the city’s challenges with affordability, and whether some of the ugliest features of the city’s longstanding housing crisis, such as the chaotic court system, are set to return.

Already, a new, crucial protection — a service for free legal representation — is reaching a breaking point, advocates for tenants say.

For years, nearly all landlords used lawyers in housing court, while the majority of tenants did not — a power imbalance that many felt unfairly left tenants vulnerable to eviction. A new city law was passed in 2017 to provide free lawyers for low-income people, and went into full effect last year.

But several nonprofits tapped by the city to represent tenants, grappling with staffing shortages and the uptick in cases, say they are not ready to meet the need. A court spokesman said last week that legal groups had declined to take on nearly 1,400 cases since March.

In Brooklyn, for example, Legal Services NYC has had about 25 lawyers handling cases through the program since 2019. But compared with February and March that year, the number of cases in those months this year doubled to more than 300, the group said.

Several lawyers have resigned, and the group has struggled to hire and train enough new lawyers amid a tight job market, said Raun J. Rasmussen, the group’s executive director.

“Right now we’re trying really hard to grab every single May law graduate who doesn’t have a job, and we’re all competing with each other to do that,” he said.

To cope, Legal Services NYC limited its cases last month in Queens and the Bronx and stopped accepting new cases in Brooklyn. The Legal Aid Society, another nonprofit, gradually stopped taking new cases in Queens, Manhattan and Brooklyn last month.

“The fear today is that we’re going to have a lot of tenants going without full representation from counsel at a time when we’re trying to come out of the pandemic,” said Adriene Holder, chief attorney of civil practice at the Legal Aid Society.

The groups have called on the courts to slow the scheduling and pace of cases moving through the system.

The spokesman for the courts, Lucian Chalfen, said last week that the number of scheduled appearances in cases was down 41 percent compared with the first quarter in 2019, and the number of new cases filed was down 62 percent.

He said that a slowdown would “accomplish nothing,” as new cases would continue to pile up.

“Are the legal services providers really all of a sudden going to have an epiphany and be able to provide representation on all of those cases?” he said.

The new city law was meant to help tenants like Damian Winns, a security guard, who moved into a one-bedroom apartment in East New York just before the pandemic. At $1,200 a month, it was one of the few places he felt he could afford.

But Mr. Winns, 44, struggled to find work during the pandemic, and missed a few months of rent last year. He thought a pandemic rent relief program paid for the missed months.

Instead, Mr. Winns found himself at a hearing in a courthouse in Downtown Brooklyn last week after his landlord moved to evict him, claiming he still owed the money.

“Where else am I supposed to go?” Mr. Winns said in an interview.

Although he may have been eligible for a free lawyer, nobody was there to take his case, and a court official told him a legal group should reach out before his next court hearing this month — maybe.

New York City’s housing courts, located in a handful of buildings and offices across the boroughs, were created by the state almost 50 years ago to enforce the housing code and keep homes from deteriorating. But the bulk of cases have nearly always been eviction proceedings over unpaid rent.

Fifty housing court judges are appointed by New York’s chief administrative judge for five-year terms, based on recommendations made by a panel of representatives from tenant advocates, the real estate industry and the bar association, among others.

New York City has a reputation for being relatively tenant friendly: Eviction cases can take months or longer compared with a few days in other parts of the nation. But the sheer number of cases has prompted criticisms that the court system is overburdened.

In one year in the mid-1990s, landlords filed more than 316,000 eviction cases. In 2019, before the pandemic, there were more than 171,000 cases. Currently, there are about 75,000 active cases in the system, Mr. Chalfen sai

Eviction cases in the public housing system, which accounted for tens of thousands of cases every year before the pandemic, have largely been discontinued. The eviction moratorium and a massive rent relief program, which has paid out $1.8 billion to address the rent debt of more than 140,000 households, have also lightened the load of cases.

Still, the court process remains confounding for both landlords and tenants.

At a recent court hearing in Brooklyn, Salvatore Candela, a lawyer representing a landlord of a three-story building in Flatbush, expressed disappointment when a judge set a new hearing date for June to give more time for one of the tenants to find a lawyer.

The landlord, Robinson Cadet, a retired corrections employee, may go another month without a rental income, after he said he was already owed $57,000 over the past year and a half.

“It makes me feel like the whole system is against me,” Mr. Cadet said.

Meanwhile, Sasha Portilla, a taxi dispatcher, appeared in a Queens courtroom earlier this month, after her landlord said she had overstayed the term of her lease and moved to evict her. It was her first time in housing court, she said, and she worried that her eviction could happen within days.

For at least 30 minutes, Ms. Portilla, 32, watched another case unfold virtually on a television screen as a court official struggled to find remote interpreters to translate between a landlord who spoke Mandarin and a tenant who spoke Spanish.

When it was Ms. Portilla’s turn, she asked a court official how soon she could be evicted. A court employee said there were still several steps in the process, and that a pro bono lawyer should, in theory, reach out before her next hearing in May, to help her through the process, but to tell a judge if that did not happen.

“I have no idea what I’m doing,” she said.

Turning Buyers Into an LLC

Wed Mar 22

Creating a separate legal entity for buying a second home is a smart way for ordinary households to protect themselves

If you’re working with a couple interested in buying a second home as an investment property, you might suggest they talk to a lawyer about setting up a limited liability corporation or other legal entity before they buy. That way, if they’re sued by someone who was on the property after they bought it, they can limit their damages and protect their personal assets against losses.

Suppose a contractor they hire makes negligent repairs to a deck and it collapses while tenants and guests are having a barbecue. The judgment in a case like this could easily exceed the equity the owners have in the property and even the coverage limits on their insurance policy.

Or perhaps they rent the property to a person who owns a dog not covered in a typical landlord policy and the dog bites someone on the property. State Farm, for example, determines risk based on a dog's bite history not its breed. The company paid $121 million in dog bite claims in 2016 at an average of $33,000 a claim. A claim of that amount might exceed the equity the homeowners have in their property. That could make their personal assets vulnerable to the judgment.

Or let’s say the carbon monoxide detector is faulty and the property has a 20-year-old furnace that develops cracks, releasing gas indoors. Tragically, a family of four staying in the property is killed. The owners could face four wrongful death actions caused by negligence.

Gravity of Risk

These are rare occurrences, to be sure, but they point to the gravity of risks that investment property owners can face. In fact, the scenarios illustrate one of the main differences between real estate and other types of investments like stocks or bonds: real estate can carry risks that exceed the investment in the asset.

Of course, an owner’s first layer of protection is insurance, but owners might fail to recognize that their losses can exceed coverage limits. Or there may be exceptions or carve-outs in the coverage that exclude or limit the losses. These gaps in coverage might expose the owner to unlimited liability. In today’s litigious world, $100,000, $300,000, or even $500,000 liability coverage may be inadequate. Also, owners converting their home to an investment property might not think to take out landlord or vacant property coverage.

To get the right amount of protection, buyers should strongly consider a personal liability umbrella policy with $1 million to $2 million in coverage. But they should also consider forming and running a corporation or LLC. The type of entity they can form varies and is governed by state law, but nearly all states allow incorporated entities like limited liability corporations, partnerships, C corporations, and subchapter S corporations.

Pricing Considerations

Deciding which type of entity to set up and how to structure it should be done with advice of counsel. The process may not be expensive. Depending on the area and particularities of the household, the legal work can be done for a few hundred dollars. There are also do-it-yourself forms online, but self-help isn’t recommended; these entities, whether for  your own investments or your clients’, have to be set up correctly to get the maximum protection.

Investing in real estate can be a smart decision. The right property can outperform other investment vehicles. But because real estate investment comes with potential pitfalls, it makes sense to have sufficient insurance and for investors to consider setting up an LLC or other type of entity to separate their liability from their personal assets.

 

Mortgage Pre-Qualification vs Pre-Approval

Mon Mar 22

Two often confused terms in the home buying process are a mortgage loan pre-qualification and a home loan pre-approval. Even some loan officers and real estate agents will use the terms incorrectly, so here's what you really need to know about each one.

 

Pre-Qualification

A mortgage loan pre-qualification is simply an estimate of how much house you can afford and how much money a lender would be willing to loan you. The best time to get a pre-qualification is right at the beginning of your home buying process, before you even start looking at houses. This involves either sitting down with a lender or talking with one on the phone, and providing information on your income, assets, debts, and a potential down payment amount. The lender would then provide you with a ballpark figure in writing of how much he thinks you could afford to pay for a monthly mortgage. There is no cost involved and there is no commitment on either side. This estimate is just helpful in helping you figure out if buying a home is a viable option, and if so, what your price range would probably be.

 

Pre-approval

Getting pre-approved means that you have a tentative commitment from a specific lender for mortgage funding. In this case, you provide a home loan lender with actual documentation of your income, assets, and debts. This process typically requires an application fee as well, since the bank will run a credit check and work to verify all your employment and financial information. Once you are approved, the lender will give you a letter of commitment, stating how much money her bank is willing to loan you for a home purchase. With a pre-approval in hand you can start your shopping - real estate agents and sellers will take you much more seriously when they see you have your mortgage funding in place.

It is important to understand, however, that even a pre-approval is not a guarantee that you will be approved for a mortgage loan.  The funding will only be given when the property appraisal, title search, and other verifications check out on the home you have chosen to buy.  Neither is the pre-approval binding; you can still obtain a mortgage from a different lender. If you do stick with the same company that pre-approved you though, the application process will be much shorter once you find the right house.

SELLING A FOR SALE BY OWNER

Thu Mar 22

In today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons why this might not be a good idea for the vast majority of sellers.

Here are the top five reasons:

1. Exposure to Prospective Buyers

Recent studies have shown that 95% of buyers search online for a home. That is in comparison to only 17% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

2. Results Come from the Internet

Where did buyers find the home they actually purchased?

  • 49% on the internet
  • 31% from a Real Estate Agent
  • 7% from a yard sign
  • 1% from newspapers

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

3. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find some problems with the house
  • The appraiser if there is a question of value

4. FSBOing Has Become More And More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. You Net More Money When Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

study by Collateral Analytics revealed that FSBOs don’t actually save anything, and in some cases, may be costing themselves more, by not listing with an agent. One of the main reasons for the price difference at the time of sale is: 

“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”

If more buyers see a home, the greater the chances are that there could be a bidding war for the property. The study showed that the difference in price between comparable homes of size and location is currently at an average of 6% this year.

Why would you choose to list on your own and manage the entire transaction when you can hire an agent and not have to pay anything more?

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

Remodeling? Recoup Your Investment When You Sell

Mon Feb 22

Remodeling? Recoup Your Investment When You Sell

Before you pour your savings into a new kitchen and a rainforest shower for the master, think about whether or not you'll be able to recoup your investment when it comes time to sell. 

If you have equity in your home, you can make improvements, but don't go over the limit of what other buyers can spend for a home similar to yours in your neighborhood. 

While it's tempting to make your home more beautiful, you have to consider the rest of your neighborhood. If most residences in your neighborhood are three-bedroom single-story homes, buyers are unlikely to shop in your area for two-story four-bedroom homes. 

Buyers want to shop for a home where there is the most selection of homes that fit their criteria. If they want a swimming pool, they're going to look in neighborhoods where many homes have pools. They won't be aware of your home if you have the only pool in your subdivision.  

That's why over-improving for the neighborhood is a bad idea. Not only will you not get your money back for some updates, your home my be harder to sell because of them.  

Another reason buyers don't tend to pay as much for updates as you might think is broad differences in taste. Your updates may include choices your buyer wouldn't have made because of several reasons:  

You only improved one or two rooms, leaving the rest of the home looking unfinished. 

Your updates were too radical, such as cold minimalism in a traditional setting. 

Your updates masked a problem but didn't solve it, such as a kitchen that's too small. If the kitchen is still too small after you've put in granite counters, don't expect buyers to care. 

You failed to do necessary repairs and updates that were less visible than the new décor but buyers noticed anyway. 

Your updates are beautiful but require a lot of cost and upkeep. 

Buyers want to make a home their own, and don't want to be distracted or confused by design statements that they don't agree with. Enjoy your home while you can, but make sure your new look can be easily depersonalized when it comes time to sell. 

Don't expect to set a listing price based on what you've put into your home no matter how long you own it. Your home will be worth market value no matter when you sell, whatever the value is for that point in time. 

All the improvements in the world won't change that basic fact. Your home and the improvements you make are only worth what willing buyers say they will pay. 

Before you begin renovations, talk to your Realtor and your lender. They will help you develop a reasonable plan for updates that will add value to your home. 

Home Inspection List - You do as many as possible to prepare

Mon Feb 22
Prepare your house for an inspection


What will a home inspector be looking at and how you can prepare for a home inspection?  The below listing may be helpful in preparing for a home inspection.  Many of these items can be done with little or no cost and many are regular maintenance items for a home. 

  1. Remove grade or mulch from contact with siding.  Six (6) or more inches of clearance is preferred. 
  2. Clean out dirty gutters or debris from the roof. 
  3. Divert all water away from the house; i.e. downspouts, sump pump, condensation drains, etc.  Grade should slope away from the structure.  Clean out basement entry drains. 
  4. Trim trees, roots and bushes back from the foundation, roof, siding and chimney. 
  5. Paint all weathered exterior wood and caulk around the trim, chimney, windows and doors. 
  6. Seal asphalt driveways, if cracking. 
  7. Seal or point up masonry chimney caps.  Install metal fluecap. 
  8. Clean or replace HVAC filter.  Clean dirty air returns and plenum. 
  9. Point up any failing mortar joints in brick or block. 
  10. Test all smoke detectors to ensure they are in safe working condition. 
  11. Update attic ventilation if none is present. 
  12. Have the chimney, fireplace or woodstove cleaned and provide the buyer with a copy of the cleaning record. 
  13. Seal masonry walls in the basement. 
  14. Don't do quick cheap repairs.  You may raise questions that will unfairly cause great concern to buyers and inspectors. 
  15. Ensure that all doors and windows are in proper operating condition, including repairing or replacing any cracked window panes. 
  16. Ensure that all plumbing fixtures (toilet, tub, shower, and sinks) are in proper working conditions.  Check for and fix any leaks.  Caulk around fixtures if necessary. 
  17. Install GFCI receptacles near all water sources.  Test all present GFCI receptacles for proper operation. 
  18. Check sump pump for proper operation. 
  19. Replace any burned out light bulbs. 
  20. Remove rotting wood and/or firewood from contact with the house. 
  21. Ensure that proper grading is followed under a deck. 
  22. Install proper vapor barrier in crawlspaces. 
  23. Caulk all exterior wall penetrations. 
  24. Check to ensure that the crawlspace is dry and install a proper vapor barrier if necessary.  Remove any visible moisture from a crawlspace.  Moisture levels in wood should be below 18% to deter rot and mildew. 
  25. Check that bath vents are properly vented and in working condition. 
  26. Remove paints, solvents, gas, etc., from crawlspace, basement, attic, porch, etc. 
  27. If windows are at or below grade, install window wells and covers. 
  28. Have clear access to attic, crawlspace, heating system, garage and other areas that will need to be inspected. 
  29. If the house is vacant, make sure that all utilities are turned on, including water, electric, water heater, furnace, air condition and breaks in the main panel.

 

GREAT TIME TO PURCHASE

Wed Feb 22

The Housing Market is Doing Just Fine

There are some that think that housing affordability is a challenge. Historically, that’s not true. Others think that home prices are approaching bubble values. If we look back over the last sixteen years, that is also not the case. As a matter of fact, the numbers show that the U.S. residential real estate market is doing just fine.

Here are two articles and excerpts that make this point:

The Housing Market Is Finally Starting to Look HealthyThe NY Times

It has been an excruciatingly long time coming, but the housing sector in the United States is finally getting healthy. Thank millennials and thank homebuilders who are starting to produce more of the starter houses young people demand.”

Why the U.S. Housing Market Is Good and Getting Even BetterThe Street

“Interest rates are so low now that a family can buy the median-priced U.S. home on income of less than $45,000 a year -- about $11,000 less than the median household income. And half of America's houses are cheaper than that.” 
There are those worried that all this positive talk resembles what was being said in 2004 and 2005. Jonathan Smoke, Chief Economist at realtor.com, explains the difference very simply but effectively:
“The havoc during the last cycle was the result of building too many homes and of speculation fueled by loose credit. That’s the exact opposite of what we have today.” (emphasis added)

Mortgage rates increase to 3.12% as Fed charts new course

Wed Feb 22

Freddie Mac economist said rates inched up due to economic improvement and a shift in monetary policy guidance

The average 30-year-fixed rate mortgage increased to 3.12% during the week ending Dec. 16, up from 3.10% the week prior, according to the latest Freddie Mac PMMS Mortgage Survey. A year ago, the 30-year fixed-rate mortgage averaged 2.67%.

The 15-year-fixed-rate mortgage averaged 2.34% last week, declining from 2.38% the week prior. A year ago, at this time, it averaged 2.21%. Mortgage rates tend to move in concert with the 10-year Treasury yield, which reached 1.47% on Wednesday, down from 1.52% a week before. 

The report is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit

Sam Khater, Freddie Mac’s chief economist, said in a statement that while house price growth is slowing, prices remain high due to solid housing demand and low supply. “We expect rates to continue to increase into 2022, which may leave some potential homebuyers with less room in their budgets on the sideline.”   

According to Khater, the 30-year-fixed mortgage rate inched up due to economic improvement and a shift in monetary policy guidance.

The Federal Reserve announced on Wednesday it is accelerating the tapering program initiated in November “in light of inflation developments and the further improvement in the labor market.” Beginning in January, it will reduce the pace of its monthly purchases by $20 billion for Treasury securities and $10 billion for agency mortgage-backed securities.

The central bank sees progress on vaccinations and strong policy support, solid job gains, and improvements in sectors most affected by the pandemic. But supply and demand imbalances and the reopening of the economy have continued to contribute to elevated inflation levels. 

“The path of the economy continues to depend on the course of the virus,” the FED said. “Risks to the economic outlook remain, including from new variants of the virus.” 

Rising mortgage rates have already begun to sap demand. Mortgage application activity dropped 4% for the week ending Dec. 10, according to the most recent Mortgage Bankers Association (MBA) survey. 

The Refinance Index decreased 6.4% in one week, while the Purchase Index increased 0.7% in the same period. “Fewer homeowners have a strong incentive to refinance at current rates,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a statement.

 
 

 

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