Sep

23

Recent Economic Events Affecting The Mortgage Industry

Filed Under Buyers, Mortgage Matters, Sellers, Sellers & Buyers | Leave a Comment

Recent economic events affecting the mortgage industry.

The Fed announced plans to create a market place for illiquid mortgage debt. This should do a lot of long-term good to help the housing and lending environment. As if that weren’t enough, the Securities and Exchange Commission also placed a temporary ban on the short selling of 799 different financially related stocks.

What prompted these dramatic actions? Very dramatic happenings earlier in the week.

After 158 years in existence, Lehman Brothers filed for bankruptcy last Monday due to overexposure of high risk loans in the mortgage arena. Then, the Fed gave insurance giant AIG an $85 Billion lifeline to keep it from going into bankruptcy, after initially stating it would not intervene. Then it was announced that Merrill Lynch is being acquired by Bank of America, which will save them from the same fate as Lehman Brothers, and now troubled bank Washington Mutual is looking for a buyer as well.

Also playing a role was the fact…

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Sep

21

Long Island Real Estate Market: Moving Forward

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In my previous article, Long Island Real Estate Market: It’s Starting To Look Ugly, I struggled with that title for the simple reason, it just sounds aweful. So I wanted to make the next article a bit more positive in tone.

The content of the previous article is filled with facts about declining prices. I wrote it not to discourage homeowners, but to warn them of what lies ahead. While we have a long way to go before prices settle and the Long Island real estate market begins an upward tend, there are many national statistics indicating an end to the market decline.

“Sales of new homes rose by 2.4% in July to a seasonally adjusted annual rate of 515,000 units the Commerce Department said Tuesday.” Source: Commerce Department 8/25/08 - Courtesy of Steve Harney, Keeping Current Matters
“Existing sales were up 3.1% in July. The sales rate was the highest since February. Sales averaged a pace of 4.95 million the past three months, the same rate as the previous period, indicating that purchases may have touched a bottom.” Source: Bloomberg 8/25/08 - Courtesy of Steve Harney, Keeping Current Matters
“In a sign that the U.S. housing market may strengthen in coming months, an index of sales contracts on previously owned U.S. homes rose 5.3% in June from the prior month.” Source: MarketWatch 8/07/08 - Courtesy of Steve Harney, Keeping Current Matters

Now these statistics are positive. However (I’m beginning not to like this word very much), these improvements in the marketplace are lagging behind the negative impacts on our financial markets and housing supply vs. demand ratios.

My hesitancy to jump for joy in my articles is simply because I do not want to give the wrong impression to homeowners wanting to sell. It’s imperative that homes are priced aggressively. One of the mistakes people make in listening to the news is they hear terms like, “improvements in sales” and translate that to, “improvements in sale prices”. And that is not the case. We may have sold more homes throughout the Long Island real estate market within the last month or so, but that does not mean, prices improved. It means several other things like, prices dropped to a point where buyers paid the respective price(s), mortgage rates dropped, gasoline prices dropped, and real estate agents marketed their properties harder than ever before.

This paragraph above is key for homeowners to understand. So please, read it again so that you build an understanding of the business of real estate and how the market works.

In closing, I’d like to leave you with some positive quotes from some pretty respectable names in the news. Hopefully they will help us in our attempts to continue moving forward.

“I am now telling you that between now and the next six months you have to buy a house.” Source: Mad Money Blog 7/23/2008 - Courtesy of Steve Harney, Keeping Current Matters
“We’re hopefully getting in the vicinity of a bottom,” says David Resler, chief U.S. economist at Nomura Securities International Inc. in New York. Courtesy of Steve Harney, Keeping Current Matters

By Thomas McGiveron, Licensed Real Estate Salesperson, New York State

Sep

20

Long Island Real Estate Market: It’s Starting To Look Ugly

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For the Long Island real estate market, as we move forward into the abyss…no scratch that…

As we move forward towards certain doom…nope, not going there…

As we look toward the dark days that lie ahead…no, no…

As we look toward the future…(breathe)…there are definitely going to be some bumps in the road. Okay, that was much better. I recently went ahead and started taking a close look at individual towns throughout the Long Island real estate market and their last 30 days of activity. I focused on a few characteristics and I will share them in this article.

They are:
1. Highest-Priced Sold Home in the Area.
2. Average Selling Price in the Area.
3. Number of Units (houses) Sold.

I will be delivering an updated foreclosure report in the coming weeks, because ultimately, the situation with home values is going to be crushed by the wave of pending foreclosures throughout the Long Island real estate market.

The following is a breakdown of towns that I randomly chose to include in this article. If you want information on a specific town, not featured in the article - leave a comment or call me.

Town
Deer Park
$435,000 = Highest-Priced Sold Home
$345,267 = Average Selling Price
15 = Number of Units Sold

West Islip
$994,000
$478,308
13

Babylon
$618,000
$472,125
8

Farmingdale
$575,000
$379,265
17

Amityville
$725,000
$493,688
8

Huntington
$1,600,000
$581,597
39

Smithtown
$810,000
$476,556
23

Brentwood
$450,000
$278,735
26

Massapequa
$1,200,000
$481,940
34

Elmont
$450,000
$357,639
15

W. Babylon
$380,000
$313,091
11

Riverhead
[Only 4 closings in the previous 30 days – data insufficient]

Manorville
$495,000
$406,214
7

Mastic
$295,000
$214,472
12

Now after looking at these numbers, you can see that the amount of closings is siginificantly low. For example, in Mastic, New York, there are over 500 homes for sale. With only 12 closings in the last 30 days, that translates to less than 2% of the market selling. In Riverhead, New York, there were less than 5 closings during the last 30 days.

Additionally, in West Babylon, the average selling price for the previous 30 days was less than $315,000 and in Farmingdale, the average has dipped below $400,000 down to $379,265.

While some high end homes closed in towns like Huntington, West Islip and Massapequa, you can tell by their averages that most of the homes in those areas are signficantly less in selling prices and, those homes that did sell for over 1 million dollars have lost signficant equity value to sell at those prices.

With the continued increase of foreclosures throughout the Long Island real estate market, homeowners must take into consideration that it is not going to get better overnight. Anyone who wants to sell their home should know this information and take it very seriously.

If you would like more information on the Long Island real estate market, please feel free to email me at
th om as . m c g i v e r o n @ topproducer.com (please remove all spaces - I do this to avoid spambot emailing). Or feel free to leave a comment on this article.

By Thomas McGiveron, Licensed Real Estate Salesperson, New York State

Sep

11

Long Island Real Estate Market: Licensed Salesperson

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It’s no secret that real estate agents are looked upon as “salesman”. It’s in our title as “Sales Associate” or “Salesperson”. The funny thing about the profession of sales is, there’s a lot more to it then what most people think. In the profession of real estate sales, am I really selling a home worth over $250,000? In the grand scheme of things, I am. But what really goes into being a real estate agent?

I decided to write this article mainly to allow readers to get an insight into who I am and what I do. I recently had a selling client, who I had been working with for over six months, decide they were going to now try and sell their home on their own. We had the home in contract early on in the listing period (we had an offer within the first month and another offer which they accepted within 50 days). My client decided to enter into an extended contract, which I consulted them not to do, given market conditions.

My main concern for them was the appraised value of their home. In this market, appraisals will change from month to month or say every 45 days. An appraisal that is done in May and sits around until the middle of July stands a very good chance of being reevaluated due to the declining market.

I am a professional in the real estate field. It’s part of my job to consult people when buying and selling their homes. My professional advice is given to better their chances of buying right (good terms, price, conditions) and selling for maximum dollar (providing good terms and conditions in the contract).

As a professional in the field - someone who understands the business of real estate - it is one of my key responsibilities to render analysis and professional advice about the market and the inner-workings of the business itself.

Getting back to my selling client, It’s important to note that they did not take my advice (maybe because I’m “just a salesman”). So they entered into an extended 3 1/2 month contract, the home was reevaluated by the appraisal company and…the home did not appraise for the agreed upon contract price. The buyers backed out and even though I immediately tried to have the home appraised by another lender and work with the buyers agent to “put the deal together”, the bottom line is, not only did the appraisal get reevaluated but…the buyers also reevaluated a purchase price of (in this case) over $350,000.

Think about that for a second. For 3 1/2 months, the buyers watched the price of gasoline go over $4.00. They watched CNN and other media outlets and kept hearing about the economy and all the doom and gloom associated with the news. Over 3 1/2 months, they lingered…waiting…with a future “bill” to placed on their shoulders of over $350,000 (mortgage). They saw energy bills, mortgage bills, and more bills, not to mention news of increasing foreclosures throughout the nation.

Three and a half months is a long time to think about things. And, in my opinion, they walked on this deal, putting their down payment in jeopardy, rather than buy the house. Their motivation for purchasing this home declined.

Now throughout this process, I kept in constant communication with the buyer’s agent. I called on a weekly basis. I spoke with my client’s attorney, as I always do, and also kept on the mortgage consultant for the buyers. From the beginning, I demanded an appraisal be done to assure the value of the home matched the deal. Unfortunately, the buyer’s agent and mortgage consultant never really understood the full picture - a down-side to this business that cannot be underestimated. Neither of them shared by cause for concern because, in my opinion, they simply do not understand the entire nature of the business.

I should note they have “years of experience” in the field. I’ve learned in any profession that “experience” is usually just a measure of someone putting in 1 year of experience and repeated that one year over and over. It’s scary to think, but I’ve worked with people who’ve been in the business over 20 years and I’ll have conversations with them about basic real estate “stuff” and it’s as if they’re learning the business for the first time. I’m all for learning. Life is a journey and you never know it all - but in your 20th year, I assume a 20 year “veteran” understands the relationship between an appraisal and a mortgage commitment.

Furthermore, being in the real estate business for “over 20 years” or whatever the case may be, you might think that a person would understand the psychology of letting a deal linger and how that may impact their ability to think decisively. In having conversations with the buyer’s agent in this particular case, the agent could not understand how their client could walk away from buying the house.

To me, it made perfect sense. However, I would summize that the agent never took the time to sit with her clients and go over the numbers, consulting them and helping them to feel better about their purchase. From all indications it would appear that the buyer’s agent never took the time to consult her client. This is sales. You’ve got to be ready to help your client make the right decision.

I can tell you this, not fulfilling a real estate contract can cost thousands of dollars, not only in terms of lost down payment, but also attorneys fees and other associated expenses. As their agent, I would have helped them understand the process, sending them articles to help assuage their fears of buying a home. And I wouldn’t do it blindly to “get the deal done”. I would do it professionally.

At the end of the day, I want to help people make wise purchase decisions about buying or selling a home. That’s a big part of being a Licensed Real Estate Salesperson.

By Tom Mcgiveron Licensed Real Estate Salesperson

To contact me for a comprehensive analysis of your home’s value, call me at 631.831.9048.

Sep

10

Long Island Real Estate Market: Three Simple Steps Toward Relisting Your Expired Home

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Has your home expired off the market? Did you have it with an agent, who took the listing and then disappeared? All too often, people fall victim to agents who do not actually know how to sell real estate. There is a tremendous difference between being a professional salesman and getting a license and slapping a listing on the Multiple Listing Service website.

In the Long Island real estate market, homes for sale are in abundance. One of the key factors in selling houses has to do with having a command over the information and sharing it with the client! There’s a little dirty secret that agents don’t share with their clients and it is - agents make money off of your home (in most cases), whether they sell your home or not.

So selling your home, may not be on the top of the listing agent’s list of things to do, because they’re most likely going to get:
A. Buyers from your listing (whether they buy your home or not).
B. New listings in the area (neighbors will see the sign and call the agent to “see how much their home is”).

So here you are with your expired listing and what are you to do? Well here’s a thought, interview more agents. Here’s three simple tips when considering a new agent to list your home:

1. Sign for a 30 day listing (no exceptions - be firm). Don’t believe the hype. Tell the agent if they impress you, you will gladly sign an extension. They will tell you that they “can’t” take a 30 day listing or that they really can’t commit to the listing if they don’t have your complete confidence. While I agree somewhat with this - I still think, if I’m doing my job right (pricing it correctly and aggressively marketing the property) then in 30 days, I’ll either have an offer or at the very least, it will be shown by fellow agents, alot and you’ll gladly sign an extension. There are other issues agents will throw at you for not signing a 30 day listing and they are somewhat legitimate, but stick to your guns or…

2. Sign for a six month listing but have in there that after 30 days, if you have had no offers (in writing) that are within 20% of your asking price, which include a pre-approval, then you have the right to fire them with no conditional obligation. This means, your home would be released from the agreement completely and you could list with another agent (important). You want it to be within 20% because even though you may not accept something that low, it’s not a “low-ball”. Any agent can pretty much get a low-ball offer - you want to see a relative respectable offer. Also, the pre-approval means that it’s a semi-serious buyer, not some schlub the agent just picked off the street.

3. Addition to number 2, put in subsequent 30 day reviews. The agent may negotiate that in these 30 day reviews, that if you decide to continue the listing, you will also agree to alter the listing price (and rightfully so).

Now these three simple steps toward relisting your expired home can pay off and should help you to get back on track. Remember, not all agents are created equal. There are many questions you can ask of the agent about his/her office and how much they sold last month/last year, etc. But getting an agent in the act of negotiating a listing is where you get a chance to see them in action. Interviewing skills are not so important in selling a home. If the agent can negotiate on their feet, and are creative and confident enough to negotiate a listing agreement with you, then chances are, they know what they’re doing. And if not, then you’ll be able to fire them after 30 days!

By Tom McGiveron Licensed Real Estate Salesperson

Sep

1

Long Island Real Estate Market: Mortgage Matters August, 2008

Filed Under Buyers, Mortgage Matters, Sellers, Sellers & Buyers | 1 Comment

WHY SELLERS SHOULD “SELL” AND BUYERS SHOULD “BUY” RIGHT NOW!

Lately many buyers are asking themselves is this the right time to buy? It seems a major contributor to this uncertainty and question is because buyers are wondering if they would be better off taking the gamble that home prices will continue to fall. Is this gamble a smart one? Should you wait and take that risk? The answer to both of these questions is “no”! While yes, it’s true that home prices are likely to continue to fall some, the more important factor that needs to be considered, and is also likely to occur, is that home mortgage rates will continue to climb. This is in large part due to the fight of growing inflation, increased foreclosures and the sub-prime mortgage mess. While the average mortgage rate for a conventional 30-year fixed rate is still relatively low compared to historic rates, aggressive buyers who wait around for rates to go lower have little time to react once rates start to climb.

But what about the seller? Should they wait to see if a buyer is willing to pay what they’re asking or even close to the asking price? Well, to answer that question, we have to consider several factors. 1- What is the motivation of the seller? Are they looking to purchase another home or even better yet, are they already in contract to purchase their next house? In a majority of cases, this seems to ring true for a large portion of sellers. If this is the case, it is far better for a seller to consider lowering the price of their house ”now”, or have a realistic price set in their minds that will attract buyers, than to wait for that “one “ buyer who is willing to pay top dollar…it’s not going to happen, not in this market!

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Sep

23

Recent Economic Events Affecting The Mortgage Industry

Sep

21

Long Island Real Estate Market: Moving Forward

Sep

20

Long Island Real Estate Market: It’s Starting To Look Ugly

Sep

11

Long Island Real Estate Market: Licensed Salesperson

Sep

10

Long Island Real Estate Market: Three Simple Steps Toward Relisting Your Expired Home

Sep

1

Long Island Real Estate Market: Mortgage Matters August, 2008

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