Sep

26

Long Island Real Estate Market: Unexpected Drop In Sales Across Nation

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I posted this article on my blog site: tommcgiveron.blogspot.com about how the Long Island real estate market is following along with the rest of the nation.

I, as a real estate agent, am very busy working with buyers and sellers. But I have seen somewhat of a slow down, overall, in call volume. Last month was very busy and much of what I have for sale went to contract and many of my buyers bought a home.

It’s the lack of new faces that concerns me and should concern sellers out there.

Anyhow, check out there article here: Unexpected Drop In Sales Across Nation.

(c) Copyright 2009 www.tommcgiveron.com
By Thomas McGiveron, LSA

Sep

22

Long Island Real Estate Market: What You’re Not Hearing In The Media Part I

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For the Long Island real estate market, there are issues facing the market overall that you’re not hearing about in the media. I want to take a peak at the money issue.

Part of me really doesn’t want to write a series of articles about the realities because it just doesn’t look good for sellers. Another part of me says that I owe it to my communities here on Long Island to “keep it real”, otherwise I risk becoming just another real estate agent with head firmly implanted in sand.

One item we hear about is the “FHA” or Federal Housing Authority and the loans they back called “FHA loans”. Banks provide money to buyers at a greater amount (up to 96.5% Loan to Value or LTV). LTV is based on what the total appraised value is of a given home is and how much the buyer puts down and how much the bank lends.

So if a bank lends $80,000 on a home that costs $100,000, the LTV is 80%. The bank is lending 80% of the total money to a buyer to purchase a given home. This is referred to as a conventional loan.

On Long Island, due to the cost of homes in this area, many buyers put down less than 20% and thus require a FHA loan.

When a bank lends more than 80% to as much as 90% of the value of a given property, it’s risk factor increases because the equity position of the buyer (new owner) is very little.

Here on Long Island, the market is losing about 1% every month. So banks are lending money to buyers right now, in this local Long Island market, who are putting down 3.5%. The bank lending this money is providing money to a buyer who is buying a declining asset. For you who invest in banks, it would be wise if you reconsider your investment.

Now while this seems okay because real estate is a long-term investment overall, it still begs the question, why are banks lending 96.5% or over 90% of a value of a property during a time of 9.7% unemployment nationwide? Also, why are banks lending money to such a high risk investment?

The answer is because FHA loans are “guaranteed” by GSE’s or Government Sponsored Entities like FANNIE MAE up to 80% of the loan. So the exposure of the bank(s) lending on a given property is significantly reduced.

Now behind all this are mortgage insurance companies that provide the banks an insurance policy against default of a given asset or assets. What does this mean?

Anyone who’s bought a home has heard of “PMI” or “MIP”, primary mortgage insurance or mortgage insurance premium. Anytime a property is purchased with less than 20% equity position for the buyer (they put down 20%), the bank must have an insurance policy to back the investment, beyond the 80% loaned.

Well, read this article: Short On Capital, Mortgage Insurers Still Feel The Crunch in DSNews.

Now if you clicked the link for Fannie Mae, you noticed that as of today, it’s trading under $2.00. If you read the article in DSNews, which covers the Default Services field of real estate (foreclosures, short sales, etc.), it doesn’t take a genius to realize that we, as a real estate market both locally and nationally, are no where near out of this challenge.

Banks need money to invest. Part of the TARP funds from the government were made possible to avoid a complete breakdown of the real estate lending market in America. You do remember TARP? That’s the money the banks got and didn’t really need…and now not everyone knows where that money went (but that’s a political/governmental debate which I will leave out of this equation).

Now bringing things back down to us, read my last articles about the Long Island market:
August Update
Distressed Properties

Now for Part II in this series, I will be talking specifically about foreclosures and how bad things really are. Back in April, I broke down every zone of Long Island demonstrating exactly how the market has been hit in 12 months previous. I will be doing this again with an update. And I will also show, as much as I can from the information at hand, how many short sales (pre-foreclosures) there are all over Long Island. And here’s a small taste of what’s going on with foreclosures nationwide.

Sigh. When insurance companies don’t have the business they need to sustain, nor the money to back loans for real estate, what happens to the local Long Island market, that relies so heavily on FHA loans? Is the answer another bailout for the mortgage insurance industry?

I urge anyone reading my articles to leave a comment. Come back and continue checking in. It’s articles like this that make the difference between being informed and being misguided.

For buyers of today, I am not suggesting that now is not a good time to buy. Indeed it is. With prices approaching 35% less than peak and with interest rates so low, it’s an unbelievable time to buy. Just be clear on what you want and how much you’re spending.

To work with me as a seller or buyer, please call 631-831-9048 or email me.

(c) Copyright, 2009 www.tommcgiveron.com
By Thomas McGiveron, LSA


Sep

19

Help For A Home Buyer: How Much To Offer?

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I frequent the website, trulia.com. I am a Pro on Trulia Voices where homeowners, buyers, and others can ask questions about real estate and get multiple answers from an array of real estate professionals.

I recently answered a question and below is the exchange:

The Question:
Im looking at a house on long island that is asking $225,000. How do i determine a good first offer? The house backs to railroad tracks but has a had alot of cosmetic work done.

Michael David
Home Buyer
Mount Sinai, NY

My Response:
mike –

what are you willing to spend for the property?

of course – you’ll say – “as little as possible” – but step back and ask yourself that question. determine UP FRONT what you want to spend. they’re asking $225,000 – i’m sure THEY KNOW they’re backed up to RR tracks.

knowing what sold when and all that stuff will help determine if you’re getting a good “deal” of course.

yatayatayata….do you want to buy the home? If so – how much are you willing and ABLE to spend.

what’s the monthly cost involved (how much, if any, mortgage payment can you afford?). now if you don’t know what the answer to that question is – then YOU are not ready to make an offer on any property. if you do know – then you’ve done your homework and built a foundation for making a real estate purchase.

so to answer your question – “how do i determine a good first offer?” determine what you want to spend – MAX – HONESTLY – then offer a little less than that. define “a little”…3% less than what your max is.

your max might be $215,000 – for this house. after factoring in, how much you can afford and other considerations which might include – how much there is to fix in the house, your time frame for purchase, how long you’ve been looking already, stressors with your partner over looking for a long time (if that’s the case), job, money, etc…

so say it’s 215,000 – then offer $208,550.

Okay – now what?

N E G O T I A T E

Are you a professional negotiator? How will you present your offer? How will you assure that you literally are not over paying for the home? How do you know it will appraise? do you know your closing costs (estimates)? Do you have enough money in savings? Do you know a competent home inspector?

Now THESE are the issues you’re up against AFTER you’ve determined the easiest part…how much to offer.

Email me http://tommcgiveron.listingbook.com/?&page=contact

If you’re out on your own – you’re winging it. Which is fine. Go for it. BUT – if you’re making the largest financial investment of your life (which for most people – that’s what a home is) – doesn’t it make sense to really know what you’re doing…or at least – have a pro helping you do it right? Seriously…Food for thought…

Either way man – good luck!!!

Web Reference: http://www.tommcgiveron.com/buyers/

_____________________________________________________

I just wanted to share the exchange with any of the buyers on my website because I thought the feedback was very pertinent to most buyers. That is a big question, “What to offer?” But there are other questions that are just as, if not more important when considering a home purchase.

One of the keys to making a serious decision to purchase a home is simply asking yourself:
How much you would spend on a particular home?
Can you afford the monthly payment?

It’s like any other purchase, only a lot larger. I believe buyers get caught up in “getting a deal”. But a “deal” is really a home you like and can imagine spending the next few years of your life living there. That’s a deal…

By Thomas McGiveron, LSA

Sep

18

Long Island Real Estate Market: High Sales In August!

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I have featured information on the Long Island real estate market for 2 years and I’m still waiting to entitle an article, “Long Island Real Estate Market: We Have Hit The Bottom”. Unfortunately (for sellers), this month, we’re not there yet.

However, for the local market, and many other markets across the country, this spring season brought on a number of contracts which of course closed in August. Remember, a home that closes in one month, went to contract in earlier months. The months of July, August, and a portion of September are great indicators for how busy a market was in May and June.

Long Island saw increasing sales in each subsequent month (with September’s numbers still to be completed).

But of course, I want to examine not only August, 2009, but also compare it to months previous. This will let us know how the month of August really was and how the market is doing overall.

august-09.jpg

Again, I continue to come back to the point of how inventory is affecting the market. Yes, sales are up…way up.

june-09-inventory-vs-sales.jpg

From June to August, we see a solid spike in sales. This is fantastic. More homes are selling. I believe this trend will continue through the rest of the year. Buyers know it’s time to buy. Of course, it’s not good enough. For sellers, 3000 sales would have been very welcomed and real estate brokers would like that too!

The fact of the matter is, in August, 1 in 10 homes sold. So for every 10 homes out there, if you’re a seller in this market, ask yourself this, “Am I going to be that 1 in 10 that sells?”

Let’s go back a bit further.

august-08.jpg

Now sales in August, 2009 appear to have gone up marginally (about 5%) from August of 2008. But the good indicator is the drop in homes for sale (over 3750 less on the market).

I have been telling homeowners all over the Island, that it’s small steps that are getting us back to a recovery in the housing market. At this rate of improvement, we’ll get there, it’s just going to take time. What does this mean? It means that home values are going to continue going down. But if a home is priced right, it will sell, as evidenced by all our increased sales. Buyers are buying.

For a comprehensive home value assessment, call me at 1-877-765-3123, ext. 51.

(c) Copyright, 2009 www.tommcgiveron.com
By Thomas McGiveron, LSA


Sep

17

Long Island Real Estate Market: 2 In 3 Homes Underwater In Western Suffolk!

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Today I was searching homes in Lindenhurst, Babylon and West Babylon for a buyer. I had certain criteria in my search guidelines which included number of bedrooms and price.

My initial search yielded 121 homes.

I then remembered that my buyer was not interested in short sales or foreclosures, so I updated my search criteria to include NO short sales and NO foreclosures.

My updated search yielded…40 homes.

That’s an 81 home difference. That means that over 66% of homes (or 2 in 3 homes) is a distressed sale.

That is absolutely unbelievable…

I wrote this on my blog at tommcgiveron.blogspot.com.


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