Dec

2

Long Island Home Prices: How Real Estate Offices Are Being Affected

Filed Under Sellers | Leave a Comment

Long Island home prices are hurting. What you’re thinking right now is, “Gee thanks for the insight there Tom!” While many people talk about homes sales and focus on the values of real estate, one thing many people don’t talk about is the business of real estate.

Since 2006, over 220 offices throughout Long Island have closed. They’re either large companies “restructuring” to become more centralized, or they’re small offices that are just no longer in business any longer.

Many offices and their agents have dropped commissions to “compete” with low-cost real estate companies. This has been a trend for the past 30 months or so. But oddly enough, what has happened is these offices have closed down. The “flat-fee” brokerages charging $3500 (plus a commission pay out for cooperating brokerages) are mostly shut down.

Without boring anyone, I’ll talk briefly about how business works. It’s simple really. The equation is:

Revenues - Expenses = PROFIT

Now let’s look at the retail world of clothing. If a clothing company like The Gap decreases their prices, they are inadvertantly decreasing their revenues. They need to sell more in order to make a profit or, they need to eliminate expenses. Now fortune 500 companies usually will cut costs by firing people. It’s that simple.

In the real estate business, in order for a brokerage charging a flat-fee or charging a 4% commission (split 50/50 with another brokerage - the other brokerage brings the buyer and each office splits the commission), to make a profit, the must either sell more houses - faster and not hold onto them or they must decrease expenses.

In the real estate business, decreasing expenses includes less advertising, less auxilary staff to run the office, less open houses, less signs - basically less marketing all around. This is a fact, or the office will close like the over 220 offices that have gone that route since 2006.

Now think about prices of homes and add this into the mix. If a brokerage is letting their agents take 4% listings and the homes selling in their market have come down in price over 20%, assuming a standard and healthy commission is 6%, and their charging 4%, that’s a 49% drop in revenue.

Now prices across the board have come down. We all know this as you astutely thought to yourself at the beginning of this article about my insight. So ask yourself this question next time you’re sitting with a real estate agent who will accept a 4% or flat-fee commission:

“How can this agent and their office market my property when their revenues are down 50%?”

Ask yourself this question next:

“If this agent and their office is taking a 4% commission now, how well are they going to negotiate a price for me in the future?” (because they’re bottom-feeding right from the get-go).

If you could buy something now, that will definitely do what you bought it to do, or spend a little less and buy something that could very likely turn out to not be able to do what you’re buying it to do - which do you think you should buy?

The reason for this article is push back a little against the trend that is putting real estate businesses out of business and putting homeowners in situations where their equity is flying out the window each and every month their home doesn’t sell.

Price is king in this market, but effective marketing helps make any listing pop off the long list of homes for sale (over 30,000) on Long Island.

Call me now to talk about actually selling your home and how I use my fee for service to help sell your property faster and for more money than my competition.

1-877-765-3123, Ext. 51

(c) Copyright, 2008 www.tommcgiveron.com

Nov

29

Long Island Short Sales: Announcing New Website

Filed Under Foreclosure Info, Sellers | Leave a Comment


The number of Long Island short sales is increasing much like the rest of the country. Homeowners are finding themselves stuck behind a mortgage payment they cannot afford and we are seeing these homes coming to the market for sale - when the home is worth less than what is owed on the mortgage.
In my travels all across Long Island, I continue to meet with homeowners who have either just bought at the height of the market or many who have refinanced their home or taken out multiple home equity loans and now find themselves with a home that isn’t worth what they “pulled out” in equity. This isn’t a problem in and of itself.
The problem is now these homeowners are getting a divorce, in poor health, currently unemployed, lost a business, and on and on. Some who bought homes just a few years ago in 2004-05-06, are deciding they don’t want a home anymore for whatever reasons, but most are people who should never have purchased a home to begin with. Enter subprime lending.
Those that purchased in say, 2001 - 2005 are now facing resets on their adjustable rate mortgages (ARM). An ARM is a mortgage that offers a low-interest mortgage up front, but follows the market and adjusts after a certain period to whatever interest rates are at the current time. Luckily, the interest rates are still low. However, even a homeowner who purchased with a 4% ARM in 2004, is now paying for sake of argument, 5.5%; that’s a whopping 1.5% increase on a mortgage, not a car loan!
With all this, I am introducing www.longislandshortsales.org. It is a website dedicated to the cause of helping homeowners who need professional real estate agents, attorneys, and reputable mortgage consultants to assist them with their options.
For every home that I help avoid foreclosure, the stability of the real estate market remains intact. If all the homeowners who are in trouble on this very day, November 29, 2008, with paying their mortgage were to be foreclosed on, homeowners all across the island, would see the bottom drop out from under their home values. We’re talking 50% loss of equity from today (we’ve already lost over 20% during the past 30 months or so).
A boarded-up home next door to you is bad for everyone - the family that was there, the investor who tried to make something out of his/her life, the neighbors, the bank holding the note. In these situations, everyone loses.
My point in announcing this website on tommcgiveron.com, is to create awareness for my visitors and subscribers, that if you know of anyone who is in trouble, call me. Visit longislandshortsales.org and just read the home page.
One of the main reasons I am creating this website and forging ahead into the direction of short sales is because time and time again, I, and many of my colleagues, are running into real estate agents who are not managing these types of sales correctly. They are time consuming and delicate listings that must have a solid real estate professional with the experience and tools to analyze all of the homeowner options.
Many homeowners are listing their homes with agents and not disclosing that they’re a month or two behind on the mortgage payment. They list the home too high because they’re listing with real estate agents who are not fully vested in this business. The home is sitting on the market. The homeowners are not making their mortgage payments. And worst of all, after 6 months of falling behind, the homeowners find themselves in a haze of misinformation coming from a real estate agent who doesn’t know what they’re talking about.
These times call for professionals in the legal field and real estate industry to pull together to make sure homeowners are not taken advantage of by businesses proclaiming to perfrom miracle “loan modifications” for $1000’s of dollars. Their are reputable companies and attornies that handle this, but homeowners have to be careful.
Longislandshortsales.org is a place where homeowners can come and get a trustworthy company, Coldwell Banker and a real estate agent, me, who is experienced with helping homeowners fully evaluate their circumstances. I am not a lawyer, but I have teamed with the best. I am not a loan modification specialist, but I know the best. I am a real estate professional who knows the market, has extensive experience with short sales and can help homeowners actually avoid foreclosure. Whether it’s through short selling their home fast so as to maximize the lenders return so that they accept the short sale or it’s a referral to a qualified attorney to help them get out of a bad situation, I am available at 1-877-765-3123, ext. 51.

(c) Copyright, 2008 www.tommcgiveron.com

By Thomas McGiveron, Licensed Salesperson


Nov

11

Long Island Real Estate Market: Numbers That Add Up To “WOW”

Filed Under Sellers | Leave a Comment

Throughout the Long Island real estate market, sellers are wondering where the market is going. In order to make any prediction, one only has to look at what has happened to the industry during the past year.

According to the Multiple Listing Service of Long Island, in October 2007, there were 2,871 real estate offices throughout Long Island (Queens, Nassau, Suffolk). As of October 2008, there are 2660 real estate offices still in business. That’s a whopping 211 office closings in one year.


According to the Multiple Listing Service of Long Island, $12,787,251,000 worth of real estate was sold during the months of January through October of 2007. Compare this to the $8,755,692,338 of real estate sold during January through October of 2008. That is a tremendous decline of over 4 Billion (with a “B”) dollars.

The average home sold for $456,500 this year in October. October of last year, the average home sold for $521,200. That’s a 12.5% decline in prices from October 2007 to October 2008. And in September of 2008, homes sold throughout Long Island for an average $478,100. Comparing that to October of this year, that’s over 4% decline in prices on one month!

So if an owner asks me where I think the market is going, the answer is simple - down. Period. No one has a crystal ball, but I can safely say that and not think twice about it. Sure there are some bright spots which have been discussed in previous articles, but ultimately, if you have plans to move on in life, holding on until next Spring or even Spring, 2010, you’ll be faced with a significant loss of equity.

prices-2003-november-slide.jpg
Click the image to enlarge.

If your current real estate agent is not keeping you up to date with these facts, tell them you want the information you need to make the best decision for you and your family. If you’re in the midst of deciding whether or not you want to sell, it is imperative that you call a qualified real estate agent in your area. Since I already have the information at my fingertips, why not call me right now at 631.831.9048 and let’s discuss how I will sell your property fast, with no hassles while your neighbors sit on the market, watching their equity fly out the window.

(c) Copyright 2008, www.tommcgiveron.com

By Thomas McGiveron, Licensed Real Estate Salesperson


Oct

31

Long Island Real Estate Market: Home Pricing Update

Filed Under Sellers | 1 Comment

The median price of homes under contract in the Long Island real estate market (Nassau and Suffolk) fell again last month. Additionally, the number of available homes on the market fell. The median price of homes under contract dropped $15,000 in August from $350,000 to $335,000 in September.

In September of 2007, median price of a home sold was $380,000, a 12% decline. Nassau saw less severe declines of $417,300 in August to $415,000 in September of this year, with a decline from $445,000 this time last year (a 6.5% deline).

Throughout the island, there are less properties on the market than there was a year ago. There were 14,413 homes on the market in Suffolk County in September of this year, compared to 14,761 this time last year. What this shows is a decline in inventory, albeit a marginal decline. This means less homes are coming to market for sale.

The months of supply throughout the Long Island real estate market has declined as well from 19 months last year to 14.8 months as of September this year. The months of supply helps us determine how long it would take to sell every house that’s currently for sale. While this is over a 20% decline in months supply, 14.8% is still very high.


To summarize and make sense of all of this data, it’s important to note that these are all indicators that the market will continue to slide downward as we head into 2009 and probably well into 2010. Many experts were predicting Spring, 2009 as the overall bottom, but these numbers don’t indicate a bottom in 2009. It is a game of “catch up” and the numbers homeowners need to improve are getting better, but that’s just to get us to break even or to the bottom. From there, the numbers need to improve in the opposite direction for prices to actually go up, which does not seem to be anywhere in the near future.

If you don’t want to wait around indefinitely trying to recoupe the loss of equity during the past 32 months or so, the first step would be to determine your home’s value - now. See where you stand. I like to look at this situation this way: If it takes 40 months of decline to lose 25%, it will probably take at least that much to gain it back. Historically, over the past 100 years, real estate realizes a respectable 5% appreciative value annually. Forty months is equal to just over 3 years. Once we reach bottom, the best case scenario is the market will again begin realizing 5% appreciation which is actually on 15% compounded value.

All the jibberish aside, if you can follow it - it’s going to be a long time before the Long Island real estate market is back to normal. Keep in mind that this article did not even take into account a “global recession”, local foreclosures and the increasing number of short sales, as well as the credit crunch and decreased qualified buyer pool. And of course, our ever-increasing property tax burden, which in Nassua County especially, doesn’t seem to have any hope for, at the very least, a holding pattern, as county officials are looking to increase property taxes there once again.

The purpose of this article is to help those homeowners who are on the fence or mistakenly thinking that they can wait until Spring, 2009 to miraculously sell their home “for more”, to consider the hard reality that now is the best time to sell their home. For those homeowners who are “in it for the long haul”, obviously that’s a better position to be in, but that “long haul” must be carefully weighed against reality.

For questions about the Long Island real estate market, please feel free to call me at anytime at 631.587.1700, ext. 51.

(c) Copyright, 2008 www.tommcgiveron.com

By Thomas McGiveron, Licensed Real Estate Salesperson


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Oct

28

Client Testimonial: Kevin M.

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

I just wanted to thank you both for everything. It’s a rough market out there right now and I appreciate everything you guys have done and what you have to go through in these types of transactions. Thanks for your efforts in helping us, especially in regards to your hard work, your excellent availability and tenacity in a tough market. I will certainly recommend you to anyone I know in the area if they go looking to sell (or buy for that matter).

Kevin M. - 10/17/08

Thank you Kevin for those kind words. My partner, Paul Musso, and I helped sell Kevin’s home in West Babylon. It was a great house to market, as it was always ready to show. When we first began the listing, I thought it would be a fast sale, quick and easy. This market proved otherwise. We managed to still sell it in 78 days, but I first thought we would sell it within the first 30 days because it was a great house, a cut above the rest in the area. Through our efforts of aggressively following up with other agents and buyers, we managed to sell it and help Kevin and his family move on. Congratulations and good luck!

Oct

16

STAR Program For New York State

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

The STAR program for New York state is one of those elements of Long Island real estate that talked about alot, but understood very little. Most people refer to the STAR program as a simple real estate property tax decrease. STAR is an acronym for School Tax Relief.

The STAR program application is completed by homeowners one time and provides an exemption from school taxes for non-owner occupied, primary residents. The deadline for filing is generally March 1st of each year, however it is best to check with your local tax assessor.

A great resource for information on the STAR program is http://www.orps.state.ny.us/star/index.cfm.


Oct

11

Long Island Short Sales

Filed Under Foreclosure Info, Sellers, Sellers & Buyers | 2 Comments

Long Island short sales are on the rise. The numbers are staggering. According to the Long Island Board Of Realtors, short sales will continue to rise and real estate agents will be scrambling to assist homeowners in danger of losing their homes to foreclosure.

However, in my travels as a professional real estate salesperson, I find that many homeowners do not know anything about “short sales”. A short sale occurs when the seller’s lender (the bank that holds the mortgage on the house) accepts a discounted pay off in order to release the existing mortgage. Basically, the bank agrees to take less than what is owed on the property and the homeowner is able to walk away from the property without having any further debt owed to the lender.

On Long Island, short sales are becoming increasingly “popular” with homeowners who cannot pay their mortgage due to mortgage resets on adjustable rate mortgages.

The main reason why short sales are the most viable loss mitigation alternative is because the effect on the homeowner’s credit is much less damaging than a foreclosure. On a FICO score, the average loss is 300 to 400 points when a homeowner goes through the process of foreclosure. However, if the homeowner chooses to negotiate a short sale, the drop in FICO score may only be 80 to 100 points, assuming their mortgage is the only debt they can’t pay.

The short sale “package” that many homeowners will need to submit to the bank will include a hardship letter written by the owner(s) which explains the circumstances surrounding their inability to pay the mortgage. The lender will also require an authorization form allowing the real estate agent and/or attorney for the seller, to speak to the bank and negotiate the sale approval. Additionally, the lender will want proof that the money coming into the household is insufficient to cover the mortgage, so W-2’s, bank statements, and check stubs will be required.

The agent you choose to assist you must have extensive knowledge of the short sale process. On Long Island, many real estate agents do not have the experience to successfully complete a short sale transaction. Many agents will just tie up a property in a long listing agreement, only to poorly advise the seller and ultimately pass the point at which a short sale will even be acceptable to the lender.

As a homeowner, it is imperative that certain objectives are met with regard to the conducting of a short sale. Since I consider these objectives privaleged information I will not list them here. If you are a homeowner and would like to discuss the process in depth, I am available at 631.831.9048.

For more information on Long Island foreclosures - click here.

(c) Copyright 2008 www.tommcgiveron.com

By Thomas McGiveron, Licensed Real Estate Salesperson


Oct

9

Long Island Real Estate Market: Sell Now Or Hold On…For A Long Time

Filed Under Sellers, Sellers & Buyers | Leave a Comment

I have been writing articles about the Long Island real estate market for some time now and I came across the perfect information that illustrates what homeowners might expect during the next few years. I thought about the title to this article and decided to just lay it all out there.

What you’re about to read is not just my opinion. I’m not as self-absorbed or diluted as our typical politicians who seem to know it all when things are good and point the finger when they’re not. No, I don’t, and will not, publish articles about what I think or feel. Rather, I publish articles about information.

1008-freddie-mac.jpg

You may click the image(s) to enlarge it. The information is forwarded-looking in nature and deals with what’s down the road for real estate values. I find myself talking with many homeowners who ask me “my opinion” about what’s in store for the Long Island real estate market. As I explain to them the ramifications for “holding on” and not selling now, or asking a 2005 price for their home in 2008, I get alot of, “Well, you don’t know what’s going to happen in the future…” or “I think it’s going to come back next spring…”

Well Freddie Mac doesn’t think so according to Bloomberg News who quoted officials citing the S&P Case/Schiller Home Price Index. (I’m scratching my head)…So I guess the average homeowner who is a teacher or a plumber or a doctor knows more about the real estate market than Freddie Mac or Bloomberg News or Case and Schiller. See the next slide.

1008-radar-logic.jpg

I took this quote directly from the previous slide: Radar Logic publishes price-per-square-foot data used as the basis for the Residential Property Index, or RPX market, used by most hedge funds and institutional investors to hedge their mortgage-related bets. The 2011 estimate is not the company’s own, but is based on a forward curve produced from futures trading in the RPX market.

This information is gathered and based on hard data. Data that people collect at Radar Logic that make up the RPX market, cited on Sqawk Box, Mad Money and other financial-related news programs. The data suggests that home values will continue a downward direction across the nation. So do you still think next spring will bring back the 20% equity loss during the past 3 years? Enter the last slide.

Before clicking on this last slide, I want to address my cynical tone in this particular article. I’ve found that being “Mr. Niceguy” with regard to my presentation of information really doesn’t hit home as well as being somewhat cynical and hard-nosed. “Mr. Niceguy” is boring and “Mr. Cynical-In-Your-Face” helps to nail down the point. However, keep in mind that I own a home, my sister owns a home along with my Mother, other family members and friends as well and I do not take any pleasure at all from watching home values drop.

But I digress. Click the next slide.

5-year-appreciation-increments.jpg

What this slide shows is probably the single most important piece of information. It shows five year increments of the market since 1980. Now real estate values tend to increase (appreciate) about 5% per year. And during the previous 20 years, home values have appreciated a total of about 106%. So if you bought a home in 1980 for $100,000, your home in 2000 would be worth about $256,000 (appreciation values compound: 100,000 + 25% = 125,000 + 27% = 158,750, etc.).

During those 5 year increments, you’ll notice, about a 5% or more average increase - per year. Now from 2000 to 2006, you’ll notice a tremendous 89% home appreciation figure. That’s a whopping 14.8% appreciation - per year. So in 6 years, the real estate market and definitely Long Island included, realized a surge which rivaled the previous 20 years. And on Long Island, the numbers are staggering when we discuss appreciation from 2002 through 2006.

What this last slide represents is the inflated values and what experts would refer to as a signficant economic anomaly (deviation from the norm). What we’re seeing now is a market correction which may very well overcorrect itself in the form of the following:

A. Buyers not being able to get mortgages

B. Buyers refusing to buy (or “hold out for the bottom”).

C. A combination of both.

In any event, I am writing this article to inform my readers, especially homeowners, that this real estate market is not something you treat lightly or “go with your gut” when it comes to making major financial decisions about the sale or holding of your property.

I am available anytime to my clients for further discussion (as they know I am only a phone call away). If you would like to become one of my clients and hire me to help market to sell your home, please call me at 631.831.9048. For a closer look at the Long Island real estate market or to schedule a one-on-one personal meeting with me, call today.

I welcome the opportunity to assist you in any way I can.

(c) Copyright, 2008 www.tommcgiveron.com

By Thomas McGiveron, Licensed Real Estate Salesperson

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…

Click here to read the rest of the article


Sep

21

Long Island Real Estate Market: Moving Forward

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

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.

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.