As a real estate agent I get asked this questions a number of times a week.  I could answer that question in a number of ways.  I could say the market is down, compared to 2 years ago.  I could also reply with the market is up compared to last year.  The number of days on the market is up, the number of sales per month is up, homes on the higher end–over $800–are sitting on the market longer, homes on the low end–$400 and under–are selling faster.  As you already know, data can be manipulated like Play-Doh into any form to get one’s point across.  Instead, I like to take a different approach at presenting data by allowing the numbers to speak for themselves, instead of making personal observations about the market. Using my Altos Research data, I will publish a monthly graph to track how the Westchester Real Estate market is doing.  If you are an analytical or are on the fence about purchasing a home, this data will be invaluable.

Residential house prices, in Westchester County or any other market for that matter, are a function of supply and demand, and market conditions can be characterized by analyzing those factors.  The Market Action Index (MAI) illustrates the balance between supply and demand using a statistical function of the current rate of sale versus current inventory. An MAI value greater than 30 typically indicates a “Seller’s Market” (a.k.a. “Hot Market”) because demand is high enough to quickly absorb available supply. A hot market will typically cause prices to rise. MAI values below 30 indicate a “Buyer’s Market” (a.k.a. “Cold Market”) where the inventory of already-listed homes is sufficient to last several months at the current rate of sales. A cold market will typically cause prices to fall.

I picked 3 different towns in Westchester and compared them to MAI of the county as a whole.

For data/charts on specific zip codes in Westchester County, please shoot me an email or subscribe to the reports on the right-hand column.

If you’re like most home buyers, there’s an 87% chance that you started looking for a home on the web, according the National Association of Realtors® (NAR). And according to the National Association of My Personal Experience, there’s a high probability that you’re working with multiple real estate agents.  Most home buyers don’t realize that every Realtor® who is a member of the WPMLS has access to all the homes for sale in Westchester County and even Putnam and Bronx County.

As a home buyer myself, I realized that the main reason buyers hop from Realtor® to Realtor® is trust . The agent you’re working with, and it might be me, has not given you a sense of comfort that would have you commit to that one agent. And understandably so! You just met the person once or twice.

Chances are that you’re looking around for a home on Realtor.com, Remax.com, or every agent’s personal favorite Zillow–more on this on another post. You find a home you like, and give a call to the first agent that shows up on the right-hand column of that specific page to setup an appointment. The problem with that is that you were trying to get in touch with the listing agent of that property. However, you just managed to contact a random agent and not the listing agent.  You didn’t know that most of the time any agent can buy advertising on that right-hand column, or any other area for that matter, on that web page.  So finding the listing agent of that specific property is sometimes more difficult than finding a home.  In the Westchester County we agents practice something called reciprocity.  Meaning, we could show and sell each others listings.  In fact, it’s one of the core mechanisms that drives this industry.

The real question to buyers is why do home buyers want to contact the listing agent directly?  Here are a few ideas buyers have shared with me in the past:

• I can get a better deal by negotiating with the listing agent.
• The listing agent will have “insider” information about the seller or the house that no one else does.
• It is easier to negotiate with the listing agent–no middleman.

My response is always the same to buyers:  If the listing agent is representing the seller, how are you going to get a better deal?  Who’s going to tell you that the home is overpriced, and it’s not worth the asking price? Who’s going to advise you on attorney, mortgage banker, and home inspector–the seller’s agent?  Are you likely to get sound advice from the same agent who has doubled their interest in selling the home because they get the entire commission instead of half?  Let me know when any of this makes sense you to you.

Think about it.  The listing agent represents the seller and her best interests.  Who’s guarding you, the buyer, and your best interests?

Please note that in the State of New York, it is completely legal to represent both the seller and the buyer in the same transaction–as long as both parties consent to the arrangement.  If both parties agree to engage in dual representation, then the agent has to provide both parties with the same level of loyalty (fiduciary duty).  Do you see where this could be a problem?

Personally, I’ve never represented both the buyer and the seller in the same transaction. Perhaps I’m one of those people with a conscious or maybe I’m just stupid for forfeiting all that money.  The bottom line is that if the agent has access to the Multiple Listing Service (MLS), he/she can show and sell you any home because of reciprocity.  Long gone are the days of “pocket listings”.  There’s absolutely no benefit to keeping a listing to yourself (unless the agent wants to buy the home themselves).  There’s overe 7500 other agents out there in Westchester with a possible buyer for that listing.  Why not take advantage!

Therefore, if you’re a buyer find yourself a good, full-time, responsible, and knowledgeable real estate agent to work with.  And stick with him (I mean me) until the end.  On the other hand, you may get some scrupulous real estate agent that just wants the commission and encourages the seller to sell the house for less than what it’s worth.  When it’s time for you to sell, will you plan to use the same agent?

Whether it’s a $100,000 Co-Op or $2mm home, buying a home is a huge endeavor. Wouldn’t you want someone who has your best interest in mind to go to bat for you?  Look at it this way:  if you were in a trial and facing life in prison, would you hire the same attorney the accuser hired?

NYS advice on Dual Agency  “Be Wary of Dual Agency“

When negotiating to purchase a home, understanding what your ‘levers’ are can be a significant advantage to winning a the deal.

Most people believe that price is the only bargaining chip when purchasing a home.  Although this may be true in most cases, it does not hold true for every case.  There are “levers” that you can adjust in order to make the best and most attractive offer to the seller.  In a seller’s market you often hear the expression “Highest and Best” when there’s a bidding war on a home.  The truth is that most people only pay attention to the first part, and disregard the second.  Sellers want the Highest and Best offer, not necessarily the highest offer.  For example, if the asking price for a home is $500,000 and the seller receives 2 offers.  Offer 1 is $490,000 with 5% down payment and 95% mortgaged to close in 90 days. Offer 2 is $480,000 with 50% down payment and 50% mortgaged to close in 30 days.  And lets assume (which I hate to do) the house was vacant because the seller had already moved to their new home and was carrying 2 mortgages.  Which offer sounds the “Highest & Best”?

Well, I hope you picked the 2nd offer!  Why? Because selling a home is about probability.  The probability that the home is priced aggressively enough to attract at least one offer.  The probability that the home home shows well enough.  The probability that once an offer has been accepted, that the buyer can close.  The probability that the home inspector does not find something wrong with the home.  The probability that the attorneys involved will not break the deal.  The probability that the buyers will close in said time.  The probability that the 2 real estate agents know what they’re doing, or at least one of them does.  I could keep going.  I’m as optimistic as the next Tony Robbins, but there are so many variables involved in a real estate transaction that you need to anticipate and plan for the unexpected.

Back to the offers!  I would advise my clients to take the 2nd offer because the probability of the deal actually closing is higher.  All variables being equal, buyers number 2 seem to have a better package than buyers number 1 even though their offer is $10,000 less.  Will the seller risk losing the opportunity to sell his house over $10,000?  If he takes offer number 1, and the deal falls apart, will offer number 2 wait around?  If offer number 2 is planning to close in 90 days, that means that the seller will have to carry 2 mortgages for an additional 3 months, versus 1 month with offer number 1.  Will the difference in closing time compensate for the difference in offer amounts?

Here’s the big issue with this scenario if you’re one of the buyers:  You may know that there’s a second offer, but you don’t know what the offer is for! Then what?

ADJUST THE LEVERS!  Among the other terms you can offer, the three major bargaining chips that you have at your disposal as a buyer are:

Price: Purchase price of home compare to the asking price.

Time: How soon or late can you close on the home?  Some sellers may need to move quickly, others may need more time to relocate.

Down Payment: The higher the down payment the greater the probability of getting a mortgage.  The bank wants to minimize it’s risk by lending a lower amount than the home is worth.  LTV -loan to value.

Adjusting up or down 1 or all 3 of these variables will make your offer more or less attractive to the sellers.  Use them wisely, it could be the difference between thousands of dollars or worse, losing the home.

These concepts at time can be confusing for some people.  And I sometimes presume to think that everyone understands the message I’m trying to convey–which often is not the case.  So please feel free to send me an email or call me if you have any questions on this and any other topic I discuss on my site.

I recently released a calculator for sellers to calculate their closing costs when selling their home.  I did not realize it was going to be so popular.  In fact, I have already received some suggestions on how to make it better.

Hey, I listen. What the customer wants, the customer gets.  I’ve enhanced the calculator (with the help of my developer, AKA, my brother) to calculate other expenses that some people may not be aware of until they’re at the closing table.  The new calculator now calculates the mansion tax charged to homes sold over $1 million.  In addition, for some reason the City of Yonkers does not want anyone that moves out of the city to ever come back because in addition to the State Transfer tax of $4/1000, they have imposed a City Transfer tax of 1% of the sale price.  I’ve now updated the calculator to include these 2 additional costs.

Click below to access the new calculator.

I’ve written various posts on this topic before, but it’s so important I thought I would write another one.

I’m a huge believer in the term “managing expectations”.  Being in the business of providing a service, too often we tend to assume that the client is educated or informed on the process of buying a home. Just because we’ve been around the block a couple of times does not mean the client knows their way through the intricacies of buying a home.  Educating the client up front eliminates frustrations and especially surprises in the future.  When representing a buyer, I try to give them as much information about the process as possible.  Here’s what to expect when buying a home.  For those who are analytical, you can download a spreadsheet to keep track of the home buying process.

Get pre-approved. This is key as it will help your agent understand what you can afford.   More important than knowing how much you qualify for, is knowing what your monthly payments are going to be for the amount you have been approved for.  This includes mortgage payments (principle and interest) PLUS taxes PLUS home owner’s insurance.  These four numbers are also known as PITI.  Too often I found that after having negotiated a price for a home, the client was not fully aware of what their monthly payments were going to be.  Needless to say, they were not comfortable with the monthly payments and had to back out of the deal.

In addition to knowing your monthly payments, get a Good Faith Estimate from your mortgage banker.  This sheet will outline how much your closing costs will be.  Obviously the numbers may change based on the interest rate you lock at, the final purchase price of the home, the property taxes, and the insurance on the home.  However, the number should be very close to what your final bill will be at the closing table.  Remember, no surprises.

Find a house. Looking for a home, especially for the first time, is a process.  After viewing a few homes, you start to realized what features you are willing to give up or trade.  The perfect home does not exist.  Compromises will have to be made.  You may find the house in the ideal condition, but the yard may not be as big as you expected.  The home may be the right size, but not in the right condition.  The schools are just right, but the house is not a colonial.  You soon will begin to prioritize.  The features that seemed important in the beginning may be traded in for other features that you were not aware were even an option.  For example, you may have not realized it, but you now prefer an open floor plan or having central air.  Those features were not on your original “must have” list.

Inspections. Once you find the right house and the price is negotiated to a comfortable price, it is customary to perform inspections within the first 48 hours.  Why?  Because up to this point all agreements have been verbal between you and the seller-nothing has been signed.  Yes, you can walk away without any recourse, however, so can the seller if they receive a better offer.  What if you negotiated a great price for the home (say 10% under asking price), and the seller now decides to drop the price to the new negotiated price to see if they can get a bidding war going?  I’ve seen it happen more than once.  This may seem unethical, but the sellers are simply trying to get the most money for their home.

Contracts. Assuming nothing major came up during the inspection, within the next 24 hours, you move to the contract stage.  The seller’s attorney will draw up contracts and send it over the buyer’s attorney for review and signatures.  Buyers sign contracts first.  At this point a deposit is(usually half the down-payment) but the number is negotiated a between the agents or/and attorneys.  Keep in mind that if you don’t get approved for a mortgage by your bank, you will get your down payment back.  The seller then signs contracts.  The home is now “under contract” and should be removed from the Multiple Listing Service as an “Active” listing.  All future offers are held as back ups.  This process takes any where from 1 to 2 weeks.

Commitment. Over the next 3-4 weeks, as the buyer, you’ll work with your mortgage banker to get all the documentation the bank requires.  This includes W-2, tax returns, bank statements, letters, etc.  Once the bank receives all the necessary documentation it will issue a Commitment Letter indicating that the loan has been approved.  The commitment may be clean, but sometimes the letter may have some open contingencies such as homeowner’s insurance and updated bank statements, or employment verification.

At the same time the bank will be ordering an appraisal of the home in question.  The bank needs to make sure the home is actually worth the amount you’re borrowing.  This step does not require your attention.  The real estate agents will be contacted directly.

Cleared to Close. This is when all the contingencies have been satisfied and the bank is ready to schedule the closing.  At this point you’ll be contacted by your attorney to determine a closing date.  The date needs to be coordinated between you, the buyer, the sellers, the bank attorney, and the buyer and seller’s attorneys.  Real estate agents are not required, but some reason they like to show up.

Closing usually occurs within 1-2 weeks after Commitment has been issued.

Close.  This is IT! Day of closing your attorney will contact you to finalize your closing cost numbers.  You will be asked to bring certified checks to the closing.

The day of closing, you should perform a “walk-through” with your agent to make sure the house was left “broom-swept” and that it’s still in the same condition you remember.  Check all water faucets, heating/AC, and appliances.  I did a walk through with a client once where there was a 6 inch mound running underneath the hardwood floors running the length of the living.  The mound was not there when we saw the house 3 months prior.  Apparently, the sellers were aware of it and said that that happens every summer due to humidity. WHAT?  Needless to say we negotiated a credit for my client at the closing table.

LAST TIPs: Remember to make sure that you change the utilities to your name and complete your STAR application.

PMI stands for Private Mortgage Insurance.  When someone takes out a mortgage for more than 80% of the home’s value an additional premium, or penalty depending on how you look at it, must be paid to protect the lenders against default.  (a contributing factor why banks would rather foreclose than modify a loan–buyers were paying the insurance in case this happened–but this is a whole other topic).  The introduction of PMI is, in truth a double-edge sword: it gives people who normally could not come up with the large down payment, especially in Westchester County where the median home price is approximately $540,000, the opportunity to purchase a home.  On the flip side, there’s a reason 20% down-payments have always been required to buy a home.  Can you guess which is the group of homeowners who are defaulting on their loans these days?

There’s only 2 ways to avoid paying PMI, 1-Place a down payment greater than 20% or 2-get a second mortgage to cover the difference between the down payment and the 80% value of the home or LTV.  Number 2 is the one that has been causing a lot of people to default on their mortgages.  You see, the second mortgage is usually a variable interest rate home equity loan or line of credit.  Borrowers never calculated the impact of a rate increase on their mortgage payments.  But again, this was the only way most people could afford to get into a home.  In hindsight, whether or not it was the right decision is a topic for a future post.  But at least if you’re planning to buy in the near future, you should plan accordingly.

PMI, STOP IT!

Most people don’t realize that you can get rid of your PMI payments once you believe the amount you owe on your loan has fallen below 80% of the value of the home.  For example, if you purchased a home 10 years ago and you borrowed $400,000.  You were making PMI payments, but now you believe the home to be worth $500,000 due to appreciation and the payments you’ve made over the years to lower your principal balance.  Now what?  Will the bank automatically eliminate your PMI premiums?  NO WAY!  You must petition the bank to eliminate them by showing proof (usually an out-of-pocket appraisal).  Another way to eliminate the PMI premium, if you believe that the amount you owe is at least 20% lower than the amount the house is worth, is to refinance for an 80% loan or less if possible.  Hopefully, the interest rate will be lower as well.

If You Can’t Beat Them, DEDUCT them.

If you not eligible to eliminate your PMI premiums, then deduct them from your taxes.  Starting with loans issued or refinanced in 2007, and continuing through 2010, you can deduct each year’s premiums paid on PMI for your principal residence and for a non-rental second home. The tax break was originally good for 2007 only, but the government extended it for three years. Unless it’s extended again, you won’t be able to take the deduction beyond 2010.

The deduction begins to phase out once your adjusted gross income reaches $100,000 ($50,000 for married filing separately) and disappears entirely at an AGI of $109,000 ($54,500 for married filing separately). In general, you can only deduct the premiums paid for the current tax year. If you pre-paid premiums for future years, that portion must be allocated to those future years. Rules can vary for mortgage insurance provided by the Federal Housing Administration, Department of Veterans Affairs, and Rural Housing Service, so consult a tax adviser.

Again, consult your tax adviser on this matter.

For more tax saving tips, click here

Real estate agents, yes, we are a funny bunch!  Our creativity levels range from complete plagiarism to the absolute head-scratcher.  Most of us real estate agents did not go to school for marketing or advertising.  Attempting to make a compelling and memorable offer like the Geico Caveman is usually not at the forefront of our marketing efforts when we’re trying to sell a home.  And I don’t recall any advertising courses or segments being offered while I was studying to get my real estate license. Ultimately,we just want to sell the house.  How much creativity does that actually require?  4 years ago, probably not much, but these days “seasonal water views” or “your client will love it” is just not cutting it.

I look at dozens of listings on a daily basis and I’m always stumped with what some agents write on their listings.  I could only imagine what buyers are thinking when they’re reading the description on some of these homes. I have to admit, I too have been a victim of un-creativity.  Perhaps I should stop!

I compiled a list of the most popular (and by popular I mean played-out) descriptions used by real estate agents to attract the attention of would-be buyers.  (with my commentaries, of course) Whether or not they actually work is to be determined.  If you’re a buyer please let me know if these actually work on you.

Priced To sell – If it’s priced to sell, why has the house been on the market for 230 days?

Priced for a quick sale — If it’s still for sale after 3 months, are you going to change the description to say ‘Priced for a slow sale” instead?

Motivated seller — If your seller is not motivated, why are they listing their home for sale;  so people can get decorating ideas?

Price negotiable — Does the seller know the agent disclosed the fact that the seller is willing to lower their price?

24 Hour notice to show — In this market, where demand is lower than normal, shouldn’t the seller provide every possible opportunity to sell the home.  Chances are the home will not be shown to ALL potential buyers.

Taxes do not include STAR — But the taxes are at $32,000 a year.  Is $1,200 deduction really going to make a difference?  That’s like saying  you get 5 cents off on your next gas purchase when you’re trying to sell a Ferrari.

Within Walking Distance to ( _____ ) — That’s a bit presumptuous.  What happens if that one buyer is in a wheelchair?  How will he/she get there?

Recently Updated — Really? How do you define recently?  The last time the kitchen was updated gas was $1.89/gallon?

All reasonable offers considered or Bring all offers –  I will trade my condo and pay you an additional $200,000 for your house.  Would that be considered reasonable?

Don’t miss this one –Why not? Tell me why it’s so special.

Your buyer will love it — How do you know what my buyer is looking for?

One of a kind — Are you sure? I just came from a colonial that looks exactly like it and it was listed for $50,000 less.  PS, the home is in a newer development–they all look the same.

Looking for that special buyer — in fact, any buyer will do.  The only requirement is that they be qualified.

a listing with one picture — and the picture was taken at night from the car. What’s wrong with the inside of the house?  Very suspicious!

Possible Short Sale — It is or it isn’t.  Which one is it?  You might as well change the description to “Possible Foreclosure”.

With stuff like this I rather not make up my own interpretation, or worse, paraphrase.  That’s why I copied and pasted directly from the Realtor.org website.  I get no credit for this, but I thought I share it with you because I think this is a critical topic most people don’t talk about.

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It’s important to understand what legal responsibilities your real estate salesperson has to you and to other parties in the transaction. Ask what type of agency relationship your agent has with you:

As you may already know–or not know, I’m always trying to figure out how to help clients and future clients with their real estate needs.  Helpful Realtor® it almost sounds like an oxymoron (two opposites put together), but what the heck.  Here’s another FREE tool for your arsenal.

As part of my service offering I provide all my sellers with a Net Sheet.  Basically it’s a statement calculating approximate closing costs and net proceeds after the sale of the home.  It’s not exact, but it does provide a better picture for my clients so that can make an informed decision about their real estate needs.  With this tool, sellers can calculate their approximate closing costs on their own. Unfortunately, it’s a bit more involved to calculate buyers’ closing costs. As a rule of thumb, buyers should expect closing costs to run between 3-5% of purchase price. Condos and Co-ops are at the lower end and Single Family and Multi-Family on the high end. Most of the closing costs for buyers is comprised of Title Insurance, upfront Property Taxes, Mortgage Points, and Mortgage Tax.

So Here It Is:

**NOTE: If this is a Co-Op, the seller may incur an additional cost called a flip tax which must be included in closing costs.

I remember the time when I was looking for a home, before I became a Realtor®.  I only wished for one thing: to have access to the Multiple Listing Service (MLS) like my Realtor® did.  If only I could get in there and performed my own searches, I thought to myself.  I wish I had my Realtors®’ login information, then it would be easier to find a home.   Herein lies the duality of being a Realtor®, if the customer has the access to the MLS, then what would they need a Realtor® for?

In the old days agents were trained to keep information from their clients and potential clients.  Just give buyers enough information to bite, and then reel them in–that was the real estate agent’s mantra.  When the customers call in, tell them the town, but not the actual address.  Tell the customer a price range, but not the actual price.  Get them to the your office at all cost!   And for the most part this was the case.  How else were agents supposed to keep customers from running to the next agent.  Keeping secrets was good for business.  (Perhaps this is why real estate agents are held in such high regards in the eyes of the public) Harris Interactive Prestigious Occupations

Fast forward to the age of information where everyone has Twittered or text message even before the agent has time to setup the appointment with you.  I personally never understood the concept of withholding information.  In fact, I’m a big fan of overwhelming customers with information.   I provide my clients with the tools and information they want to make the best decision possible-FOR THEM.  This saves so much time and frustration-for both parties.  I have a very simple mode of operation when it comes to potential clients:  give them what they ask for, and pretty much that’s it.  If I was looking for something–the last thing I want is someone hovering over me-nagging me.  If the potential customer chose to go with another agent, then they will meet another agent with a different philosophy.  It’s nothing personal, it’s just business and I understand that.  I have to continue searching for those customers that will value my approach and appreciate my services.

Being a Realtor® is not Rocket Science.  I’m sure you’ve figured that out already.  After the marketing and shameless self-promotion, a Realtors® has 2 responsibilities: to negotiate the best deal for their clients and project manage the transaction.  This holds true for both buyers and sellers.  If you’ve ever been a project manager you understand that part of being a good project manager is to plan for the unexpected.  That’s the hard part of being a good agent.  The easy part is that the problems are always the same.  It’s not like new real estate problems are being invented.  The problems don’t change, only the players!  The problems are always the same in some form or fashion; personalities, most agents don’t abide by the same rules, home appraisals don’t balance out, uncooperative attorneys, financing problems, FHA requirements, problems with the inspection, and on and on and on.  I’ve seen them all. And by the way, contrary to popular belief, Short Sales were not just discovered last year.  They’ve been around since before double-digit interest rates.

I put myself in the shoes of the customer, how would I like to be treated?  As a client or potential client I always figured that if the agent was straightforward, honest, and knowledgeable then why would there be a need to seek someone else?  Real estate has 99 problems, and the agent shouldn’t be one of them!