Saratoga Real Property

Remember that game awhile back “Where’s Waldo?”  Waldo was a character that was hidden somewhere in the world, and the object was to find him, through clues. Neat game. Educational too.Anyway, today’s Seller is playing a version of the game, “Where’s the market?” when trying to price and sell their home. Buyers are playing too, and the hard part of this game is that there are no clues…on either side. Not so neat a game. I was asked this morning about how to help someone who really HAD to sell, NOW. What should they do? How can they get action and offers??  My response was this-“Find the market, as today, it will not find you.”  If I HAD to sell today, I would determine what was the lowest possible price I could or would accept to get it done, and immediately price it accordingly. I would tell my Realtor to be sure and put in the remarks about the house the words “Present all offers. Motivated seller!”.I would tell all my neighbors that I needed to sell, who did they know that might like the neighborhood? I’d have my Realtor create a web and Facebook page for the house, I would put it on every social media site I could find, including my own. Point is folks, YOU have to find the market. Buyers are looking alright, but they are looking for realistic sellers, and bargain basement prices. What was the market is no longer; prices need to find the bottom, so to speak. It is a different bottom for each property of course, but , like Waldo, it has to be found to win.What is your house really worth?  It is worth what a buyer will pay, can finance, and will appraise by the Bank, and also pass all the inspections the buyer may demand.  Value is subjective; it has to be perceived by the buyer that the Seller is being realistic, even aggressive in their trying to find the market.  When a Seller does find it; a magical thing happens…they get offers. They get to negotiate, and they SELL their house.  Hire a realistic Realtor; not a smoke and mirrors type with a big name and lots of listings. If a Realtor has a lot of listings, guess what? They aren’t SELLING them! They promise the world, but…can they find Waldo? We can. Give us a call anytime to talk, no obligation, just honest real answers. It’s our motto, and our name…Saratoga REAL Property.

Paul Simon is a poet laureate in my book, and his words “slip sliding away” seem to fit the perception of the real estate market, and the world’s economy, not to mention yours and mine.  If you listen to the news, one can’t help but be concerned about all that is happening, or not happening, that impacts us all in everything we do.It is really hard to know what the TRUTH is anymore. Our leaders are suspect, our government is rife with lies and half truths, spin and doublespeak. We the people are polarized, and the threat of anarchy is more real worldwide, than ever before. The split between the haves and have nots is growing exponentially.What to do?  Good question. I have one recommendation, one that I think makes very good sense. Buy real estate. Yup. It has never been more affordable, and rates are rock bottom. Yes, it’s harder to borrow money, but banks are loaning. The market for rental property is strong, so buy and rent. Don’t want to be a landlord?  Hire a property manager. Buy real estate to protect yourself, your family and your portfolio. People have to live somewhere. Why not in one of your properties? YOU have to live somewhere; so buy if you can, and stop paying rent. The tougher things get in this world, and I believe they will get a lot tougher, the more safe haven you will need, and real estate is real, solid and there. So is gold and silver, but you can’t live under a pile of gold. It would be nice, but kind of impractical… Buy real estate now, and pay for it with cheaper dollars down the line. It is an excellent hedge against inflation.  Buy right. Don’t overpay, and be patient. The deals are abundant; you just need to approach the market carefully and make the best choice for your objectives.It may seem contrary to what the perception is out there, but being contrary may be just what you, and the country needs right now. Nothing else seems to be working, so why not stop the slide and dig in; invest in real estate. Invest in yourself.  It may be the best decision you have ever made. If you need help, or want to just talk about options, get in touch with me-518-857-6400 direct. Talk, text, whatever-let me know you’re out there, that you haven’t slipped away!Rory

10. The market is really soft, with lower prices, hungry sellers and low rates.9.   It can’t get much worse, can it?8.  The apartment is too small for us now, with the kids, dogs, cats, ferret, and your boa constrictor.7.  We gotta get out this place!6.  The kids need a yard.5.  Our house is too big, I want something smaller.4.  Your Mother can’t move in here with us, we need a bigger place.3.  I want a nicer house or I’m leaving you.2.  I want to live closer to town.1.  If your Mother is moving in, I’m moving out.OK, so there may be other reasons to take the plunge; mortgage money is pretty cheap right now, and that does, make buying a home more affordable.  Add to that fact the reality that our local economy, although not booming, is still breathing, and people are working. This is a positive thing that other parts of the country are not experiencing. Banks are slowing down on their foreclosures; realizing that it does not benefit them to add more cheap inventory to an already flooded marketplace. They need to let the existing inventory sell off  to help stabilize the market. The experts are saying this year  may be the bottom of the cycle, and that we may start to see stabilization, and slight increases in value in some markets.  Others indicate the turnaround may be as much a s two or more years off-either way, if you plan on staying in your new home for the average of 5-7 years, you should be seeing gains in value by that time. Not huge gains, but increases nonetheless.I’m not saying to go running out and buy right away folks; but I am thinking it is not a bad time to start looking, and have a little confidence that things are beginning to show signs of stabilizing…and if you Mother in Law is moving in…well maybe that new larger house will save you from moving out!

Mortgage rates are at all time lows, prices are down across the board, yet very little is selling. Here, there and everywhere. It is confusing to buyers, sellers and professionals alike. Are you confused?Well, I can’t promise all the answers, but I will try to clear up the obfuscation that prevails in the market.First of all, people are worried about the economy, and are delaying big decisions. They are renting, rather than buying as I have mentioned in previous blogs. As no one is certain whether or not the “bottom” has been reached-Zillow.com says not until the middle of next year-so folks are not willing to commit, fearing they will over pay, which is understandable, but frustrating to sellers, who have difficulty accepting the value of their home is not what they expected.The Banks are also reticent to loan, and are under Federal scrutiny like never before. The Feds want to prevent another “bubble”, but their over regulation has caused the industry to bog down, and increased the paperwork and documentation/qualification requirements, eliminating large segments of the buying population altogether.  It is simply harder to get a mortgage today.We also have the “baby boomer” effect, as I like to call it. Statistically the boomer generation is less well prepared for retirement than any generation that has preceded it. They do not have large retirement funds, and have mostly relied upon the homestead to build equity and help pay for college and retirement. They are slowly realizing that their plan has been devastated by the drop in values, and thus, the money they planned on for retirement is no where near what they anticipated. So-they can’t really sell, and they certainly aren’t buying-which reduces both inventory and demand-a classic double edged sword.Finally, and related to all the above, is value. What is a property worth in this type of market? Do Appraisers know? Do Buyers know? Do Realtors know? Do Banks know? The answer is not really. Value is a moving target; the best one can hope for is a price that all concerned can accept, finance and work with. Never before has value been so arbitrary. Never before has value been scrutinized so carefully, by so many.  Buy low, sell high has always been the goal; I suggest to buyers and sellers today, the goal is buy as well as you can, sell at what you can accept, like it or not—and hope the Bank does. To discuss your real estate needs, questions, or just to chat, rory@saratogarealproeprty.com

I read a lot of articles, blogs and pundit pontifications on real estate, money and such.  Most of the things that are written get reported in the media, spun in a variety of ways, depending upon what flavor they are selling.Recently, I’ve been reading about the real estate market, and where it is going this year. I came across the concept of “double dip”, and I thought it is both possible, and important to reflect upon in these musings I post.Double dip, in real estate, means that the market shows signs of recovery-as it does locally-and then, like a melting ice cream cone, it begins to drip and drop, killing any hopes of a rally/recovery. It has happened, to some extent in other parts of the country, and has been reported as such by reputable date research firms, that specialize in such analysis. The Federal government has actually fostered the double dip phenomena, with the big incentive to buy programs last year, which artificially stimulated demand, while the underlying weakness in the market remained. Numbers looked good for a while, and the politicians touted their brilliance in yet another bailout, vaguely hidden under the guise of the homebuyer tax credit. Bailouts don’t work guys, just look at housing, and “government motors”.Mortgage rates are at an all-time low; and the Fed says they will remain there for the foreseeable future. Why then, is housing so depressed, with values and equity melting away like a Popsicle in August?  Not an easy answer, but there are understandable reasons, and they don’t bode well for sellers…or buyer either, for that matter.First of all, in the neighborhoods, at the bus stop, at lunch, in the coffee shops and bars, the folks aren’t exactly optimistic about the Country, the economy and their jobs, business, and that all important cash flow. Pessimism rules, unless you are lucky, or really rich. Even if you are loaded, I’ll bet you’re still not spending like its 1999. So people are worried and more cautious—they aren’t racing out to buy things, especially houses.  They are renting. (See previous blog)Then there is the matter of the foreclosures.  Not so prevalent here (yet), but trust me, they are out there, and they remain an albatross on the neck of the market. When a bank forecloses, they eventually resell the property at a lower than market value—thus lowering the values of all the homes around the bank owned property. You can see the problem looming, like a black thunderhead cloud.We also have the job market to factor into the equation-signs point towards a modest stabilization locally, but there is not exactly a huge growth in jobs, or wages-and you need both to grow, in order to sustain a recovery. The loss of a job or the start of a new one limits a buyer’s ability to get a mortgage temporarily, a fact that adds to the complexity of the problem.The housing market drives everything in our economy. When it is in the dumper, so is everything else. When people are nervous, they don’t spend. When the government is not able to ‘fix” the problem, and may actually be contributing to it, people tend to pull back. Owning a home used to be a sure fire way to build wealth, and insure equity dollars for the future. That is not a sure thing any longer, and until the government and the folks start doing and feeling better, the dreaded “double dip” may very well become a reality. If you want to buy, or sell–TALK TO A PROFESSIONAL REALTOR. This is not a time to do it yourself, regardless of all the information available to you on the internet! Manage the risk, reap the rewards, and go to Stewart’s and enjoy a double dip!As always, if you have questions or comments on this epistle, or any of my other musings, please get in touch. I remain cautiously optimistic, and aggressively realistic.Rory

Apologies to Mr. Shakespeare for taking liberties with his wonderful words…anyway, it has become apparent to me that the demand for rental property, apartments, condos and single family homes is far exceeding the supply. Reason? Simple. Folks need places to live, and either cannot, or do not want to buy in this difficult market.  The influx of people working at the AMD site, not to mention the normal needs of people in transition, has driven the rental market of late, and it may be time to think about taking advantage of it.If you are trying to sell your home and find it’s not going so well, renting it may be a very good option to buy time, and cash flow.  Several of my clients have taken this route, and are much happier as a result. Yes, they had to find a new place to live, but their asset is protected by rental income, enabling them to weather this depressed market.  If you have empty in-law type space in your home, now is the time to pretty it up, and get it rented.  There are certainly opportunities created by people relocating to the Malta area to work for Global Foundries who may not want to purchase a home right away.   It is even reasonable to consider short term rental of a bedroom or two, if your home is set up in such a fashion, as to make that workable.  Rooms would rent for $300-400 a month, as an example.  I would estimate average rentals for 1-2 BR apartments to be in the $700-1200 range, and houses/condos from $1000 up, per month.Tenants pay for utilities in most cases, as well as water and sewer costs.  Many leases specify that they also do lawn care, and snow removal; or the landlord may include those services as they desire.  Each situation is different, the point is, someone else is paying your expenses, which may be the difference between paying the mortgage, and not—well worth thinking about.As a new, or potential Landlord, there are things that are important to know-if you are renting your  home,  you’ll need to change your insurance to a commercial policy. Costs more than homeowner’s, but necessary, as most Homeowner’s policies do not cover rentals. A talk with your accountant  is also a good idea, as you will want to know what the differences are in the taxes, and depreciation, if you make the house a rental.Many people are reticent to rent, because they do not want to be bothered with landlord duties, dealing with tenants, screening, rent collection, maintenance, etc. That’s easily remedied through the use of a Property Manager, who takes that burden on, for a monthly fee, or percentage of the rental. For many, it is the answer they need to feel comfortable in becoming a “Landlord.”Having been both a Landlord and Property Manager for years, I can tell you that renting is a good decision, if you have the need and temperament. It also is a great way to stabilize a tough situation, in a tougher Real Estate market, and build wealth using other people’s money. Not a bad deal.  If you have questions, or want to consider renting, get in touch!

Have you noticed that the service you get, no matter where you shop, or what you are looking to buy, is pretty mediocre these days? No one seems to take responsibility, fewer are polite, and generally, one gets the feeling that they are bothering those who are hired to help them. I think that is terribly wrong. It offends me. I decided I want to do something about it. But what, you ask? Good question.I thought about just being honest with those who don’t provide me good service, and tell them so, as bluntly as possible.  While it’s fun to watch the glazed look on their faces when confronted by someone who won’t accept their mediocrity, it also tends to cause a commotion, and takes time away from more important things.  So, I decided that I would become a one man “good service” recognition giver.Instead of ranking on bad service providers (almost a full time job), I simply pour on the praise and thanks to those who actually do a good job. I stop the line in the grocery store to loudly tell the cashier and baggers that they did a nice job checking me out quickly, and bagging my stuff. I send thank you notes to establishments that have provided me with a positive experience.  In short, I tell people when they do their job well. It surprises them, which may be part of the problem, but that is not the subject of this little diatribe.Here’s the thing; in my business—real estate—about all we have left to do is provide service to our customers. The internet has supplanted much of what we Realtors used to do; our customers are pretty well educated now—but we still provide really valuable services—if we do our job.  Here’s a little story about two realtors, one tenant, one landlord and the services provided. Your job is to decide which realtor you would rather have on your side.  Realtor 1 represented the tenant. Realtor 2 represented the landlord. Realtor 2 was present when the property was shown, answered many of the questions asked by the tenant, as Realtor one was late to the appointment, and talked on the cell phone for a good portion of the appt.  The tenant  liked the property, and was told an application form would be sent to Realtor 1 for completion. Realtor 1 then advises Realtor 2 that they are ready to move in, and to whom do they make the checks out to? Realtor 2 says, we don’t have a completed application. Time passes. Realtor 1 says the big corporation doesn’t fill out applications; Realtor 2 says the big corporation, if they are paying the rent, has to cooperate. Time passes.  Realtor 1 says, here’s the number to call, Realtor 2, you work it out.Realtor 2 contacts big company, and tenant, explains procedure, and surprise! A trip to the company, application completed, checks cut, tenant moves in. Tenant and Landlord happy. Time passes.  Realtor 1 calls Realtor 2 and asks for commission check, which was already mailed. So…who do you want on your side?  Feel free to comment, I love feedback…and referrals! Rory   (aka Realtor #2)

I used to hear “never quit” all the time when I was growing up…I guess it sunk in, because I tend to stay at things until they are done, sometimes to a fault.  I also have noticed that persistence and the willingness to “never quit” is becoming a rare attribute. I guess it’s easier to just give up or take the easy way out.  Not for me.So I had this client recently, who really needed to sell her house.  Suffice it to say, she, like many of us, is a good person, who fell on tough times. Rather than lose it altogether, she filed Chapt. 13.  Trouble was, she also lost her tenants, which meant she could not keep up with the payments; things were not good at all.  I told her “never quit.”Now, the house was her only asset folks, she had lost everything else, and had believed that she would survive on what was left of the equity in the house when she sold. I had to tell her that was not going to happen; we’d be lucky to get out with enough to pay the bank in this new world of real estate.  We listed it, much lower than she wanted, but realistically.  It got action. People came and looked. Meanwhile, the Bank isn’t getting paid. The Trustee of the Bankruptcy isn’t happy. Stress is the rule of the day. Tears, frustration, anger dominated our conversations.  It was not good at all.  I told her “never quit”.Not too long after it was listed, a buyer came through who loved it.  They made an offer.  It was much lower than the asking price, but with good terms that would get her out of it, if she would accept it. Of course, that was a problem, which I fully understood—this was her end game; the whole enchilada so to speak.  She needed every dollar; and there weren’t going to be that many left.  We talked, I listened, we talked some more. It’s hard to realize that your life’s savings and homestead are going down the drain in front of you, and you really have to let it, in order to move on.  We made the deal; signed the contract, and she was devastated.   I told her “never quit”.Now you’d think that things would get better right? You’d be wrong dear reader. So very wrong.  I won’t go into the inspections, and the need to reduce the price, and write a new contract because the buyer’s bank demanded it. Nor will I tell you all the little things that we had to fix to keep the buyers happy; good thing I was a builder/renovator in my past life!  What I will tell you is that everything gets taken care of, a closing date is set—all we need is a payoff letter from the Bank of America so we can settle up. I soon learned that those three words… Bank of America are the black hole of any real estate deal.And into the hole we went…see,  BoA has systems. Lots of systems. More departments. Lots more people who hate their jobs and the people who call asking questions. Even more people who swear they will help and get right back to you…and never do. People you can never find again! You start all over, but nothing happens.  You want to PAY them. They can’t tell you how much!  Really.  Bank of America. Makes you wonder…and it make you mad. Things are not good, and I tell her “never quit”.  The lawyers are talking now, the buyers want to close, things are getting even more stressful for everyone, and BoA remains eerily silent. Nothing. No calls, no emails, no answers—we are told “don’t call anymore, it starts the system all over again”.  WHAT?  Yup. It seems that everytime we, or the Seller called to inquire as to where the payoff letter was, that call pushed the whole process back to the beginning!!  No logic to it; just their system.  And we bailed these people out with TARP money!  They should be renamed the Bank of UnAmerica.  Sorry, I digress.  The lawyers are discouraged, the Seller is ready to take the bridge, and I will admit, I was beginning to think that maybe this wasn’t meant to be…maybe BoA really wanted her house, and not their money…I mean it is now six weeks we have been asking how much we owe them. Six WEEKS!!! To generate a two page letter…so…I went to internet, I searched blogs, chat rooms(not those kind!), websites, anywhere that BoA came up—and I found a link, hidden in a blog comment that gave me—get ready—a phone number that was supposed to connect me to a real person at BoA…Executive Customer Service.I dialed, it rang, and a person answered!  I explained our plight, he listened, said he couldn’t help—but, he would transfer me to someone who could. And…he did! I got a guy who listened, understood, and told me he would investigate, and call me in 24 hours. OK…this is better than we have had in six weeks-I say fine.  24 hours later, to the minute, he calls! No resolution, but he is working on it. Lawyers, client and buyers notified.  We are hopeful…but not optimistic.To cut to the chase, this one good man at BoA and I spoke for  over a week or more, but no payoff letter. Buyers are ready to walk; to quote Warren Zevon “it ain’t that pretty at all”.  Nope it was dark and ugly.  Never quit, I say to myself.  On February 23 the payoff letter arrives. HOO-HAH!!!  Eh…not so fast big boy.  Letter is only good until 2/28. Have to close Friday2/25 to get the money to them by the 28th. Lawyers rearrange vacations, we’re on…Mother Nature decides 2/25 is a great time for a Nor’easter.  Snow sideways, airports closed, no matter, we’re closing this deal.  Ah…no we’re not. Seems FedEx couldn’t land, money and checks from Buyer’s out of town bank are stuck in the plane—have to be Monday now…this can’t be happening-but it did! We contact BoA tell them what happened, and pray they can live with the payoff being a day late, and we go to the closing.  After almost an eight week delay, papers are signed, checks cut, and we close the deal!!At last,  a happy ending!  Not so fast dear reader, not so fast. It seems that some of  the money had to be sent to BoA, and the rest to the Trustee, who would then send the balance to BoA.  DANGER!! DANGER!! The lawyer is not happy about this, she feels that BoA won’t connect the two amounts,  but off the money goes, and we relax…sort of.  A day goes by, two days, five days, ten days—we are home free…right?  Nope. BoA systems strike out of the blue…actually probably black…Since they didn’t get the payoff in one check, they can’t find the other check from the Trustee, so they advise they have to send the money BACK!  A Bank sending money back??? Can’t be. Oh yes, oh yes it is.This creates true chaos. We try to reason with them. No reasoning. WE have to find the money THEY lost in THEIR system in less than 48 hours.  The lawyer talks to anyone who will listen, the Seller goes off on the Trustee(rightfully so), and I call the one good man again, and beg for his help.  It takes him a day to get back to me; he listens, can’t believe it, and in 3 hours, has it fixed!  He does in three hours what we were trying to do for two days.   Everything that you just read is true, and there was much more that was left out . People’s lives were almost destroyed by a broken, over burdened banking system, people in that system  who didn’t follow directions,  and all that saved the day was persistence by the Seller’s Realtor, and one good man at BoA who cared.  Never quit…Rory

John O’Connor Joins Saratoga Real Property to Assist in Growing Business and Real Estate Consultations BALLSTON SPA, NY:  February 28, 2011 – Rory O’Connor, Broker/Owner of Saratoga Real Property, proudly announces that John M. O’Connor (no relation), a NYS Licensed Associate Real Estate Broker, has joined the company.  John O’Connor was most recently with the Saratoga Springs office of RealtyUSA, where he was best known for consistently producing high-end sales, as well as many sales in all phases of residential real estate. With nineteen years experience, O’Connor has a proven record of being able to adjust to difficult market conditions. Always the optimist, his past customers have generously provided him with many referrals.  Prior to his Real Estate career, John O’Connor was the President of O’Connor Graphics Service, Inc. For more than twenty years, his company provided innovative services to the local printing industry.  O’Connor has owned investment properties, and has managed apartment buildings. He has also provided peace of mind, at an affordable price, for homeowners who do not live in their homes year-round through his separate company, Home Watch Services. John O’Connor is a Saratoga Springs native, fourth generation. He resides in Saratoga Springs with his wife Mary. They have four children and fifteen grandchildren.    An active member of the Saratoga-Wilton Elks Lodge, he has volunteered for many worthwhile activities over the years. He is active in the Elks bowling league and most recently he has served as Acting Secretary for the Lodge. He has also volunteered for the American Red Cross.   John O’Connor can be reached at (518) 573-4859“It’s a challenging time in Real Estate,” says Rory O’Connor, Broker/Owner of Saratoga Real Property.  “This is one of those times in our business where experience and longevity is a significant point of distinction.  We are bringing John on board precisely because of his commitment to his clients and his wealth of knowledge in this business.  We are both problem solvers and are dedicated to helping our clients get this most out of this market.”    About Saratoga Real Property:  Saratoga Real Property is located in the 199 Professional Building, formerly the Masonic Lodge in Ballston Spa, NY.  Owner and developer, Rory O’Connor has restored the building to its former elegance providing affordable, professional office space with amenities. For further information, please call 518-857-6400, visit us on Facebook, or go to the website at www.saratogarealproperty.com and www.199offices.com ContactRory O’ConnorCompany Name: Saratoga Real PropertyPhone: 518 857-6400Website: www.saratogarealproperty.com # # #

So I’m doing my Monday read of the various news sites on Tuesday because of President’s Day, and I come across the same quote from two different experts—and they both include the phase above. I laughed.The market has recovered in many parts of the Country to pre-bubble pricing, according to Moody’s; which would seem to be good news—except, of course, if that pre-bubble number puts you underwater…(see my thoughts on that mess on an earlier blog post).If you are a buyer out there, there are many good deals to be had, if you can get a mortgage. (or don’t need one) For those fortunate folks, skip the rest of this.  But if you are, like most of us dear reader, in need of a loan to buy–stick with me for awhile as we delve into the question…can I get a loan?Well, can you? If you don’t know, I suggest, if you really want to buy, that you go talk to your favorite Banker, or any Banker that makes mortgage loans, if you don’t have a favorite—and ask the question.You won’t get an answer of course, but it’s fun to just ask and watch them try and tell you how it all works.  They may ask you a few basic questions, and may even bless you with the “pre-approval letter”—you’ll feel great, confident that you can get a loan.  Don’t be. You are a long, long way from seeing that happen.Here’s the deal-in today’s world, you, your spouse or significant other, your financial position, credit score, downpayment, house value and appraisal, title, condition and color of your kids’s eyes (only kidding-they really don’t need to know that) will be taken into account by the Bank, before they consider the loan.  And, even then, even if you are squeaky clean credit wise, even if the house is appraised high, even if you put  a big chunk of cash down—it may take months to get through the system.It is more important now to know that your Bank is willing to lend to you, and will—than it is to find the dream house. If you can get the loan are the operative words. Nothing else matters. So-talk to Banks, learn what they want and need from you to consider making a loan. Become “one” with the new rules, become your own advocate, and have your Bank lined up, BEFORE you go out and get excited about the dream house. They will want to know what you are going to buy-give them a price you are comfortable in paying and work with that. Learn all about the hidden costs and fees so you will not be surprised later on.If you can get the loan, then you are ready to call your fave Realtor (hint…who writes this blog?…) and get to work on finding the best deal out there for you. It’s out there, and chances are you’ll be able to buy it, because you can get the loan!

It has been estimated that 6 out of every ten homeowners in this Country are underwater; their home values have dropped below the amount of the mortgage debt they carry.  Now it’s true, that a few years back, many of these folks re-financed, took out home equity loans and maxed out their loan to value, sucking all the inflated equity out of the old homestead, leaving themselves at risk, if the market dropped.Well, it dropped; by some estimates 20% or more, and thus, the need for homeowner underwater breathing apparatus has risen dramatically.  Besides the loss of any equity they may have had, these owners now have some real problems; they cannot re-finance, they will have difficulty selling, as the market doesn’t care they owe more than the house is worth, and renting, although an option, may not cover expenses, and yields no cash going forward. Yikes. This is not good.As you can imagine, this has lead to a variety of strategies in the real estate world; the short sale, the strategic default, deed in lieu of foreclosure, and the ever popular, “just walk away” scenario.  Each may have merit, depending upon the individual circumstance, each has risks, and none is truly a good solution—but let’s look at each briefly, as long as we hare holding our breathe anyway…The “short sale” has been around awhile. Basically, you get a contract on your property; if it is less than what you owe, you present it to the Bank and ask them to accept it, allowing you to sell the house, and move on. You may face a nasty little thing called a “deficiency judgment” however; the Bank can go after you for the spread between what you owe them, and what the sale generates; this can, and should be negotiated as part of any short sale discussion.  The short sale works; your credit rating doesn’t take as bad a hit, and you’re above water.  Homeless perhaps, but breathing air, able to move on with your life.The “strategic default” is a conscious plan to set yourself up financially to be minimally injured when you stop paying your mortgage, eventually forcing the Bank to foreclose on the homestead. This is not a strategy for the faint of heart, and certainly needs professional consultation, lawyer, accountant, tax preparer, all the guys need to be in on this one.  There is a website devoted to this plan, www.youwalkaway.com. I’m not endorsing it by any means, but it is worth a look to see if you have the stomach for, and the need to go this route.In some cases, especially if the Bank feels your home is in an area that values are stable, or will potentially increase, they will entertain a “deed in lieu”, meaning you give them the deed to your home, they accept it, instead of going through the expense of foreclosure.  I’ve seen very few of these actually happen over the years, but in a tight situation, it could be worth a try.Lastly, and becoming more and more common, especially in areas where the depth of the water is deeper, folks just pack up their stuff, and walk away, leaving the keys and deed on the kitchen counter on the way out  the door.  This is simple, but leaves one open to all the bad things credit wise-foreclosure, judgments and the like; but in some cases, that may be the least of the owner’s problems.All of this is the “brave new world” of real estate; things are different, and the wise homeowner does have to accept, if not exactly love, the difficult position they my find themselves in—and make the intelligent decisions necessary to move on with their lives. It also requires professionals in all the disciplines, to assist where necessary. Choose those guys wisely, and beware the fee grubbing parasites out there who will want to take advantage of the situation.  Keep treading water if you can; and let us know if you get tired—we have the expertise to help choose the best lifeboat!  Never quit.Rory

I am in the process of re-doing  my website, when I came across the section on financing, and had to laugh at the words I had on there from a few years back. Things have really changed!!!It was true back then, that getting the money to buy a home was a pretty simple, albeit detailed, task.  You pulled together all your financial info, bank statements, W-2, etc., and found a mortgage broker who would get you a loan with one of many banks seeking new business. At the height of the financing boom, all you really had to do is be breathing, and be able to sign your name. It was the age of  the “’no doc” loan…no documentation needed, sign here! Move into the home of your dreams!Lots of us did that, and the mortgage brokers, banks and Wall Street loved us. We signed, they brokered, and mountains of money was made, property values escalated, and everyone thought it would go on forever. Yeah, right.When it all began to come apart, the Wall Street guys went first, the Feds moved in, “bailout” became the new operative word, and all of those who signed so easily began to see the error of their ways, as introductory rates jumped, and mortgage payments outstripped incomes. It is not over yet.If you want to buy a home in today’s environment, be prepared to be scrutinized at every level. You, your spouse, you job, your prospective new home, everything will be examined under a microscope; the Feds demand it, the Banks do it, and loans are few and far between.  It is one of the primary reasons the housing market has not shown any real signs of recovery, in spite of historically low interest rates.It is a problem of significant proportions, and the impact on both the individual and the Country itself is staggering.  The primary source of wealth building for the average American was the equity built up in their home; it paid for the kids college education, retirement, emergency financial needs…it was the savings account for many a baby boomer, among others. Not any more. I have been in the real estate business for 25 + years, and have seen cycles before, come and go. This folks, is different. This environment requires a level of knowledge and understanding by all parties, buyers, sellers, bankers, appraisers, and underwriters that is unprecedented in this country’s history. The good news is that deals are getting done; people are selling, and buyers are buying. It is just a much, much more involved process. The Realtor’s job in today’s market is infinitely more demanding and requires more knowledge, time and commitment than ever before. Nice advertising and signs, impressive presentations, and expansive marketing proposals are all well and good; but the ability to negotiate with Banks, lawyers and buyers and sellers is the paramount skillset needed today. I believe in home ownership as the bedrock of this County’s economic stability. I believe we will ride this perfect storm of tight money and declining values out, but not without a price tag.  All of us will need to realize that uncontrolled greed, when left unchecked, comes back and takes what is ours.  We need to keep greed in check: if it’s too easy to borrow, it will be certainly be much harder to repay…

If you are considering selling the homestead, or buying a home, “the times, they are a changing”.With the financial meltdown still settling out, both Sellers and Buyers need to realize the game has changed, and so have many of the rules. The first thing to realize its that over 98% of mortgages are now being put through the Federal government operated Fannie Mae and Freddie Mac entities. These are the same guys we bailed out with billions of our hard earned tax dollars; the same guys who actively participated in the “no-doc” junk mortgages that, among other things, caused the system to crash two years ago.Anyway, they now underwrite the majority of loans made by your local friendly lender–and, surprise–they have much more stringent requirements for both Buyer and Seller. Sellers–you may think your property is worth what you are asking, and you may get a contract reflecting that price. However, that doesn’t really mean a done deal. The Bank will employ an appraiser who will determine the value of your property from the Bank’s perspective for financing.Now this was always done in the past; however much more emphasis is now placed upon this valuation. If an appraisal came in “light” before, it was simply a matter of discussing it with the Appraiser, and asking for a number reflecting the contract pricing. Unless it was grossly out of line, the adjustment was done, Bank was happy, and off to closing we go. Not so much now…if the appraisal is lower than the agreed upon contract price, it is now the norm for the Buyer to come up with more money down, or for the Seller to agree take the Bank’s appraised value as the contract sale price. Either way, the Bank is no longer flexible–a direct reaction to the aforementioned junk mortgage catastrophe. Message-Selling? Price it right. Buying? Be prepared to dig deeper if the “dream” house doesn’t appraise.It’s also important to know that the Buyer’s credit history will be much more closely examined; and must also fall into the Fannie/Freddie guidelines, in order to get the mortgage. I’m not going to go into all the numbers and ratios applied here, but trust me; squeaky clean credit is much more important today than ever.Lastly, you need some money in the Bank (or a wealthy relative) to provide the required cash downpayment. Gone are the “no money down” loans, unless you are a Veteran, or active military with a VA certificate. You guys deserve such a break, and should utilize it whenever you can. As for the rest of you, a regular deposit in a savings account each payday will go a long way to making the Bank feel you are a good credit risk. It will also give you the cash needed for your downpayment over time.So…it is said that “everything old is new again”, and so it is with mortgages. Years back, you needed 10-20% down and good credit to buy a home; while the downpayment isn’t quite that much now, yoiu do need money and you do need a decent credit score. Work with professionals; don’t believe the hype on TV and the ‘net; embrace the changes and fear not-your home will sell, and buyers can buy…it just will take working within the “new” parameters. Until next time, shin a”will.Rory

What?? Sorry folks, but the hard truth is that the guaranteed growth in value we all are used to seeing in home values is pretty much over. True, in this area of NYS, we are better off than most, but–we are not immune, and smart homeowners and buyers need to understand this, and what to do about it.First of all, the system is broken. The Banking system collapse has created some very interesting conditions in the real estate markets; some obvious, some rather subtle. Consider this scenario-you live in a nice development, with nice homes, pay your mortgage and taxes, and feel quite secure. The developer, and perhaps some of your neghbors, are not so well off.The developer needs more money to survive, his bank says no. He goes under. Your neighbor loses his job, and his house is foreclosed upon by the bank. Guess what? Your home’s value just took a hit; and you did NOTHING to deserve such a thing! In some areas of the Country, notably NV, AZ, and FL, this has become the norm. People who have paid faithfully find their equity gone, and their property now worth less than they owe–and, because of that, they can’t re-finace, or sell, without taking a loss. They are stuck. It gets better-or really worse. The second “wave” of foreclosures, that is those people who suffer the above scenario, and have to sell or walk away, force the market values even lower, and so it goes, with the Banks ending up owning way too many houses, and  eventually elling them at bargain basement prices, effectively establishing completely new values for the neighborhood. As Warren Zevon wrote…”It ain’t that pretty at all…” What to do?  Good question. Not many good answers, I’m afraid. If you find yourself in a difficult situation, act sooner, rather than later! Time is not your friend when the homestead is at risk. Consult EXPERIENCED professionals-avoid the internet parasites who prey upon anxious homeowners. Look at the BIG picture; and all your options.Your home may not be the cash cow it once was, but it is your home, and with understanding, planning and knowledge, you can navigate these troubled waters.  More to follow on what to do, and how…questions are always welcome rory@saratogarealproperty.com