The Town Broker

Archive for March, 2010

Pricing Your Home For Sale: The 5% Rule

Pricing your home correctly so that you get a sale (and don’t sit on the market forever), is one of the most important skills that a professional Realtor can offer. I met a seller in Westfield the other day who was selling his home on his own (For Sale by Owner). It is a terrific house… well maintained, and in a desirable neighborhood. I asked him how he came up with his asking price. He assured me that he kept a close eye on recent sales in his neighborhood, and that he knew the likely selling price for his home. Incidentally, I though his target price was correct.  But then he shared how he came up with his marketing price, and that’s where things got problematic…

He told me that he knows many buyers in today’s market look to negotiate a hard bargain. He simply added a 15% cushion to what he thought was the correct sale price. This way, he’d have room to negotiate.

On the surface, I understand his logic. Unfortunately, the numbers aren’t on his side. The surprising truth is that you can actually get MORE for the sale of your home by asking LESS for it. Let me explain…

Pricing Within 5% Improves Sales Outcomes

While it’s true that buyers today are looking for a bargain, they also recognize value when they see it. Homes that are priced correctly (within 5% of the final selling price) can disappear fast…often with multiple bids (yes, even in this market). But with inventory levels up in much of our market area, buyers can be picky. If they think the price is too high, they’ll simply wait for a price correction. And if sellers wait too long to get it right (more than 30 – 45 days), the market will simply pass them by. The end result is that their price improvement will need to be pretty dramatic in order to catch the buyer’s interest again…bigger in fact, than it probably needed to be.

Still not convinced? Then check out these numbers: Read the rest of this entry »

Tags: 5% Rule, Home For Sale, Home Pricing, List to sale ratio, LP/SP

A Westfield Tribute to Charles Addams

They’re creepy and their kooky, mysterious and spooky. They’re all together ooky. But to those of us in Westfield, hey…they’re family!

Do you remember these words to the theme song from the 1960’s TV sitcom The Addams Family? (OK… so maybe I’m giving away my age.) But I remember watching this show as a kid. Then, in the 1990’s, there was the movie. And now in 2010, a new Broadway musical is about to open starring Nathan Lane and Bebe Neuwirth! And all of this is the inspiration of Westfield’s very own native cartoonist, Charles Addams.

“A Is For Addams” Tribute Scheduled

A very special local tribute is going to be paid in town to Charles Addams on Monday, April 5th beginning at  1pm. Members of the Westfield Board of Education, The Downtown Westfield Corporation, The Westfield Historical Society and The Charles Addams Art Scholarship will unveil six large wooden letters that spell out the name ADDAMS. Each of the letters will be decorated by the children in the Westfield school system.

Mr. Addams was an artist for The New Yorker Magazine. A Westfield native and 1929 graduate of  Westfield High School, he drew over 1,500 cartoons. Some of these drawings were the inspiration for The Addams Family. According to his Wikkipedia page:

“That house at 552 Elm Street (now a local landmark), and another on Dudley Avenue that police once caught him breaking into, are said to be the inspiration for the Addams Family mansion in his cartoons. He was fond of visiting the Presbyterian Cemetery on Mountain Avenue. One friend said of him, “His sense of humor was a little different from everybody else’s”.

Addams died in 1988, but his legacy lives on. The “A Is For Addams” event is a celebration of Mr. Addams life, and a recognition of what a terrific artist he was!

For more information about the event, contact: Ron MacCloskey, founder of The Charles Addams Art Scholarship, at 732-925-6089 (cell).

Tags: Addams Family, Charles Addams, Westfield

Now This Could REALLY Be A Game Changer…

Earlier today, I was showing homes for sale in Union and Essex Counties. I have an investor looking to buy, and there are some really good opportunities out there at the moment. The sad part is that these were ALL distressed properties…bank owned or pre-foreclosure.

Now you might remember that only yesterday I posted a story saying that distressed property sales were not as big a problem in NJ as in other states. I even went so far as to say that in some Union County towns, there weren’t enough out there to have a significant impact on home values.

I still stand by that claim. But in several Essex and Union County communities there ARE distressed properties…LOTS of them. I learned a long time ago that there is a story behind each of these homes. In most cases, distressed property sales are the result of decent, hard working people, who met with an unfortunate twist of fate (can anyone say unemployment?!)

As I drove home, I listened to the evening news on the radio. This story really caught my attention. Bank of America announced a bold new plan today to not only modify troubled mortgages, but in some cases, FORGIVE some of the mortgage principle.

Mortgage Debt Forgiveness Could Be A Game Changer.

At the moment, the program is limited in scope. It’s only being offered to borrowers who received loans from Countrywide Financial, the biggest and one of the most aggressive lenders during the housing boom. (Incidentally, Bank of America bought Countrywide in 2008.) But this is one of the first programs I’ve heard  Read the rest of this entry »

Tags: bank of america, Foreclosure, mortgage debt relief

Are Foreclosures Hurting YOUR Property Value?

We’ve all read about the growing number of foreclosed properties out there. According to the Mortgage Bankers Association (MBA), one in 10 borrowers is seriously delinquent on their mortgage, up from one in 16 borrowers a year ago, and one in 33 two years ago. Increasingly, I’m being asked whether or not all these distressed properties are having a negative impact upon existing home values here in Westfield and our surrounding Union County towns. The short answer is…maybe. It all depends on where you live.

Union County Foreclosure Levels Among The Highest In The State.

It’s important to understand that while foreclosures are a big problem nationally, they are not as common here in New Jersey. Nationally, over 50 percent of all foreclosures are concentrated in only 4 states… California, Florida, Michigan and Illinois.  NJ ranks only 39th out of all 50 states in total reported foreclosures. That’s the good news. But their numbers are growing here in NJ, and a large number of distressed property sales CAN pull down the value of neighboring homes. That’s the bad news.

According to Realty Trac, the nation’s largest provider of foreclosure information, Union County ranks 3rd highest in terms of NJ’s reported foreclosures…behind only Essex and Ocean Counties. That number concerns me. But the number of new filings varies dramatically across all Union County towns.

Realty Trac Heat Map

Realty Trac also maintains this “heat map”. The map shows the concentration of new foreclosure filings for the month of February, 2010. What you see here is that new filings are ABOVE THE COUNTY AVERAGE in some towns, but SIGNIFICANTLY LOWER in others. In the towns with the highest concentrations, I’m seeing property values suffer. In towns wil the lowest levels, I’m not seeing any significant impact.

The Take-Away

Depending on where in Union County you live, foreclosures may or may not have a negative impact your property value. If you have a question about a specific property, feel free to contact me. I’d be happy to provide a price opinion for you.

Tags: Foreclosure, Realty Trac, Union County, Westfield

Westfield Residents Offer Disaster Relief

I have to admit, I really didn’t expect last weekend’s nor’easter to be as bad as it was here in NJ. In fact, we threw a 50th Anniversary party for my folks in the middle of the storm! (Who knew we’d need to plan a rain date?!) Many of our friends and neighbors suffered terrific property damage due to the high winds and flooding. But as I walked around the yard gathering fallen branches, I started thinking about the people of Haiti and Chile. Now that’s a clean-up job!! I honestly can’t remember a time in my life when I’ve witnessed so many serious storms and natural disasters, all coming so close together.  All in all, we’re still pretty lucky.

Westfield Residents Continue Their Support in Haiti and Chile

One of the things that makes our communities so great, is the character and heart of our neighbors. When devastating earthquakes ravaged Haiti in January of this year, many local residents immediately stepped up to help.  But life marches on, and it’s easy for us to forget how many people still need our help all around the world…

With this in mind, members of The Presbyterian Church in Westfield are gathering items to make Hygiene Kits for Haiti and Chile. Items will be gathered locally, and with the assistance of the Presbyterian Disaster Assistance, will be distributed to victims of crisis and natural disasters in both Haiti and Chile.

Many of the needed items are things that we have buried in our linen closets. Or, if we travel for business, we get more of these items than we could use on every trip. Please consider making a donation of the essential items to help those less fortunate than ourselves around the world.

Over the course of the next four weeks, items will be collected according to the schedule below:

• March 21- Nail clippers (no metal files or emery boards please)
• March 28-Wide tooth combs and band aids
• April 4- Toothbrushes in original packages
• April 11-Washcloths and Hand Towels

Donations can be brought to the church each Sunday, and placed in one of the bins located in the narthex or Parish House. A collection box is also located in the mailroom for donations made during the week. If it would be easier for you, simply contact me and I’ll come by your house and pick up your donations.

At the end of the collection period, members of the church will assemble the kits and send them on their way.

The Presbyterian Church in Westfield is located at 140 Mountain Avenue, Westfield, NJ. 908-233-3424.

Tags: Chile, Disaster relief, Haiti, neighbors, Presbyterian Church, volunteers, Westfield

Census 2010: Why Being Counted, Counts!

I recieved by 2010 Census form in the mail this week. You probably did too. I’ll be taking the time to complete it and mail it back this this weekend, and I’m encouraging you to do the same. Why is this so important?

Now, More Than Ever Before…NJ Needs An Accurate Census Count.

I don’t know about you, but I’ve been pretty alarmed by the recently announced cutbacks in our state budget. One way to address this is to be absolutely certain that we’re getting all the federal dollars that we’re entitled to. I learned this week that NJ gets back 50 cents for every dollar we send to Washington.  OUCH!

The census will help determine how over $400 Billion in federal dollars are allocated. This money is used to pay for things like:

• Hospitals
• Schools
• Senior Centers
• Community Centers
• Emergency Services
• Bridges and Public Works Projects.

In my own industry, buyers and sellers rely heavily on the community demographics provided by the census when making real estate decisions.

Now, more than ever before, NJ residents need to be sure that we get our fair share back from Washington. So this weekend, take 10 minutes to complete the 2010 census form, and send it back.  We’re counting on you!

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Tags: Census, real estate statistics, Westfield

Home Affordability: Are We There Yet?

I was speaking to some Westfield neighbors the other day about the roller coaster ride we’ve experienced in our local housing market over the past 10 years.  We were all excited on the ride up as our home values climbed to unimaginable heights.  And, we all became a bit nauseous as they hurtled back down again.  You know what they say…”what goes up must come down”. I guess somewhere inside we all knew that this would be no exception.

But the question on everyone’s mind that day was simple: are we there yet? My answer was “I think we’re close. It all comes down to affordability.”

Housing Affordability Drives The Market

Affordability has always been the key driver in housing. When home prices go beyond what people can afford, they come back down. Simple, right?  But what people can afford is a complicated mix of: 1) how much money they have, 2) how much money they can borrow, and 3) how emotionally comfortable they are about going into debt.

The National Association of Realtors tracks what’s known as the Housing Affordability Index (HAI). The index measures whether or not a median income family could qualify for a mortgage loan on a median priced home. (The calculations assume a 20% down-payment, and a qualifying ratio of 25%. This means that the total principal + interest payment can not exceed 25% of the borrower’s monthly income.) An index value of 100 means that the median income family has exactly the income and resources needed to qualify for a mortgage on the median priced home. A higher score means that they have more than enough resources while a lower score shows not enough.

The most recent HAI shows a national index score of 177.8%. This is the highest it’s been in a while. However the lowest score was in the northeast which posted a modest 131.4%.  According to NJ market expert Jeffrey Otteau (President of the Otteau Valuation Group), NJ’s affordability index typically hovers somewhere between 120% – 140%. But at the end of 2009, NJ posted an affordability index level of only 109%. (I guess the good news is that this is UP from a mere 81% in 2006.)  OK…these numbers hurt my head. What does it all mean?

I think it means that housing affordability is coming back in NJ, but we’re not quite there yet. There will still be some towns where prices will continue to decline. Others will level off and hold their own throughout 2010. (Incidentally, I think Westfield and many of the surrounding towns fall into the later camp).

But our journey back into affordability is fragile. There are several key things that could significantly alter the affordability equation. These include:

1. Rising mortgage interest rates,
2. Tight(er) credit qualification standards,
3. Decreased consumer demand as tax incentive programs expire,
4. Increasing inventory levels (if more distressed properties come into the market, OR  sellers who gave up in recent years decide to come into the market now),
5. Consumer Anxiety (aka “I’m still worried about losing my JOB” anxiety).

The recently announced State budget cuts will also factor into the discussion, although it’s too soon to say exactly how. Will buyers continue to pay current market prices in a town that anticipates cutbacks in services or school programs?

So…are we there yet? I think we’re close, but affordability will remain an important issue in NJ for many years to come. Stay tuned…I’ll keep you posted.

Tags: home affordability, home prices, Housing Affordability Index, Westfield

Why “Exclusive Listings” Are A Sucker’s Bet!

(Yeah…I’m probably going to take some heat from a few of my colleagues over this post, but so be it.)

I’m seeing a trend in the Westfield area real estate market that really irks me. There are some brokers who routinely make new listings “exclusive” for a period of time, ranging from a few days to a few weeks. What is an EXCLUSIVE LISTING? It’s a listing that isn’t being fully exposed to the marketplace, in the hope that the broker can sell it to one of their “in-house buyers”.

Putting The Broker’s Interest First.

Now I understand that there are a few circumstances where clients don’t want to go “public” with their listing. Perhaps they have some celebrity status. Maybe their property is notorious for one reason or another and the seller simply doesn’t want to deal with curiosity seekers. Keeping the listing exclusive allows for more limits and better control. I get that. But is this really what’s happening in the majority of cases? I have my doubts…

Hey…I’ve managed a real estate sales office myself.  I know the impact to the bottom line if we can generate fees on both side of the transaction. But this rarely works out well for the seller, and requires the brokerage to engage in the controversial practice of dual agency (which is a post for a different day).  Simply put…when a seller limits the pool of potential buyers to those of a single brokerage company, there is by definition a reduced demand (regardless of what market share they claim). Reduced demand leads to less market urgency, and purchase offers that are not necessarily the best that the market could deliver. I don’t believe this is the best course of action for anyone acting as a  fiduciary. (Incidentally, some companies require that sellers sign a consent form acknowledging that they understand this, and are choosing to be an exclusive listing anyway.)   The sad part is that the seller never really knows how much money they could be leaving on the table.

Why Would A Seller Choose To Be Exclusive?

Being exclusive sound like you’re being treated special, doesn’t it?! But unfortunately, I have heard from numerous sellers who either don’t know that their listing was being withheld from the market in this way, or they didn’t fully understand the implications. That’s not special…that stinks! Our job is to fully expose our listings to the market. Full market exposure provides better outcomes for the seller. Anything less is a sucker’s bet!

Aren’t the sellers the ones we’re supposed to be looking out for anyway?

Tags: dual agency, exclusive listing, fiduciary duty, responsibilities to clients, Westfield real estate

Spring Ahead Into Home Safety!

Yup…it’s that that time again! Daylight savings time officially begins at 2am on Sunday, March 14th. As someone who is probably more of a night owl, I don’t really love losing the hour of sleep. But… the extra evening daylight is a wonderful treat! (More time to explore some of our local parks and attractions!)

Hopefully, when you set your clocks ahead this weekend, you’ll remember to change the batteries in your smoke and carbon monoxide detectors. It’s not a bad idea to use this time to review what your family would do if there REALLY WAS a fire. (When I was a kid, we all knew the escape route from our bedroom in case of fire, and we knew where to meet other family members outside).

But here’s a question for you: When was the last time you replaced the smoke or carbon monoxide detector?

Most smoke detectors are designed to last about 8 – 10 years. Carbon monoxide detectors commonly last about 5 years. If you don’t know how old your units are, then you should probably just go ahead and replace them this weekend. They’re cheap…your family is irreplaceable.

I recommend that you write the installation date in the battery compartment. This way, you’ll always know when it’s time to swap them out.

Happy daylight savings time everyone! Enjoy the longer days!!!

Tags: carbon monoxide detector, daylight savings time, fire safety, smoke detector, Union County, Westfield

Affordable Housing in Union County: Who Should Decide?

I think we can all agree….NJ housing is expensive. As a real estate broker, I see how hard it is for individuals and families to come up with down-payments for a home purchase. And many of us know folks who are struggling to make their mortgage payments during these hard economic times.

While home values in Union County have declined substantially in recent years, it is still a very expensive place to live. Our local towns struggle with ways to provide affordable housing to residents. Recently, Cranford NJ faced a “builders remedy lawsuit” in which a Paramus- based developer sued for the right to build a large housing complex in excess of what the town seemed prepared to approve. Stating that Cranford had “not met its obligation to affordable housing”, the suit proposed the construction of hundreds of new residential units in the Township.

NJ Council On Affordable Housing (COAH)

NJ’s Council On Affordable Housing (COAH) is the State agency responsible for establishing and monitoring municipal affordable housing obligations in New Jersey. The organization’s mission statement reads as follows:

At first blush, the goals of the Council seem admirable enough. But it has come under severe criticism through the years, and was even sued by a group of municipalilities which challenged the State regulations. The local leaders maintained that while they support affordable Read the rest of this entry »

Tags: affordable housing, COAH, Home Rule, Union County