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Brighton Feels Like 2004

Looking at the Brighton real estate market numbers I feel like I’m time traveling back to 2004.  Not enough inventory!  Instead of anecdotal stories I will give you actual multiple listing service statistics.

In researching the difference in our local Brighton, Brookline and Newton trends versus the National real estate trends, I came across these year-over-year figures for Brighton, and I simply had to share them.

The average time on market for Brighton properties went from 89 days to 45 days comparing March 2011 to March 2012.  Market time has cut in half! Prices are pretty much flat with median home prices going down from $248,000 to $250,000 in the same time frame.  But the number that I find most interesting is the number of active listings on market.  On March 31, 2011 there were 118 homes on market.  On March 31, 2012 there were only 68.  A 42% drop in inventory.

I can go on and on about statistical insignificance of all sorts of numbers the National Association of Realtors provide, and the numbers we real estate agent give to prove a point.  But the drop in Brighton real estate inventory is sufficiently large that it can’t be ignored.

Is everyone sitting on the sidelines waiting for something to happen before they can sell?  It’s happening, folks.  The market is tight; A six week average market time and a lack of inventory sends me back to my early days of real estate, when every new listing was attacked by a mob of first time home buyers.

These days the mobs are smaller, more educated, and less prone to overbidding, but significant changes are underway from the slow, sleepy, depressing market.

Even if you are not buying or selling in Brighton, this information is important to you.  A couple weeks back I wrote about how the Brighton real estate market is a leading indicator of change.  This market is dominated by first time home buyers, who set off a chain of real estate events.

I’m not saying everything is fabulous, only that change is in the air.

Finding the Balance

One of my favorite clients was buying a home with her husband while she was finishing law school, studying for the bar exam, and expecting her first child.  Talk about a stressful time.   It would have all been enough without looking for a new home, but sometimes you just have a lot on your plate and you have to manage it somehow.

Buying a home, especially a first home, is stressful.  And if someone ever doubts the need for a real estate agent to guide a buyer through the process, all I have to do is go through the to-do list of home buying and tally-up the time involved.  Figure out how to incorporate it all into your daily life, while keeping your wits about you, and you got yourself one mess of six months.

Unless you find the right agent.

You know you have the right agent if you feel you’d be more stressed without him or her.  An agent will save you loads of time (and money), and navigate you through all you have to do to become a homeowner.  More importantly, though, an agent should help you find the balance between the stress of change and the joy of it.

If you are buying a home, it means you are going through a major life change.  Even if it is just a first small condo, comparable to the apartment you live in, in the same neighborhood, you are still adopting a new lifestyle.  And like all complex processes, home buying is never free to snags, snafus, bumps, and issues.

So don’t overlook the importance of a real estate agent.  Instead find the right one.  When shopping around for an agent, ask yourself the following:

•    Will this person be helpful in making decisions and be supportive of my decisions?
The right agent will direct you to realistic expectations and help shape your home buying goals.  Then, he or she should enthusiastically assist you in reaching those goals.

•    Does this person make me feel secure and calm, or do I find myself stressed and confused?
Some people have sense of security, and some seem to be confused and overwhelmed.  Both are contagious so be careful.  When the home-buying process will meet its inevitable challenges, find someone who’ll make you feel better, not worse.

•    Does he or she explain things in a way I understand?
A real estate transaction has many subtleties and complexities, but it is not difficult.  You should be able to know what is going on the first time it is explained, it is not brain surgery.   Misunderstandings and confusion are a great source of stress and wasted time.  Ask questions and hire an agent who answers them clearly.

And most importantly, keep your sense of humor.  by Ruth Malkin-Lerner, Senior Sales Associate, Dwell360

How Landlords Save the World

The title of this entry is over-the-top, I admit, but I am just here to stick up for the landlords out there who are trying to do some good.  The word “landlord” in itself has some negativity associated with it, and the use of “lord” in this context is distasteful in our American sensibility.  In media, landlords are portrayed as misers ready to make a buck on the poor and take advantage of families.

Please!

Let me tell you about the landlords, the real estate investors, I know.

First and foremost, there is a commitment to maintain the property and keeping the tenant happy and comfortable, even with the high occupancy rate and the increasing rents.  I am not suggesting any altruism here, but it is cheaper to keep than replace tenants.  It only makes sense that tenants stay for a long-run, and take care of the property, as it is their home. Fostering that environment is essential for positive tenant-landlord relations, which is the relationship you want in between any consumer and supplier.

A rental property is a huge financial commitment and a landlord idiot enough to not take care of it and ensure it’s livability is ill suited for the job.

Yes, there are many terrible landlords out there.  The worse of them are the ones who neglect their properties, fail to keep up with safety codes, and don’t treat their tenants with the respect they deserve.  Just like in any occupation, in any aspect of humanity, there are some bad apples.

For more on tenant-landlord rights in Massachusetts, go to http://www.mass.gov/ago/docs/consumer/landlordtenant073007.pdf

Three Ways to Invest in Real Estate

Investing in real estate can seem overwhelming and reserved for the very rich.  In the current economic conditions and marketplace, it may even feel a bit too risky.  But if you’ve ever thought real estate investing may be right for you, this is a great time to learn about your options and how it can be done by almost anyone.

Before we learn about our options, though, let me say that I believe real estate investing can be a long a cumbersome process if you are new to it.  That is not a bad thing, and I think of a lengthy process as a series of checkpoints that will make me very sure of my decision at the end. But it does mean that you have to have a critical eye, some good research skills and an a greater-than-average supply of patience.  If this sounds like you, then let’s review how you can get into the lucrative business of real estate investing.

Whatever your budget, real estate can be your investment vehicle.

1.  All cash deal.  If you have lots of cash, you may be able to find an investment property in your area and buy it without a mortgage.  The advantage of this is that you will be a highly qualified buyer and you can probably secure a property for a bit of savings over a buyer who has to get a mortgage.  Another advantage of a cash buyer is that her expenses are much lower, as there is no monthly mortgage payment.  This enables her to be more flexible on the rent, giving her more options in choosing tenants.

The disadvantage of an all cash deal is that it is not taking advantage of very low mortgage rates.  Borrowing is pretty cheap, and if all your cash is in one place, you can’t use it elsewhere.  Leverage is a real estate investor’s friend.

2. Part cash, part mortgage.  The down payment minimum is 20-30%, depending on various circumstances and your financial qualifications.  My rule of thumb is that you should make money, or at least break even, with this kind of down payment.  If you lose money on a monthly basis, the property is not worth the price, (at least not not for an investor). Your mortgage payments, any association fees and taxes should be covered by the rent.

The advantage here is that you’ll be taking advantage of the cheap borrowing costs, and you’ll own a property with an income without the whole cash outlay.

The disadvantage is, obviously, the cost of borrowing money and the higher cost due to your mortgage payment – same as the mortgage on your home.

3. Pool of investors with little cash.  Gather a few friends and family, and pool your money together to buy one property.  It can even be a small property at first, but at least get into the market.  If ten friends get together with $15,000 each…you do the math.  The advantage is that you are in the real estate market, getting a piece of the pie, however small.  It is a start, or a great single investment you have.  You can hire a real estate broker and an attorney to help maybe for a stake in the property instead of commission and fees.

The disadvantage is finding like-minded individuals and putting it all together in a legally binding agreement.  To me, this is just a bit of leg-work, and not so much a disadvantage, but it does add to the complexity of the transaction.

Entering the real estate market as an investor is not simple at first, but once you are in, it gets easier and easier.  If you’ve ever considered investing in real estate, this is a great time to get in.  Just choose your strategy and do it!

Top Three Reasons Why Property Investment Is King

No one wants to hear this, but I’m saying it anyway.  Real estate is the best long-term financial investment.  Phew…that’s a relief.

With the real estate market in the dumps for several years now, it is not easy to get back into the pro-property mind-set.  But, it is exactly at these times that you should be considering expanding your real estate portfolio.

One reason I know this is because while the real estate market is dragging in most of the country, it is dominated by the professional real estate investors.  Don’t you want to learn a lesson or two from them?

The professional investor loves real estate above all other investments.  There are three main reasons for this.

First, real estate investing can come in many forms, just like any other investments.  There are small condos, multi-family buildings, commercial, residential, mixed use properties, different towns, neighborhoods, etc.  For every budget, preference and style, there is an investment instrument.

Second, real estate has a certain tangible value that you just don’t see in other investments.  Property investors love that there is an asset they can visit, fix and maintain.  There is a satisfaction in knowing that you have some control and responsibility in the relative value of the property.

Third, although real estate is illiquid – meaning it takes relatively a lot of time and effort to sell it – it is a versatile investment.  You can hold it, or resell it when the market turns your way. You can do extensive renovations and have a quick resell, or you can hold it with tenants for years to come.  Whatever it is, you have options and you can make decisions based on the best scenarios for your needs and the market conditions.

All of this assumes that you have sufficient funds for a down payment and that your expenses on the property are covered.  The major drawback in investment real estate are the unavoidable expenses in maintaining it and the difficulty of selling it if you need the cash.

But this said, it may be time to consider an investment property, especially in such a critical time in the market.  Opportunities and possibilities are present, and real estate investing can be a perfect fit for long-term financial goals.

The Strategy for Home Hunting Without Fear

As any daredevil, extreme sports addict or adrenaline junkie knows, well-grounded preparation for the specific task at hand is what takes the fear out of trying.

The sometimes risky sport of home buying is no different.

Those who’ve suffered the agony of defeat in what’s likely the most dangerous consumer game, learned the hard way that sheer fearlessness isn’t enough to become and remain a homeowner — through good times and bad.

With the rules of the housing game changed forever, preparing to just squeak by the home buying ordeal isn’t enough to achieve a decisive and lasting victory.

The idea isn’t just to buy a home. The goal is to keep your own roof over your head.

Preparation is key, according to the National Association of Realtors (NAR).

From NAR, here’s how to get ready to be and remain a homeowner.

•  Create a wish list. Write down housing wants and needs. Include all the physical characteristics you want or need. Include style, size, layout and room configuration. Look at the number of bedrooms and bathrooms, and the basic amenities you must have. Include critical features such as location and services and a home’s proximity to good schools or public transportation lines.
•  Browse for housing. Realtor.com and other Web sites offer home valuation features and neighborhood data on trends in local markets. Use features to determine how a listing compares with nearby, comparable properties in terms of value, actual sales prices, home features, neighborhood characteristics, and more.
•  Work with an expert. Finding a professional real estate agent who will represent your best interests can make the difference in location, negotiating the best offer, and closing the home of your dreams. Look for a full time real estate agent, who has uploaded telling photos and videos of their listings and look for agents with good Web sites to market your listing.
•  Get the complete picture before you visit. You can’t know everything about a community from an online listing. Schools, crime, and proximity to shopping and work all impact property values. NAR says talk to a Realtor and go to Realtor.com to explore communities.
•  Make sure the property details are reliable. Buyers need know when a listing has experienced a price change. Look for Web sites like Realtor.com that updates listings frequently, including price changes. Fresh and reliable information is critical. Realtor.com time stamps listings to help buyers make better informed decisions. Get email alerts and stay on top of changes so you can be first to act.

Written by Broderick Perkins

Three Reasons Home Sellers Should Decline An Offer….Even in a Buyer’s Market

Home sellers are reluctant to say no to offers these days.  The fear of losing a buyer overwhelms the reasoning behind selling in the first place.  In such a strong buyer’s market, it is very common to find a home seller ready to take imperfect offers and risky buyers.

There are three reasons, though, that should have any home seller rethinking an offer to purchase:

Reason #1 to decline an offer: The closing date is inconvenient.  Sometimes home sellers don’t think long and hard enough about the closing date in the offer to purchase.  This is a very important date and it can’t be easily renegotiated at a later time.  Don’t underestimate the importance of carefully considering when you will be ready to close.

What will you have to do before the closing date?  Usually you will want to wait until the buyer has funding for the home, so that means you want to look at the time between the mortgage contingency expiration and the closing date to assess if this is enough time for you to pack and move.  If the buyer is denied a mortgage, you will be going back on market, and it is most often best to leave the home in showing condition, rather then empty.  So don’t pack too early.

Ask yourself, do I have where to go?  How long will it take me to pack?  Does this closing coincide well with any work commitments or vacations coming up?  How does this fit into the school year?  If these things are not in place or worked through somehow BEFORE you make a commitment to the buyer, you can end up wasting lot of time and money trying to move out of the home while leaving your life in tact.

Reason #2 to decline an offer: The buyer is risky.  This is a big one!!!  Many buyers are risky these days.  There are few things more frustrating to both the home seller and the listing agent than to go through negotiations, an inspection, planning a move, etc, to find out that the buyer is denied funding.  This is happening more often than ever.  Ask your agent the following questions: Has the buyer been pre-approved?  Is the pre-approval from a reputable financial institution?  How much down payment does the buyer have?

If you are selling a condo, this is even trickier.  Many buildings are not approved for FHA loans, which means buyers with a low down payment are rejected for a mortgage.  Your agent must know ahead of time if the building is FHA approved, and if not, ensure no buyer who needs FHA backing is even considered.

Reason #3 to decline and offer: Too little money.  Honestly, in this market, home seller disappointment in the final sale price is a common occurrence.  But this does not mean you just take whatever you get.  You and your agent must know what has recently sold in the area, what the most you can expect for the home, and not expect much less than that.  If you home has major faults, don’t deny it and be realistic about the price.  Expect a fair market price, and the buyer should expect to pay it.

All these reasons for a home seller to decline an offer to purchase, even in a buyer’s market, represent the most important elements of an offer.  The price, closing date and risk level of the buyer should all be discuss and well considered.  Most often, when you decline an offer, you should think about a counter offer and hope to reach an agreement.  A flat out “No” can mean the end of a deal that could have come together.  But, as a home seller, you should be realistic about the market while maintaining your confidence in yourself and your home.

Have you gotten some low-ball offers lately?  How did you handle them?

People Love Their Homes, Now It’s Your Turn

My clients often ask me, “is it a good time to buy / sell?”  My reply is usually the same, “It depends on your needs.”

Buying and selling homes is a major life decision first, and an investment second.  Most often my advice to my clients is to follow their plans and do what they need to do in order to live where they want to be and in a home which meets their need.

Usually this is the case.  But things have been different the past few years and the decision making of home buying and selling different.  I found myself advising many clients against selling homes a couple years ago – unless a major move was necessary and holding on to the property impossible.

As for buyers, I’ve never stopped encouraging home ownership.  Some may say that as a real estate agent that is self-serving advice, but I stand by it, even today.  Here is why.

The recent “Allstate-National Journal Heartland Monitor Poll: The American Dream” revealed that nearly 90% homeowners say they would buy their same homes again.
Even those home owners who’s home lost value agree!  Still, almost nine of ten of them would still make the same home ownership decision, and buy the same home.

Buying a home is a long-term investment, and most people really love their homes.  The process of choosing a home can be sufficiently elaborate that you are almost assured a home with which you’ll be happy for a long time.  The alternative is renting, which is money you are guaranteed to never see again.  People understand this, even in this challenging real estate market.

This Spring, my advice to buyers remains a firm BUY!  In fact, it is a golden opportunity for buyers this season.  Between the low home prices and the very low mortgage rates, your affordability as a buyer goes way up.

Chief Economist of the National Association of Realtors, Lawrence Yun, says, “Housing affordability conditions have been at record levels and the economy has been improving.”  He does remain cautious, though as the housing market has some problems.

Between the tight credit and strict appraisals, you may run into some bumps along the road of a home purchase.  So start your home purchase well ahead of your moving schedule (if you have one), in case you have to cancel a transaction and look for a new property.  Furthermore, have you pre-approval ready from your mortgage lender so you know how much you can afford and avoid disappointments later.

Go confidently in the direction of home ownership.  You’ll love it!

Spring Into Action and Become a Homeowner

Can you believe that people still believe that buying a home is a great way to invest your money long term?  Even in these economic conditions?

A recent study shows that almost 9 out of 10 homeowners would buy the same home again!  And 7 out of 10 Americans would tell a friend to buy a home.

How come people are still so keen on homeownership with all the mess we’ve been through in the past two years?

Well, although no one is suffering from excessive optimism or cheerfulness about the economy or housing market in general, we still need a home to live in.  Over the long run, buying a home has proven as a sound investment.

Now is the best time to buy!  As a buyer, you will have many advantages this Spring:

1. You’ll have lots of choices.  Go out there and see for yourself what’s there to offer.  Make a list of great homes with your agent, and enjoy the choices and options.
2. Interest rates are so low, prices have sunk, so housing affordability is way up.  You may be able to afford more home than what you thought!
3. If you can get a mortgage, show off that pre-approval! A strong pre-approval from a reputable lender is gold. Got cash, well, expect some serious buyer super powers.

It is not all rosie out there.  This country, and some areas more than others, are suffering and going through economic turmoil.  And the lending institutions are now overly cautious.

There are two pitfalls to watch for during your purchase, once you find a home.  First, make sure to follow all the lenders’ guidelines and requests.  Credit is tight!

Second, ask to see the appraisal on the home you choose.   The bank’s appraisal may come in lower than the price negotiated, which can kill the deal.  A smart agent may be able to save the day with some renegotiation of the price in your favor.

So get out there, search around for your home, the market is waiting for you.  Just watch your step.

What kind of home do you want?  Where are you looking?