In the wake of the 'Great Recession', many homeowners were left with homes that were no longer worth the mortgage they paid for the home. For example, if you paid $500,000 for your home (Home 1) with a $400,000 mortgage, and Home 1 is now worth only $300,000, you are 'underwater'. With so many underwater homes, the number of short sales increased dramatically in the past 5-8 years, to the chagrin of many homeowners in neighborhoods where property values were effected. No neighborhood was safe from this, and consequently, short sale and foreclosure prices met market value (so many of these sales caused regular prices to factor in these distressed prices) and there were no longer 'good deals'. These sales became a burden, instead of an opportunity.
Here in 2016/2017, now that less foreclosure inventory is coming on the market, and short sales are no longer 50% of all sales, the market has improved greatly. However, there are still many homeowners waiting on the sidelines to sell, but don't want to risk their credit to unload their property (by using a short sale option).
Disclaimer: I am not an attorney nor a mortgage broker. Please seek professional advice before taking action on what I write. Or call me, I'll hook you up with the right professionals.
I don't like to think that I have neglected buyers in these posts, but I want to set the record straight - you are important to me too!
A lot of times, a new buyer comes into my life with no experience with the process of buying a home. I love to answer questions, and discuss what this process entails, but I want to do it justice through a general, but concise blog post about some of the ins and the outs. Keep in mind, this is meant for all buyers, as it is a dissection of the process of purchasing a home. Also know that there are many other aspects to this process, so I will do my best to write additional posts in more detail in the future.
There is an air of mystery surrounding real estate financing, and there shouldn't be. This process needs to be as transparent as possible, especially when there are so many misconceptions about requirements, and the process. Imagine a world where you could put less than 5% down on a property…...would you have enough cash to buy something then?
The 20% Requirement Myth
Let's discuss the 20% requirement for a down payment. As you can imagine, 20% down can be a lot of money, especially in the area surrounding Fairfield County, CT. For a $400,000 home, $80,000 tends to break the bank, and that is just the median price in Norwalk, with other surrounding towns having double, triple, or more of that median. The conversation then changes to, "What can I afford to rent?"
Rent or Buy, that is the question...and an unfortunate one at that. Renting is often times a necessity, given the state of your credit, your personal situation, or yes, your financial situation. But many times, buyers choose to rent instead of buy, because of the 20% myth. I am a firm believer that if you rent, and thus pay the mortgage of someone else, your money is going down the drain, never to be seen again.
Even more striking, is that you can probably pay FAR less in a mortgage than you would with a rent payment, especially with the competitive climate of rental properties in this NYC suburb.
What Are the Alternatives?
Since the 2007/2008 financial crisis that surrounded the financial sector, but was caused by faulty practices in the real estate world, banks and lenders have done what they can to reinvigorate the rate of home-ownership we saw prior to this time. This included things like the $8000 credit to first-time homebuyers in 2010/2011, and the reduction of interest rates to spur growth (by the Federal Reserve).
More recently, lenders have created Fannie and Freddie-backed products that have taken the huge down-payment requirements and minimized those in order to give more options to would-be homeowners. Fannie Mae recently introduced their Homeready program that is available to first-time home buyers with only a 3% down payment requirement. And that is where the 20% Requirement Myth goes to die.
As recently as last week, I have had buyers using the FHA program, which is a government program that insures your loan, while allowing you to put 3.5% down. The credit requirements are also a bit lower than the conventional loans of 20%. As with all loans under 20% down-payment, there is a requirement for an insurance premium that is attached to the loan, but paying this extra few hundred dollars destroys the idea of paying another person’s mortgage when you rent.
Going even further, an exciting, old program (but unknown) for first-time Connecticut home buyers is called CHFA (Connecticut Housing Finance Authority). The State of Connecticut sells tax free bonds and lends the money in low interest rate residential mortgages. I have had buyers use this program to put 0% down and finance the down payment in the process. This program has a host of Assistance and Voucher Program for all sorts of professions and situations – making it even more valuable for Teachers, Veterans, and those requiring Down payment Assistance (and more). CHFA is targeted to first-time homebuyers within certain income limits depending on the property’s location. In certain “targeted areas” buyers don’t have to be first timers or be within the income limits.
How Do I Learn More?
As you know, I am a Real Estate expert, not a mortgage financing expert. I have limited knowledge in this area, but enough to be of value. However, I have a team of experts around me that are ready to step in and help make this happen. In this case, you could ask a bank, and get left with a rough process resulting in frustration – or you can work with someone from a company that gives you some reassurance, that results in responsiveness.
That is where my go-to mortgage banker comes in – Ken Csehak. He works with a company called PHH Home Loans, and has done my mortgages, and worked with the majority of my clients. He is the person who educates me about these programs. To reach him, call him at 203.394.2688 or email him at Kenneth.Csehak@phhhomeloansne.com. Don't forget to mention me!
Whenever a client, friend, or family member asks me about real estate, the FIRST tool that I give them as a value-added resource, is Listingbook.
How does it work?
Listingbook has been around for many years. The company made the wise decision to work directly with local MLSs (Multiple Listing Services) throughout the country, giving them direct database access. In other words, when a Realtor changes the status of their listing on the MLS (usually the first place they change anything), it is automatically updated on Listingbook. This highly contested real estate content is restricted from Zillow, Trulia, and Realtor.com (not to mention most other sites).
Listingbook is not exclusive to Norwalk and Fairfield County, CT. It is something that spans many different MLSs throughout the country.
What is Listingbook?
In addition to acting as a database, Listingbook is so much more. I call it a comprehensive search tool - and they specialize in just that, search and everything associated with it. The user (or a Realtor's client), will use this software to create an account that they can then set their ideal search criteria, which is saved. From there, they can seek new property, view past sales of property, and then save their favorites, or eliminate the 'rejects'. The user can also write notes on each property, which can then be viewed by the Realtor. This can be described as a communication tool, as much as a search tool, specifically for real estate transactions.
Probably the most underrated feature is the ability to receive daily updates in your search criteria, making you the expert on what you are looking for. This power makes the client more timely on new listings that the Realtor (unless they look at new changes to the market every hour).
On the Realtor end of the product, we can see what the client is looking at. This makes it easier to make appointments to view properties, allows the Realtor to do additional due diligence, knowing what the buyer is looking at, and has many other benefits.
Great For Sellers Too!
Additionally, though the tool is intended for buyers, it can also provide value to sellers. In this case, a seller can use this tool to follow the market as they try to sell their home, or in advance of doing so. The knowledge they gain, allows them to make more informed decisions when putting their home on the market. The more familiar a seller is with the market, the easier it is for the Realtor to do their job, and get the home SOLD.
In the context of real estate, the Credit Score is a make-or-break factor when it comes to qualifying for financing for a home, or other purchase. Typically, I tell buyers and sellers to be prepared 6 months or more in advance, but when it comes to fixing your credit, a couple of years might be required. Let's talk about credit:
The past five years for the spring market in Lower Fairfield County has been consistent until this year. The past few years have seen everything selling. This spring has been somewhat of an outlier, with certain price points moving, and others sitting stagnant, with few exceptions.
In this case, the New Canaan, Darien, Wilton markets have been unusually stagnant, where usually these are the markets most desired by buyers, if they are able to afford them. My opinion is that buyers are out there, but the inventory is so vast that finding the right home, priced well, is out of reach. Westport on the other hand is becoming more and more like New Canaan was, where everyone wants to get into this market.
The real bright spot in the market has been below $500,000 in the Stamford, Norwalk, and Fairfield markets (Trumbull as well). These price points don't tend to exist in other markets, so those seeking Fairfield County will move to these cities, to avoid unnecessarily expensive homes.
As a buyer under $500,000: Get ready for a tough market, and low, less desirable inventory. You might have to settle if you are in a rush, but with patience, and the right agent, you can find those gems. There are ways to find new homes that are not currently on the market, so if your agent is only using MLS, then find another agent!
As a buyer over $500,000: Get ready to have a plethora of options. You will have the leverage, so take advantage of it. Look in other towns and cities, because there might be opportunities to be the cheapest home in a great neighborhood (which is a good thing).
As a seller under $500,000: If you have your home on the market and it isn't selling, something isn't right. If you don't have your home on the market, but are considering, do it NOW. It is a seller's market for you.
As a seller above $500,000: Your patience is going to be necessary. The market will soften a bit after this huge inventory push, that is typical of the spring and early-summer time frame. If you are getting no showings, and getting no offers on your home on market, get a new agent. If you are considering listing, either wait, or expect a much slower process.
Where Hanson Realty Stands
Despite an odd market, we are still listing champions, especially in Norwalk. Here is the current Hanson Realty Group inventory, with Joe's inventory linked to a blog post. There is more to come, so let me know if you would like to follow the progression of our new listings. Here is current inventory with prices:
15 New Canaan Way, Norwalk, $699,00
2 Silwen Lane, Norwalk, $426,960
182 Silvermine Avenue, Norwalk, $499,000
279 Silvermine Road, New Canaan, $1,148,690
35 E Hills Drive, New Canaan, $450,000
10 Leslie Lane, Norwalk, $669,000
4 Blue Mountain Road, Norwalk, $567,315
2 Eclipse Avenue, Norwalk, $298,315
1 Horizon Drive, #10, Norwalk, $225,000
25 Grand Street, #234, Norwalk, $225,000
41 Valley View Road, Norwalk, $468,738
59 Barbara Drive, Norwalk, $445,150
3370 Madison Avenue, #17B, Bridgeport, $65,000
207 W Rocks Road, Norwalk, $513,213
115 Fillow Street, #4, Norwalk, $268,155
17 Grey Hollow Road, Norwalk, $648,833
160 Strawberry Hill Avenue, $499,838
43 Old Rock Lane, Norwalk, $949,419
7 Sheridan Street, #2, Norwalk, $180,763
18 Eastwood Road, Norwalk, $424,676
47 Comstock Hill Avenue, Norwalk, $647,833
18 Red Oak Lane, Norwalk, $875,379
29 Old Rock Lane, Norwalk, $864,290
5 Hillside Place, Norwalk, $235,000
4 West Lake Court, Norwalk, $1,250,000
Dear friends and family,
It is with great pleasure that I announce that Hanson Realty Group is officially the top producing team within William Raveis Real Estate in Norwalk and Rowayton! Beyond Raveis, we are also the top producers in Norwalk across all the Realtors and Companies. With $22,182,864 in closed volume, we have taken this city by storm, and continue to do so with a zeal and effectiveness not seen in our competition.
Along with these accolades, we have achieved Top Listing Team, remained in the Chairman's Elite, the top tier of William Raveis sales agents, among others.
Personally, I am proud to be awarded a 5 Years of Service and Dedication Award (as I enter my 7th year in August). My time with William Raveis as a Realtor has been tremendous, and my successes have only been possible because of the trust and faith of all my clients that have used my expertise to get their home SOLD, or help them find the home for them. So THANK YOU!
Here are all of the awards:
Also, a special thanks to Susan and Steve Hanson, who taught me how to be an honest and effective Realtor. Their guidance has been invaluable, and clearly we are doing something right. Susan and Steve were awarded several other awards including '#1 Top Insurance Support', 'Outgoing Referral', and 'Sales Vice President' awards. Congrats to you as well!
I may get some backlash for the secrets I will be uncovering about the real estate business, but I think full-disclosure is warranted in a business that is shrouded by misconceptions, many of which may be intentional. Here are some statements you might hear from your Realtor and the things you should look for:
"Your home isn't selling, we have to reduce the price"
This might be true in some cases, but how can a seller understand why a price reduction is requested? In 9 out of 10 cases when this happens, the seller just hears the words, "We need a price reduction." Instead, imagine if the seller heard, "We need a price reduction, here are the numbers and feedback, all in one place." All of a sudden, this request becomes more manageable and understandable.
"I cannot price your home at the price you want"
The Realtor may not want to sell the home at your price, but they can do anything you want. Taking a straightforward and open approach avoids running into a lie. Just tell the truth people! Try this instead, "I understand you want this higher price, but I do not take listings that are overpriced. I would rather disappoint you now, than in 6 months."
"Zillow and Trulia are the best places to find real estate"
A lazy Realtor will say this. There are better tools out there to seek real estate, and the MLS is only the beginning. You Realtor should have other ways to find you homes to look at, otherwise they are neglecting a part of the market where opportunity abounds.
"I cannot take a cut on commission"
This is typically a false statement. There may be restrictions because of the company, but if a manager is going to lose a listing because of a lower commission, they will accept it. This does not address the fact that a Realtor willing to take a lower commission will likely put a fraction of the effort required because the payout decreases, and with it the tools and money spent decreases, but that is another topic.
"I cannot spend money on marketing on the internet"
Having the know-how to market listings effectively is something lost by many Realtors. Instead, they opt to say they cannot, when really they mean to say they don't know how. Marketing through the Internet is a skill that is honed by few, but those that can use their money to effectively target buyers will get ahead of the pack, quickly.
"Listing your home in the newspaper and through direct mail will get it sold"
Physical advertising is dead. Newspaper and direct mail advertising are for the benefit of the Realtor, not the seller, in most cases. According to NAR, in 2014 92% of buyers used the internet in some way in their home search process. The Internet is IN.
"Open houses are for the benefit of the homeowner and getting the home sold"
A minute percentage of buyers purchase the home they see at an open house (According to NAR, in 2014 only 9% of buyers found the home at an open house that they purchased). Most buyers prefer to search the internet and see inventory with their Realtor. The open house is a branding tool for Realtors and to recruit clients. However, there ARE benefits to an open house for the seller, though they are not discussed often enough. When a Realtor markets the open house, if they are doing it right, they should be promoting the open house in ways that they might only be able to do for an open house, such as an Open House Promotion. This is where the seller sees benefit, specifically through these additional promotional means.
"I can only show you homes within X miles of my office"
Real estate has become a much less location-restricted business. Realtors can now sell and buy across town, county, and state lines. If you get this line from Realtors, they are being deceptive. The better way to convey this, is, "I can only show you homes within X miles of my office because my knowledge of that area is minimal. You would be better served using a Realtor with expertise in that location."
"I can take the photos that are better than a photographer"
A photographer should always be able to take better pictures than a Realtor, but that's not to say a Realtor can't take great pictures. Basically, they want to spend as little money as possible, and this would add to the expenses. As a seller, I would ask if the Realtor uses a DSLR camera with a wide-angle lens, and if they touch up the photos before putting them on the Internet. If they cannot do these things, demand a photographer.
"I am marketing the home on Zillow/Trulia/Realtor/major brokerage sites"
Inherently, when a home is put into MLS, your home will most likely be put on these major websites, no matter what. A decent Realtor should go far beyond these means of marketing. Ask questions about which other websites they are promoting your property to.
Assisting buyers and sellers in real estate is not easy. According to the National Association of Realtors, there are 1.167 million Realtors, or about 1 Realtor for every 300 people in the country. That is a LOT of Realtors. 80% of the Realtors get into the business thinking it is easy, unaware that there is a huge amount of necessary skill to be successful. If your Realtor says any of these things, find someone else. After all, there are so many Realtors, you should have no issues finding one!
It was the winter of 2014, and my buyer David was struggling to find the perfect condo to purchase that would fit his needs. This often happens in this business, and tends to lead to the loss of a client for a Realtor. In my case, I knew there must be more to do in order to get him something he would love.
His focus seemed to keep coming back to a condominium complex in Norwalk where we had seen multiple properties. We placed some offers, and even had an inspection on a unit, that ended up falling through because of the price we had placed - the bank was not interested in what we (homeowner included) considered a good offer. Ultimately, there were no good options remaining there, and it was either wait, or take action.
The great thing about this market, is there are other transactions that don't get completed, called 'expired listings'. In this case, I recognized a unit that was on the market, that didn't get sold for reasons I couldn't comprehend (considering the price wasn't too high). Through a complex process, I was able to get in touch with the homeowner, Eliana. Eliana and her family were in dire straights, holding a mortgage they couldn't afford. They hadn't been able to sell because of the inability to get the money back that they had lost in a purchase when prices were higher. At times like this, my first thought is, 'How can we help this family?' There is no reason why a family should be held hostage by a liability like real estate, especially when there were options on the table.
Immediately I knew there was a solution that would get her and her family out, and get David a property in a complex he was very interested in. I approached David with this option, and we immediately placed an offer, off-market, that would get sent to the bank. I signed papers with Eliana and Dave, and we were off to the short-sale-races!
This transaction was not as easy as making a phone call, signing some papers, and sitting back - it was a difficult short sale that required negotiations with a bank that was difficult last time around (when Eliana had the home on the market previously). The first thing I needed to do was find Eliana an attorney that would make sure this came to fruition, and with some suggestion and seeking, I found the perfect firm. Now Eliana was well-represented, and just needed to make sure she did everything the attorney asked.
After several months of difficult work with the bank, as sometimes happens, we ran into an additional problem. Because this transaction was more difficult than others the law firm had dealt with, the attorney was requesting more money than the bank was offering. Of course, the seller had no money to give her. So there were options, but asking David to pitch in wouldn't have been fair. I knew I needed to step up - because this was a short sale, with no Realtor representation for the seller, I was going to get the whole commission (and a higher one at that), instead of the half I usually get during a transaction. So, to make up for the attorney's loss, I sacrificed part of my commission, knowing this was the last piece of the puzzle, to get it closed. This is not something I can do under normal circumstances, but in this case, it was feasible.
Ultimately, we closed the property successfully, and Eliana and her family were able to move on, and David was now situated in a condo, at a lower price than market value, where he was happy.
I come across many different scenarios in this business, and I never give up. Had I just said, 'let's wait' to David, we might have not found something for a long while. This type of complacency causes buyers to leave, and find the Realtor that will work for them. Instead, we got creative, and were rewarded for this unique strategy.
It's stories like this that make my time in this business worth every minute. I hope to continue to share these stories, as it gives a great example of what can be done with a Realtor that goes the extra mile. But, it also shows what pitfalls you might encounter in a purchase or sale, and how you can overcome those hurdles.
It amazes me how quickly technology is progressing. Less than half a century later, these fax machines are completely obsolete in a modern real estate market. This does not mean that this equipment is completely missing from the workplace, but it is likely that those agents still using it are FAR behind the times. Scanners are still relevant, though they require a physical machine, limiting their capabilities.
This brings me to the tool of the year for 2015, TurboScan (by Piksoft Inc.). In this case, I specifically mention this app that costs between $2 and $4 on an iPhone, likely the best investment for a Realtor or his/her client going through a transaction.
This app is a scanner, plain and simple, without those physical restrictions I first mentioned fax machines, because they began a wave of new technology used to send documents, which evolved into the proliferation of scanners, skipping quickly to apps that allow you to scan documentation, quickly, and easily, from anywhere.
How does the App work?
All you have to do is to take a picture of the file, and then it automatically crops the document to white space, and you can immediately add pages, if necessary.
What is amazing about this tool is the ability to send files directly to your email, or an email. But, if used correctly with your Dropbox (Tool of the Year in 2010-2014 for me), the impact is greater. Read about Dropbox so you can understand my next point.
This app completely eliminates the need for physical storage of any paper documentation. You can scan anything directly from your hand into your Dropbox making it immediately accessible to you on any computer or device in the world (with Internet connectivity), or to those that are connected to your Dropbox...again...IMMEDIATELY.
You can also instantly send these documents (as JPEG OR PDF) in a text message to someone else. Or immediately open these files in any app that supports PDF files, on your device, such as Evernote, Google Drive, iBooks, or Notes App (iPhone).
I have had buyers use this app to scan documents quickly and effectively to their mortgage broker, in a timely fashion. The testimonial from my mortgage broker was incredibly positive, and he immediately adopted this technology into his business, advising clients to utilize its powerful and quick interface.
So, whether you are working with a mortgage broker on obtaining financing, are a Realtor trying to modernize your business, or really anyone that has too much physical paper, check this App out. If you don't have an iPhone, there are certainly going to be alternatives on the market, for your purposes - just look for something that had some of these features, and you are in good shape.
Here is a basic Tutorial:
Enjoy this App, and hopefully it is as powerful and useful in 2016 as it was in 2015 for me!
As always, feel free to contact me with additional questions, comments, or testimonials (or just comment below).
We (Joe and Chris Balestriere) are Realtors in Fairfield County, Connecticut. Our blog is meant to educate buyers and sellers and equip them with tools to get the most out of their Realtor, whether it is us or someone else. We focus on technology and how it enhances the work we do for our clients--we are not top CT Realtors by accident.