Seller Concessions

One of the new realities of the current real estate market is that buyers often ask for concessions, monetary and otherwise, from sellers.  It used to be that they asked for things to be included or fixed, based on the inspection.  Now, they also may ask for the seller to pay some or all of the closing costs.  This is often so that the purchase price is higher, and allows them to qualify for a higher mortgage amount.

We have seen some issues at the closing with these requests.  The sellers don't always seem to realize that the purchase price will be the basis for the conveyance tax, the land records, and the commission.  It's the amount at the top of the sales contract that governs all those amounts.  We, for instance,  have other brokers to pay in almost all cases.  Sometimes it's a referral, sometimes a co-broke, either inside or outside the company.  The commission offered is on the full amount, and we are responsible for it, whether or not the seller made concessions.  While I understand why sellers wouldn't always like that, I don't see the difference between a concession made in cash or at closing from a concession made during inspections or even during negotiations.  It happens, and it isn't our fault.  And we shouldn't have to take the co-broke commission difference out of our pocket.

There are a lot of ways to get upset during the length of a sales transaction.  But, please, don't shoot the messenger.  We're trying to help.

Thanksgiving

Despite the woes of the real estate market, there are many things to be grateful for this season, as always.  For those of us who are healthy, most people would rate that as enough to be happy, all by itself.  For those who have family with them, especially at the holidays, ditto.  For those who have enough to eat, a place to live, a job, and friends, that's enough for most of the world.

Could the real estate market be better?  Of course.  Could transactions be easier?  Of course.  Would it be nice for us to be a little higher up on the food chain?  Undoubtedly.  But, every once in a while, and more often for some, we get to feel good, when we help a family, a business, or an individual find the perfect space, especially when they take the time to tell us.  And we get calls from loyal clients and friends who think of us for their real estate needs and those of their colleagues and relatives, and that's nice as well.  Bottom line:  we're in a helping profession, and we're glad to be of assistance.

So Happy Holidays to all of our clients and friends, and may the coming season be full of joy, good cheer, and closings!

Help from the Government?

President Obama has proposed some new rules that would allow homeowners to refinance in many cases where that has not been possible up until now.  The main hurdle has been the appraisal--often, homeowners who have the ability to pay have not been able to take advantage of lower rates, because their homes are "underwater" (worth less than the mortgage, or worth less than the amount that they could refinance for).  His proposal would allow homeowners who are current on their mortgages, and have been for the last six months, to refinance without an appraisal (it does say "in most cases", and I'm not sure what that means).  His stated goal is to lower people's monthly payments and free up the extra cash to circulate into the economy and improve sales of other goods and services.

I see two problems with this.  One is that such homeowners would be allowed to convert their loans, at their option, into 15-year mortgages.  Since such a move would raise, rather than lower, their payments, I fail to see where the extra cash goes into anything except a different loan.  Secondly, the idea that banks are being told to refinance without qualifying appraisals seems ironic.  Isn't that supposedly how we got into this recession in the first place?  So, we tell them to make loans that don't meet the criteria that we just tightened?  And, if those loans go bad, and we can't blame the banks and their greed, whom do we blame?

It's clearly frustrating for good credit risks to lose out on lower rates because they are paying their mortgages regularly, and I understand that.  Somehow, though, the whole program has the ring of having started with some White House staffer complaining about not being able to refi his/her house, and then letting policy people hash out a compromise so that the banks would be happy with the result.  It seems to me that we have done that too often already.

It's That Time of Year Again

Every year at this time, I remind people of my strongly-held belief that the period between Halloween and Thanksgiving is the best time to buy a property.  Heating bills have begun. This year, even plowing bills have begun.  The holiday season is not quite upon us, but the end of the year is beginning to loom.  Anything that is going to get done by December 31st has to be in the works very soon. 

Add all of those factors up, and you come to one conclusion:  If you want to buy a property this year, act quickly.  Make your offer right now, and hurry to close by the end of the year.  You are likely to get the lowest price if you buy now, and take winter worries off the hands of the current owners.  Owners will be worrying that they might not sell until spring, and they will be at their most receptive. 

What are you waiting for?  Stop reading, and call your real estate agent immediately!

Why the Rental Market Matters

We have been reading lately about New Haven's stellar rental market--either the lowest or the second-lowest vacancy rate in the country, depending upon your source.  Why is this?  And how does it relate to other real estate data?

New Haven's extraordinary occupancy rate for apartments has several causes, some of which are unique to New Haven, and some of which apply across markets nationally.  New Haven's own reasons have to do, first of all, with the large number of students residing in the region.  Students are almost always renters, and graduate students rarely live in university housing.  The second driver in New Haven is the nightlife and culture prevalent here, so that young people (and empty nesters) who work in other places in Connecticut will disproportionately choose to rent in New Haven and commute to their jobs. 

Around the country, there are certain trends that are helping rental markets to stay strong.  Of course, high foreclosure rates will result in more renters, as the people displaced from their houses won't be able to buy right away.  Also, the uncertainty of all job security means that many more workers, executives included, leave their families behind and rent in the new city until they are confident that they will stay at the job.  That trend is exacerbated by the difficulty transferees are having in selling their homes in the locations they are leaving; until they do, many must rent.  Even those who sell are renting in many instances, since they worry that housing prices have not bottomed out, and that this may not be the best time to buy a new home.

All of these factors have combined in Greater New Haven to make rentals scarce and expensive.  It also offers an opportunity for investors to buy property and rent it out, and not just the typical apartment building or multi-family house.  Single family homes make good rentals also, particularly when you can buy one for a price that allows you to cover costs with rental income.  It can even be a good alternative for those who have houses on the market that are not selling.  Many people are looking for homes to lease, not just in the center city, and it's a good time to find tenants.  This is especially true if you allow pets!  As with all types of real estate markets, there are ways to make money in this one.