Keep Your Expectations Low

Remember the old phrase that "it's not over til the fat lady sings"?  Real estate transactions are like that often.  Things happen, and they happen right up until the papers are signed.  We have heard -almost- everything, but new stories keep popping up.  There are issues of sellers getting cold feet, buyers getting sick, or having children who get sick, sudden job losses, sudden divorces or separations or reconciliations, financial issues arising, and nearly anything else that you could imagine.

That's why a calm attitude and a good sense of humor both go a long way toward making the experience better for everyone.  Often it's the person who insists upon locking down the dates, who in the end can't meet them.  Or the seller who won't let the buyers postpone the closing, and then is the one who can't get out in time.  Given all of this, and more, I recommend that all parties expect at least one thing to go wrong (or maybe two or three things), so that they aren't thrown by a sudden change.  I would say that it's less the exception than the rule that something in your new home will stop working, or start leaking, right after the closing.  If you take that in stride, you'll be a lot happier.  Try to make it into a good story, that will get everyone laughing at a future dinner party or family reunion, and see whether anyone else can top your entry into a contest.  In our family, although it's not a real estate tale of woe, we can recount the day that one car caught on fire, one child got hit in a different car, by someone turning illegally, while the other child broke her arm, and the dog ran away.  You can't help but laugh when you tell it!

So, if you are ever annoyed because your real estate agent is not outraged by a request, a change, or a problem, now you know why.  We have memories of worse!

Declining Markets

We recently received a list of "declining markets", as defined by AIG (some irony there, huh?) for appraisal purposes. Some states--Arizona, California, Florida, Michigan, and Nevada--are considered Severely Declining in their entireties. Our county has a list of declining markets, defined by zip codes, which appears to cover almost every town in our region. Hartford's noted zip codes are listed as Moderately Declining.

What this means is that, when you go to get a mortgage in an area marked as Declining, you are subject to certain restrictions or rate adjustments, in order to protect the lender. Therefore, since a town like Guilford is on this list, everything in Guilford will be subject to a higher rate for the same LTV (loan-to-value) ratio than a property listed in, say, Cambridge, Massachusetts.
I chose Cambridge for several reasons: it's like New Haven in some obvious ways; it's still in the Northeast, where real estate sales are broadly down; and, finally, I knew the zip code. In case you thought New Haven might be spared, 06511 through 06515 are all there as well.

This may make it easier to understand why so many sales are falling apart after the contracts are signed, since people may not be aware of these rules before they actually sign a sales agreement on a particular house. They may have been counting on getting a higher LTV, or a lower rate, both of which may have been advertised, but then are not applicable in the zip code in which they are buying.

It's hard to know how to fix this problem, but it needs to be addressed if we are going to break the cycle of lagging real estate transactions. This rule is not only arbitrary, since there are submarkets within these areas which are selling well and where prices are not declining, but lags in time as well, being based on prior sales. In addition, it punishes those who most need to sell, but throwing another roadblock in the way of their attempts to find buyers.