Real Estate in the News

U.S. Home Prices May Fall But Drops Will Be Mild

2006-10-26T08:19:00.001-07:00

By Brian Blackstone

U.S. housing prices may decline "a little" within the next year, but any such drop is likely to be mild and inconsistent with a bursting housing bubble, according to a paper written by a Federal Reserve economist.

Based on an analysis of housing futures and options and derivatives of housing-related company shares, "market participants expect home prices to decelerate sharply or actually decline a little within the next year," wrote J. Benson Durham, an economist with the Fed's monetary affairs division. However, the anticipated drop in prices "is mild compared to some estimates of the purported overvaluation of the housing market," he added. The paper, dated September, was posted on the Fed's Web site Thursday.

Mr. Durham cautioned that deep and liquid markets needed to signal future home-price trends don't fully exist and that housing futures and options have only been trading on the Chicago Mercantile Exchange since May 22. Still, implied volatility on CME housing options are greater than the historical average, "which suggests that investors see more risks to home prices going forward," he wrote. That higher uncertainty, however, is "generally inconsistent with the perception of a "bubble,'" he added.

Mr. Durham also examined options on shares of certain homebuilders to gauge whether investors see upside or downside risks to home prices. Those options "are only marginally negatively skewed at the present time," he wrote. "This suggests that market participants do not, in fact, view the risks to home prices or, perhaps more accurately, to the broader housing sector as especially tilted to the downside," Mr. Durham concluded.

The paper's conclusions seem in line with the thinking of Fed officials that the sector will slow substantially through the rest of 2006 and into 2007 but is unlikely to derail the economic expansion.

In the minutes of the Sept. 20 Federal Open Market Committee meeting, the Fed said housing "seemed to be cooling considerably" but that the overall economy should strengthen next year "as the housing correction abated." Officials also continue to remark that higher inflation poses a greater risk than a slower economy.

Housing data had declined markedly in recent months, raising fears of a housing-induced slowdown severe enough that it would eventually require Fed rate cuts. But there have been tentative signs of stabilization of late. The National Association of Home Builders index rose in October, albeit by only one point, but nevertheless breaking a string of eight straight declines. And housing starts unexpectedly rose in September, breaking a string of three straight declines.

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Commercial Real-Estate Cycle Peaks and Will Pull Back in 2007

2006-10-26T08:19:00.000-07:00

By Ryan Chittum

From The Wall Street Journal Online

The commercial real-estate cycle appears to have reached its peak and will begin pulling back in 2007, according to a new survey of industry executives.

The Urban Land Institute, a Washington-based nonprofit planning and research group, and PricewaterhouseCoopers surveyed more than 600 developers, investors, brokers, consultants and lenders this summer for an annual report on the industry, dubbed Emerging Trends in Real Estate 2007.

The survey suggests commercial real estate is beginning a return to its norm as an income-producing investment rather than the wildly appreciating asset class it has been this decade. The easy lending of the past several years will tighten next year in part because of worries about the economy, surveyed executives said. Investors will have to turn to asset management and operating performance to raise returns as investment inflows slow because of lower return expectations, respondents added.

"I think it's a clear mandate from people that you're going to have to make money the old-fashioned way," says Stephen Blank, an Urban Land Institute senior fellow who specializes in real-estate capital markets. "You're going to have to earn it" through leasing, cost control and other asset management.

The report also says real-estate investment trust stock prices "appear to have more downside risk than upside potential over the short term."

Still, those surveyed expect commercial real-estate cash flow to continue to grow as factors such as reduced vacancies and higher rents keep improving across most property types. One reason: High construction costs are putting a damper on new construction.

While the commercial real-estate market has exhibited some signs of a bubble in recent years -- driven by low interest rates and an influx of investment -- it has differed from the residential market. A key difference is that supply and demand have been more tied to vacancies and rents and not as closely linked to the rising interest rates that have cooled the housing market.

The report advises investors to sell marginal properties and hold on to well-performing ones, with an eye to improving their performance in advance of a potential economic downturn. It advises developers to "hunker down," saying most property markets don't need much new space.

A pullback in the galloping commercial real-estate market will raise capitalization rates -- the initial return on investment in the first year -- by as much as 0.7 percentage point in some property types and restrain the increase in property values, the report says. Falling cap rates mean investors are willing to take a lower return for their money. Cap rates are already rising in some areas, especially in lower-quality properties, after dropping between 2.5 and three percentage points to record lows over the past five years. Cap rates vary by property type, but high-income apartments, for instance, averaged a 5.66% cap rate in July, while limited-service hotels brought a 7.93% cap rate.

The property sectors with a "buy" in the report are warehouse, which the executives interviewed said will boom on the East and Gulf Coasts because of overflow import traffic from the West Coast, and moderate-income apartments, especially on the coasts. Retail property fared worse, with executives suggesting consumer spending will be "middling" and advising investors to sell weak properties while holding strong ones.

Those surveyed said Seattle is the best office market to invest in right now, with office rents set to rise and supply tight. The city is also sitting in a prime position to benefit from explosive growth in Asia and has the best potential of any American city to become the next "24-hour" hub like New York or San Francisco, according to the report. The report lists five U.S. cities as "global pathways" with bright futures for real-estate investment: New York, Seattle, San Francisco, Los Angeles and Washington.

Philadelphia and Chicago are ranked among the worst markets for investment in all property types in the survey. Chicago is being dragged down by economic problems, the "Midwest malaise," the report says, while investors question Philadelphia's future as a global city since it lies between New York and Washington.

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International Real Estate Gets Its Very Own ETF

2006-10-26T08:18:00.000-07:00

By Ian Salisbury

From The Wall Street Journal Online

Many people would like to own real-estate abroad -- and while buying a pied-à-terre in Biarritz may be difficult, investing in international real estate could soon get easier.

State Street Corp.'s State Street Global Advisors recently filed with the Securities and Exchange Commission to launch an exchange-traded fund based on real-estate securities in 23 countries. Exchange-traded funds resemble index-oriented mutual funds, but trade on an exchange like a stock.

While there are a number of traditional mutual funds to track international real estate, so far all the real-estate ETFs on the U.S. market follow domestic stocks.

In the past few years, real estate has been a hot investment and, importantly, one that promises not to rise and fall in correlation with U.S. stocks and bonds. That has many brokers saying an international ETF would be welcome.

"It would help us span markets" overseas, says Louis Kokernak of Haven Financial Advisors in Austin, Texas. Mr. Kokernak allocates about 5% of his clients' portfolios to real estate.

He says he already uses State Street's domestic real-estate ETF and, if an international version became available, he would consider switching a quarter to a third of his clients' real-estate exposure to it.

Mark Willoughby of Greenbaum & Orecchio Inc. in Old Tappan, N.J., is also interested. "We've looked at international real estate for the past two years," he says. His firm recently started using two institutional funds for its high net-worth clients, but also would like to see an ETF, because ETFs typically have lower annual expenses than other funds.

"The expense ratios are not that bad, about 100" basis points, or 1%, he says. "We're used to something cheaper, but we haven't been able to get it."

The State Street filing doesn't say what the annual fees will be for the proposed ETF, but a number of advisers say they would be surprised if it were much more than 60 basis points, or 0.6% of assets.

One possible rival, the Northern Global Real Estate Index Fund, boasts an expense ratio of 65 basis points. That product is "global" rather than international, meaning it includes some U.S. stocks, but still, an ETF that wasn't priced in this range could find it hard to compete.

The State Street fund will be based on the Dow Jones Wilshire exUS Real Estate Securities Index. The "exUS" means there are no U.S. stocks.

The index has posted some eye-popping returns, but because it was introduced only in March, those numbers are based on hypothetical back tests and don't reflect actual results.

According to the tests, the index has returned 33% over the past three years, 23% over the past five years and 9% over the past 10 years.

Investors should note that, despite the large number of countries in the index, nearly 60% of the holdings are concentrated in just three: Australia with 20%, the United Kingdom with 19%, and Japan with 18%. The top nine countries comprise just more than 90% of the weightings. Also, many of the stocks in the index are "real-estate operating companies" instead of real-estate investment trusts.

Ronnee Ades, senior director of institutional markets at Dow Jones & Co.'s indexing unit, says a REIT-only index wouldn't be as diverse, because many countries have yet to adopt that special tax structure.

REITs, which were introduced in the U.S. in the 1960s as a way to invest in income-producing real estate, are largely exempt from tax on profit at the corporate level, and distribute nearly all of their net income as dividends.

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Home builders stress their foundations strong

2006-10-26T08:17:00.000-07:00

Asbury Park Press 10/25/06

BY David P. Willis

The bankruptcy of Kara Homes, one of the largest home builders at the Jersey Shore, has more than enough victims: customers, employees and scores of creditors owed millions of dollars.

It has also placed a cloud over the New Jersey home building industry as potential customers wonder just how strong other builders are and if more may be following Kara into bankruptcy court.

"People are skittish," said Carolyn Villani, vice president of sales and marketing at Paramount Homes of Jackson. "People are waiting to see what happens to Kara and what happens to other builders. They are concerned about everyone right now."

On Oct. 5, East Brunswick-based Kara Homes filed for Chapter 11 bankruptcy, saying the real estate market's slowdown hurt sales and scared off lenders.

Builders are trying to distance themselves from the Kara controversy.

Representatives of Hovnanian Enterprises mention the differences between Hovnanian, a large, publicly traded Fortune 500 company based in Red Bank, and Kara Homes when the topic comes up. The company has a strong cash position and $1.5 billion in bank credit it has not touched, a spokesman said.

"We are very financially stable, and that usually reassures people," Hovnanian spokesman Douglas Fenichel said.

Likewise, Paramount representatives tell prospective customers about their own company and its reputation, Villani said.

Offer to Kara customers

Paramount Homes officials have also decided to go on the offensive, reaching out to help Kara buyers worried about their down payments and deposits and, at the same time, drive some sales their way.

"A lot of us, the majority of builders and the builders' association, are very reputable people," Villani said. "We want to do our part if possible."

Paramount's Villani said the company has started a marketing program meant to get Kara customers into new homes. Here is how it would work:

A customer who has put a down payment on a Kara home would receive a credit of an equal amount, up to $150,000, on a Paramount home, depending on the development. Paramount would then have the right to the homeowner's down payment, or any part of it, if it were to be recovered.

"We would take the buyer's position in bankruptcy court," Villani said.

Alternately, Paramount would complete construction of the customer's Kara home if the customer were able to obtain clear title to the property.

Paramount would help a customer obtain a construction loan to finish the house and a mortgage if the person has a clear title to the property.

If they qualify financially, customers could finance 100 percent of their new Paramount homes.

"We can't say that any of these are absolutely 100 percent going to work," Villani said. "We may be the right builder for some of the people out there. There is a good faith here."

Robert Kenney of Staten Island put $126,000 down as a deposit for a Kara home in Monroe. He signed a contract in March 2005, sold his old home, and has lived in an apartment for a year.

"We are in limbo. There is no end in sight," said Kenney, 49, a construction project superintendent in New York City. "I have no idea when or if I can ever get a house."

Paramount's offer might be an option, but it would depend on the home's location, he said. "Being in the bankruptcy, there (are) no guarantees," he said. "We could absolutely lose our money."

Court to hear Kara plan

Kara Homes has said it has lined up $5 million in financing to resume building the homes it has already sold and to reimburse buyers who canceled their contracts before the home builder filed for bankruptcy protection. The company has about 300 contracts for homes in New Jersey that it did not complete or start to build.

A hearing on Kara's plan is scheduled for Monday in U.S. Bankruptcy Court.

David Bruck, a lawyer for Kara, said in court papers that the plan would help remove the "aura of distrust" surrounding the embattled developer, something that is "critical," he said, if the company is to reorganize successfully.

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Real Estate Markets and Their Price Spreads

2006-10-05T08:10:00.000-07:00

Author: Edward Grano

The price difference between various real estate markets is what many people try to profit from. I call this the spread. For example, Manhattan residential real estate prices are roughly $1000 a square foot. Downtown Jersey City and other equivalent outlying urban areas of Manhattan, such as Brooklyn Heights and Park Slope, might be $600 a square foot. That makes the spread between those markets about $400 ($1000 less $600) a square foot.

Bond traders or people that trade stocks look for or observe price spreads. Bond traders refer to the spread in basis point and in yield to maturity. So if a corporate bond yields 8% and an equivalent term US treasury bond yields 6%, then they would say that corporate bonds trade at a spread of 200 basis points or 2% (8% - 6%) to US treasuries.

In real estate people reach out to more far reaching real estate markets in the hope that those markets may mature or improve and that the price may rise closing the spread between that market and another.

Example: Brooklyn Heights versus Downtown Jersey City.

In Brooklyn Heights versus Downtown Jersey City, I observed there to be a significant price spread. The selling price per square foot for housing in some comparable neighborhoods of Brooklyn Heights can be significantly higher than in Downtown Jersey City.

Recently I previewed several properties in Brooklyn Heights selling for about $750 a square. Since Downtown Jersey City is at about $550 per square foot, then this would imply a spread per square foot of $200 ($750 - $550) between Downtown Jersey City and Brooklyn Heights.

I am looking for those spreads to narrow. A lot of development is transpiring in Downtown Jersey City. This will probably keep prices down in the near term (next couple of years) as a lot of inventory comes on the market and requires market absorption. However beyond the next couple of years as Downtown Jersey City improves, I believe those spreads will narrow.

As larger developers further their projects and advertise their projects on an international level, more attention should be brought to bear on Downtown Jersey City. I speculate that Donald Trump has every intention of marketing his Trump Jersey City beyond the local markets. Plus let’s not forget about the new $130 million dollar international golf course over at Liberty State Park. This is all free advertising on the coat tails of these projects and I further speculate that these projects will bring international attention to Downtown Jersey City.

So expect to see some price spread movements between the above mentioned markets over the next ten years. Although there is no guarantee that the spreads will narrow, I speculate (based on the above circumstances) that the probabilities point to the spreads narrowing rather than widening.

www.RealEstate-Calc.com

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Leverage Real Estate Using Options

2006-10-05T08:07:00.000-07:00

by Derek Pierce

What if I told you there was a way to profit from deals with no liability, no risk of money, no credit required, and no obligation on your part?

Sounds good right?

Well, it's not totally true...

You could risk a whopping $10 bucks.

Yep, that's all it takes to get into a profitable real estate deal and you're not asked once about your finances, about your credit, nope, none of that... The method is using Options. Yes, Options are a powerful way to leverage real estate to get paid mega bucks without any financial obligations on your part. Options simply give you the right to purchase a property at a set price for a certain amount of time. The Option to buy does NOT obligate you to buy, it simply gives you the option.

Now, on the flip side, if you're the seller giving the Option, you are obligated to sell the property to the buyer if they exercise their Option within the allocated time frame. Now, imagine for a moment, the potential by simply getting Options on properties in your own area, then reselling them for enormous profits and the only time you go to the bank is to deposit or cash your check...

Why would someone, give me the option to buy their house? Well, until you've been a motivated seller yourself, it's hard to explain. When people have some underlying situation, they need you and they need your help.

It's all about how you position yourself. If you go into the deal thinking, "Boy, if I could just get this option" then you're going to be eaten alive.

You've got to be confident and realize the seller needs you more than you need them. If the seller is in any way motivated, they'll want you to do everything you can to get the house sold so they can move on with their lives.

Do options work for everyone?

Absolutely not.

You're looking for the handful of motivated sellers it will work with and the others may need some other creative method to getting rid of their house.

What's great about options is you could have as many deals in the works with literally no liability and minimum money on your part, all while you crank up your marketing to find buyers for your deals. This method works regardless of area, regardless of appreciation, and regardless of the price of the property if you're getting leads from sellers that are motivated.

Now, why I did I say you could risk $10? Well, $10 is all you need to give your seller to make the deal legally binding. It's called legal consideration and without it the seller could later claim they didn't get any consideration for the option. So, whenever you get an option to any property, be sure to give the seller $10 to seal the deal.

About the Author

Derek Pierce is a full time real estate investor and business owner, who, now reveals how he went from corporate slave to Real Estate Success in with his Free E- Coaching Program. To sign up for the Free Program, go to http://www.thereisecrets.com

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Prices fall for luxury homes, too

2006-09-20T07:47:00.000-07:00

More high-end homes on market; taking longer to sell

Asbury Park Press on 09/15/06

BY LARRY HIGGS
COASTAL MONMOUTH BUREAU

They’re not as prolific as wildflowers, but more for-sale signs have blossomed in front of some of the palatial homes in Rumson recently.

The softening of the real estate market is hitting higher-end homes, too, and how that affects individual sellers varies depending on how they financed the home, property taxes and what town they’re in, according to experts.

Like their less expensive cousins, there are more higher-end homes on the market than demand requires, said Donald Moliver, director of the Kislac Real Estate Institute at Monmouth University.

“There is a lot of inventory on the market, more than I’ve seen in years,” he said. “Inventory grows and prices drop.”

Moliver, who lives in Rumson, said he sees the increase in the number of for-sale signs every time he takes a drive.

During a recent drive along Rumson Road to the Little Silver boundary, 11 for-sale signs were counted. Moliver said there used to be three or four signs on average.

High-end homes are still selling, but they are taking long to sell, creating a backlog of inventory.

Christina Banasiak, president of the Monmouth County Association of Realtors and a broker with Weichert Realtors in Marlboro, compared sales of homes valued at $1 million and up on the Monmouth-Ocean Multiple Listing Service. She found that 54 homes in that category sold in August, compared with 53 homes in the same month last year.

However, she also found that this year, as of August, there were 824 homes in the million-dollar-plus category for sale, and the average time on the market was 83 days. At the same time last year, there were 591 million-dollar-plus homes for sale, and they were on the market an average of 77 days.

“This year they are selling for less than what they sold for last year, and it means that sellers are reconsidering their price,” she said. “I don’t know if I’d say the market was soft, but there are more homes on the market and it takes longer to sell.”

How home sellers weather the current conditions varies by the individual.

Banasiak said she has seen some sellers opt to wait and some who are willing to deal.

“More are reducing their prices and being more flexible to get their homes sold,” she said. “A lot depends on the sellers’ motivation. If it’s an elective sale, they can take the house off the market.”

Deals offered by sellers don’t always involve reducing the price. Some sellers have offered to replace appliances, install carpet or offer a credit toward closing costs, she said. Some developers have offered to pay six months of mortgage or property-tax payments or pick up maintenance fees, she said.

The decision by a seller to wait or adjust the asking price also depends on how they financed the home and if their mortgages are tied to variable interest rates, Moliver said.

The seller’s experience, how long he or she has been in the market, especially if it’s in the speculative home market — also will determine what they’ll do on pricing, Moliver said.

“It’s a function of what their experience was. If it’s a guy who was successful six times and is now stuck, he has the resources to hold on,” he said. “If it’s an individual who built a spec house and intended to flip it and this is the first time they got caught short, they’ll have to adjust quickly.”

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Living in: MANALAPAN

2006-09-20T07:46:00.000-07:00

Asbury Park Press on 09/15/06

WHERE: A section of Manalapan Township in Monmouth County.

DETAILS: The northwestern section of Manalapan borders on Marlboro and Old Bridge (Middlesex County). Located north of Union Hill Road, many of the homes here are fairly new and are situated within almost a dozen cul-de-sacs. The section of homes closest to the boundary of Marlboro, on Hawkins Road, is located in an area called “the peninsula” by residents.

HISTORY: The oldest settlements in Manalapan date to the late 17th century, and were centered around what is now Englishtown and Route 522. All of Manalapan was rural until the 1950s — the municipal building was not built until 1961, and workers broke ground for Manalapan High School in 1968.

NOTABLE: Like adjacent Marlboro, Manalapan has undergone a rapid shift from a sleepy rural community to a wealthy suburban enclave of upper middle class workers, many of whom have fled neighborhoods in Brooklyn and Staten Island. Residents tout the fact that Manalapan was recently named as one of the best towns to live in the Northeast by Money magazine. Unlike Marlboro, large sections of Manalapan’s rural past remain, especially in the western edge of town, off Iron Ore Road. And every year, in the last weekend of June, eager history lovers reenact the Battle of Monmouth, one of the last battles of the Revolutionary War and the largest, in terms of participants. The reenactment takes place in Monmouth Battleground State Park, on Route 522.

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Coming back down to earth

2006-09-20T07:45:00.000-07:00

Buyers, sellers and real estate agents adjust to a

changing market as home prices begin to stabilize.

Asbury Park Press on 09/15/06

BY DAVID P. WILLIS
BUSINESS WRITER

Lacey residents Scott and Renee Hanula have a lot going on.

They are building a house, which is supposed to be ready in December. They have three children and are in the process of adopting a fourth. At the same time, they are trying to sell their home in a real estate market that is softening. Originally priced at $404,900, they have reduced the price of their four-bedroom Colonial-style house on Fox Hollow Drive to $399,000.

“The market being a buyer’s delight right now, we wanted to price the house to sell,” said Renee Hanula.

Between 2000 and 2005, home prices at the Jersey Shore skyrocketed. Owners became accustomed to seeing their homes appreciate by double-digit rates every year. The median sales price of a single-family house in the area that includes Monmouth and Ocean counties nearly doubled between 2000 and 2005, rising 99.5 percent, according to the National Association of Realtors.

For much of that time, homes were in high demand, as buyers took advantage of lower mortgage rates. Sellers reaped the benefits as bidding wars ensued, pushing prices even higher.

But that ended in 2005. Now the numbers tell a different story:

The rampant run-up in prices has stalled. The median sales price for an existing home in the region that encompasses Monmouth, Ocean, Somerset and Middlesex counties was $393,600 in the second quarter, down 0.1 percent from $394,100 in the second quarter of 2005, according to the Realtors association.

It’s the first time that the association has seen a percentage decrease since prices in the region fell from $148,600 to $148,500 from 1993 to 1994. They have climbed every year since.

Sales in Monmouth and Ocean counties are down.

In Monmouth County, sales fell 25 percent in July from the same month last year, and are down 17 percent in the first seven months of the year over the same period in 2005, according to the Otteau Valuation Group in East Brunswick.

In Ocean County, sales fell 28 percent in July from July 2005 and were down 19 percent from January through July compared with the same period a year ago.

“That this slowdown comes in the midst of the prime March-to-August selling season, when home sales should still be running hot, provides compelling evidence of a market transition wherein home buyers have greater control over the selling price than at any time since 1991 — a 15-year span,” according to a report by Otteau.

Inventories are up. In Monmouth and Ocean counties, there was a 10-month supply of homes between January and July, up from five months for the same period last year, according to the firm’s monthly study.

“What we are into here is likely to be a two- to three-year cycle of a stagnant real estate market because it will take that long to sell out the unsold inventory that we have accumulated to this point,” said Jeffrey G. Otteau, the company’s president.

Experts say they are not surprised that real estate activity is slowing down.

The market could not stay “red hot,” said Joel Naroff, chief economist at Commerce Bank. “You are coming off of levels that we have never really seen, and now we are slowly moving down to more stable levels.”

It’s become a question of affordability, Naroff said. Income levels have not kept up with the rise in prices.

“Essentially, to buy a house, you had better have a house to sell or you can’t get into the market,” Naroff said. “As long as you can sell your house in one place you can come and buy a house in another area.”

Who’s affected the most in this market? The first-time home buyer.

“They tend to be people who are starting out in life, and they are the most sensitive to these affordability crunches,” Otteau said.

And what happens to them affects everyone else in the housing market, he said. The first-time home buyer allows the seller to upgrade to a second home, which allows that homeowner to buy another house. Eventually, the person at the top of the chain is the purchaser of a retirement home.

“Each first-time buyer purchase triggers five other home sales in the market simultaneously,” Otteau said. “All of this happens in a 24-hour period.”

Ocean Township resident Joe Corpina put his Bowne Road home on the market in August with a $599,900 price tag. He and his wife, who has started an interior design business, want to move to a smaller home.

He calls his house a “rare find.” In the seven years they have owned it, the Corpinas have spent about $100,000 on upgrades, including new windows and a gourmet kitchen with granite countertops.

“Our house is definitely attractive. It just appears that the market is working against us,” Corpina said. “If it wasn’t for the mindset of the market, I think our house would have sold in five minutes.”

The market has changed, real estate agents say.

“It was like a fire running out of control,” said Ron Raimondo, broker-owner at Key Agency in Hazlet, describing the residential real estate market. “There is going to be a period where there is a quiet, ebb tide. We are in a strong adjustment period.”

“The buyers are realizing that it’s not a fire sale on every corner,” said Lou Redbord, manager of Coldwell Banker Residential Brokerage in Holmdel. “The sellers are now starting to understand their house isn’t going to appreciate into the double digits or even the high single digits like it has done.”

Buyers have more choices and are asking to see more properties.

“We can take the buyer out for the same category and spend a few weekends with them and several showing trips with them,” Redbord said. “Two years ago, give me a few hours on a Saturday, and we can take care of everything that is in your parameters.”

While the entire region is seeing the same overall trends, there are differences when you break the market down.

NORTHERN MONMOUTH

The Bayshore region includes some towns, such as Union Beach, Keansburg and Highlands, where homeowners can still find reasonably priced homes, real estate agents say.

“You can primarily purchase a house between $250,000 and $400,000 and get a really comfortable, nice house in mint condition,” said the Key Agency’s Raimondo.

The less-expensive homes are smaller and are on smaller lots, he said.

Homes in towns such as Rumson and Fair Haven represent the other end of the spectrum. Of the 206 homes for sale in those two towns, 93 are priced over $1 million, said Deborah Madey, a broker with Peninsula Realty Group Inc. in Shrewsbury.

That doesn’t mean they are going to sell for that much. For homes priced at $2 million to $3 million, it’s not unusual for a buyer to offer 10 percent off the asking price, Madey said.

“Buyers are always more comfortble offering below ask on a higher price point,” she said.

WESTERN MONMOUTH

In areas of western Monmouth County, where most of the new housing in the region is located, builders are offering incentives to help sell new homes, said Charlotte Ruden, a broker/sales associate at Re/Max Central in Manalapan.

“They are throwing in extras to become more competitive,” Ruden said.

Meanwhile, she said people from New York are continuing to buy in the area because of local schools and the one-hour commute time to New York City. “We still have a very strong market in western Monmouth in spite of the fact that it is not as hot as it was,” Ruden said.

COASTAL MONMOUTH

In the coastal area, there is still value in the county’s waterfront properties, said Stan Kozlowski, general manager at The Mary Holder Agency, which has nine offices in Monmouth and Ocean counties.

“You can do another development in Manalapan, Marlboro and Freehold Township and develop a cornfield,” Kozlowski said. “But you aren’t going to develop any more waterfront property.”

Those properties will hold their position in the market, he said.

But as in other areas, there are more homes for sale, he said.

“My agents are showing more and more houses to the same buyer,” Kozlowski said. “There is less urgency to have to commit because of the scare of multiple offers tomorrow. They say “Honey, we have the time. Let’s look at another six houses.’ “

NORTHERN OCEAN

In northern Ocean County, Williamson said there are three times the amount of listings coming in than sales in towns such as Dover Township and Brick. “That is just creating a backlog of listings,” he said.

As in other areas, homes are staying on the market longer as well. For instance, in Dover homes are staying on the market almost 90 days, up from 70 days last year, Williamson said.

While prices are not going to continue to escalate as they have in the past, sellers still are reaping gains, Williamson said.

“They (houses) still proved to be a heck of an investment,” he said.

SOUTHERN OCEAN

In southern Ocean County, homes are traditionally less expensive than other parts of the Jersey Shore.

“People have historically gone further south because it is a bit less expensive, and they think they can get more house for their dollar,” said William Donnelly, broker and owner of Re/Max at Barnegat Bay, which has three offices in Ocean County.

As in other parts of Monmouth and Ocean counties, homes are taking longer to sell, Donnelly said.

And buyers are winning concessions from sellers, who are agreeing to make home repairs and pay buyers’ closing costs, he said.

Jim Joeriman, manager of Prudential Zack Shore Properties in Lacey, said he believes buyers’ decisions are being affected by the high price of gasoline. Many residents work outside of Ocean County, he said.

“As the price of gas goes up, that goes right to their monthly wallet,” he said. “We have heard some people say, “I want to live down here, but I can’t afford the price of gas right now.’ “

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ERA Othello Realty is your source for your real estate needs throughout New Jersey. From the shores of Spring Lake NJ to Newark NJ they can handle all your real estate buying and selling needs. For homes for sale in Monmouth, Ocean, Mercer, Burlington, Camden, Middlesex, Passaic and all the other counties in NJ. From Central NJ to Northern NJ to Southern NJ you can count on ERA Othello Realty for New Jersey Real Estate. Look at these Listings of Homes for Sale in NJ. We are the realtors NJ!

To Get You Into a New House, Builders Help Sell the Old One

2006-09-20T07:44:00.000-07:00

By Ruth Simon

From The Wall Street Journal Online

Home builders have a new trick to try to sell you a new home: They will help you get rid of your old one.

Faced with falling sales, some builders are helping would-be buyers spruce up their current home by bringing in professionals who advise them on what furniture to get rid of and tell them whether they should rip off the wallpaper. Others are offering to make payments on the buyer’s old mortgage (or the new one) in an effort to close the deal.

There is also renewed interest in so-called buyback programs: The builder, or a broker, agrees to buy your current home, for a preset price, if it turns out that you can’t sell it.

The offers are coming both from local builders and national firms. For instance, Pulte Homes Inc. recently started pairing its customers with professional “stagers” who sweep in and do things like remove window coverings and touch up the paint, and covering up to $2,000 of the cost of the service. The program is available in about a dozen markets, including Detroit, Indianapolis, Sacramento, Calif., Tampa, Fla., and Washington, D.C.

In Phoenix, Lennar Corp.’s U.S. Home division is offering a program in which customers who sell their homes through Coldwell Banker pay 3% instead of 6% commission on the sale of their current home. (To make up for that, Coldwell Banker is paid a 3% commission for the sale of the new home.) In Detroit, Toll Brothers Inc. will make principal and interest payments of up to $2,500 a month on a buyer’s new mortgage for the first six months, or give the buyer a credit equal to that amount at closing.

“Everyone is trying to be creative,” says Larry August of Pacific Pride Communities, a central California builder. With so many homes on the market, selling an existing home is a “huge obstacle for anyone looking to purchase a new home.” In some cases, Pacific Pride is making mortgage payments on customers’ old homes for as long as six months.

The new spate of offers means that prospective home buyers have another variable to consider. On the one hand, some of these deals can put valuable extra cash in the customer’s pocket, or make a deal happen that might otherwise fall apart. However, buyers need to pay attention to the fine print and make sure the terms fit their needs.

For example, special-financing offers typically require that the customer go through the builder for their mortgage. Buyers need to first check whether they can get financing that better suits their needs, and carries a lower cost, somewhere else.

Buyers may also be able to use these deals to negotiate other perks instead — say, fancier appliances or a lower mortgage rate. “If they want some other feature or benefit that is of the same or less value, we would be willing to look at that,” says Kira McCarron, chief marketing officer at Toll Brothers.

The growth of such offers comes as home sales have stalled in much of the country. Builders have already started tapping their usual raft of incentives, ranging from free swimming pools to subsidized closing costs. In some cases, they have even cut prices. The National Association of Realtors recently said it expects home prices to fall during the rest of this year.

For builders, the housing downturn has translated into slower sales and higher cancellation rates among prospective buyers who get cold feet. This month, Beazer Homes USA Inc. said that in July and August, orders fell 49% from the previous year’s levels, and cancellations climbed to 50% from 26% in the same period in 2005. KB Home said this month that orders for new homes fell 43% in its fiscal third quarter.

The kinds of help builders are offering varies from market to market, and even from project to project. The best deals are typically offered on homes that are already completed, or near completion.

In the Northeast, K. Hovnanian Homes, a unit of Hovnanian Enterprises Inc., often pays to have a customer’s existing home appraised (a move also designed to ensure that the property goes on the market at a realistic price). In some cases, the company will also arrange for the customer to get a lower mortgage rate, pay brokerage commissions on the sale of the existing property or pick up several months of mortgage payments.

Some builders trumpet special deals on their Web sites or in ads in local newspapers. Other offers are made quietly, on a case-by-case basis. For months, Fran Carroll, a mortgage broker in California, has been telling her builder she may not be able to close on her new home because she can’t sell her current one, even after dropping the price by $151,000. The builder, Shea Homes, recently offered to pick up the mortgage payments on the new home for three months.

When Ms. Carroll balked, it boosted the offer to include mortgage payments and homeowners’ association fees for six months, though she isn’t sure she will accept the offer. Like many builders, Shea is making promotional offers, but extending them to people already under contract “is not a common practice,” says Eric Snider, national vice president of sales and marketing.

Some builders are also increasingly willing to accept contracts that are contingent on the sale of the buyer’s existing home. “We’ve moved from selling homes, to helping people buy,” says Bob Moesta of Lombardo Homes, a builder in Detroit that this year started doing this under some circumstances.

Erickson Retirement Communities, which develops and manages communities in 10 states, has taken hand-holding further in its “Moving Home” program in Michigan. When Elizabeth Kramer decided to move into Erickson’s Fox Run community in Novi, Mich., Sharon Baksa, Erickson’s “relocation counselor,” gave her the names of three real-estate agents who could help her sell the four-bedroom Colonial she had lived in for more than 40 years.

To make the home more attractive, Ms. Baksa recommended that Ms. Kramer pull up the carpet that covered the home’s hardwood floors. She also recommended a mover and a service that could help with packing and unpacking, and helped pay for installing air conditioning for the buyer of Ms. Kramer’s home.

“It was a huge undertaking and they made it easier,” says Ms. Kramer, who sold her home for $235,000 in August. Erickson says it is now rolling out some of the elements of the program in other markets, including Massachusetts, Illinois and New Jersey.

Real-estate brokers say they are also starting to see renewed interest in guaranteed-buyback programs. In these programs, the seller is typically promised a preset price if the home doesn’t sell within several months. Berkshire Hathaway Inc. unit Reece & Nichols, a Kansas City, Kan., real-estate broker, says it has already done 10 to 15 buybacks for builders this year, compared with none last year.

But in a cooling market, buyback offers are often greeted with a skeptical eye by sellers, who think their home is worth far more than they are promised. At Long & Foster Real Estate Inc., a mid-Atlantic broker, agents meet with three to five customers a week to explain its buyback program, but only one in 10 signs up. The others “aren’t willing to believe what the actual number is,” says Danny O’Sullivan of Long & Foster.

Some builders, he says, are now considering whether to make up the difference between the initial listing price and the guaranteed sale price.

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Tips for Purchasing a House With a Pal to Save on Rent

2006-09-20T07:43:00.000-07:00

By Diana Ransom

From The Wall Street Journal Online

Kelly Furlong is fed up with renting. After sending a sizable chunk of her pay to her landlord each month, the 25-year-old sales professional in Springfield, Va., has decided she is “making someone else rich.”

But she doesn’t have the financial resources to swing a big down payment and hefty mortgage payments on her own. So she and a longtime friend are now looking for a house that they could buy together, Ms. Furlong says, “because it’s way too expensive to do on my own.”

Like most home buyers — even in this dicey market — Ms. Furlong and her friend are banking on the home appreciating in value over time.

They also seek tax benefits in being owners rather than renters: People who itemize their tax deductions can deduct payments of mortgage interest and property tax.

But buying a home is risky — in part because it’s a large investment that can take a lot of time and expense to sell. And in an arrangement where two individuals are linked by nothing more than a deed and a mortgage, the risks and complications are heightened.

So Many Questions

Say your co-owner gets a job transfer to another state. Do you sell the home? Do you buy your partner out or bring in a new co-owner? And what if you don’t even like a prospective replacement housemate?

If you’re the one who decides to move on, meanwhile, getting your cash out of the deal may be more complicated than if you owned a home on your own and immediately put it up for sale.

If you and a friend buy a home together, real-estate brokers and attorneys generally recommend you do so as “tenants in common.” In that way of holding property, you can each sell your interest individually and choose who will inherit your interest if you die. Depending on how much you each have to invest, the split could be 50-50 or whatever you decide.

But there is something else to consider on a joint purchase: Tenancy loans are typically shared, meaning that if one owner balks at paying, the other one is liable.

Plan to accompany any such purchase with a legal agreement between the two investors, typically called a tenancy-in-common or TIC agreement, that spells out how you will handle various contingencies. Figure about $1,000 in legal fees for that agreement.

Among key points, the agreement should spell out how expenses including the mortgage and tax payments will be split. The agreement should also cover how you will proceed if and when one of you wants out.

Get an ‘Exit Strategy’

You need “an exit strategy,” says Andy Sirkin, a real-estate attorney in San Francisco.

Typically, the agreement provides that when one owner wants to leave, either the house will be put up for sale or the remaining owner must buy the other out at a price based on the property’s appraised value.

Another option would be for the departing individual to sell his or her share to someone else.

Typically, the remaining owner would have the “right of first refusal,” or first dibs at buying the other’s share. In case you don’t want to buy your co-investor out, and you want the ability to approve a new co-investor, put that in the agreement.

Consider jointly funding a reserve account, with enough cash to cover one or two mortgage payments along with a little extra for emergencies.

Not That Color!

Property usage rules are also key to the agreement and your sanity. If you don’t like orange paint, here’s your chance to say so.

Spell out a method for resolving disputes. To avoid expensive court proceedings, co-owners typically choose either mediation or arbitration.

“You absolutely have to have an agreement,” says Clifford A. Hockley, a real-estate broker in Portland, Ore.

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We have hundreds of listings of homes for sale in your area. If you are interested in buying a house feel free to search through our database. This is a free service and we have a low-pressure policy. We list homes for sale in Manalapan NJ, Point Pleasant Beach real estate and many other New Jersey properties for sale. There is a lot of property for sale in New Jersey. We are the realtors NJ!

More unsold homes on Jersey Shore

2006-09-20T07:42:00.000-07:00

The housing market in New Jersey’s coastal Monmouth and Ocean counties is slowing, but the bottom is not falling out, according to an article by the Asbury Park Press. The number of houses for sale has risen dramatically and real-estate agents are seeing “pages and pages of price reductions,” the newspaper reports. However, some local real-estate professionals describe the market as “stable.” Says one agent, “Prices may not be accelerating, but I do not see drastic reductions in prices at all.” According to the article, 6,884 homes remained unsold in Monmouth County in the second quarter of this year, an increase of 57% from the second quarter of 2005. In Ocean County, there was an increase of 68% to 6,728 unsold properties, the article says.

By Lauren Baier Kim

http://www.realestatejournal.com/

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Using Your Energy Wisely: Alternative Energy in the Home

2006-08-02T12:10:00.000-07:00

By: Eric Yablonsky

Energy costs are on everyones mind, and alternatives are a hot property though many homebuyers arent sure how to find and evaluate them. There are a number of technologies to choose from which can help make your next house the home of the future.

Alternative energy gives new meaning to the real estate mantra of location, location, location what works in sunny California may be different from what works on the windy plains. But just as there are many styles of homes for buyers diverse tastes, there are varied options in energy systems with more than one sometimes working hand-in-hand for the same house.

Wind power an ancient energy source now seen in high-tech windmill farms with tall propeller-like turbines has come down in the cost for generating electricity by over 80 percent since 1981. Geothermal energy home heating powered by underground steam warmed up by the temperature of the earth itself is a source getting more attention in the American West.

Relocating homeowners can choose to move to areas where wind generation is lowering electricity costs, while geothermal energy has applications for both large-scale power plants and individual homes. There has also been progress in residential settings with fuel cells, power systems that convert natural gas fuel to electricity through a chemical reaction with hydrogen, producing just water as a byproduct.

Perhaps the most familiar and popular source of renewable alternative energy remains the sun itself. Photovoltaic (PV) systems, which convert sunlight to electricity, have shown great energy-bill savings and homeowner satisfaction. These systems, which have been likened to a car that makes its own gas, are now available in the form of roof tiles that can integrate attractively with regular roofing.

Households that use roof tiles have found some 80 percent of their electricity needs supplied by them The homes can remain on the conventional power grid for the rest; at sunnier times when the home produces more energy than it can use, it goes back into the grid and credits the homeowners account, literally turning back their electric meter. Across the country rebates from utility companies and tax credits from government are available for such setups. Its a way of contributing not only to the global community by using up less nonrenewable energy, but also to your own neighbors by freeing up conventional power.

Solar tiles are growing in popularity with home-development builders, and are seen as paying for themselves in savings and simplicity of maintenance. The savings increase considerably in combination with energy-efficient appliances. For example, in Sylmar, Californias Village Green complex, this mix is a standard feature and the average resident has been shown to pay one-tenth in monthly utility bills what other town residents pay.

Your local real estate professional can help advise you on what energy alternatives are most available and may work best in your area. A little shopping around may shed light on options that make yesterdays technological dreams todays homeowner dream-come-true.

Author: Eric Yablonsky is the president of ERA Othello Realty in Lakewood, NJ and a licensed real estate broker.

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ERA Othello Realty is your source for your real estate needs throughout New Jersey. From the shores of Spring Lake NJ to Newark NJ they can handle all your real estate buying and selling needs. For homes for sale in Monmouth, Ocean, Mercer, Burlington, Camden, Middlesex, Passaic and all the other counties in NJ. From Central NJ to Northern NJ to Southern NJ you can count on ERA Othello Realty for New Jersey Real Estate.

Age Differences: Old Homes vs. New

2006-08-02T12:09:00.001-07:00

By: Eric Yablonsky

Of the many concerns to weigh when buying a new house, a major one is whether to buy a new one in name only: both state-of-the-art properties and distinguished older homes have their attractions and possible drawbacks.

In making this decision, its important to literally leave your preconceptions at the door of any home youre considering. Quality construction can appear in any era, and you just have to be knowledgeable about the strengths and problems to look for in each individual house.

Surely newer homes assure a certain measure of structural integrity, energy-efficient features, and safer electrical wiring and heating systems. They can have less wear and tear, more modern conveniences built in, an aesthetic more suited to todays tastes, and often better handicap accessibility.

On the other hand, older homes can have a proven history of safety and stability, styles appealing to those looking for more old-fashioned elegance and charm, and a track record of repairs that leaves no surprises.

There are some pros and cons in which old and new houses are evenly matched. Newer homes, as part of newer economic growth, can be found in more promising areas just setting out on a boom of development (and thus presenting substantial investment advantages), while older homes can be found in more established, comfortable, and picturesque locations which have their own premium value to many types of subsequent buyers. Older homes can come with the headaches of aging structures and systems, while newer ones can be hastily made, with their own set of consequences. Old homes can harbor the health concerns of obsolete materials (like lead paint and asbestos), while new homes can include ones more recently recognized (like arsenic in outdoor wood and formaldehyde in carpets).

But either can still be your dream home, and this overriding point is tied more to the intangible interests that lead you to shop for homes in the first place than it is to scientific specifics. For any house youll want to get a professional inspection done, but in the end you have to follow your heart.

Old homes and new ones have upsides and downsides of equal weight, so tip the balance with your own preferences and abilities personal taste, financial resources, handy-person skills, available time and long-term goals. Which is the winner of Old vs. New? If you decide carefully, either one can be the winning choice for you.

Author: Eric Yablonsky is the president of ERA Othello Realty in Lakewood, NJ and a licensed real estate broker.

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Weyerhaeuser Plans to Pull Back From a Slowing Housing Market

2006-08-02T12:09:00.000-07:00

By Jim Carlton

From The Wall Street Journal Online

Weyerhaeuser Co.'s home-building unit said it is pulling back from the housing market in several parts of the country, in the latest sign of how corporations are shifting strategies to respond to the national housing slowdown.

Weyerhaeuser made the announcement in a conference call with analysts yesterday, when the forest-products titan released its second-quarter earnings. While profit for the Federal Way, Wash., company declined 25% from the same quarter a year earlier, amid a fall in lumber prices and other factors, it was substantially higher than analysts predicted because of strengthening paper prices.

But company officials sounded a cautionary note on one important growth area: its expansion during the past few years into home building. Now accounting for almost 15% of the company's total revenue, the Weyerhaeuser Real Estate Co. unit ranks as a major U.S. home builder, with brands that include Pardee Homes, Winchester Homes, Trendmaker Homes, Quadrant Homes and Maracay Homes.

Officials of the unit said that their home-building activity remained strong in the second quarter in the Houston and Seattle markets, but that new-home sales have slowed in the once sizzling markets of Southern California, Las Vegas, Phoenix and suburban Washington, D.C. As a result, Weyerhaeuser's overall cancellation rate for new homes in the second quarter shot up to 26% from 12% at the same time a year earlier, pushing its total homes completed but unsold to 176 at the end of June from 109 at the same time last year, Dan Fulton, chief executive of the unit, told analysts.

Mr. Fulton said Weyerhaeuser is reacting to the slowdown by limiting its housing starts and deferring land-purchase commitments, where it can. He added that Weyerhaeuser remains confident in the long-term prospects for housing and will stay positioned "to take advantage of buying opportunities in support of our long-term vision for business expansion."

For the second quarter, Weyerhaeuser reported net income of $314 million, or $1.26 a share, on revenue of $5.69 billion, compared with a year-earlier profit of $420 million, or $1.71 a share, on revenue of $5.71 billion. Both quarters included various charges and gains.

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Is Buying a Home in Your 20s A Step Ahead or a Wrong Move?

2006-08-02T12:08:00.000-07:00

By Emily Meehan

From The Wall Street Journal Online

Wish you were more grounded? Here's a solution: Buy a house.

For people in their 20s, owning real estate is a way to take on more responsibility, get a sense of stability in at least one area of life and maybe even build up some equity, too. But it involves a heavy commitment -- to a mortgage, to a place, to holding a steady job -- all of which can limit lifestyle and career choices. What about that six-month trip around the world, going back to school or joining the Peace Corps? Once a deed is signed, it may not be that easy to skip town on a month's notice.

Jamie Schab, a 26-year-old interior design assistant, bought a townhouse in Sunnyvale, Calif., with her fiancé last May. Together they saved $120,000 for a down payment on the new $592,000 property. "It's made me more responsible," she says, "and I feel equal to my co-workers now because I'm not just renting and doing whatever ... I have to go home, clean, cook, and make sure the house doesn't fall apart." Ms. Schab feels comfortable with the commitment and has been budgeting for emergency repairs, property taxes and homeowners insurance. She doesn't plan on changing jobs but says if she does switch to a less lucrative career, her fiancé's income from his job as an office engineer for a contracting company would make up the difference. She thinks it helps that the property is new so bursting pipes and leaky roofs aren't likely for quite a while.

People in their 20s are more inclined to buy real estate now than they were 20 years ago, according to annual statistics from the U.S. Census bureau. In 2005, almost 26% of household heads under 25 years old owned their home, up from 17% in 1985. Homeownership rates for 25 to 29 year olds also increased over the past two decades, though not as sharply.

But don't we have a propensity to change jobs and cities in our twenties? How about college and graduate school? Military deployments? In this phase, it may be hard to count on an income beyond the most immediate job, which could change. Is it worth taking the risk of committing to a mortgage payment budgeted around unpredictable conditions?

"I wouldn't have done it any other way," says Jaya Manske, 23. Ms. Manske, a school teacher, bought her first home in Albuquerque, N.M., her first year out of college for $130,000. She was recently laid off and took a lower-paying job at a private school. "I couldn't move out of state -- even though the prospects in any other state would have been much better -- because I owned a home here," she says.

Ms. Manske talked with her boyfriend, whom she lives with, about the possibility of moving out of state and renting the property. "It seemed daunting and expensive," she says. Her parents had loaned her the $5,000 down payment for the house, and she was making just enough to cover the mortgage and expenses at her former job. Now she's getting a little help from her boyfriend. If the roof leaks, she says she might have to put the repair cost on her credit card.

The house is in her name and she says she'd prefer to be self-sufficient. "Certain things need to get pared down a bit ... going out to eat, going on vacation or camping for the weekend. There isn't really room for anything like that right now," she says. "It's much more dedicated to bills and only bills."

But in her view the economic benefits of building equity trump these concerns. "Each time I pay my own mortgage, I feel like I'm paying myself back for later on rather than paying into someone else's -- a landlord's -- business," she says.

For others, financial equity and flexibility are mutually exclusive.

Josh Brehm, 29, just bought a duplex in Wausau, Wisc., for $73,000 with his girlfriend. "When I was 23 or 24, I would have loved to buy a place," he says, "but my whole bag was 'What if I'm not here next year? What if I have to move ... do this, do that?' I've traveled quite a bit over the years ... that's one of the reasons I put this off for so long."

Mr. Brehm saved money through his twenties working in a management position and now works as a part-time supervisor at UPS and attends college. He says the income capacity of his duplex gives him and his partner the flexibility to move and rent out the whole building, perhaps leaving friends or family members to look after it. For now, they live downstairs and rent out the upstairs unit, which generates enough income to cover monthly payments on the mortgage.

But becoming a landlord is a big responsibility and it's not always easy to secure tenants. If moving is a likely possibility, the cost of hiring a property-management company should be factored in before making a purchase. And if renting out a house is out of the question, young people should consider how long they'd be willing to wait before getting a good offer to sell.

Phyllis Attebury, a real estate broker who lives in Carmel Valley, Calif., and works with clients on the San Francisco peninsula, says the market is slowing down a little and that buyers should be prepared to keep a house for at least five years to weather market downturns. "In the long haul, real estate has been a saving grace for many. But for a single person who's here, there, and everywhere they should probably just think about renting for a couple of years," she says.

Michael Esquivel, 23, a budget analyst who lives in New City, N.Y., is considering buying a house with two of his oldest friends. "But we're young, and any of us could change jobs easily or move out and the other two would be stuck paying the mortgage, which would be horrible," he says. On his own, Mr. Esquivel says he could only afford a shack and would prefer to live at his parent's house and save money to buy a nice house later on.

I'm a renter myself, and I often wonder if owning a home that I could paint orange and cerulean and landscape with agave cacti and olive trees would instill such a serene sense of propriety that I'd be willing to give up being footloose and cosmopolitan. Or maybe I'd be better off renting indefinitely, and spending any extra money on dinners out and trips to Oaxaca and Paris.

It's a tough call between empire and freedom.

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Marlboro Schools

2006-08-02T12:07:00.000-07:00

October 2005:
The Marlboro schools (K-8) enrolled 92 more students this year in K-8 than last. Net migration into the schools was 342 (246 into grade one, 72% of intake), but K/8 replacement was an offset of -250. (The entering K of 426 is 250 smaller than last year's graduating grade 8 of 676.) SE/POP also grew, by 53.

The district has grown 611 (K-8) in the past five years, while 1,232 new housing units were permitted and over 2,256 existing homes sold (2002-2005). SE/POP increased 83 with the opening of MELC. The state Dept of Health's Center for Health Statistics, in a December 2005 report on births, advised NJ births fell 5.1% between 1990 and 2003.

October 2004:
The district has grown 1,732 over last decade, 1994-2004 (+41.9%).
Growth this year over last was 57, the net of:

Grade 1 walk-in of 207;
Entering K 296 smaller than last year's graduating gr. 8 (428-724);
Net other migration (gr. 2-8) of 170;
SE/POP decrease of 24
= 170 + 207 = 377 - 296 = +81 - 24 = 57

District enrolled 5,941 in Oct 2003, has 5,998 students this fall.

March 27, 2004
Enrollment projections

Until 2000 NJ school districts were permitted to use either percent-of-population or standard cohort projections in their long range plans (New Jersey Administrative Code 6:22-4.1). After the Educational Funding Construction law was passed in July 2000 (PL 2000, ch. 72), educational facilities code was rewritten and percent-of-population was dropped as an enrollment projector. Under NJAC 6A:26 NJ districts use cohort projections for enrollment estimates. The NJ Dept of Education worksheet, required with referendum filings since 2000, is online Under code, projections are to be no more than one-year old, ie, in 2003 should be based on the 2002 or 2003 school year opening (October) enrollment figures.

Projections are updated every fall, to incorporate the latest year of community change (housing sales, starts and net migration) in estimates of upcoming enrollments. A projection is for five years forward, as the children born in the latest calendar year are the Kindergarten class five years from now (born in 2003 will generally enroll in K in 2008).

Projections done for Marlboro in 1999 did not include planning, then, for the MELC and a quadrupling of the POP enrollment.

Property of the Marlboro Township Board of Education

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A Third Of Us Real Estate Still Appreciating

2006-06-26T07:20:00.000-07:00

Despite contrary reports in the mass media, a third of the 50 US States real estate markets are still appreciating at healthy levels, according to an in depth study conducted by Real Estate Add, an information driven website, which provides detailed information on real estate markets in all 50 states.

Seventeen of the nations states are still appreciating strongly, including seven states located in the southern portion of the country. The southern states are experiencing the largest migration of new residents in history.

The southeast is bolstered by warmer climates than the northern part of the country, causing an onslaught of new residents as US weather patterns change. Many businesses have moved or are planning on moving to the southeast.

Tennessee, Kentucky, South Carolina, North Carolina, and Alabama are still growing in population with new residents and are maintaining strongly appreciating local real estate markets.

Nashville, Tennessee is the nations home of country music, and Nashville has seen a rise in appreciation over the past three years unprecedented in its history. Nashville housing prices are forecast to appreciate nearly another 7% by the end of 2006.

But Memphis will appreciate a whopping 7.7% by years end, according to the websites economists.

South Carolina, however, may have one of the longest lasting and strongest appreciating housing markets in the nation. Many new businesses have been drawn to South Carolina through tax incentives, and many retirees are buying more affordable housing in South Carolina.

The Mississippi and Louisiana housing markets were dealt a severe blow by Hurricane Katrina nearly a year ago. But both states real estate markets have turned into strong buyers markets, where the shortages of housing have fueled a building boom, mainly confined to areas outside of the disaster zones.

The shortage of construction workers in both states, a lack of building supplies, and problems with insurance payoffs have contributed to a rebuilding slowdown.

In the nations northern tier of states North Dakota real estate is still appreciating, mainly because of its low cost of living and growing job markets in a handful of communities.

Idaho, Montana, Utah and Alaska are also still experiencing positive home appreciation. Alaska hasnt seen a booming market like it is in Anchorage since the oil pipeline boom days of the 1970's.

Boise, Idaho, selected by numerous publications as one of the best places to live in America, is also continuing to experience a housing market that has been appreciating for more than three years, and doesnt show any signs of slowing down any time soon.

By Mike Colpitts

Utah is another western state that is under going unprecedented growth and appreciation. But of all the states in the nation that have experienced booms and busts in major urban real estate markets that could have slowed down already, Washington is still experiencing appreciation.

In Seattle its still a sellers market, despite rising interest rates and increasing inventories of homes and condos on the market. Across the Cascade mountain range in eastern Washington, Spokane has under gone a market of rising appreciation unlike anything it has experienced for 15 years. Spokane housing will appreciate another 7.9% in 2006 on average.

Many states real estate markets have slowed down after 13 years of low interest rates. It may be difficult to determine just how strong many local real estate markets are. Real Estate Add surveys local markets on a regular basis for changes with information supplied by title companies, closing attorneys, lenders and real estate agents.

About the Author:
Mike Colpitts is the publisher of Real Estate Add, an information driven website, which provides appreciation forecasts and unbiased real estate information on local real estate markets in all 50 States. Visit http://www.RealEstateAdd.com

Adding Diversity to the Kitchen: Designers Push Mismatched Look

2006-06-26T07:16:00.000-07:00

By Christina S.N. Lewis
From The Wall Street Journal Online

After years of focusing on marble countertops and stainless steel, designers and manufacturers are pressing a new look: the jumbled kitchen.

An estimated six million Americans will renovate their kitchens this year, according to the National Kitchen & Bath Association. To try to win some of that business, the industry is toying with new designs, from ultra-minimalist "hidden" kitchens to colorful themes. But another strategy that's getting more attention lately combines multiple materials, styles and dimensions -- like three kinds of countertop stone, or cabinets in glass, metal and wood.

A similar aesthetic emerged in other parts of the house 20 years ago, when homeowners traded bedroom and living-room sets for stand-alone pieces. Now, many companies are promoting the idea for the kitchen. The Los Angeles showroom for minimalist design company Boffi just installed an L-shaped island in oak and stainless steel, with Corian cabinets and melamine drawers. German kitchen manufacturer SieMatic recently introduced a new collection of wood cabinetry, designed by Chicago-based Mick De Giulio, that is built to work with multiple thicknesses of countertops and varying accent materials like stainless steel and stone. Wm Ohs, a Denver cabinetry company with 28 showrooms nationwide, added stainless-steel and glass-accent doors for the first time in April -- a departure from its traditional all-wood look.

Nickel and Limestone

When Lori Naccarato's designer proposed the idea, she wasn't convinced. "I'm the kind of person who needs everything to match," she says. But after seeing all of the components in a showroom, she agreed. Her new $150,000 kitchen has five different materials incorporated into the counters -- including French limestone near the oven, a handmade nickel sheet in the pantry and red granite on the island -- two sinks made out of stone and stainless steel, and a Turkish travertine floor in two patterns, herringbone and puzzle. Ms. Naccarato, a 34-year-old homemaker in Hinsdale, Ill., calls it "more homey" than the all-white kitchen in her old house.

"At one point, everything had to be perfectly matched," says Ed Pell, market-research manager for the National Kitchen & Bath Association in Hackettstown, N.J. "Now people want diversity. They like to see things broken up."

The campaign is making some headway. Two years ago, Wilsonart in Temple, Texas, launched a marketing campaign stating that "mixing materials is the new black." Annual sales of its collection of colorful mix-and-match laminates, which are used in counters and backsplashes and promoted for their compatibility with other materials, were up 30% last year, compared to 3% for the company's laminates overall. At DuPont, the Wilmington, Del., maker of countertop materials like Corian and Zodiaq, 10% of customers are combining two different surfaces in the kitchen, up from practically zero seven years ago.

"People are still asking for stainless, but they're asking for less of it," says Robert Schwartz, owner of design firm St. Charles of New York. The company has specialized in stainless-steel kitchens, but one recent display, built for last month's Kips Bay Decorator Show House in New York, included a red porcelain island, brass ceiling, white compressed-glass countertops, crystal hardware, mosaic floor and cabinets in walnut and stainless steel.

Designers have experimented with mixing over the past decade for mostly functional reasons, by inlaying a cutting board directly into the counter or adding a few glass cabinet doors that would let homeowners show off their plates. They're building on the idea as kitchens become more of a place for entertaining and living -- and as they look for ways to differentiate their products from off-the-shelf kitchens sold at companies like Ikea.

The pitch comes as sales have slowed for the estimated $80 billion kitchen-remodeling industry, and as some trends show signs of aging. The number of home-kitchen renovations fell 1.8% last year, according to the National Kitchen & Bath Association. Stainless steel, once a luxury feature, now appears in 25% of all kitchens, says market-research firm NPD Group in Port Washington, N.Y. And as prices for granite have dropped because of cheap imports from Brazil, sales at the high end have shifted to engineered stones that come in many colors and expensive materials like concrete and zinc, says Mr. Pell.

The kitchens could bear a high cost. Brokers say that an unusually eclectic design could knock off 10% from a home's asking price. "The cleaner look tends to please more buyers," says Bonnie Adams, a residential broker in La Jolla, Calif. Using multiple materials can also increase labor costs as much as 10%, contractors say. "It does make a job more difficult," says Michael Graziano, owner of Aladdin Remodelers in Massapequa Park, N.Y.

The juggling can compound a classic renovation problem: construction delays. Myron Martin's kitchen overhaul was originally estimated to take four weeks. It's now in its third month. One problem is engineering issues in fitting a prep sink, made from copper and mother of pearl, into a black walnut and granite island. "Everything takes longer than you would think," says the 63-year-old lighting-company executive from Atlanta.

Cleaning Rules

The work may not end there. Darlene Landsittel's newly eclectic kitchen came with a list of cleaning instructions for each material, compiled by her designer. Though she has a regular housecleaner, Ms. Landsittel placed the kitchen off-limits for fear something will get damaged. "It's my project right now," says the 63-year-old caterer in Chicago, who polishes the nickel counter every six weeks, seals the Calcutta marble once a month and uses only soap and water on the bamboo island.

Don Silvers, a kitchen designer and former professional chef in Los Angeles, sticks to more traditional looks. Mr. Silvers, who once ripped out a mismatched kitchen for a frustrated client, says combination countertops can be prone to splitting or unevenness over time. "They create spaces that look wonderful," he says. "Too bad you can't cook in them."

Some homeowners may find that the melting-pot approach doesn't come with easy accessories, as Carol Flier did after a $140,000 renovation last August. In the month before Thanksgiving, the dance teacher in Newton, Mass., scoured a dozen shops within 20 miles, hunting for dishes that would match the three types of stone in four colors. She finally went with French country-style serving pieces. But Ms. Flier has no regrets about leaving behind her old kitchen, in white and stainless steel. "That, apparently, is out," she says.

New Plan Calls for Scaling Back Of World Trade Center Memorial

2006-06-26T07:15:00.000-07:00

By Alex Frangos
From The Wall Street Journal Online

The World Trade Center Memorial faces simplification of its design, including moving carved-in-stone names of Sept. 11 victims to ground level, possibly eliminating or scaling back waterfalls and reducing the size of a museum.

Those were among the recommendations made yesterday to New York Gov. George Pataki and New York Mayor Michael Bloomberg in a closed-door meeting, according to people close to the situation. A formal report on the redesign will be released next week. Real-estate developer Frank Sciame presented the plans after Gov. Pataki asked him last month to create a budget that would bring the bulk of the project's cost to $500 million. A construction estimate in May put the total cost of the memorial, including infrastructure and other elements, at $1 billion.

Mr. Sciame also recommended -- and Gov. Pataki agreed -- that the Port Authority of New York and New Jersey, which owns the site, build the memorial. That task lies with the World Trade Center Memorial Foundation, a publicly chartered, privately run group that also is in charge of fund raising.

The original memorial design by architect Michael Arad called for two square openings that covered the footprints of the Twin Towers. Waterfalls would fall from the edge of the openings into underground chambers, where victims' names would be etched in granite. Mr. Arad couldn't be reached for comment.

People who have been briefed on Mr. Sciame's report say it simplifies the project by doing away with separate entrances for the memorial, an adjacent museum and a visitor center. The museum would be reduced in size, but still would be underground. There would be a much smaller amount of space underground dedicated to the memorial. The waterfalls could be eliminated or greatly reduced. Scale mock-ups of the waterfalls showed they would be difficult to operate in the wind and cold.

People familiar with the project said Gov. Pataki favored Mr. Sciame's recommendation to bring the etched victims' names to ground level -- an idea preferred by several groups representing family members of victims killed in the 2001 attacks. Placing the names underground -- and providing space where visitors could reflect on the attacks -- was a centerpiece of Mr. Arad's vision.

Moving the names would eliminate the need for large underground chambers and would fundamentally change the visitors' experience. Instead of descending into the underground chambers, visitors would look at the names amid an open-air, tree-lined park. Nine million people are expected to visit the memorial the year after its planned opening, which, despite the redesign, is scheduled for Sept. 11, 2009.

Visitor access to the underground slurry wall, which protects the site from the nearby Hudson River and survived the collapse of the Twin Towers, would be limited to a smaller area than before.

Before the Port Authority of New York and New Jersey could take responsibility for building the memorial, the transportation agency -- controlled by the two states' governors -- would have to agree to take on the cost of underground infrastructure shared by the memorial and a neighboring rail station, shopping mall and office buildings. The May report estimated the cost of infrastructure -- including ramps, air-conditioning plants and sidewalks -- at $300 million. Mr. Sciame's analysis put the cost between $150 million and $200 million, according to those familiar with his report.

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KB Home Gets Set to Build Houses in New Orleans Area

2006-06-26T07:13:00.000-07:00

By Michael Corkery
From The Wall Street Journal Online

Nearly 10 months after Hurricane Katrina, KB Home is the first large publicly traded home builder to start construction in New Orleans.

After a ceremonial start today on seven homes, the company plans to build hundreds of houses in greater New Orleans in the next couple of years despite an uncertain profit outlook, a shortage of building supplies and other obstacles.

City officials welcome the homes, priced between an estimated $140,000 and $450,000, but they say New Orleans still needs more affordable housing.

The first houses are being built on relatively high ground, on the edge of downtown, which was spared major flooding. The company, based in Los Angeles, says it has also received approval from local planning officials to build homes on roughly 776 lots on undeveloped land in Jefferson Parish, in an area southwest of Orleans Parish. KB is teaming with Shaw Group, an engineering and construction company based in Baton Rouge, La., in a joint venture to build the homes.

"I am thrilled with the progress we've made," says KB Home Chief Executive Bruce Karatz. "Whether we look back a year from now and say if this is a good business is something we will have to judge a year from now."

There's little doubt that New Orleans needs new housing badly, but many issues are unresolved. Ivan Miestchovich, director of the Real Estate Market Data Center at the University of New Orleans, says the local housing market is going to start to "turn some corners" in the coming months.

He says the end of the school year could prompt families with one spouse living in New Orleans and the other spouse in another city to decide whether to relocate or remain in the Crescent City.

Another wave of activity could come after the end of the summer, when the state says it will start cutting checks to cover uninsured damages borne by New Orleans residents. That money could motivate residents to rebuild locally, or take the funds to another city.

So far, Mr. Miestchovich says, one of the hottest markets is on the north side of Lake Pontchartrain, in St. Tammany Parish, where $150,000 to $200,000 houses -- built mostly by small local builders -- are selling briskly. Some new homes, priced for less than $100,000, "are selling before the first nail is hammered," Mr. Miestchovich says.

New Orleans City Council President Oliver Thomas Jr. says the biggest need is for homes priced between $90,000 and $150,000. "When you get above that, it's hard to service people who live in this city," he says.

The KB development within the Orleans Parish limits will total about 73 homes -- including 15 designated affordable units, to be priced as low as $140,000.

Other large home builders haven't rushed into the New Orleans market for several reasons. Even before Katrina, the market never offered the kind of sales volume that many large builders desire. The hurricane created other obstacles, such as high home-insurance costs and difficulty finding qualified workers and supplies.

To compensate for the labor and material shortages, Steve Davis, KB's Gulf Coast region president, says KB has built several roof trusses in Mississippi for shipment to New Orleans.

Mr. Karatz says part of KB's motivation is to help New Orleans recover, but adds, "We are structuring it as a business and for it to stand on its own feet."

Homeowner Gets Caught Up In a Classic Mortgage Swindle

2006-06-26T07:11:00.000-07:00

By Lew Sichelman

From Marketwatch

Question: I recently sold a home for $89,000. The bank's representative falsified the contract to show a sales price of $100,000, then financed $85,000 with the remaining $15,000 in a promissory note that I am to carry. The note has been filed with the county clerk, but I am not carrying the third lien on this property. It was all falsified. Where do I go to report this company? I am in Texas. Kathy.

Answer: Sounds like you're caught up in a classic mortgage swindle in which the value of the property, backed by a faulty appraisal, is inflated beyond what the seller is asking. Then the buyer pockets the difference between what you are actually paid and the fake sales price. In most cases like this, the supposed buyer never even makes the mortgage payment and the lender loses the entire $100,000.

With all the focus that's being put on mortgage fraud these days, the bank should have had systems in place to spot this kind of scam and stop it before it hands anyone any money. Consequently, it's hard to feel sorry for the lender. Nevertheless, you should report the situation to someone in the bank's quality-control section. If that doesn't work, find out if the bank has a fraud department. And if you have no luck there, write a letter directly to the president or chairman of the board.

Also report the incident to your state and local authorities. That would be the police locally and lending industry regulators at the state level.

Question: Here's a question about a family member stealing practically an entire inheritance from other family members. Uncle Steve left his estate to nine members of his and his deceased wife's families. However, a sneaky niece stepped in and told the family members that Uncle Steve meant for the 200-plus-acre farm to be left to her alone. He had already left a tidy sum of stock for her ($600,000). She was the executor of the will and convinced the lawyer that Uncle Steve told her it was to be this way. Then she went to the family members, including her own children and their wives, and got releases from all of them at no cost, except for a cousin, who she paid $15,000 for her share. The niece has now closed my uncle's estate after charging obscene amounts for acting as executor, among other roles, leaving the estate pretty bare bones. But she ended up with $1.7 million for her work. Now the other eight heirs want to know what happened and what can be done. Linda.

Answer: Not knowing all the details here, I can only speculate that the crafty niece seems to have snookered the lot of you. Wills, like rules, are made to be broken, and from your telling of the story, anyway, that seems to be what happened. I'd sit down with a seasoned estate attorney and discuss your options.

Sorry, I know that's a pretty standard nonresponse, but I really can't add any more than that. You have a complicated legal issue here and I'm not an attorney.

Feedback

Several folks have written to say that I missed another option in my response about the intricacies of gifting money to someone who wants to buy a lot, in this case, the reader's son.

I said up to $12,000 a year can be given as a gift without incurring any gift taxes. But I failed to mention that if both parent and son are married, each parent can gift $12,000 each to the son and his wife for a total of $48,000 -- "instantly," in the words of Clint Logan, "without gift taxes."

Also, Gary Mason correctly point out that only cash transactions of $10,000 or more are reported to the Internal Revenue Service by financial institutions, not checks, as I also said. In some cases, says Mason, who has been a banker and an attorney, even cash amounts of less than $10,000 are reported to Uncle Sam.

More feedback

Jay Jewson, a broker in Wabasha, Minn., says I'm way behind the times with my suggestion to put up only a few hundred dollars of earnest money. "A few hundred dollars of earnest money won't get a house bought in most of the country," he wrote.

In Jewson's opinion, deposits should be a minimum of $500 on sales up to $100,000; $1,000 with contracts between $100,00 and $200,000, and five or ten grand on offers above $200,000. "Earnest money makes purchase agreements binding and legal," he said. "It also shows the seriousness of the offer."

Still more feedback

Also, several readers wrote to say my suggestion to walk away from your deposit money if something is amiss at the settlement table was bad advice, plain and simple.

"Pull that in a high-priced area like California and you would lose a lot," said Rg Lutz, managing director of a real estate investment firm in Redondo Beach near Los Angeles. Instead of leaving his money behind, Lutz suggests that as a less expensive alternative, switch to a loan with no prepayment penalty and refinance right away.

"Think twice about simply saying real estate would be better if people walked away," he also chastised. "Real estate would be better if people did due diligence" by making sure they receive a Good Faith Estimate within three days of applying for a mortgage, then comparing that to the loan documents and threaten to sue if the items that don't match up aren't corrected on the spot.

Lutz also said true novices would be well served by hiring a real estate lawyer to look over the loan documents and disclosures to ensure correctness and clarity.

http://www.realestatejournal.com/

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Realtor Group Lowers Forecast, Asks for Interest-Rate Hike Pause

2006-06-09T09:02:00.000-07:00

By Campion Walsh

From The Wall Street Journal Online

The National Association of Realtors on Tuesday lowered slightly its forecast for existing and new home sales this year, while the group’s chief economist called for the Federal Reserve to pause its interest rate hikes.

The slowdown from the previously hot housing market is positive because the economy needs a solid housing sector, and slower price appreciation will improve affordability, said NAR Chief Economist David Lereah.

"But this is a time for the Fed to pause rate hikes because we have some interest-sensitive housing markets that have become vulnerable," Lereah said.

The group lowered slightly its previous forecast for a slowdown this year in home sales and construction. Existing home sales are now projected to decline 6.8% from last year’s record to 6.60 million in 2006, while new home sales are seen down 13.4% from last year’s record to 1.11 million. Housing starts are forecast to decline 6.2% to 1.94 million this year.

The Realtors’ group also lowered slightly its forecast for 30-year fixed mortgage rates. It now expects them to average 6.9% in the second half of the year, a tenth of a percentage point lower than its previous forecast.

The NAR said the housing boom has ended, but it still expects 2006 to be the third-strongest on record for the market. Existing home prices are still expected to grow by slightly more than the historical trend of house appreciation at 1.5-2 percentage points above inflation, Lereah said.

The group forecasts the national median existing home price will rise 5.3% this year to $231,300, while the national median new home price will rise 0.8% to $242,900. It expects inflation measured by the consumer price index to grow 3.1% this year, while the economy grows 3.4%.

In general rising inventories have eased what was unsustainable home price growth, and for most of the country future home price gains will "be much closer to normal returns we expect from housing," said NAR President Thomas Stevens. Higher interest rates have slowed sales in many high-cost markets, but job growth has boosted sales in some moderately priced areas, Stevens said.

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Tips for Avoiding Land Mines In New-Home Contracts

2006-06-09T09:01:00.000-07:00

By Steve McLinden
From Marketwatch

Question: When signing to build a home, what are the most important points that should be in the sales contract? Should we have a lawyer look at it?

– Tom Willtell

Tom: Builder contracts can be loaded with hidden land mines. Like most contracts prepared by teams of lawyers for large companies, they’re meticulously sculpted to give "the house" every edge possible. What makes the job of those lawyers easier is buyers who purchase directly from a builder who are not represented by an agent or lawyer and will thus sign on the dotted line without really knowing what they’re getting into. Sometimes there are only inconsequential issues at play. But often, there are significant ones.

Here are just a few of the many clauses and codicils to be wary in the fine print of builder contracts:

Language that allows the builder to "modify" your floor plan to conform to the nuances of your lot, making it "similar" to the plans you agreed upon. Look for other elusive phrases like "vary only slightly" or "dimensions may vary" and verbiage that allows the builder to make "minor changes" in the dimension of rooms, walls, windows and doors to conform to your land. Sometimes "minor changes" turn into major ones for you. They can even include flips in floor plans. You’ll want leverage to make the calls on all such decisions.

Substitution clauses that give the builders latitude to replace certain components of your home with "similar or better quality" items, should the originals suddenly rise in price or become unavailable. Again, you’ll want language that gives you — not the builder — the latitude to make such calls.

Mentions of additional fees due at closing, like special assessments that oblige you to chip in for infrastructural elements in your new neighborhood like sewer and utilities and (or) amenities like jogging paths and swimming pools. Make sure that amount, if applicable in your deal, has been agreed upon in advance and is specified in the contract to avoid any surprises.

Closing fees of 1 percent to 2 percent of the purchase price. Find out what expenses these fees cover.

There are many other potential considerations. For example, we’ve heard of instances where builders don’t yet hold title to the property they’re marketing when the building contract is signed. You should address that concern in the fine print by inserting language such as, "If seller does not presently hold title, this contract may be rescinded by the purchaser." Some builders even have anti-speculation clauses that allow a builder the right to buy back your house at the original price if you put it back on the market within a year after purchase. If you plan to flip the place in short order, you’ll want to address that issue in the contract.

So yes, if you’re contracting with any home builder to construct a home, no matter how reputable, I strongly recommend using an attorney. In fact, you should request a copy of your sales contract from the builder for the attorney’s review well before you sign. If he won’t oblige, then tell him you will have to reconsider the deal.

Best of luck.

http://www.realestatejournal.com/index

Real-Estate Slowdown Causes Condo Conversion Aversion

2006-06-09T09:00:00.001-07:00

By Kemba J. Dunham
From The Wall Street Journal Online

One of the first signs that the Gateway Club at Orchid Lakes was going condo was when the owner of the Boynton Beach, Fla., apartment complex closed the gym within the past year. Tenants became suspicious when they couldn’t get a clear answer why they no longer had access.

Their fears turned out to be well founded. Residents complain that they were later offered steep "insider" prices to buy their units — $400,000 for a $1,500-a-month rental in one case. Some declined and moved out. When would-be buyers were wooed at a luau at the pool, existing tenants were excluded.

"It was like we were the redheaded stepchildren," says Jack Carney, a 41-year-old salesman who lives at the Gateway Club with his wife and three children.

Now, Gateway’s owner, faced with slow sales, is reversing course and reverting to apartments. Although one-third of the 319 units had been upgraded in anticipation of sales, no deals were closed. The owner had to refill the complex with renters, so incentives — like lower rent — were offered. Current tenants say they weren’t given the same perks when they looked into resigning their leases.

As double-digit housing-price appreciation cools in many markets, rental apartments once seen as ripe for conversion into more lucrative condominiums are beginning to return to their roots.

Michael Cohen, a research strategist at Boston real-estate analysis firm Property & Portfolio Research Inc., dubs the reversions "repartments." "It’s definitely becoming a problem," he says. "Some of these projects probably don’t look as attractive as they did six months ago when developers were buying the conversions."

So far, the reversions are dwarfed by the number of units that have been converted into condos in recent years. But an emerging trend is evident as developers stuck with slow-selling condo units struggle to recoup part of their investment and as tenants gripe about being caught in the middle when their building swings from apartments to condos and back again.

"It was the wrong market, wrong time," Jenny Reidy, Gateway Club’s rental manager who recently left the company, said in an interview in the spring. The complex’s owner, MSP Enterprises of Boynton Beach, didn’t return requests for comment.

In south Florida — where the condo-conversion craze has been particularly frenzied — eight converted complexes containing 2,156 units have reverted to rentals in Broward and Palm Beach Counties, according to Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach, Fla. That compares with about 62,904 units that have been converted or have begun to be converted into condos in the area since 2004, he adds.

Mr. McCabe expects the trend to spill over to San Diego, Washington, D.C., Las Vegas and Phoenix — all areas that have experienced among the sharpest increases in home prices over the past few years.

The San Merano at Mirasol, a 476-unit apartment complex in Palm Beach Gardens, Fla., is a case in point. The luxury development adjacent to a country club was built and developed by Kolter Communities LLC of West Palm Beach, Fla., as an apartment complex several years ago. Not too long ago, Kolter had started running newspaper ads pitching the units as condos and sending letters to existing residents alerting them of the switch, but it called off plans a few months ago after getting nervous about the rising number of competing condos. None of the units were sold as condos.

"I knew we were in trouble when the guy who delivered my television a few weeks ago said he had bought two conversions [in the area] and was trying to flip them," says Kolter chief operating officer Peter Donnantuoni, pinning most of the blame on speculators for driving up prices to unreasonable levels.

Industry watchers say the repartment trend isn’t necessarily a bad thing for the apartment and condo markets. The rush to switch to condos in some markets led to a dearth of apartments and caused rents to increase. Units coming back on the market as rentals could ease upward pressure on rents.

But the financial pressure on would-be condo converters can be intense, analysts say. For conversion properties, typically they’ve been willing to pay 35% to 40% more than their value as rental apartments, says Coral Gables, Fla., real estate analyst and consultant David Dabby. If the project cannot be converted, it becomes a substandard investment being run as a rental property. And if the investment was highly leveraged, the converter risks losing the property, adds Mr. Dabby.

In some cases, developers are selling and renting in the same complex. At the Estates at Stuart, a 237-unit development in Stuart, Fla., nearly half the units, now priced between $166,900 and $402,900, have sold since Philadelphia-based Philadelphia Management & Cos. started selling them as condos last year, with sales slowing markedly in recent months. Now, in addition to a sales office, the property has an on-site leasing office, renting units between roughly $995 and $2,000 a month.

Tenants often feel left in the dark. Earl Kratzer, a 68-year-old retired policeman, bought his unit at the Estates at Stuart last year for about $263,000. Like other buyers intent on immediately selling for a quick profit, he put it up for sale for $295,000 right after he closed in October. No luck. Then he tried to rent it for $1,400 a few months later. That didn’t work either.

Mr. Kratzer later discovered the owner of the Estates was renting units as well as selling them, but some at a much lower price. He says he was ultimately forced to drop his rental price to around $1,100 to match the Estates listings. He finally found tenants last month. "It was just a mess," he says. Officials at Philadelphia Management declined to comment.

At the Gateway Club, Adam Culp, a 39-year-old programming manager, says he received mixed messages about the price to buy his nearly $1,200-a-month, two-bedroom apartment. First the sales office told him he could buy it for $320,000. Then the price dipped to $260,000 and eventually shot back up to $300,000. "I still can’t tell you what the final offer price was," he says.

Mr. Carney, the salesman, was told he could purchase his $1,500-a-month, three-bedroom Gateway Club unit for $403,000. He has 16 months left on his lease and plans to assess his children’s school situation before deciding whether to move even though the complex will remain as rentals. He thinks some of the new renters aren’t desirable neighbors. "They’ve always tried to rent to the family type, but with all these promos and things," he says, some new tenants play loud music and drink beer at night in the parking lot. On the bright side, he notes, the gym — with new equipment — has reopened to tenants.

Exotic Mortgages Remain Popular Despite Their Increasing Risks

2006-06-09T09:00:00.000-07:00

By Rachel Koning Beals
From Marketwatch

Call it the triumph of the exotic mortgages.

Such loan innovations allow home buyers to put little money down and make low monthly payments. They’ve also poured fuel on one of the hottest and longest housing booms in the nation’s history.

But in the wake of the Federal Reserve’s push to take away easy money, low interest rates and red-hot home prices have faded away. With them went the main conditions that made interest-only and other flexible mortgages worth their risks. So the consumer’s love affair with such loans is drawing to a close now, right?

Wrong.

Far from just another financing fad, exotic mortgages have become such a fixture on the U.S. housing landscape that they’ve proven to be a key lever for many borrowers even as they have become a greater danger at the same time.

"In our changing market, from unprecedented low rates to a steady rising of interest rates, these varieties of loan programs have become much more popular," says Bill Callanan, a partner with Mortgage Management Systems, a San Francisco mortgage broker. "But if you’re scraping nickels together, they’re not for you."

While traditional long-term, fixed-rate mortgages remain the loan of choice for the majority of home buyers, more borrowers are also shopping for interest-only loans, pay-option ARMs and hybrid fixed-ARM loans.

That’s particularly true in high-cost housing markets, where taking one of those loans may be the only way to afford a house.

It worked well when double-digit home-price gains built equity while leaving more cash in homeowners’ pockets. Low interest rates muted the potential sting of upward rate adjustments.

But neither of those conditions exist today: Interest rates are well above year-ago levels and home-price gains have cooled or, in some of the hottest markets, already started to erode.

One big problem, says Callanan, is that household incomes haven’t been rising as fast as interest rates, creating greater affordability hurdles for home buyers. Borrowers who use these loans now are challenged more than ever to gauge the health of home prices in their area and measure their ability to stay on top of payments, and to know when to refinance.

Paying off

For some, the gamble still pays off. Regardless of the health of the housing market, say mortgage experts, increasingly savvy consumers want more control over their own finances, including being able to invest money that would otherwise be tied up in a mortgage.

They say the mortgage market should never be viewed as one-size-fits-all process, particularly because few homeowners keep the same loan for more than a few years — they either move or refinance.

"There’s a risk-taking attitude," says Anthony Hsieh, president of Lending Tree.com, an online brokerage. "People aren’t as motivated to pay off their home. Most people aren’t in their home for more than five to seven years, anyway."

That penchant for added risk, including some mortgages that allow borrowers to vary their payments or skip a payment, has drawn several warnings from regulators and from consumer watchdog groups, who anticipate a shock to monthly budgets once the impact of higher interest rates is fully felt. For many, that time is coming soon.

Since the Fed’s two-year campaign to tighten monetary policy, there has been a pronounced effect on mortgage rates. The 1-year, Treasury-indexed adjustable-rate loan, for instance, has jumped to a national average rate of 5.68%, according to Freddie Mac, up from 4.26% a year ago and from a low of 3.39% in March of 2004.

Mortgage bankers concede that demand for alternative loans that reduce payments isn’t as brisk as 12 months ago, in part due to the warnings. But marketing remains aggressive and mortgage lenders continue to compound the options: qualifying buyers now face an often confusing buffet of loans with terms of anywhere from 1 to even 50 years. Some of them can result in negative amortization — an increasing monthly principal balance.

The complexity of these options can leave less-sophisticated borrowers at the mercy of lenders, who consumer groups charge are all too willing to entice home buyers with looser financing so that they may go after properties well out of their conventional reach.

"While the lending industry has characterized nontraditional borrowers as financially sophisticated and savvy consumers, the truth is that many are far from affluent and could be betting the house on their mortgage," says Allen Fishbein, director of credit and housing policy at the Consumer Federation of America. "Because homeownership is so critically important in financial security, these Americans are unwittingly putting their entire financial livelihood at risk."

The federation analyzed certain borrower and loan characteristics of more than 100,000 mortgages originated between January 2005 and October 2005. Their findings show that more than one-third of interest-only borrowers earned below $70,000 annually; about 1 in 6 earned less than $48,000. Some 35% of borrowers with the option to make a payment or not earned under $70,000; 1 in 8 earned less than $48,000.

Cash flow

"Truth is, an option ARM is appropriate for a very small part of the population," says Steve Habetz, president of Threshold Mortgage in Westport, Conn. "Think of a doctor just out of medical school, maybe with kids, and who wants a home in a desired school district and so is maybe going after more house. Negative amortization is worth it in this case because ultimately, that doctor’s income will pick up and he’s cut out transaction costs of moving up in house soon after that income kicks in."

Adds Habetz: "But that’s not who [this loan] is being sold to. It’s sold as this great cash-flow thing, eating up equity."

Interest-only mortgages carry their own risks, but Habetz says they typically make sense for a wider range of borrowers, offering the benefit of more control over monthly cash flow and providing a tax deduction on the interest payment.

While interest-only loans push back payments on principal to a set date (there’s typically no penalty for paying toward principal early), an option ARM allows home buyers to vary their monthly payment. But as with many nontraditional loans, payments early on won’t reduce the size of the loan, limiting the equity buildup and increasing the risk of default should home prices falter.

"We’re socialized to think we ought to be paying down debt, but you can use debt to create wealth," Callanan says of the rationale behind taking out such loans.

Despite their prominence in the news, exotic mortgages do not, in fact, entice all that many Americans. The good old 30-year fixed-rate mortgage is still used by 72% of U.S. homeowners, although that loan type is less popular in the West, where home prices have been highest.

"Fixed rates are a great deal right now," says Greg Eckert, vice president of Centennial Mortgage in Kingston, N.Y. "Historically, rates under 7% are low and that is what we have at this time. This payment offers stability and predictability."

Even those wooed by adjustable rates are moving out on the spectrum. Five to 10-year ARMs are in much greater demand these days than 1-to-3-year plans, says D.C. Aiken, a North Carolina-based lender with Homebanc.

But that presents another personal-finance dilemma: Many of those holding 30-year mortgages are paying for security they don’t need.

Rates on longer-term fixed loans are higher to compensate lenders for the interest-rate risk. With an adjustable-rate loan, homeowners share that risk with the lender and so get a break on rates, at least initially. Since homeowners move, on average, every seven years or so, it makes little sense for them to hold a 30-year loan.

That’s why lenders like Hsieh believe demand will remain strong for alternative mortgage products. He says more borrowers will tailor their loan to their predicted stay in a house.

"But plans do change," he says. And then consumers need to be prepared to refinance, and at the mercy of current market rates.

Here’s a short list of some of the loans being marketed today, their advantages and their risks:

30-year, fixed-rate, interest-only mortgages

These relatively new mortgages allow the borrower to make interest-only payments for the first 10 years. The principal balance is repaid over the final 20 years.

Advantages: Rate doesn’t fluctuate; lower initial payments

Disadvantages: Fixed rates are generally higher than adjustable-rate mortgages; borrower doesn’t build equity in the first 10 years (unless the home is appreciating); payments increase dramatically starting in the 11th year (however, lenders assume that the borrower’s income has grown substantially over the first 10 years).

Adjustable rate, interest-only loans

The program is best suited for borrowers who have a proven track record for managing their finances well and understand the product’s pros and cons.

Advantages: Rate can go down; initial payments are lower; borrower can pay down principal balance at any time and it resets the next month’s payment.

Disadvantages: Risk of payment shock as rate can go up; risk of payment shock when amortization period begins; borrower not building equity during the interest-only period; these loans can have a balloon payment at the end of the interest-only period; also, at the end of the initial fixed-rate term the rate can adjust as often as every month.

40-year fixed-rate loans

This loan offers a payment nearly halfway between interest-only and 30-year fixed. The 40-year fixed works for buyers focused on the long-term value of their property and who want to build equity each month.

Advantages: Stability of a fixed rate and predictable payments; lower payments than traditional 30-year fixed rate loan.

Disadvantages: Rate slightly higher than 30-year fixed; longer term to pay off loan (slower equity build); balloon payment after 30 years.

Option ARM

Advantages: A popular product over the past few years because it allows consumers the option of making their payments in one of four different ways: Interest only, fully amortizing over 30 years, fully amortizing over 15 years or a minimum payment for 12 months.

Disadvantages: This loan shouldn’t be used to qualify someone who wouldn’t normally qualify for a regular fixed-rate loan. Sees gradually increasing minimum payments for the first five years, resulting in a higher loan balance and a significant payment shock in year six, when the loan is recast and fully amortizing payments are required.

‘Piggyback’ with home-equity loan

A primary mortgage can be combined with a home-equity loan or line of credit.

Advantage: Tends to eliminate the requirement to pay private-mortgage insurance.

Disadvantage: Sees payment shock of 48% over five years, beginning in the second year when the floating rate on the home-equity line of credit begins to adjust and increasing in year four when the fixed period on the first loan expires.

http://www.realestatejournal.com/

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Thoughts on the Future of the Real Estate Market

2006-06-09T08:58:00.000-07:00

You hear it everywhere. The baby boomers are starting to retire. The stock market and real estate market will suffer as money is pulled out. This hardly seems true for real estate.

Thoughts on the Future of the Real Estate Market

Baby boomers are those individuals born during the period from roughly 1945 to 1964. Following World War II, peace and economic prosperity occurred for roughly twenty years. Along with this came an explosion in the birth rates in the United States. This increase in birth rates created a bulge in the overall population, to wit, the baby boomer generation.

As economists and pundits look to the future, they worry about what will happen when baby boomers move out of the job market. Who will replace them? What happens to their money? Will the drain on the stock market from 401k distributions wipe out the stock market? What about real estate where baby boomers are starting to pass their peak earning years? Is everything going to crash? No.

The first reason the real estate market will not die is the boomers. They do not just disappear when they retire. Most are continuing to invest in real estate as they start receiving retirement distributions. In 2004, this fact was evidenced by the fact that of all home sales, 35 percent were for second homes. Clearly, the boomers will remain active for some time.

There is also a new generation starting to be introduced to the real estate market. While it is true that baby boomers are the largest population bulge we have seen, one has to keep in mind that the boomers had their own offspring. The second largest population bulge we have seen are these children. They are now entering there twenties and thirties, which means they are entering the real estate market as buyers - often borrowing from their parents for down payments.

Immigration is a controversial subject. Regardless of your view, the undisputed evidence shows a large number of legal immigrants coming into the country since 1970. Obviously, these individuals and families represent another pool of buyers.

Despite the wailing of so-called experts, the real estate market should continue to purr along as it always has. Real estate is still one of the best investments. Yes, there will be fluctuations, but the prophecies of doom and gloom are unsupported by the facts.

About the Author:

Raynor James is with the FSBO site - FSBOAmerica.org - homes for sale by owner.

A cool breeze on the Jersey shore

2006-05-24T10:12:00.000-07:00

By Lauren Baier Kim

Home prices in New Jersey's Monmouth and Ocean are still rising, but the rate of appreciation has dropped from double-digit increases to less than 10%, says the Asbury Park Press. "Clearly the glory days of the housing market are now history," the paper quotes an economist from the Edward J. Bloustein School of Planning and Public Policy at Rutgers, The State University of New Jersey, as saying. In the first quarter of this year, the median home price in the area was $374,100, an increase of 9% from the same period a year before. As examples of the slowdown, the paper quotes a Lacey, N.J., home seller who cut the asking price of her waterfront property from $700,000 to $675,000, and a Jackson, N.J. home buyer who negotiated a $150,000 discount off the price of her new home, purchasing it for $790,000.

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U.S. Single-Family Home Prices Cooled in the First Quarter

2006-05-24T10:11:00.001-07:00

By Benton Ives-Halperin
From Dow Jones Newswires

Prices for single-family homes in metropolitan areas cooled in the first quarter, but many metro regions are still showing double-digit annual gains, according to a survey released Monday by the National Association of Realtors.

In the first quarter of 2006, the median price for an existing single-family home was $217,900, a 10.3% increase over a year earlier. That pace of appreciation is down from the fourth quarter of 2005, when home prices rose 13.6% compared with the same period a year earlier.

A NAR economist said increased home inventories have reduced price pressures. "With the supply of homes picking up very nicely in many areas of the country, pressure is coming off of home prices," said David Lereah, NAR's chief economist.

Looking ahead, Lereah said he expected "most areas will be returning to normal rates of price growth in the single-digit range," when second quarter data is reported.

Still, while single-family prices are cooling nationally, some metro areas are still showing strong price growth.

Of the 149 metro areas surveyed by NAR, 60 regions had annual price growth in the double digits, while 16 showed price declines.

Several Florida regions showed surging prices over a year ago, with the Gainesville, Ocala and Orlando areas posting gains over 30%.

Condominium prices showed smaller prices gains than single-family homes in the first quarter, up 5.2% from a year earlier. The national median price for an existing condo was $224,100 in the first quarter.

Increasing inventories are also responsible for the slower price growth in the condo market, according to NAR President Thomas M. Stevens.

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Top 2% of Market Still Selling As Overall Sales Volume Falls

2006-05-24T10:11:00.000-07:00

By Troy McMullen

From The Wall Street Journal Online

Despite growing indications of a cooling housing market, one niche continues to sell briskly -- multimillion-dollar homes.

Over the past few months in the overall U.S. real-estate market, more homes have crowded the market and sales volumes have fallen in areas from Houston to Boston and Washington, D.C. Freddie Mac, the government-sponsored provider of mortgage-loan funding, predicts total home sales this year will be down by about 7% from 2005's record levels. Yet one area of the market appears immune to all that: In many locations, homes on the ultrahigh end of the price scale -- those costing $3 million and up -- have been selling in increasing numbers.

In San Francisco, 18 homes in that range sold in the first quarter, up from 15 in the same period last year, according to real-estate information service DataQuick. In Jackson, Wyo., that number rose to 21 homes from 17, according to Jackson Hole Real Estate and Appraisal. Higher up the scale, 10 homes at $5 million or more in Palm Beach, Fla., sold in the first quarter, up from eight last year, says the county assessor's office.

One factor in the growth could be that median prices of all homes have risen, pushing more homes into the luxury end. Also, inventory is up across the board. But at a time when the overall number of home sales has declined in many markets, the number in the ultra-high range has continued to grow. One possible message: Just as it is often said that the rich aren't like the rest of us, the real-estate market of the rich appears to bear a decreasing resemblance to the one experienced by most Americans.

Paying in Cash

Homes at $3 million and up represent less than 2% of the overall market, estimates the National Association of Realtors. Activity at this small upper end has traditionally been a leading indicator for the broader market, says Gregory Heym, chief economist for the New York real-estate brokerages Brown Harris Stevens and Halstead Property. Now, he says, there may be less of a connection between the two segments. The stock market has created new wealth and the number of millionaires has grown, so more buyers are paying in cash. (The National Association of Realtors found that 8% of home buyers paid in cash last year, up from 6% in 2003.) That has left luxury buyers mostly insulated from economic factors such as rising short-term interest rates.

Mark Zandi, chief economist at forecasting firm Moody's Economy.com, says the segment of high-end buyers "won't be immune from the unfolding travails of the rest of the market, but it will weather those difficulties much better than it has historically."

Walter Molony, a spokesman for the National Association of Realtors, says the highly volatile high-end market serves as a poor market indicator. Activity among first-time home-buyers, he says, is more telling. "That segment provides liquidity for people to be able to trade up to larger homes," he says. "Without strong entry-level activity, the market would sink."

When Todd Michael Glaser listed his 11-bedroom Miami home in February, overall sales volume in the city was slipping -- sales fell 21% for the month over a year earlier. But he wasn't concerned. He listed it for $40 million, well above Miami-Dade County's record single-family home sale of $27.5 million in 1999.

Mr. Glaser, a 41-year-old real-estate investor, figured the property would sell based on its amenities and location. The 20,000-square-foot home is one of the biggest on North Bay Road, where neighbors include Billy Joel and Matt Damon. A month after hitting the market, it went under contract for purchase. Brokers with knowledge of the deal put the price at over $30 million, though Mr. Glaser wouldn't reveal the number. "It's not a property for the everyday home buyer," he says.

In Los Angeles County, 217 homes priced over $3 million sold during the first quarter, up from 114 during the same period last year, according to Cecelia Kennelly-Waeschle of Sotheby's International Realty. That is the biggest first-quarter jump since the firm started tracking sales in 1988. For the same period, the number of all sales in the county fell 10.3%, according to DataQuick. Two homes priced above $10 million sold in Santa Barbara, Calif., during the first quarter -- including a $28.5 million, 17-acre oceanfront property to actor Kevin Costner -- up from one a year earlier. (The data in this and other markets do not show how long the homes spent on the market or whether they sold at their original asking price.)

The Kravis Solution

Some affluent buyers don't limit themselves to what's on the market. When Henry Kravis, managing partner of New York-based Kohlberg Kravis Roberts, went shopping for a Palm Beach house in January, he didn't like any of the available properties. His broker, Lawrence Moens, identified a property that wasn't for sale, but fit Mr. Kravis's criteria: a 15,255-square-foot home on five acres along Lake Worth. "I just knocked on the door and said, 'I've got a buyer willing to pay a lot of money for your home,' " says Mr. Moens. A few weeks later, the deal closed for $50 million, public records show. Local brokers say it is the highest price ever paid for a non-oceanfront property there. Mr. Kravis declined to comment.

Not all markets are seeing a surge in high-end sales. In Manhattan, 212 homes priced above $4 million sold in the first quarter, from 226 in the year-earlier period, according to Brown Harris Stevens. Appraisers say that apartments are staying on the market longer.

Even where sales are falling, confidence hasn't always flagged. On the Nevada side of Lake Tahoe, sales of homes priced above $1 million fell 35% in the first quarter over a year earlier, according to Chase International Realty. That didn't stop Tom Gonzales from raising the price on his home in Incline Village, Nev. After staying on the market for a year at $60 million, he raised the price on the 4.5-acre property to $65 million last month, to account for the upkeep he's paid. "I don't think there's a shortage of people looking for a property like this," says Mr. Gonzales, 61, who co-founded software company Commerce One in the 1990s.

Yet in Fairfield County, Conn., Lake Forest, Ill., and San Diego County, brokers say many sellers are trimming prices amid a glut of pricey homes. Writer Jane Green and her husband, bank executive David Burke, cut the price of their Westport, Conn., property by $1 million after it sat for eight months at $5 million. Shortly afterwards, the property sold in January for $3.9 million, public records show.

Talk of a slowdown hasn't affected Sean Wolfington, a former Philadelphia Internet entrepreneur, who just outbid two other buyers on a six-bedroom estate in Key Biscayne, Fla., formerly owned by the singer Cher. The cost: $8.8 million, in cash. "Interest rates aren't a factor for me," says Mr. Wolfington, 34, who now runs an independent film company. "Waterfront properties like these are in limited supply. I saw this as an excellent buying opportunity."

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Price Your Home Right To Help Speed a Sale

2006-05-24T10:10:00.000-07:00

By Marshall Loeb

From Marketwatch

With home sales slumping and inventories on the rise, experts say getting your home sold depends a lot on pricing it correctly. One tool sellers can fall back on when the market is shifting is a home appraisal.

You can have an appraisal done before you contact a broker or if you're just curious what your home would be worth. They cost, on average, from $250 to $400 for a single-family home, slightly more for multiple-family dwellings.

An appraiser will physically inspect your house for shoddy workmanship or needed repairs, measure its dimensions and takes notes on the floor plan, utilities and other factors that affect pricing.

He or she should also look at three or four "comps" -- comparable homes in your neighborhood that have sold within the past six months -- and analyze how homes currently on the market are faring, says William J. Doka, owner and president of Erickson Appraisal Company in Fair Lawn, NJ.

That's a more comprehensive assessment of market conditions than the free comparative market analysis, or CMA, that a broker will give you, says Doka.

He cautions that brokers want to earn your listing and can be tempted to paint an overly rosy picture of how your home will sell while appraisers, although sometimes subject to similar pressure from mortgage brokers, strive to be objective.

The results of the appraisal will be presented to you in a report that can run from five pages, for a simple summary that suits most lenders and homeowners, to 50 pages or more for a "narrative" that banks might demand before financing the purchase of a multimillion-dollar home.

Homes are typically listed for sale at a price several percent above the appraised value.

Predictably, most of Doka's business comes from lenders, who typically require an outside appraisal before making a loan. But homeowners are also hiring him before contacting a broker. He charges from $350 to $400 to appraise a single-family home.

Some things to remember when looking for an appraiser:

Make sure the appraiser is licensed by your state.
Ask how long the business has been around, what professional education the appraiser has had and what organizations -- like the Appraisal Institute or the American Society of Appraisers -- the appraiser belongs to.

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Cost-Saving Tips for Fixing Up Your House to Attract Buyers

2006-05-24T10:04:00.000-07:00

By Rachel Koning Beals
From Marketwatch

A slower U.S. housing market means sellers can no longer bank on having their pick of offers for properties showing their age and the wear and tear of everyday living. Dressing up, or staging, a home with a thorough cleaning and decorator touches may be vital to luring increasingly fussy buyers.

Sellers work within a range of budgets as they prepare a property for sale, often from a few hundred to a few thousand dollars. Yet many critical fixes don't cost a dime.

"Walk through the house and remove all the clutter," says Rhonda Duffy, an agent for Rainmaker Realty in Atlanta. She reports four houses on the market for every one buyer in her area, plus slower activity in her firm's northern California, Washington D.C., and Florida offices.

"A living room should have a couch and chairs, a table, some plants and maybe a TV, not a 30-year life history," she says. "Clean out the closets and don't forget the garage."

Since similar houses that had routinely sold in weeks over the past few years may now be sitting on the market for several months, sellers are challenged over a longer time to keep their home free of the remnants of hectic family life.

At the least, agents recommend, stage the house for a series of high-quality photos to run on an Internet listing sight -- first impressions take on even greater importance these days. Then, keep copies of the photos accessible to would-be buyers as they walk through the house, says Duffy. Toys, piled-up mail and crowded countertops are likely to be forgiven if a buyer can see the home's full potential. Staging for photos can include moving a sofa away from a feature window and editing items on a fireplace mantel.

Personal items that will soon have to make the move to a new place anyway should be boxed up and stored ahead of opening the house to potential buyers. Sellers must try to distance themselves emotionally from the house as soon as the decision is made to list, says Fran Bailey, an agent with Baird & Warner in suburban Chicago. "Yes, the purpose of a home is to support a lifestyle. Now, it has another purpose and that is to sell itself," Bailey says.

Don't rid the home of its lamps, however. Plenty of light, including a small lamp on a kitchen counter, can go a long way to warm the place up. Made beds and emptied garbage cans should become second nature since sellers never know when they may have to show the place on little notice.

The few hundred dollars budgeted for the house sale might be best spent on storage rental or professional clutter removal -- out-of-commission appliances for instance -- in order to optimize square footage. For smaller homes, space is often a trick of the eye, says Lindsay Peroff, with 1800gotjunk.com, a junk-removal service operating in larger cities.

When to call the pros

Once personal items and extra furniture are out of the way, sellers may want to spend enough to hire professional cleaners, including someone to wash windows inside and out and to shampoo carpets. Pets shouldn't be around for showings and neither should their smell.

"This may seem simple, but you'd be surprised how many people don't do it," says David Henry, an agent with Coldwell Banker in Aptos, Calif., in Santa Cruz County. "Air the place out several hours a day, for several days."

Have pest, septic and mold inspections prior to investing in any upgrade projects, he says. Then, sellers can better prioritize upgrade ideas and budget accordingly.

Sellers hoping to keep their staging expenses lean and their family routine intact might focus on the exterior. Web-based listings may be key to generating early interest, but curb appeal is what's likely to get buyers to the front door.

Get rid of clutter and dead vegetation and add color with some new plantings. When possible, try to pick flowers that will bloom in time for showings, says Duffy. Remove broken and dated lawn features and fences -- and, says Duffy, tear out chain-link fences in any condition.

Inside, modest budgets stretch the most if spent on fresh paint, particularly for the entry and main rooms of the house. Cracked windowpanes, leaky faucets and other modest repairs deserve attention.

Agents and decorating professionals said budgets of several thousand dollars might be best used toward exterior panting, new landscaping and kitchen face-lifts.

Value rooms

It's no surprise that kitchens and bathrooms sell a home, so spiffing up these spaces, even for a few dollars, can go a long way toward boosting the asking price and generating interest.

Many people underestimate the low cost and high impact of swapping out cabinet hardware and faucets for updated styles, says Daryl Coley, who co-owns the Tulsa, Okla.-based franchise of national remodeling chain Kitchen Solvers.

He suggests that larger budgets go to countertop upgrades; solid surface materials such as granite, quartz and marble give a high-end feel. Even less-expensive choices, such as a laminate with a beveled front that runs $1,000 to $2,000 depending on footage, can give the overall room a fresher look. Floors should be considered next, he says. Those watching the bottom line might consider long-wearing laminate flooring as an alternative to hardwood or tile.

Gut kitchen renovations or even a few choice updates -- refaced cabinets, new floors and countertops -- can typically add $5,000 to $10,000 to the asking price depending on size and quality, says Coley. But sellers must keep in mind that new owners may have different taste; a few staging updates might prove more enticing to buyers than being stuck with an expensive renovation they don't like.

Dressing up

It's likely that a designer free of emotional investment in the property can better dress a home for the widest range of potential buyers. If the budget allows, a professional stager -- a growing field of certified and noncertified participants -- might ease seller anxiety; many agents, but not all, also consider staging a specialty.

Think twice before assuming you can stage on your own. Chicago designer Philip Popwici was called in to help sell a midrise Chicago apartment, on the market for nearly three months with little interest, that along with several similar two-bedroom, two-bath units in building, was about to have its Lake Michigan views compromised by new construction. Staging introduced to potential buyers the appeal of the apartment exclusive of its view. It sold long before any of the comparable properties, some of which had to be pulled off the market.

Popwici, owner of Rooms Redux, a staging company catering to a clientele of condo and town home owners, helped carve out a dining space in an open floor plan with furniture positioning, essentially adding a room within existing square footage. He recommends hanging a mirror to mimic a window in rooms lacking natural light. He says bathrooms and master bedrooms are a good place to use limited resources. A few touches, like rich window treatments and candles, can make these rooms feel like a retreat for potential buyers.

He too emphasizes a good edit of life's possessions.

Yet, while decluttered homes stand a better chance of selling, that doesn't mean homes should be shown completely empty, the experts say.

Those working under a larger budget might consider trendy and appropriately proportioned rental furniture to fill the main rooms, says Baird & Warner's Bailey.

At the least, says Rainmaker's Duffy, stage small vignettes of tables, lamps and artificial plants to soften corners and add interest. Make sure to provide a chair or two, even inexpensive covered folding chairs and a simple covered table, for any buyer who might need to sit down and weigh her options -- like making an offer.

http://www.realestatejournal.com/

Homebuyers Should Steer Clear of White Elephant Properties

2006-03-21T10:43:00.000-08:00

First time homebuyers need to know what type of properties might speak to them but not to the majority of homebuyers when they need to sell. According to industry sources the average homebuyer stays in their first home just shy of six years. Buying a white elephant can be a costly mistake, both in selling price and long market times to find the buyer willing to take a chance on a home that doesn't fit the market.

Features, location and style can create a white elephant property. Mark Nash author of 1001 Tips for Buying and Selling a Home updates homebuyers on what to stay away from when looking for a home. Understanding that all homes are not created equal, Nash outlines what the top elephants are in today's market.

-Homes that back up or look onto cemeteries. Many homebuyers are very cautious about purchasing a home that features a view of a cemetery. Cultural customs and plain old creepiness keep buyers away from homes that overlook headstones and spooky mausoleums.

-Off-beat locations such as busy streets, corner lots, noisy trains and jets will be more difficult to sell to choosy buyers. Buyers want quiet, middle of the block locations away from busy intersections and train tracks, both commuter and freight lines. You might get a discount when you buy for a second rate location, but it's one thing you'll never be able to improve.

-Buy properties that stay in demand. Many smaller homes will fit your budget, but determine if they are in demand by buyers. One bedrooms have a limited audience. Buying a contemporary ( even if it's a steal) in a neighborhood of colonials will be a tough sell.

-Basement bathrooms and bedrooms don't have the same appeal as if they are above grade. Some buyers have security issues as well for garden level condos.

-Tuck under garages. Even though news reports on fires originating in automobiles are low, many homebuyers don't like the idea of sleeping over garages filled with gasoline.

-Mansard roofs. Popular in the the 1970's this roof style is a hard sell with buyers today. Often seen on a second floor of a two story home, the dormer windows protruding from a sloped roof say ugly to homebuyers.

-In-ground swimming pools in northern climates. With the limited season, the amount of space a pool requires in a back yard and the built in maintenance, many buyers won't even look at a home with pool.

-Homes on a crawl space when full basements are the norm. Each area of the country has foundation styles that are the custom. Steer clear of crawl spaces when full stand-up height basements are in over two-thirds of homes. In areas where crawl spaces are the norm, steer clear of slab foundations, many buyers find rooms on slabs are cold in winter months.

-Homes that lack central heating systems. Mortgage lenders and buyers appreciate the utility of central heating. If a home you are interested has a wood or other alternative heat source, factor in adding a central system before you resell.

-Earth-sheltered homes. Popular in the 1980's and very energy efficient, earth homes are not the rage with most home buyers and can be difficult to finance. If you plan to stay a long time, potential resale issues might not be your main concern.

-Homes with knob and tube wiring. Very old homes from the early 1900's had knob and tube electrical wiring. If a home you are interested is entirely or partially wired with knob and tube, check with your homeowners insurance company before you sign on the line.

AUTHOR: Mark Nash's fourth real estate book, "1001 Tips for Buying and Selling a Home" (2005), and working as a real estate broker in Chicago are the foundation for his consumer-centric real estate perspective which has been featured on ABC-TV, CBS The Early Show, Bloomberg TV, CNN-TV, Chicago Sun Times & Tribune, Fidelity Investor’s Weekly, Dow Jones Market Watch, MSNBC.com, The New York Times, Realty Times, Universal Press Syndicate and USA Today.
Article Source: http://EzineArticles.com/?expert=Mark_Nash

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How to determine the best real estate markets to invest in?

2006-03-21T10:40:00.000-08:00

by Gurubhakt

Now, let's suppose you are planning to invest in real estate ... you might want to ask yourself two questions -

Where will you invest? And

What sort of property will you buy?

Why ask questions like these? Well, like some wise person said, money is made when buying. It's very important that the buying decision is a very good one ... that decision alone might greatly increase the possibility and amount of profits made.

Also, buying real estate properties at relatively low prices in areas that have very good fundamentals and future prospects is one way to almost guarantee profits.

One way to answer the first question might be to see which are the fastest growing communities ... and then determine why they are the fastest growing communities.

For instance, according to a recent article on netscape.com, Greeley, Colo. is one of the fastest growing communities ... and the possible reason stated for it being one of the fastest? Its relatively inexpensive homes and its proximity to a major metropolitan center.

If Greeley remains at the head of the list of fastest growing communities for another year or two, its "relatively inexpensive homes" might become fairly expensive ... and by that time the people who saw this trend first and bought homes there would have made many a pretty penny :-)

Communities with the fastest rate of population growth can also see very high real estate value appreciations.

And coming to our second question, what sort of property will you buy?

Well, the answer to the first question might determine the possible choices for this ... for the type of property to buy might well depend on where you buy property ...

Location might determine the best type of property to buy ...

For instance, luxury property has a been one of the best performing segments of real estate, but you may not want to buy luxury property as an investment option just about anywhere - maybe if you chose to buy property in Beverly Hills, then luxury real estate would be a great option.

And what if you are buying property in a fast growing community where a large percentage of the new population is single families? Then maybe buying single-family homes would be a good option...

And if a large percentage of the population is retirees, then you might want to determine what types of property people in their golden years prefer.

AUTHOR: Gurubhakt is a writer and web content developer who has written content for several niche sites, and one of the latest is http://www.abeachfronthouse.com that discusses a wide variety of real estate like golfcourse condos, Baja real estate, cottage in PEI, Canada and more.

Build A New House Or Buy An Existing One? Use Your Head And Your Heart.

2006-03-21T10:38:00.000-08:00

by Terry McDermott

I am living in living in the fourth house I have purchased during my 23 years of home ownership. To some that may seem like a lot of houses, to others it may seem like I've just started. The simple fact is we Americans move a lot... 11 or 12 times in a lifetime depending on whom you consult. Chances are you are going to purchase a house during quite a few of those moves and somewhere along the line you may have the opportunity to build a new home.

Should you?

Everyone has fantasized at some point about his or her dream house. You may want closets big enough to live in; a bathroom that doubles as a spa; a kitchen in which you could produce programs for the Food Network But, as in most fantasies, there is usually some epic journey required to achieve the goal. And building your dream house follows that plot line all too closely.

But isn't it the dream that makes the quest worthwhile? Yes, if you can weather the storms and battles along the way. And the determination to keep moving forward is usually a function of a strong will and a big heart. But it helps to use your head before you set off on your personal version of "The Lord of the Rings."

It is likely that you have options when you begin the process of buying a home. There may be existing homes in the area that are affordable and that meet your needs. But there are always things about any property or house that don't exactly meet with your approval. The basement may not be finished or the yard may be too small or the interior décor may have to be entirely redone. It is virtually impossible to buy an existing home without making compromises.

Building new allows you to imagine, design and build the home that accommodates needs and amenities that are important to you... within a budget of course. And that is one thing that must be considered. A new home will be more expensive, on a cost per foot basis, than an existing one. That is due to the cost of land, the price of building materials and labor expense. You might also find that taxes are high as a new area is developed and the municipal authorities factor in the required infrastructure for a growing population and the need for services like education, law enforcement and recreation. You may find yourself subsidizing some of these costs as an area develops.

The ongoing costs associated with an existing house are more predictable. However, there will likely be more maintenance expense than for a new house and energy costs tend to be higher with older properties because newer homes are more energy efficient.

Commuting costs may be an issue. Developers must go further and further out to find enough land to accommodate a new subdivision. That may mean higher costs for commuting to work and to access other businesses and venues that may be closer to the nearest major population center. You should consider this from both a monetary perspective and to determine if you are comfortable with an additional investment of time.

If your new house is built in a subdivision there may be ongoing fees required. In addition, there may be covenants that are designed to protect property values that may apply serious restrictions on your ability to enhance your home and/or your property down the road.

A new home needs new landscaping. This may be included in the price of the home but there will likely be a limit to what is covered under the agreement. To landscape the property in a way that is truly satisfying may require an additional outlay.

Beware of construction delays! Building contractors are notorious for setting deadlines they miss and making promises they can't keep. Make sure you do some thorough research about the builder and his track record before you commit. Weather is always unpredictable and may have an effect but that should be factored in from the start.

A new subdivision can be a hornet's nest of building activity. If you move into your home early in the process be prepared for hammering, sawing, trucks, mud and general chaos for quite a while as the subdivision progresses. This is a lifestyle issue and is a temporary inconvenience. But some have found this level of activity disconcerting and disruptive especially when they are settling into their "dream home" and trying to savor the experience.

If you build new be prepared to stay for a while. With new construction all around you it would be difficult to compete with the rest of the properties available for others who want to build a house from the ground up. You would have to make it worth their while and that usually means a compromise in price.

All this being said (and trust me there is more that could be said) there is nothing quite as satisfying as showcasing the house to family and friends that you designed and built and that reflects your unique vision and personality. If you survive the journey, you will likely have turned your fantasy into reality.

J. Terrence McDermott is administrator and webmaster for House Plans Central at http://www.house-plans-central.com, a site featuring recommendations and resources for those seeking information about house plans and home designs.

Location, Location, Location. There is more to this saying than meets the eye!

2006-03-21T10:37:00.000-08:00

by Edward K. Blinn, P.A.

Over the years, you have probably heard the saying, "Location, Location, Location".

It is true that location is a key element in selecting real estate. It is important to the resale value of a property to be in a desirable location. But there is a lot that goes into making "Location" that desirable entity that it has become.

Let's take a look at a few factors that not only make up a desirable location but will help you to select a location that is right for you?

First off, I suggest having your Exclusive Buyers Broker compile reports for closed sales in any area you are currently considering. This will be very helpful in determining a trend in resale values and determining desirable locations. These reports help give you an idea of what you may expect several years up the road as far as the potential appreciation of the property you are considering. An area that shows a steady increase in sales prices for properties sold over the last 3-5 years would be a good area to delve into.

When looking for a home, it is preferable to locate a property not only in a nice residential area, but one that is also close to commercial and business districts as well. Having a nice balance of residential, commercial, and business not only provides potential jobs for the residents but income to the city as well which could be used for added services or maintenance and upgrades of the area roadways.

Deciding on which community you want to live in is your next step.

Let's check out the curb appeal.

First and foremost, take a drive through a community that interests you. Look at the homes around you. Is there a sense of pride of ownership among the residents? Are the lawns neatly mowed and trimmed or are some unkempt? Is there a continuity of architecture among the homes? Are some properties in disrepair? What about the neighborhood streets? Are they well lit, nicely maintained? Potholes or poor drainage are signs that the community does not get the attention it needs. Any of these findings could adversely affect property values. What amenities does the community offer for you or your family? For example, having a community pool, golf course, clubhouse, or tennis courts would be nice if you enjoy participating in any of these on a social basis. However, these amenities come at a price and are usually paid for in an annual fee. Check to see if there is a homeowners association and if it is mandatory for all residents.

Okay, so far let's say you like what you have seen. Let's talk safety.

Where is the nearest fire station? What type of rating does it have? How far from the property is the closest fire hydrant? Knowing the location of and distance to both fire stations and hydrants is important as it will affect the rating you get and how much you pay for your homeowners insurance. Also, note locations of other fire stations. Are they located strategically enough to provide additional response if an emergency arose? What is the crime rate? Check with the local sheriff's office or police station and see what the statistics are for the community and city you are considering. This will also affect your potential resale values.

Schools are another important factor. The better the rating, the better property values will tend to be. If you have children, there are a number of things that will affect where you buy. Will your children be able to attend the school closest to the prospective home? If not, why. Are the schools in that area over crowded? Are there plans to build additional schools to support the growing population?

Many areas now allow school choice. However, you must sign up for the school of choice ahead of the coming school year. If you are relocating during the school term, check to see if there are waiting lists. It is possible that a student will move out of the area and a slot become available for your child. Check to see how the local students have scored on the standardized tests? You want your children to get the best education possible. You may obtain free testing results for schools in your area by looking on the internet. Simply search for "standardized test results city state" and replace the words city and state with the one you are concerned with.

Does the community have activities such as youth sponsored sports? Are there facilities such as a park or gym nearby that you or your family could benefit from? A community that has a nice blend parks and activities for young children, teenagers, adults and seniors is a community worth looking into.

So, next let's take a look at the property taxes. Not every area is taxed the same. One county could pay much higher property taxes compared to another. This may affect the way you view a potential property and its desirability. After all, taxes generally tend to increase as time goes by. Know your budget and take the area property taxes into consideration. Remember, the property taxes reported on the house you are considering are based on the present value of the property. Unless the owner is selling at a great loss, you can be assured that the property taxes will increase after closing due to the properties increased value resulting from the sale.

Another factor to consider is the price per square foot. How are various properties in different communities comparing to one another in their price per square foot? I would not base my decision to purchase on this fact alone, but it is one you may wish to consider. Many times, properties that are located in areas of higher taxes actually have lower price per square foot ratios.

When you take all these items into consideration (closed sales in the area, pride of ownership, location of emergency personnel, community activities and resources, rating of area schools) you come to understand just how important location can be.

Taking the time to do a little research will can make the difference between simply buying a property or making a wise real estate investment.

Next we will look more closely at the property itself and discover how different features can affect property values. However, that will have to wait until my next article.

Best of luck in all your real estate endeavors.

©2006. Edward K. Blinn, P. A. is an Exclusive Buyers Broker at RE/MAX Sundance Realty in Bonita Springs, Florida who knows the value of SW Florida real estate, area communities, and their amenities. http://www.FloridaBuyersBroker.com

The Buyer's Eye

2006-03-21T10:34:00.000-08:00

by Mary Garland

What is the first thing you remember when you walk into a room for the first time? That is the question you must have on your mind when you are preparing your home for sale. It doesn't matter if your home in a condo, a luxury home, historic home, an estate or if you have the best Realtor in the area. Appearance is everything when selling your home. A drop of vanilla on a light bulb may temporarily create a fragrance that most people like. However, it will not create a sense of pleasant calm inviting people to come in and stay awhile.

Don't think for a second that you can just give the Buyer some money to do repairs and they will be happy. You bet they will be happy. They will take your to-do money and offer you a dramatically lower price. Is that what you really want? I don't think so. Meanwhile, the longer your home is on the market, the more people want to know what's wrong with it. Is there some expensive flaw hiding behind those needed repairs, clutter or shoddy work? They don't want to take a chance to buy your home unless the price is very low...just in case that imaginary flaw surfaces right after they have purchased the home. Why should a buyer take that chance? The next house they look at can be more attractively presented and appear as a safer investment.

Your Realtor can usually recommend a contractor to do the work. However, it is not the Realtor's job to watch the contractor do the work. It is not your contractor's job to select the colors and materials. It is the responsibility of the owner to locate a design consultant to coordinate colors, styles and materials. Most large home supply companies offer free consultant advice. Use their services. Nothing looks worse than the wrong colors, materials in the wrong place. Powder blue walls in the kitchen may be your favorite but it not the color of choice for most Buyer's.

The Buyer's eye first sees the general impression of the room. Does the room feel inviting, warm friendly and neat? The Buyer's eye then drops along the edges of the floor and ceiling looking for defects. Is the paint cracked or smeared on fixtures? How does the details of the room appear? Is there a tight neat bead of caulking and the baseboards, in the bathrooms? Have the fixtures been tastefully updated? Even historic homes need fixtures that are in good condition and fitting with the era of the home. The style and colors of your choice make the difference. Ask your Realtor and your designer what colors are current. The colors will very according what type of home you have. For example, a Historic home with larger rooms and wood floors can be embellished with darker more dramatic colors and crown molding. Most luxury homes can use bolder or pastel colors. A contemporary home could support more unusual color combinations such as a lime green with dark brown. The furniture needs to work with the colors of the walls. All look great if used properly.

Recently, I sold two luxury condos with the same floor plan and a similar location within the same complex and each with a terrific lake view. They sold for dramatically different prices. One sold for $318,000.00 the other sold for $350,000. The best looking home sold for more. New kitchen appliances $3,000.00 a frame around each of the3 bath room mirrors, a new front door handle, repainted the front door and touch up paint/patch throughout the home $1,500.00.The work was professionally done with careful detail. A total of $4,500.00 invested; yielded $27,500.00 more in profit. And the first Buyer that saw the home bought it. Which Seller made the wiser choice?

Attention to detail is what it is all about. Use the best quality materials that your budget can afford. Have the best quality workmanship you can afford. Now is not the time to be cheap. Do less if you must but do everything well.

Most Buyers' want to see themselves moving into your home and doing nothing except enjoying it. After all, it is their new home.

Visit Mary at http://www.marygarlandrealtor.com
Mary, over many Real Estate Agents, has consistently earned a reputation among her clients and colleagues as a complete professional who exemplifies conscientious, competent and knowledgeable service. She is a patient realtor, responsive, calm with a personable approach which are the reasons so many of her clients and colleagues consistently repeat referral business. Almost ten years as Realtor has earned Mary many achievement awards.

How Landlords Find Tenants In A Soft Market

2006-03-21T10:28:00.000-08:00

by: David Schneider

What has happened to all the renters? Well, Let’s examine what has happen in the last few years in the housing markets.

First of all, interest rates have dropped to all time historical lows. This means that many renters have taken advantage of this and went out and bought a house. The second thing that has happened is that most real estate values throughout the country have gone up a lot in a short period of time. Because of this, many more people have decided to start to invest in rental real estate. More landlords, fewer renters equal a soft rental market.

When the market is soft, you have to be better at finding renters.

It’s the mission of all business to get and keep customers. Well, the business of owning and managing investment real estate isn’t any different. You must have a system and plan in place to find new tenants and keep you old tenants.

Typically owners of small rental property only do one or two things to find tenants. They may run an advertisement in their local newspaper or they may put a sign on the property that says “FOR RENT”. This is fine in a good rental market, but if you want avoid vacancy you have to do more.

Here are five simple ideas to help keep those vacancies filled:

>1. Put together a property feature sheet explaining the features and benefits of your property and distribute it to local real estate offices.

>2. Offer bonuses and incentives to your other residents if the refer anyone to you that rents. As an example: gift certificates for dinner out, tank of gas, microwave, etc.

>3. Use the apartment rental services in your area. They can be found in your phone book and will list your property in their “properties for rent list” that they give to residents.

>4. Make up some cards that say “Properties For Rent – Houses, Duplexes and Apartments. Call Me” and leave them all over. Put them in the envelope when you pay your bills, leave them at restaurants or post them on bulletin boards at stores. Leave them anywhere, be creative and get the word out.

>5. Create a waiting list. Keep a list of all callers on any rental that you ever had available. When a new unit comes up for rent, notify the people on your list and see if they might have an interest. If you ever get calls from someone looking for a rental and you don’t have any available now, put them on you waiting list.

Even though the above list is short, it should give you the idea that you need to have many ways to find renters. I’m sure that if you sat down and thought about it you could create a list of 50 –100 ideas. Once you have your list created, you should now test the ideas and see which ones gave you the best results. By doing this process you will fill your vacancies fast and have a constant stream of new tenants wanting to rent from you.

About The Author
Dave Schneider has been investing in real estate for over 25 years and is devoting to helping landlords make more money!. For free audio seminars, tools and information on real estate investing and being a landlord, visit this site now: http://landlordtools.com.