Archive for the 'Creating Equity' Category

With the start of  the new year, why not make a new New Year’s resolution? Instead of vowing to exercise more or eat healthier (not that these aren’t worthy goals), you might want to resolve to become a homeowner. If you’ve previously been a renter, buying a home may seem overwhelming. This really is the perfect time to buy a home, though: mortgage rates are currently lower than they’ve ever been.

According to a recent article in RIS Media, a real estate information website I follow, Freddie Mac just released the results of its Primary Mortgage Market Survey. Great news for home buyers: mortgage rates are down in every category. For instance, a 30-year fixed rate mortgage averaged 3.89 percent last week, down from 4.71 percent at this time last year. Similarly, last week’s 15-year fixed rate mortgage averaged 3.23 percent, as opposed to last year’s 4.08 percent. And the five-year Treasury-indexed hybrid adjustable rate mortgage averaged 2.82 percent last week, versus last year’s 3.72 percent.

All  these numbers make for pretty dull reading, I know. They add up to exciting possibilities, though. So take the plunge and make 2012 the year of home ownership. As an experienced New Jersey Realtor, I’d be delighted to help make this happen for you. Happy New Year!

Home sellers in Glen Ridge and Montclair often ask me- should I renovate my kitchen before putting it on the market?  There is not always a straightforward answer but this may lend some insight.

I’ve always liked the idea of solar energy: it’s non-polluting, infinitely renewable, and available domestically. Now, thanks to a 30 % federal tax credit  and the ability to sell SRECs (solar renewable energy certificates) to power companies, it’s also financially feasible. So I am having solar energy panels installed on my roof.

As part of the solar panel system, I also needed to install 3 inverters in my home. Inverters convert the solar energy produced into usable voltages; Call me weird, but I really enjoy going down to my basement to watch them count up the kilowatts of energy being generated.

The panels are just about done; once I have the final approvals in place, they will generate around 1/3 of the electricity I need to run my house. This project has not been cheap, but I expect to recoup the cost in around four years. After that,  it will provide me with an annual cash flow of several thousand dollars. Putting solar panels up is a win-win situation: I will ultimately save money while I do my small part to save our planet. It’s something that anyone with a south facing roof can do – There are even free options if you don’t have the cash to pay for the panels.  If you’d like to know more about it email me or read more on the piece from Baristanet.

Some of my seller clients spend several months and thousands of dollars upgrading a home before putting it on the market.  But for homeowners who are short on time and cash, there are some very effective smaller  projects that will increase value and reduce time-on-market.

1. Expose hardwood floors..  There is a decided preference for hardwood floors in Montclair. Worn carpet is a real turn off to buyers and they often fret about what might be underneath.  With a hammer and a sharp knife,  carpet removal is an easy and free DIY project to raise the value of your home.

2. Paint rooms in a light neutral color with white or off-white trim. Montclair’s 1920s colonials look fresh and modern with this simple combination. Wall paper and dark colors can be an obstacle for some buyers and a new coat of paint is one of the best investments you can make for $25.

3. Hire a professional cleaning service right before the home goes on the market.  Even if you’re a clean freak and consider your home to be spotless, a professional cleaner will do things that are not part of your routine and make you home sparkle like never before. Cost: $100 to $300.

4.  Have the windows washed by a professional.  Most services will do inside and out as well as the storm windows.  Have them remove the screens from windows that you usually don’t open.  Shiny windows and a clear view let in more light and make a world of difference. The cost should be about $6 per window.

5. Power wash your house, front steps and deck- and the gutters too. Moss and dirt make a house look uncared for.  You can buy a small washer for under $200 or rent one for $50/day.  Or hire a professional for about $500.

6.  Remove dark, heavy drapes and vertical blinds and replace with wood blinds or sheer curtains – or just leave the windows bare if privacy is not an issue.  Let as much natural light in as possible.

7. Spruce up the bathroom with a new, high quality, white shower curtain. Recaulk the shower and tub.  Replace the toilet seat if it is yellowed or worn.

8. Refresh the front door with a new coat of paint in a complementary accent color.  Replace the mailbox, house number and door hardware to update the look.

9. Hire a landscaper to do a “spring clean-up” of the yard, even if it’s summer or fall.  Professional crews employ equipment and skills that most homeowners don’t have. It’s like doing a deep cleaning of your front yard. Having last season’s sticks, leaves and yard debris removed will boost your curb appeal and your home’s value.

Montclair rental - gone in 1 day

Real estate is always a “good news-bad news” business. The most obvious example of this is an overheated market: great news for home sellers, lousy news for home buyers.  An article I read recently in RISMedia,  an online trade publication, discusses another good news-bad news situation: the current rental market.

The article cited a study by the Harvard Joint Center for Housing Studies, which concluded that the fledgling national economic recovery will actually hurt renters. More Americans are finding new jobs, but these jobs often pay less than their former ones, so they are choosing to rent a home instead of buying one.  In addition, the continuing foreclosure crisis means that many former homeowners can now only afford to rent. With no real increase in multifamily rental units planned by developers, rental units will almost certainly become scarcer and thus more expensive.

Montclair is already showing signs of upward pressure on the rental market – There are only 35 rental units at the moment listed on the MLS as compared to 230 that are currently for sale.  As a New Jersey Realtor, I have firsthand experience with this trend: I listed a 1 BR condo renting for $1850/month in a loft-type building in Glen Ridge, walking distance to the NYC train, on Saturday; by Monday, it was gone.

The good news in this scenario: a poor rental market often means it is a good time to buy a home. Mortgage rates are at their lowest in years, and home prices have dropped significantly from several years ago. Are you looking for more space for your growing family? Have you been considering buying a multifamily property as an investment? If you answered “yes” to either of these questions, then take advantage of the good news (for buyers) and make your move before the tide turns again.

I had a lovely client who along with her partner wanted to rent a house on a big property so their dogs could run.   We found her a great place, and the lease was signed.  She paid all the fees and deposits. And then days before the move in date, she had to back out of the deal because she lost her job.  She was a project manager on the ARC tunnel project planned to link NJ to NY with an additional rail tube across the Hudson river.  She had been working on it for eleven years. And then it was over. Her job was just one small casualty of the Christie administration’s cancellation of a major project that would have provided a vital additional link between New Jersey and New York.

As any commuter knows, our single tunnel just isn’t enough.   And the easy access of our state to one of the biggest economic center’s in the western world has always created enormous opportunities for New Jersey’s own economy and its citizens.   As reported by The New York Times,  the tunnel would have shortened commute times and linked additional communities.

As any New Jersey Realtor will tell you, one of the single most effective ways to boost property values is to offer a quick commute to Manhattan.  Bigger property values equals bigger tax revenues for the state.   One non-profit research group estimated that home values within two miles of the rail station would have risen by $19,000 and by $29,000 for homes within half a mile.  Given the estimated $18 billion increase in property values, NJ would have immediately started raking in an additional  $375 million in tax receipts per year.

Consider too the additional jobs that would have resulted directly from the tunnel project and indirectly from easier access to other business markets. And let us not forget the benefits to our environment and to our communities that always follow from better public transit and increased walkability.  We all know that Governor Christie inherited one of the most difficult fiscal situations since World War II.  And we know that the budget needs to be balanced. No one would deny that these are tough economic times, but axing the ARC midtown direct tunnel project was penny wise, pound foolish.

Many first-time home buyers are intent on getting the best deal possible – not a bad strategy at all.  But many buyers forget that “the best deal” depends both on house price and mortgage rate (unless you’re one of the lucky few who intend to pay all cash).  Remember this handy little equation: For every increase of 1 percentage point in mortgage rate you can afford 9% less in home price.  Let’s do the math:  Say you’re shopping for a $500,000 house in South Orange, NJ today but you feel that if you wait another 6 months the price might drop and you’ll be able to get this same house for $475,000.  But what if in this same time period rates go from 4.75% to 5.75%?  Now you can only afford a $455,000 house so that $500,000 house that you thought would drop to $475,000 is now beyond your budget.  Bummer!  Although my crystal ball is in the shop at the moment, I would bet that interest rates will go up before home prices come down a whole lot.

The Washington Post reports that rates for a 30-year, 20%-down fixed-rate mortgage are the lowest they have ever been since Freddie Mac started following rate changes in 1971. As of last Friday, 6/25, the average rate is  4.69%, down from 4.75% the week before and more than 5% a year ago. Rates for a 15-year, fixed-rate mortgage have gone even lower, as low as 3.875% (compared to 4.89% last year).

The Post explains that mortgage rates are dropping

because investors, nervous about global economic stability and a volatile stock market, are plowing their money into mortgage securities backed by Fannie Mae and Freddie Mac, assets that investors perceive to be relatively safe bets.

But despite the great terms, consumers are becoming less and less interested in buying houses and applying for mortgages. The end of the tax credit in April combined with shaky employment and stagnating wages have led to a steep drop in home sales, and a corresponding decrease in mortgage applications. While some people are still in the market to buy a home, the numbers are reduced and the lower mortgage rates are not working to attract those on the fence. Michael Fratantoni, a vice president at the Mortgage Bankers Association, says that consumers at this point are used to fairly low mortgage rates, and do not therefore see the 4.69% rate as a reason to commit to a mortgage if they are not otherwise prepared to.

However, for those who already have mortgages, now is an excellent time to refinance, and indeed, refinancers make up a whopping two-thirds of all mortgage activity. For those who can, refinancing is a great option, but not everyone who wants to will be able to, given that house prices have dropped and their own credit history might not fit the more stringent qualifications mortgage lenders have adopted since the subprime mortgage crisis.

If you are reading this, you are probably one of the 90% of buyers who searched for a home online this year.  According to the National Association of Realtors only 37% performed this activity 10 years ago.  Here are 7 stats that have changed – or not changed over the past decade:

1. 1999: 37% of buyers searched for a home online. 2009: 90% of buyers searched for a home online.
2. 1999: median home value is $137,600. 2009: median home value is $172,600
3. 1999: 82% of buyers purchased detached, single family homes. 2009: 78% of buyers purchased detached, single family homes.
4. 1999: 46% of buyers choose suburban neighborhoods. 2009: 54% of buyers choose suburban neighborhoods.
5. 1999: 68% of buyers were married couples. 2009: 60% of buyers are married couples.
6. 1999 and 2009: the median age for buyers was 39.
7. 1999 and 2009: “neighborhood quality, affordability, and convenience to work and school have consistently been top priorities.”

I bought my Montclair home just over a decade ago –11 years to be exact– and it has doubled in value, current market conditions notwithstanding.  Happy to be living here in Essex County, NJ and not where the median home value has increased by a mere 25% (see #2, above).

(Lani Rosales, December 31, 2009, Agent Genius Blog)

We have a saying among real estate agents that  “Kitchens sell houses.” At the mere mention of the words “granite” or “stainless steel,” buyers flock to a new listing, imagining themselves preparing home-cooked meals for the family or having friends gather around the “island” while the host prepares a gourmet meal and offers a little kitchen theater.

So powerful is the pull of the granite kitchen that it can compensate for other defects in the house such as small bedrooms or too few bathrooms.  For many, the granite kitchen has become a symbol of the good life and of good times.  There’s just something about family, friends, home, and kitchen that is inextricably tied together – despite our love of take-out.

Check out some of these Montclair homes for sale, and see if these kitchens match your ideals.

Do all of us have a strong interest or skill in cooking? No.  But even those among us who have never flambéed or sautéed love a great kitchen. Friend and fellow Montclair resident, Alma Schneider has even built a business around the incongruity between having a fab kitchen but not knowing how to use it.  “Overcoming Obstacles to Cooking” is the theme of her blog “Take Back The Kitchen.” Here she offers tips, coaching packages, and classes.

Me, I’m still living with butcher block counters in my circa 1925 kitchen, albeit with new appliances, hoping that my friends and family will forgive my sin of missing granite.  What does your kitchen look like?

Many real estate agents hate Zillow.   But not for the reason you think.  When Zillow was launched a couple of years ago the word on the street was that agents would lose their usefulness in helping sellers determine their home’s value.  That turns out to be far from the truth—which is that agents have to spend an awful lot of time explaining Zillow’s  inaccuracies.

Here’s the beef.  Zillow is a huge aggregator of data.  They use info uploaded by real estate agents (not always accurate), tax assessment data and comparable sales.  Then use a proprietary formula to calculate a “Zestimate.”  But they have no way of accounting for hyper local conditions, for example, a house that has not been updated for 50 years. Or a house that backs up to a gas station.  Or a house with a fabulous view (that the house next door may not have because it’s blocked by trees).  These are factors that only a human being with local expertise can work in to the house value equation. In fact Zillow’s self-reported level of accuracy in the Northern New Jersey Market is a median error of about 12 %.

In other words, half the houses sell for within 12% of its Zestimate.  And the other half do not.

Only 25% of homes sold for within 5% of the Zillow estimate.  That means you can count on Zillow to be really accurate only about a quarter of the time!

When Zillow is wrong, it can be really wrong. Take this house in Glen Ridge which recently sold for 380,000.  Zillow’s estimate was 573,000.  Can you imagine the agent trying to convince the seller that despite what Zillow says the house is actually worth almost 200,000 less?  Here’s what Zillow didn’t know about this house.  It needed extensive repair and was owned by a bank that wanted to get rid of it as fast as possible.

The take away is that no computer can substitute for a careful assessment by a qualified human.  While Zillow may work well for communities that have a very homogeneous stock of houses (think Levittown), it does not work as well for towns like Montclair and Glen Ridge where a two million dollar home is often a block or two away from a four hundred thousand dollar home.

On the bright side—isn’t it good to know that human experience and judgment still beat out the computer?