About New London County, CT

The Dangers of Overpricing

You want your sellers to get the best possible price for their property. However, when a
home is priced too high for the market, you'll see what happens:

Pricing a Home to Sell vs. Overpriced Homes

• The overpriced home may attract lookers, not legitimate buyers.
• The price may imply to buyers that the sellers aren’t motivated to sell.
• An overpriced home reduces the number of showings.
• When overpriced the home helps the competition (other homes) look better.
• If a home doesn’t appraise at the higher price, a buyer may not be able to secure a loan.
• The best offers often come when a property is newly listed.

If a home is overpriced when it hits the market and you need to make a price
adjustment later, you will have missed the initial influx of prospective home buyers.

Proper pricing is crucial the first time around!!

If you or somebody you know is looking to buy or sell a home in Southeastern Connecticut, I am happy to help. I can be reached at (860)514-9533 or by email at michellemayo@prudentialct.com.

I do not want to focus on the negatives and pain that currently exists across the country. But I do have to acknowledge that it exists and look for possible solutions. Many families have simply thrown up their hands and have given in to what seems to be the inevitable loss of their home.

Short Sales and foreclosures do not ultimately have to be the outcome. 80 % of all loans written in the past decade contain RESPA violations. These violations do not make the loan contract void but allow a professional to use leverage with the lender when attempting a loan modification. The attorney attempting the loan modification on your behalf will first try to capitalize arrearages, reduce interest rates until a 31% debt to income ratio is reached (perhaps lower your rate down as far as 2%) extend your loan term, and lastly forebear principal.

There is a well know company out of Oregon that will not charge any fees until your loan is successfully modified. They have vowed to have an attorney in every state by March of this year. They have a reputation of being able to work with lenders up until two days prior to loss of the home. You do have time. (I do not have any affiliation with this company....just trying to help as many people as possible)

Warmest Regards,

Tim Bray B.S. Real Estate & Urban Economics (UConn)

The past few years have been extremely difficult for many people in the Mystic Country region of CT as well as the rest of the country. I am often asked about the opportunities presented by foreclosures, short sales, and REO properties. Don't get me wrong, there are opportunities, for those people who have weathered the storm, but I want to focus on those people who have fallen into hard times and are looking for solutions.

After much thought, and countless hours of research, I must point you in the direction of a "Special Report" posted by the Real Estate Radio Guys entitled "What you must know before attempting a loan workout" This 18 page report is extremely informative and will guide you down the right path in making the best decisions possible before you contact your lender, attorney, or real estate professional. Please paste the following link into your browser to receive the report: or click here

http://web27.streamhoster.com/tbray777/Loan%20Workout/Loan%20Workout.pdf

To those people who inevitability must lose their properties, I offer you this advice. Meet with a knowledgeable real estate professional and get your property priced correctly and on the market. Let me offer you the following example:

Suppose that you owe $300,000 on your property but fair market value is $200,000. You are what we call "under water" You owe more on the property than it is worth. You place the property on the market and receive an offer for $195,000. You then take this offer to your lender and ask them to approve a short sale. Yes, you will have had to do everything outlined in the Real Estate Guys Special Report including the documentation of a hardship. The bank turns you down and you lose the buyer.

You may have just mitigated your losses. Let's say that the market continues to decline and a year from now you get another offer...only this time it is for $150,000. The bank accepts....what are you liable for? You can argue that a year ago you had a ready, willing, and able buyer for$200,000..... $45,000 more than they just accepted. You may also want to point out that all the fees paid by the bank over the past year are solely the responsibility of the bank since your clock stopped the minute you brought the $200,000 offer to the table. Food for thought.

I am often being asked if I feel that Condos are particularly risky in these trying times. Let me shed some light on the condo market and try to help you make the best decision possible. I will focus in on the primary resident condo market as opposed to investment properties in Aspen or on the ocean. Condos are built with a specific client in mind. Condo owners are typically first time homeowners who have good credit, previously were renters, who wish to enter the housing market. They often times use the condo as a stepping stone into the single family housing arena but can not afford to do so at this time. Or the condo owner enjoys the relatively maintenance free lifestyle that a condo offers.

The risk in ownership and potential depreciation in value lies in the age of the condo, management, Home Owner's Association, availability of other condos in the complex as well as the town, taxes, and the barrier to entry for developers in the market place.

There are very few condo complexes in my region that I would recommend. The first thing that I look at would be the town in which the complex is located.

•1. Has the town approved similar condo complexes that have yet to be built and would be in direct competition with the one in question?

•2. More importantly, do the existing complexes or the one you are looking at have approvals in place for the developer to build more when the market shows signs of turning?

These two questions are critical in determining your risk and the probability of a further decline in value. Developers can typically be much more aggressive in their pricing of individual units and you will rarely win when trying to go head to head in competing for the attention of buyers.

•3. Pay close attention to the spread between the cost to rent, own a condo, and a detached single family. The greater the gap in between these three factors will reduce your risk.

There are a couple of condo complexes in the Southeastern portion of CT that I would feel extremely comfortable in recommending to potential buyers. Unfortunately they comprise only a small fraction of the condos currently on the market and are losing value at a fast pace.

P.S. I do not have any affiliation, ties, or listings currently in the complexes being recommended.