Connecticut

The first report from the National Association of Realtors June, 2009 telephone survey of 1,004 people is in.

According to the interviews it seems that "most consumers are not aware of how affordable homes have become in today's market".

More data will be released later this week. CLICK HERE to read the article from the Realtor.com.

Everyone's gone at one time or another to the Fun House at the carnival. It's supposed to be a walk or ride through a scary chamber of horrors. The journey through is about as scary as a litter of kittens. About the only ones who get spooked are the littlest kids.

Yet there are real life situations that can be scary. Not a bogeyman jumping out of the dark and scaring the crap right out of you kind of scary, but a holy cow that could really turn into a bad situation with people getting hurt kind of scary.

A fireplace is not some thing that may conjure up nightmarish visions. On the contrary it is a place that has quite the opposite effect. A warm roaring fire in the middle of winter is a cozy and relaxing image.

But what if the fireplace is built incorrectly and in essence is an accident waiting to happen? That warm and cozy spot could be the start of a house fire.

Just above the fireplace is an area known as the smoke chamber. This is the transition from the fireplace to the flue. This is also an area that is often constructed wrong.

A masonry fireplace is obviously built from bricks and mortar. To narrow the smoke chamber to the flue size the bricks are "corbelled". This simply means that the bricks are hung partially over the bottom course to create an angle and decrease the size of the chamber going up. Often what is not done is the finishing of the smoke chamber by parge coating.

Parging is the smooth coating of the bricks with a special insulating refractory mortar (it is also required by building codes). The reason for parging is to fill any gaps in the masonry and provide a smooth transition for smoke. It also protects the bricks and mortar joints from the extreme heat of a fire which will open the joints over time. When a void in a mortar joint occurs it provides a path for heat, not necessarily flames, to combustibles around the fireplace and chimney.

Wood studs in the walls will become pyrolized over time from the heat. This is a physical change to the wood that lowers its ignition point from 450 º F - 500 º F down to 200° F - 225° F. Pyrolized wood once ignited can smolder for days until it finds an open area and thus an oxygen source. Once that occurs the result can be a full blown house fire.

The photo to the right is the inside of a smoke chamber from a 50 - 60 year old home I recently inspected. The smoke chamber has never been parged, even later when a good part of the entire chimney was rebuilt. This particular fireplace has certainly been used frequently. What may be difficult to see in the photo are the openings between the brick and mortar joints. Some of these openings were almost a quarter inch wide. This fireplace should not be used until it is repaired by a qualified chimney specialist.

This was truly a chamber of imaginable horrors.

James Quarello
NRSB #8SS0022
JRV Home Inspection Services, LLC

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What a profession we've chosen to be part of! For me it's become volunteerism at it's peak! Countless hours of negotiating and putting out fires makes me think that if I'm not going to be paid fairly for my efforts at least I could volunteer for the real firefighting activity!! It's really sad that this whole debacle of the real estate market has put a lot of good REALTORS on the front line of the firestorm. As we deal with small brush fires there is a whole forest fire waiting to whip up just beyond the break! I do try to stay positive but how many trees get engulfed before you say "ENOUGH ALREADY!" When do you tell a client off that doesn't value how hard you have worked to get them an offer at all?

Selling a 100 year old house in small town American for what the family feels is a fair price but the buyers don't, is a challenge considering that the house needs a roof and total updating . After a price reduction, we have an accepted offer $15,000 less than original list price and buyer asks for closing costs. This after a multiple offer situation where both parties started out at $30,000 less than reduced value. Try to negotiate that one.

Now home inspection issues: seller is angry that the buyers don't want a house with a roof that is at the end of its useful life and are asking for credit to repair. I'm being threatened that unless I reduce my commission substantially the seller will not renegotiate for the repairs and the deal is off. To quote: "no sale = no commission". I'm willing to concede some to help keep it together but being threatened like my time and effort is of no value just makes me want to let the fire burn. When this one is done, if I agree to the sellers' terms I will be making about $10/hr. for all my efforts. Hello local fire department?

I know I'm not alone - we're all facing this absudity together. Anyway thanks for listening!

This is another one of those phrases that Realtors hear all the time. It is, quite frankly, a very natural thing to feel and say. You paid good, hard-earned money for your home. You’ve put additional money (and sweat equity) into the house. You’ve lived it in for a period of time and your neighbor who bought at about the same time as you got 120% more than he paid when he sold about 2 years ago.

So why should you give it away? You shouldn’t!

What you have to do is to clearly define what “giving it away” means to you. It’s very subjective. Ask yourself the following questions:

1. Why do you want to sell in the first place?
2. What will you do if you don’t sell?

There are a dozen reasons why people want to sell their homes. Answer it honestly. Perhaps selling isn’t really that important to you. If it is, then move on to the second question – what will you do if you don’t sell? There are only 3 possible answers.

1. You’ll stay in your home
2. You’ll rent your home to someone
3. You’ll move and leave the house vacant

The most common answer is that you’ll stay in your home. If that is your answer then ask the following question

How long will you stay before your original reason for moving becomes urgent?

If you think you will stay in your house for “a while – until the market turns and houses appreciate again” you should sit down and do some math.

Here’s an example which is, admittedly based on theory – no one really knows what is going to happen in the market. We’re going to start with the hypothetical assumption that the market will continue to depreciate for another 9 months, level off for 6 months and then begin to appreciate again.

Soooo…. using my favorite $100 house, let’s look at a couple of scenarios. First, where you overprice the home and then at what happens if you try to wait it out.

SCENARIO #1. You paid $90 for your home four years ago. Your neighbor who has a similar house also paid $90 four years ago. He sold his home two years ago for $110.

Your Realtor tells you that a good selling price for your house is between $98 and $102. He suggests listing it for $100. You know that you’ll probably have to negotiate a little and sell for $97 or so. You will then have to pay a real estate fee of about $6 so you’ll end up netting $92 which is only $2 more than you paid.

You feel that that is just “not enough” and constitutes “giving your house away” and you are not going to do that.

You decide on listing it for $108, and will negotiate down to $105 if you have to. After taking out a fee of $6 you will net about $99 which is, in your opinion, “good enough” after all, it’s WAYYYY LESS than your neighbor got. You are being very flexible without giving it away.

What happens next is that your house doesn’t sell quickly. The educated buyers who have been looking at houses for a few months, take a look at your house and they know, while it might be a great house, there are others out there that are better values.

90 days go by.

You then, reluctantly tell your Realtor that you’ll lower the price to $102 – which is the top range of what he originally suggested. Sounds like a plan right? There's one more wrinkle.

Based on a continued depreciation your house is no longer valued at $100. It is now valued at about $98. A new group of educated buyers (the other ones have already bought homes), visit your house and reject it. There are some other similar houses that are selling for $96 and $97.

Your house sits for another 90 days – and the cycle continues. Eventually the market does bottom out. Your house is now worth about $92 or $93. You decide that you simply can’t sell at that price and you pull your house off the market.

SCENARIO #2. You hear your Realtor’s original price suggestion of $100 and decide to wait it out. You do nothing for 9 months. The market then bottoms out and your house is now valued at about $92 or $93. You feel that things are on track and you’ll just wait for things to rise again.

You can see in both scenarios you are sitting there 6 -9 months later with a home that is worth about 7 or 8% less than you could have sold it for when you started the process.

Again I want to reiterate that this is all hypothetical. No one knows what is going to happen. In our little story, the market begins to slowly appreciate and 12 more months go by and your house appreciated in value by about 5%. This now makes your home worth about $97. You are 21 months from when you started. If you then factor in the mortgage payments that you've been continuing to make, your net proceeds from this plan will be far, far less than if you had sold it for $97 at the outset.

So – now go back to those two questions.

Why do you want to move and what will you do if you don’t sell?

This, of course, leads again to the third question – how long can you actually wait before you move.

No one really knows when the market will turn and how quickly it will appreciate when it does. In the best of scenarios, however, you need to understand that in all probability, your house is worth more today than it will be tomorrow or in 6 months to a year- and that it could be 1, 2, 3 or more years until it is worth more than it is today.

BOTTOM LINE :

1. Overpricing your home will not help you net more from the sale.

2. Overpricing will probably delay the sale of your home and you will end up selling for less.

3. Holding off until the market turns will not help you net more unless you can wait a very long time.

4. What you WANT for your house is irrelevant to the current value.

5. What you NEED for your house is irrelevant to the current value.

6. What you PAID for your house is irrelevant to the current value.

7. What you OWE on your house is irrelevant to the current value.

8. What your next house will cost is irrelevant to the current value.

9. What your neighbor sold for a year or two ago is irrelevant the current value.

Ultimately, you have no voice in the current value - you only have a voice setting the asking price.

BOTTOM BOTTOM LINE:

The question is not how much you want to net for your house. The question is whether or not you want to move.

If you do, then you must price the house based on what people are willing to pay.

The month of June here in Connecticut was probably the wettest month that I can ever remember, and July is starting out the same. I have been posting pictures of flowers during this time that have really benefited by all this rain, and it has been very evident in their beautiful bright colors. But I think that even the flowers are ready to waive a white flag and give up because of the continuous rain. The flower below is a good example of this, it looks like it is saying I give up and surrender. A little sunshine please :) :)

There is even a couple of rain drops still hanging on its leaves.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com