Johnathan Smith

Market Conditions

According the latest Pending Homes Sales Index report, home sales may only move at a snails pace in months ahead.

While May's monthly stats showed numbers has risen 5.8, July figures showed a 3.2 percent movement backwards. This trending up and then down has left a flat market. The July index remains 6.8 percent below July 2007 when it stood at 92.8.

Regionally, the Midwest was the only region that still saw gains -- and is only 2.4 percent below its year ago numbers. It is important to consider, however, that the Midwest didn't experience the heavy swings up and then down seen by other regions in the past few years.

NAR chief economist, Dr. Lawrence Yun, reported that "contract signings have been steaming ahead, nearly doubling in activity from a year before in several California and Florida markets. The outer Washington, D.C., exurbs also are coming around very strongly. The Northeast region retreated following a robust gain in the previous month, and soft activity was observed in the broad midsection of America despite very affordable conditions."

Lease-To-Buy May Be Good Option

Many people who are struggling to get mortgages are finding comfort in a growing trend: lease-options. This is a contract that allows renters to lease the property and, at the end of their lease, they have the option to buy the home.

Hopeful buyers with poor credit are finding the rent-to-own option creates an opportunity to repair their credit while positioning them for homeownership. It's a win-win situation. Sellers find that properties that once sat vacant now offer cash flow.

The concept, while not new, is gaining momentum. There are a number of reasons buyers are finding this option appealing and it's not just because of bad credit. Some buyers are not sure if they're ready to own a home and take on all the responsibilities and extra costs that go with homeownership; the lease-purchase contract gives the buyers a chance to give homeownership a test drive.

Individual sellers in the housing resale market are considering this method to help get their homes sold and so, too, are developers who have found they're loaded up on properties they can't sell.

"In Boston, as is true with so of much the country, the condominium market is a little bit soft right now," says Eric Gedstad, Corporate Communications Manager, MassHousing in Boston.

So, some developers are trying the rent-to-own program in hope of getting condos sold. "There is one development where the renters sign an agreement that says 'If they would like to purchase the unit that they are renting any time within the next year, they can do so for a fixed price and they would have first dibs on that," says Gedstad.

Understanding the lease-option is very important. There are various differences in the way this type of contract can be drafted, so it is critical to hire experts to help negotiate the process to make sure you understand the terms and are protected. Here is some basic information about leasing with the option to buy a property.

Typically, in return for the landlord/seller extending the offer to buy the property after a period of time (usually one to three years) at a predetermined price, the tenant/buyer has to pay an upfront option (fee). That fee is generally non-refundable. A portion of the monthly rent may be applied toward the down payment to purchase the home.

Advantages for the buyer/tenant:

• Under this type of lease-option contract, for the period stated, you are the only one who has the option to buy the property.
• Typically a portion of your rent goes toward building equity and, when you purchase the home, is applied toward the down payment.
• You have a contract to buy the home when the lease is up.
• Usually you can buy the home at any time during the contract.
• You can see if homeownership is right for you by testing it out.
• In an appreciating market, you may get a good deal if the home goes up in value and you have already locked in a specific sale price for the home that is less than how much it appreciates. However, the reverse is true too. You could end up paying more for the home later on if it depreciates and a set price was locked in for a higher amount than what the home is worth when your lease-option is up.
• You have a chance to clean up your credit and build equity.

Advantages for the seller/landlord:

• Immediate cash flow from the tenant and the opportunity to sell your property later on.
• If the tenant/buyer doesn't buy your property, you keep the upfront fee (option money).
• You may have a larger pool to market your home to because you are marketing to traditional buyers and also renters and investors.
• You will likely get higher-quality tenants who take better care of the home since the tenants may want to buy it in the future.
• Since you own the home, you retain tax-shelter benefits while you have tenants in the home.
• You may get some peace of mind knowing that you have tenants in your home who are working toward buying the home.

Things to consider when utilizing a lease-option:

• Do a home inspection and document necessary repairs. Take photos to document the condition of the home.
• Make sure all payments are kept up such as mortgage, taxes, and insurance for the property.
• Verify if there are any liens against the property.
• Spell out the terms if the tenant/buyer does not exercise the option to buy the home at the end of the lease.
• Specify everything in writing; option contracts must have all the specific information that a sales contract would have in order to be enforceable.
• Prepare a draft of an undated and unsigned purchase agreement.

It's always a good idea, when purchasing real estate, to contact experts to assist you through the process to ensure that you understand the contract and ultimately complete a successful transaction.

Home values have plummeted, while the interest rates on adjustable rate mortgages (ARMs) are rising. The bubble has obviously burst for the U.S. housing market, and it may be "refinance risky mortgage" time for you.

The statements on TV ads and direct mailers may have caught your eye: "Refinance Risky Mortgage," or "Refinance Mortgage...Before It's Too Late." Mortgage lenders are urging homeowners with bad credit loans to consider refinancing in the face of a poor housing market.

Their warnings are dire, and for good reason. The housing market has experienced a precipitous drop in sales and home values. If you hold a bad credit mortgage, such as an adjustable-rate mortgage (ARM) or a balloon mortgage, it may indeed be "refinance mortgage time" for you.

Bad times theory

No matter how many times history repeats itself, Americans don't seem to learn their lessons. Stock markets have crashed, bubbles have burst, but still consumers deny the fact that what goes up eventually comes back down. The housing market is a prime example. After years of sustained growth, the appreciation of housing prices at double-digit rates seemed to be a fact of life, instead of what it truly was: a natural economic cycle.

When the market reached its apex, many short-sighted homeowners and lenders were faced with a bitter reality. Home equity, which had been the equivalent of money growing on trees, vanished overnight as values plummeted. For people who were set in their fixed-rate mortgage and weren't in any hurry to move, the drop in prices wasn't catastrophic. But for those who lived life on the edge in the form of ARMs, the subprime crisis hit with hurricane force.

Play it safe

ARMs include a teaser rate. Designed to entice a mortgage borrower with its low rate and subsequent affordable monthly payments, the rates eventually adjust upward after a period of one, three, five, or seven years. The adjustments can be between two to five interest rate points, a fact that never used to give homeowners pause. Their strategy was to refinance their mortgage prior to the adjustment.

This has been a cozy arrangement for homeowners who consistently refinanced their properties, year in and year out, jumping from one subprime mortgage to the next. However, when home values sank, these individuals found that they no longer had the equity to qualify for a new loan. They were stuck with their ARMs that, in many cases, adjusted to a higher rate that they could no longer afford.

If you're currently holding an ARM, it may be time to think "refinance mortgage." Rates are solid, relatively low, and may be for the immediate future (although there's no telling what will happen with inflation on the rise). To avoid foreclosure, refinance to a fixed-rate product, like a 15- or a 30-year home loan. You won't enjoy the spectacularly low rates previously available with ARMs, but you'll avoid the sad fate of subprime borrowers across America

If your looking to buy or sell a home you have to look for a real estate agent that knows the market in and out! Thats my job. If your selling your house please call me to come over and see your house, I will tell you the true value of your house in todays market for free. I will also give you a sellers closing cost breakdown that will show you what you will have in your pocket at the end of the deal.

Staten Island, NY Real Estate Market Snapshot updated Monday, September 1, 2008

Please feel free to email me at johnresales@gmail.com or call me at 646-400-4363

2008 Richmond County Fair

I am not like other real estate agents! I love getting out and meeting the home owners of Staten Island. If its a nice day I may walk a number of blocks to say hello to all the owners or if a fair is going on you know you can find me at the fair. I try to goto all the fairs on Staten Island so I can meet the owners of the homes and talk to them about any questions the home owners may have about the real estate market.

Before you pick a agent think about it! You should pick a from Staten Island and one that walks the streets of staten island to be side by side with you!