Bergen County Realtor, Sal Poliandro, CDPE, SRES, ePRO, Short Sale Specialist

Just recently interest rates for 30 year fixed mortgages spiked up about one percent. What's the big deal about one percent?

Let's take a look at a first time homebuyer and what that does to their purchasing power.

Recently people were qualifying for rates at or below 5%. A $300,000 mortgage at 5% interest on a 30 year fixed loan had monthly principal and interest payments of approximately $1,600.

The same family will only be able to finance approximately $270,000 at 6% to keep their payments the same. A 1% change in interest rates cost this family $30,000 in purchasing power. Where do you think that is going to come from? The buyers can look at less expensive homes or more realistically this will affect the sellers. If the cost of money goes up, typically home prices will have to come down. We have been in a unique period of time lately. Home prices have come down and the cost of money has decreased as well. A Perfect Storm if you will.

Going forward, the case can be made that we really didn't have much more downside to go in mortgage rates. Consensus is that rates will be increasing, we just don't know when. A concern is that this "stimulus" is just temporary. What will happen a year from now if confidence hasn't been restored and interest rates continue to climb? Not to mention the very real threat of inflation.

People are sitting on the fence, waiting for "the bottom". There is a flaw in that strategy if you are getting a mortgage. The $300,000 home we are talking about would have to drop 10% or $30,000 for a person to be able to afford it when rates go up just one percent from 5-6%. The tendency is to forget that the cost of the money you borrow is as important as the amount you pay for a home. The point I am trying to make here is that home prices may or may not go down. Interest rates will probably rise in the future.

Opportunities are great in this market. These opportunities are only for people who are ready to act. Last month I wrote of a home that was originally listed for $950,000 and sold for $395,000 in Wyckoff, NJ. The opportunity was out there for every buyer in the price range, but only one family was able to capitalize. Ironically enough, now that the property has been sold, plenty of people are interested in a "deal" like that.

If you are a seller, this is an appropriate time to be thinking about preserving equity. Based on the past couple of years, I'm sure there are sellers that wish they had sold their homes three years ago. Unfortunately, that ship has sailed. We have worked with sellers who sold their home in 2008 and were glad they didn't wait until 2009.

How long will this current cycle continue? No one knows for sure. History always repeats itself. Coming out of the last housing crisis in the late 1980s home prices were flat for almost 10 years. Are you as a seller, willing to put your life on hold for that long? Hoping to squeeze out every last drop of equity that you can? Folks who have owned their homes for quite some time still stand to make a tidy profit on the sale of their home. Could you wait it out and maybe get more? That answer in a future post.

Get Educated. Get Empowered.

For more information on this or any other topic, call Sal Poliandro, Broker Associate, Realtor, Marketing Advisor,

Short Sale Specialist

ePRO, SRES at 201-259-2187, visit our websites: http://www.salanddawn.com/ or www.shortsaleguy.org

Follow me on Twitter: @salanddawn

Sal can be reached by snail mail at RE/MAX Properties 73 East Allendale Road Saddle River, NJ 07458

This past weekend there was an article in the Bergen Record about Twitter and how Real Estate agents are using it. The reporter signed up and started following me and some other people.

Here is what she had to say, "When I joined "Twitter" last week, I immediately got an e-mail from Realtor Sal Poliandro of RE/MAX Properties in Saddle River, saying he wanted to "follow" me. I clicked on his "tweets" and found that he loves to bowl and that he just got a listing at 6 Saddle Horn Drive in Upper Saddle River. To see photos of the place, you could click through to Sal's blog on the real estate Web site ActiveRain.com."

Judging by the article, I was the first to fire off an email to her. It is nice to be mentioned in the newspaper. I can't believe how we have transformed from blogging to micro blogging, from Active Rain to Facebook to Twitter. I'm more amazed how interested we have become in each others lives. While all this social networking is great, don't forget to pick up the phone and call people. Face to face meetings are still what makes the world go round.

Get Educated. Get Empowered.

For more information on this or any other topic, call Sal Poliandro, Realtor, Marketing Advisor, Short Sale Specialist

ePRO, SRES at 201-259-2187, visit our websites: www.SalAndDawn.com or www.shortsaleguy.org

Follow me on Twitter: @salanddawn

Sal can be reached by snail mail at RE/MAX Properties 73 East Allendale Road Saddle River, NJ 07458

$950,000 home sells for $395,000
Wyckoff, NJ

In this market - it's possible! A home in Wyckoff, NJ was originally listed for $955,500 in March of 2006. I showed the property around that time and it was clearly overpriced. I had shown the property to clients who said that they would have purchased it if the price were more like $799,000. Prices have certainly come down in the last 3 years, but not 50%.

This property closed the last week of April 2009 for $395,000. The purchasers got a great opportunity on the house.

Everyone buyer wants to know how to get a great deal on a house. What's the secret? Where are these opportunities? Before you go and spend money on a "foreclosure" website, listen to this; the property we're speaking about should have been a short sale in 2006. (If you are unfamiliar with short sales, read my previous columns or visit shortsaleguy.org) Simply, the property was overpriced for 2006 market conditions. Since the homeowners couldn't sell, the property went into foreclosure in October of 2006. This property then showed up on all the websites that peddle "foreclosure" properties. The homeowners eventually left and the property was sold at auction to the mortgage holder in November of 2008, a full two years after it was first tagged as a "foreclosure" property.

Once the bank took possession of the property, they had to secure, winterize and clean it out. In order to sell the property in a reasonable period of time, the bank had to hire a Realtor to market it. Please note: they didn't call an 800 number nor did they go to a "we buy foreclosure" website. Truth is, anyone who really needs to sell a property will hire a realtor to give it the best chance of selling.

As a disclaimer, I do subscribe to some of these "foreclosure" services. The amount of misinformation is astounding. The reason why a subscription is necessary is because I have clients who "find" properties on these sites. They then ask me to find out more information about the property. It is great to be living in the information age. Twitter and Facebook are transforming how we keep in touch with each other. Technology has changed the Real Estate landscape as well. Fifteen years ago, if you wanted to buy a home, you drove to the town that you wanted to live in and called a local Realtor. They brought the "book," a print out of all the listings. Today, buyers can take a virtual visit to hundreds of homes in their local area or across the country. The "book" is online; we are in information overload. Availability of information is wonderful, but understanding the data and derive relevancy is something else.

A big mistake buyers make in trying to secure a great opportunity is that they're not ready. Timing is everything. When you see an opportunity, it is important to seize it. Are you ready? A bank will not entertain contingency offers.

If you have to sell your home first, you have a contingency. Having all of your ducks in a row is important. A good down payment, nothing to sell and being ready to close immediately with make a bank look favorably on your offer.

Great opportunities are available every day. Your best chance to get one is to build a relationship with a Realtor who is full-time and is active in the market. Please don't call someone up and say, "If you have any good deals, email them to me". If you don't have a relationship with them, why would they send them to you? Common sense tells us that the people that want to work with us will get the first call when something good comes along. This is the benefit for you the buyer, to have a great relationship with one Realtor. Good Realtors have expertise that you can't get from searching websites. In the end, relationships rule the world. Get yours started with a Realtor today.

Here is a link to the previous blog about the home I have been describing.

Get Educated. Get Empowered.

For more information on this or any other topic, call Sal Poliandro, Realtor, Marketing Advisor, Short Sale Specialist

ePRO, SRES at 201-259-2187, visit our websites: www.SalAndDawn.com or www.shortsaleguy.org

Follow me on Twitter: @salanddawn

Sal can be reached by snail mail at RE/MAX Properties 73 East Allendale Road Saddle River, NJ 07458

On February 26, 2009 President Obama submitted his proposed budget. Here are some excerpts from "A New Era of Responsibility"

"We start 2009 in the midst of a crisis unlike any we have seen in our lifetimes. Our economy is in a deep recession that threatens to be deeper and longer than any since the Great Depression. More than three and a half million jobs were lost over the past 13 months, more jobs than at any time since World War II. ...This crisis is neither the result of a normal turn of the business cycle nor an accident of history. ... For decades, too many on Wall Street threw caution to the wind, chased profits with blind optimism and little regard for serious risks-and with even less regard for the public good. Lenders made loans without concern for whether borrowers could repay them. Inadequately informed of the risks and overwhelmed by fine print, many borrowers took on debt they could not really afford. ...This irresponsibility precipitated the interlocking housing and financial crises that triggered this recession."

Wow, you get the feeling that things really are bad. It is easy to blame Wall Street and Housing for our current situation. While it is clearly obvious that some people were misled, others purchased homes that they couldn't afford with their eyes wide open. The risky loan, the Adjustable Rate Mortgage (ARM) was part of the problem. However, there were many people who had this type of financing that didn't lose their home. As a matter of fact, they were able to finance a much more expensive home than they would have afforded with conventional financing. There were quite a few people that made money in the boom years simply by living in their home for two years and then selling it. As long as the market is in an upward swing the riskier financing wasn't that risky. Confidence in the Real Estate market became shaky and prices started to decline. Once that was the case, the markets had to adjust.

I respectfully disagree with the statement "This crisis is neither the result of a normal turn of the business cycle nor an accident of history". Real Estate is cyclical. Sir Isaac Newtown said, "What goes up must come down". Experience tells us that he was right. Were there people who took advantage of the system? The answer is a resounding yes! Trouble is that when things are good, most people aren't thinking about the inevitable rainy day. All markets are cyclical and history repeats itself. Clearly, when we don't pay attention to the mistakes of the past, we repeat them. The stock markets have had a few "crashes", 1929, 1987 and today. The Dow industrials are down over 40% in the past year. Even the worst estimates for Real Estate aren't a 40% decline over the past year.

My grandparents generation lived through the great depression. I remember as a child, my grandfather re-using tea bags and coffee grinds. They understood what it meant not to have things. They lived in a time period before the FDIC insured banks. My grandfather told stories of how there was a run on the banks when the stock market crashed. The banks didn't have the money to give back to the people who had deposited money in their bank. People lost their life savings and then the bank would go out of business. You can understand why my grandfather felt it was safer to save money in his mattress.

Today, the consensus is that the Real Estate market is down from the highs of just a few years ago. You don't have to have an MBA to figure that out. In this challenging market you need to go back to the basics. A well priced, well maintained and appealing home will still sell in the shortest period of time. This era in Real Estate is calling for more specialized services. Our world moves at the speed of light. We are in the information age. Embracing the newest technologies is essential to survive in this environment. A homeowner trying to sell today may be at a disadvantage because they are forced to compete against short sales and/or bank owned foreclosure properties. Whether your home is distressed or not, you can still sell in this market. Interest rates are near all-time lows and the government is giving nice incentives to first time homebuyers to enter the market. Don't be misled, not everyone thinks doom and gloom. There are many buyers in this market who are ready to purchase. I know, I am working with them every day. Real Estate is still the best investment. The last time I checked, they weren't making any more land.

Get Educated. Get Empowered.

For more information on this or any other topic, call Sal Poliandro, Realtor, Marketing Advisor, Short Sale Specialist

ePRO, SRES at 201-259-2187, visit our websites: www.SalAndDawn.com or www.shortsaleguy.org

Sal can be reached by snail mail at RE/MAX Properties 73 East Allendale Road Saddle River, NJ 07458

The New Jersey Association of Realtors has jumped on board, finally.

For Immediate Release:
February 18, 2009

NJAR^® ENCOURAGES CONSUMERS TO EXPLORE SHORT SALES AS AN ALTERNATIVE TO FORECLOSURE

(Edison, NJ) In today's unsteady economy, many homeowners experiencing financial difficulty have turned to a short sale as a means of avoiding a foreclosure. In many cases, sellers who cannot keep up with their mortgage payments strike a deal with their lender to sell the home and payoff less than the total amount due on the loan. In some cases, the lender forgives the outstanding debt. A short sale can occur in any real estate transaction where the purchase price is less than the amount required to pay off the liens on the real property, such as mortgages, judgments, taxes, homeowner or condominium association fees, assessments, as well as closing costs including but not limited to brokerage commissions, realty transfer fee, and attorney's fees.

There are key advantages to pursuing a short sale over a foreclosure. Depending on how the lender reports the loan, short sales can appear on your credit report as "pre-foreclosure in redemption," not as "debt discharged due to foreclosure." Thus, people who come to an agreement on a short sale with their lender do far less damage to their credit rating than those who go through a foreclosure. Additionally, a benefit to a short sale is that borrowers will generally face a shorter waiting period before they can obtain another mortgage.

"In general, a short sale can be much faster and less expensive than a foreclosure," said 2009 NJAR^® President Diane Dilzell, CRS, e-PRO. "Troubled homeowners should remember that a short sale is not a cure-all but the ramifications are less harmful to their long-term financial well-being."

Homeowners who are having difficulty making their mortgage payments and who may be considering a short sale must generally meet three qualifying criteria: they must be behind on their payments, be able to prove a legitimate hardship, and have little or no equity in their home.

Sellers should be aware that a short sale is a complex transaction and can take several months to complete. A short sale also requires several parties to come to an agreement on negotiated terms. In addition, different lending institutions have different policies. Some lenders may agree to forgive the difference between what they are owed, while others may require repayment of the deficiency. If your lender "writes off" any portion of the amount owed it may be reported as taxable income. Therefore, sellers should always seek the advice of an attorney or tax professional.

Dilzell noted that a REALTOR^® is a valuable resource to home sellers considering a short sale. REALTORS^® can help consumers navigate the short sale process, as well as facilitate communication between interested parties.

"REALTORS^® don't just sell houses; we work to help people to afford to stay in their homes. In the end, we want troubled homeowners to know that a foreclosure might not necessarily be their only option. Whether it's a refinanced loan or a short sale, resources are available to homeowners having difficulty making their payments," concluded Dilzell.

# # #

The New Jersey Association of REALTORS^® is a non-profit organization serving the professional needs of approximately 53,000 REALTOR^® and REALTOR-ASSOCIATE^® members in the state. REALTOR^® is a registered collective membership mark which may be used only by real estate professionals who subscribe to the REALTOR^® organization's strict Code of Ethics and are members of the national, state and local REALTOR^® organizations. For more information, please visit www.njar.com.

I guess we finally have a crisis now that our state association has released a press release. I have been telling people this for over two years. As a Real Estate community here in New Jersey we have officially admitted that consumers should explore short sales. A Short Sale has been a viable option for our Bergen County customers for two years now. I have been blogging here since 2007 about our success stories. Please know that the banks are making deals. They understand this crisis. We have clients that we helped in 2007 settle short. This process is almost two full years in their past. If you believe that you may be a candidate for a short sale contact someone sooner rather than later. It is imperative that you hire a professional who has experience in handling this complicated situation. At this time being a Realtor is not enough. You have to know how to navigate through these difficult waters. A trusted advisor who has access to attorneys, accountants, financial planners, credit specialists, etc. is very important. Don't go it alone. Don't ignore the problem. When you are interviewing someone for this position, make sure you ask them specifically how many short sale transactions they have closed, be careful that you are not a guinea pig. It is very difficult to take a three hour seminar and become an expert. This is a very important process, choose wisely.

Get Educated. Get Empowered. For more information on this or any other topic, call Sal Poliandro, Realtor, Marketing Advisor, Short Sale Specialist ePRO, SRES at 201-259-2187, visit our websites: www.SalAndDawn.com or www.shortsaleguy.org Sal can be reached by snail mail at RE/MAX Properties 73 East Allendale Road Saddle River, NJ 07458