Sol Skolnick

We all spend a lot of time driving to showings, appointments, open houses and meetings. The cost of gas, of course, is part of the cost of doing business but you can save on each of your fill-ups by visiting www.westchestergov.com/gassurvey.htm.

The site lets you search by zip code and by distance so that you can make an informed decision about how far you might be willing to drive to save. I found a variance of 11 cents per gallon for regular and 19 cents for Plus within .82 miles of an address in Pleasantville, and a similar variance within .80 miles of an address in Mt. Kisco. Shame on me if I didn't go out of my way within that limited distance to find the best price.

According to the Westchester Putnam-Multiple listing service, sales of single-family homes in Westchester County fell to their worst levels, during the first quarter of 2009, since 1982. The median price declined by 14.5%, and inventory levels increased by more than 6.5%. The spring selling season has started, and you are adjusting to the changing expectations of buyers and helping sellers adapt to new realities of the market.

Loretta Chiavetta, with Coldwell Banker in Pleasantville, captured the essence of the mantra that I heard from virtually everyone “If a property is priced well, it will sell quickly, if it is overpriced, it will sit.” Loretta senses a changing mood. “Last year buyers were fearful, now they are hopeful. Seller's understand that their property will sell at fair market value, not the price their neighbors got for their house three years ago.” As Kitty Schwartz, the principal of Classic Home Staging in Mt. Kisco suggests with her common-sense approach, “Sitting on an overpriced home in this market is an expensive proposition, especially with taxes going up!”

Many sellers are downsizing and there is a sense of balance emerging in the market. Scott Richardson with Richardson Realty/Keller-Williams notes that “Down-sizers are willing to accept lower prices on their homes, realizing they are also going to get a great price on the next move.” Schwartz, also recognizes the value of the ebb and flow that is at work in the market when she observes that “excess house size for one buyer is the perfect “down size” for another.”

Tom Consaga the Broker/Owner of Remax/Ace reports “Most of the recent shoppers are first time home buyers, approximately fifty percent of the ones that I have seen have been from NYC.” Many of these buyers are families with young kids, and are, according to Consaga, “shopping schools as much as they are houses.” Michelle Toretta, a member of Team Richardson is seeing first time buyers who are looking to take advantage of the tax credit provisions of the Federal stimulus program as an added enticement to the favorable market conditions.

Sharon Foley, a veteran agent with Century 21/Haviland, reinforced this observation as she sees “starter homes doing well as long as they do not need a tremendous amount of work. The exception to “fixer-upper” rule is if they are in "the grid", meaning the village streets that surround the schools and within walking distance to the train.” Sheila Siderow, founder of Siderow Kennedy in Chappaqua believes that certain underlying market truths remain constant even as prices and home values change, “The buyers are actively looking in areas that boast great school systems, welcoming communities and reliable commute time and parking.”

It is a good time to evaluate the market. A confluence of slightly reduced taxes ( where property taxes have been successfully grieved), lower asking prices based on recent comparable sales, and historically low interest rates do not come along often.

The marked decrease in home prices and a slowing down of the purchase market causing a shift in the residential real estate market has many of my clients and colleagues wondering if lower home prices present an opportunity for investing in real estate. Not all areas in Westchester or all types of housing stock present the same level of opportunity, of course. According to Westchester-Putnam MLS during the last quarter of 2008 the median price for condominiums declined by on 7%; single-family homes declined by almost 11% while the median price for 2-4 family homes declined by over 22%.

During the recent hey day of low down payments many speculators purchased rental properties. These would-be landlords, enabled by meager capital requirements, overpaid for properties and had neither the cash reserves nor the business skills to maintain these homes. The result has been foreclosure, short sales and tenants in jeopardy of being underserved or displaced.

The lenders, in belated response to this situation, increased the required size of down payments and pegged interest rates for investment properties higher than for the same amount borrowed to purchase a primary (owner occupied) residence. For example: the rate on a loan (under $417,000) with a 35% down-payment might be 5.5%; the rate with 25% down payment would be 6.75%; and it rockets to 8% with a down payment of only 20%. The rational is simple. The mortgage upheaval and up-tick in the rate of foreclosures has reinforced the fact that a landlord is more likely to retreat from a troublesome financial situation involving an investment property than he or she would as if it meant leaving or losing his or her own home.

Owning real estate is a business proposition. Although we often interweave emotions and personal preference with the acquisition of our own homes it is essential to understand that purchasing investment properties is a business transaction. J. Philip Faranda, Broker-Owner J. Philip Real Estate LLC in Briarcliff Manor http://jphilip.com/ emphasizes that "diminishing the cost of acquisition as much as possible is key to making the process successful." The recent correction in prices has further helped to decrease the price of distressed properties increasing the potential for good investments. "Whether buying of a single-family property that you intend to rehabilitate and sell or maintaining a multi-family dwelling you must have a business plan." explained Feranda.

Peter Nikic a Real Estate Broker and professional property manager with Broad & Bailey in Pleasantville http://www.broadnbailey.com suggests that an investor must have a very clear sense of what they want to accomplish from property ownership. "When it comes to single-family homes this area is good for equity growth, for long-term investors, rather than cash flow." said Nikic. "I don't recommend that people buy a single-family home in this area with a high cost of acquisition and substantial taxes as a vehicle for positive cash flow" he continued. The cost to maintain a single-family home cannot often be justified by the rental income that it can command. This is particularly true in the current market which includes a disproportionately high number of homes that are available for sale and/or rent simultaneously by owners who have been unable to find buyers, and who have themselves become accidental landlords. Multi-family dwellings can provide several sets of rent paying tenants creating an economy of scale for certain utilities and services that is not the case in one-family home.

It is essential to calculate the totality of expenses including the mortgage, insurance, taxes, utilities, allowance for vacancies, and for refreshing the property when there is tenant turnover. This has to be compared to a realistic estimate of the income derived from rent to determine the capitalization rate. The "cap" rate is calculated by dividing a property's annual net operating income by its purchase price. It is also essential to consider that as a landlord you have taken on a job that includes being accountable for all of the situations that arise within the building.

If you are intrigued by the potential opportunities created by the correction in the real estate market be sure to solicit the advice of a real estate broker with experience in the residential investment market, your accountant and a mortgage professional. Also, you will find a wealth of information at http://reiclub.com/real-estate-articles.php.

The answer to "How much do you think your house is worth?" is often colored by the emotional investment we have poured into our home. A poll released in January by Zillow.com found that half of the sampling believed that the price of their home remained the same, or increased, in 2008. However, sobering statistics from National Realtor Association, report that the median price for a home declined 12.4%. The Westchester-Putnam Multiple Listing Service shows that 26% fewer new and existing single-family homes sold in our County last year, and the median price declined by 11% during the fourth quarter. Inventory in Westchester has increased by 33% over the past several years. The landscape is evolving.

If you are considering selling your home try and separate your sense of community and family shelter from the business of managing an asset. Are you considering a move because your family is growing and the house is too limiting? Perhaps there is a way to adapt your current home for future needs. Is it time to down-size because now it's "just the two of you"? Depending on how much of your mortgage you have paid-down you may find that the monthly principle and interest payment will diminish in an acceptable period of time to put-off the move. Give yourself the time to evaluate market conditions here and in the places to which you may relocate. You might also want to compare the cost-to-own of a new purchase with those of a rental.

Unless you live in a mobile home or a houseboat you cannot change the locale or location of your dwelling. However, you can have influence the perceived value of your house. Scott Richardson http://www.richardsonrealtyteam.com/ Associate Broker, Listing Specialist with Keller Williams in White Plains whose area of concentration includes Armonk, reminds his seller that "buyers are looking for the ‘Perfect 20%'. Homes need to be both priced well and properly staged in excellent condition, to compete. The 80% of properties that are still overpriced are going to have a more difficult time selling . . ."

How do you position your home as what Richardson characterizes as one of the "Perfect 20%"? The effective use of media will aid in making your offering a must see on the house-hunt. Maximize your homes' "web appeal". Accepting advice from professionals such as real estate agents or the expertise of a home stager can make a substantive difference in presentation and perceived value. In order to entice buyers to make an on-site visit you have to begin the process, as Alan Kellam www.kellamstrategies.com, an e-PRO® accredited Sales Associate with Century 21 Haviland in Pleasantville points out by "getting rid of the clutter so prospective buyers can imagine themselves and their furniture in your home; take great pictures - not photos of toilet bowls, which we see so often."

Supplement the promotion of your home by coordinating the sales campaign with your agent. Don't be reticent about letting people know that your house is on the market. Start with the basics, word-of-mouth, evolves into "networking".

The potential buyers' first in-person impression occurs as they pull up to your house. Curb appeal should not be underestimated. You can underpin a positive perception by making sure that the landscaping is uncluttered and well-groomed. Once inside allow yourself a degree of separation from something that you usually feel invested in, your personal possessions. Kellam reminds sellers to "give visitors space - as much as it is sometimes tough to hear their comments, it's important to give them the chance to discuss what they are seeing among themselves.

In this market "buyers are constantly reminded by the media of how bad things are, so low ball offers and critical comments abound, as many buyers falsely believe that most sellers are desperate." observes Tom Consaga, the broker/owner of Re-Max Ace www.ThomasConsaga.REMAX-ACE-NY.com in Pleasantville. If you have done your research and are comfortable with a pricing strategy based on real-time market conditions, not how much money you want to make, you will generate foot-traffic." You want avoid giving the impression that you are open to offers that disrupt the financial model that you adopted. "Don't overprice your home, and don't blame yourself, your home, or your realtor for market conditions beyond your control" reminds Consaga.

You may love your home but, ultimately you are selling a dwelling that someone else must believe they can imbue with their personality. The hard fact for the home-owner who must step-out of his familiar role to become a home- seller, is that your house it is ultimately worth only the amount of money someone else is willing to pay for it.

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First Time Home Buyers Wanted

By Sol Skolnick

If you are a potential first-time home buyer you should be planning now. Sellers are especially eager to meet you in this market because you don't have to sell your home in order to buy theirs.

Existing inventory in Westchester has increased and prices have moderated. Although the decline of home prices became incontrovertible in our area later than in many other locales it did arrive in the second half of 2008. Have we hit the bottom of the market? No one knows. The paradox is that we won't actually know that prices were at their lowest point until they start to rise again. Don't try and time the market. Seek value based on your needs. Be smart. Don't wait until you are ready to go house hunting to put your financing in place.

Check with your accountant to determine that the potential equity growth and tax benefits of home ownership are better for you than renting. Here's how to estimate how much house you can comfortably afford. Most loans can carry (except for FHA insured loans whose ratios are lower) a front-end ratio to a maximum of 33-38% of your (and your co-borrower's combined) verifiable gross income. This front-end ratio, comprised of the total of Principle, Interest, Taxes and Insurance, is referred to by the acronym PITI. The back-end ratio, including the entire amount of PITI and your credit card, auto, student loans etc. can usually go to a maximum of 45-50% (again lower for FHA insured loans) of your gross income.

Here's an example using a front-end ratio of 33%: if your monthly gross income is $8333 your PITI cannot exceed $2777.50. If your projected property taxes are $10,000 per year ($833 per month) and homeowners insurance cost $960 annually ($80 per month) you have up to $1804 to spend on monthly Principle and Interest. With an interest rate of 5.25% applied to a 30-year fixed loan you could qualify for a mortgage of up to $326,691. This assumes, again, that the balance of your debt is within the 45-50% back-end ratio.

You also need to asses your assets to verify the amount of money that you have on-hand to be used for earnest money - the deposit you make on the home when you go to contract, which will later be applied to the down payment when you purchase (close-on) the house; the balance of the down payment and money for closing costs. You will also need to show that you will have several months' worth of PITI reserve funds after the closing.

Closing costs in Westchester average 3-4% of the purchase price. You are entitled by Federal Law to receive a Good Faith Estimate (GFE) enumerating these costs within three days of submitting your loan application through a mortgage broker or a direct lender. Closing costs include an appraisal, fees for the attorney who represents the lender; lender's loan origination fees, survey, recording and document preparation fees; interest from the date of closing to thirty days before the first monthly payment is due; property taxes; NYS mortgage tax of $1000 for every $100,000 of the loan, title insurance covering you and your lender, a paid receipt of up to one year of homeowner's (hazard) insurance; money to establish the escrow account that your lender will hold to pay future property taxes and hazard insurance premiums and mortgage insurance if your down payment is less than 20% of your purchase price. You will likely want to have an attorney represent you but that cost is not part of the GFE.

It's not time to contact a lender for pre-approval (not pre-qualification) letter just yet. Pull your credit reports from all 3 agencies to verify the accuracy of information; and get a clear understanding of your current debts and payment schedules, and your FICO scores. Next, gather the social security numbers for you and any co-borrowers; copies of your checking and savings account statements for the past 3 months; recent consecutive statements for other assets such bonds, stocks, investments accounts and 401Ks; two recent paycheck stubs; copies of bank checks given to you as gift money (if any) towards the purchase, W-2s, and signed Federal Income Tax returns for the two previous years.

Solicit referrals from people whom you trust, so that you can interview potential brokers or lenders for their rates, cost and terms. Once you have chosen a lender request a pre-approval letter. This letter will confirm that you have the financial wherewithal to fund your purchase as it granted by representative of the lender after assessing your eligibility for a mortgage based on the information described in the previous paragraph. Now you are prepared to meet a realtor and be greeted with open arms by sellers.