Thomas McCormack

County to change the world...one light bulb at a time
Energy Star contest kicks off

FREEHOLD - The Monmouth County Board of Chosen Freeholders kicked off a "Change the World" Energy Star Campaign today by inviting residents to reduce energy consumption, save money and help the county win 1,000 free, energy efficient light bulbs.

"County residents can save some money and begin improving the environment today," Freeholder Barbara J. McMorrow said. "By taking an online pledge to replace at least one light bulb with an energy efficient bulb, residents can get a coupon worth 10 percent off Energy Star qualified light bulb purchases and help the county potentially win 1,000 free light bulbs!"

The County has joined the National Association of Counties (NACo) in the "Change the World, Start with ENERGY STAR" campaign that is encouraging all Americans to join with millions of others and take small, individual steps that make a big difference in the fight against global warming.

Find out more, take the pledge and get your coupon by starting with a visit to the new Green Connections section the county's Web site at www.visitmonmouth.com.

When making your light bulb pledge, you will be asked to consider lowering your thermostat this winter or caulking air leaks in your home, because every little bit helps. Only check off the actions you can take to reduce wasting energy. When you submit your pledge, you will receive an automatic e-mail with a 10 percent discount coupon on your purchase of a new fluorescent light bulb.

"Get involved today to start saving money and our environment," McMorrow said. "Energy conservation is something that we can all do. These compact fluorescent light bulbs use 75 percent less energy than standard light bulbs while producing about the same light output. They also last six to 10 times longer. The only significant difference you should notice when you replace a standard bulb with an energy-saving bulb is lower energy bills."

You also will be helping Monmouth County win 1,000 of those light bulbs. Counties across America are competing to see who gets the most pledges. It's easy. Do it today!

To make the pledge, please go to www.greencounties.org/changetheworld.

Believe it or not, there are actually quite a few buyers out in today's real estate marketplace. Unfortunately, most seem to be under the impression that there's a "Clearance Sale" underway based on the numbers they throw around regarding home values.

Granted, our market, like most others, is down from the peak, which in Monmouth County NJ occurred in 2007 for single-family home values (median 2007 $450,000) but thru the end of 2008 we were only down 5.6%. True, the number of homes sold declined signficantly (about 21% from '07 to '08) which would indicate fewer buyers were househunting. This should and did have an impact on prices... the magic question for most buyers and sellers alike is "How much?"

What's most interesting to me is that despite the lower demand, the overall available inventory is about the same if you compare 2007 & 2008 (actually 2008 had slightly lower numbers). You'd expect the opposite: that inventory would shoot up higher if the sales were down. What's happened is many homeowners who may have been tried to sell when the market was hot are now less interested because of the downward pressure on prices and the overall increased time on market for most homes sold. This is a good thing. Better to not have so many sellers who are merely "testing the market". Better to have motivated sellers in the marketplace who really want to sell.

Next question buyers ask is "How much do you really want to sell?" In other words, how much pain are you willing to endure? I would say that many home sellers in our market are fairly reasonable and are willing to negotiate but they're thrown by offers that are sometimes 20-30% off and firm. While I can understand an investor mentality - someone who is purely looking at the transaction as a financial transaction in which either the numbers work or they don't - most of these buyers are not buying to flip, or develop a revenue stream by renting it out... they're looking to live in it.

To me, there's a big difference between wholesale buyers and regular homebuyers. Most home sellers do not need or want to engage wholesale buyers and these buyers play the numbers.... just keep making low offers and eventually someone will bite. The problem with regular buyers taking this approach is they have one, maybe two, maybe three houses that might work for them. And they sometimes get indignant when their offer of 25% off asking price is not accepted immediately.

Fear is playing a large role in all of this, of course, whether it's of "timing the market" incorrectly or simply a general dread due to the uncertainty of the job market and economy overall. While this is understandable, real estate professionals, myself included, have a responsibility to our clients and to our communities to help educate the public about the reality of the situation.

So here goes:

"Reality" in my market as I see it? It's a great time to buy. Why?

• Because most home prices have come down significantly from the inflated prices of a year or two ago.
• Because many home sellers are still negotiable if it's a reasonable discussion.
• Because interest rates are great and the savings realized from a decrease in your mortgage interest is probably going to equal a much greater dollar amount than any price reduction you are working so hard to negotiate.
• Because there are other ways to negotiate when buying that will still save you money but not be as difficult to get accepted as a flat out price drop (e.g. seller concessions, mortgage buydowns, etc.)
• Because there are programs out there such as the first home buyer $8000 tax credit which save you even more! (And by the way, "first home buyer" means you haven't owned a home during the last three years... attention anyone who may have owned a home previously and moved into a rental.)
• And lastly, because your reality has changed in some way to make this a time to move: marriage?divorce? new baby? new job? time to downsize?

Is it the best time to buy? I can only answer that with another question: For whom? Only you can answer that question. The market conditions are such that I can safely say that if you are in a position to buy (i.e. pre-approved for a mortgage, have your home sold or nothing to sell) and you are wanting to move, there is no reason to not take action. No one will ever be able to say it was the perfect time to buy until after the opportunity has already passed.

And besides, if the home you really want has already been sold to someone else when you've been told by someone on TV that it's the "perfect time" you'll be kicking yourself because the advantages present now may not exist, and the house you really loved got away.

As a local REALTOR, I am often called on by a client to help guide them with a property assessment appeal. This process can be a hurdle as towns do not want to erode their tax base.

Some tips to consider offered by our state association of REALTORS:

1. For most municipalities, the last date to file a tax assessment is April 1st. But each property owner should check with their municipality to determine what the last day is to file your assessment appeal. (For instance, the last day to file appeals in Middletown Township is May 1st.)
2. Once you obtain the appeal forms and the important instructions which are attached, remember that your completed form needs to include what you believe your property is worthy based on at least three closed comparable sales.
3. You must file a copy of the appeal papers with the municipal clerk, the local Tax Assessor and the County Board of Taxation. Hand carry the copy to the local Assessor and get proof that it was delivered.
4. If the property owner wants an appraisal to support a tax assessment reduction, the appraisal report must be prepared by a licensed appraiser with the State of New Jersey and the appraiser must ultimately appear at a subsequent hearing to present testimony about the report and the comparable sales used. Corporations must be represented by an attorney.
5. If you hire an appraiser for a residential or commercial property assessment appeal, they must be available to testify at your appeal hearing.
6. Get a minimum of 3 closed comparable sales. Your comparables should ideally come from the January-October 1st, 2008 time frame. Closed sales before or after those dates may only be considered to be corroborative or may be thrown out altogether.
7. Remember, one sale does not make a market, so don't hang your hat on just one sale.
8. In addition to comparable sales, you may bring pictures, maps or other descriptive items which may further describe the subject property under appeal. For instance, if they claim you have an extraordinary view, and you don't, pictures can be helpful to support that.
9. Remember, under law, your tax assessment is presumed to be correct. Therefore, the burden of proof is on your shoulders to present enough evidence and testimony to demonstrate that the assessment should be lower.
10. Be persuasive with your information. Quantify why your property is worth less and provide evidence to back it up.
11. For purpose of uniformity, your Tax Assessment was developed by the Assessor using the Cost Approach. The Market Approach (comparable sales) is usually the best approach to use unless the property under appeals requires another approach such as the Income Approach.
12. Do not compare your assessment with your neighbor's assessment. It could be their assessment may be wrong. Do not offer testimony about how much you are paying in property taxes. This is irrelevant information. Stick to presenting closed comparable sales and persuasive reasoning as to why your assessment should be lowered.
13. Try to find arm's length closed sales. Try not to use short sale transactions. But if you use a short sale as a comparable sale, be sure to disclose that information and support why you chose to use it. Be professional and transparent with your information.
14. If the assessment represents what the property could have sold for on October 1st of the pre-tax year and comparable sales seem to back that up, then right now may not be the time to appeal.
15. At a tax assessment appeal hearing, only the Commissioners need to be convinced that the assessment should be lowered.
16. There can be a big difference in how to approach a tax appeal for a property if a revaluation has been completed or if the appeal being considered occurs in a non-revaluation year. Be familiar iwth the Chapter 123 formula.
17. Familiarize yourself with Understanding Property Assessment Appeals from the Monmouth County Board of Taxation which explains Chapter 123 and includes other valuable instructions.

While the real estate picture on a national scale remains a less than pretty sight, looking at this past year's activity relative to the previous year, we get a much less dire view: Monmouth County 2007 vs 2008

• Sales Volume: about 21% fewer homes sold in 2008 than 2007 (5036/3966)
• Available Inventory: remains the same with less than 1/2% point difference (4357/4336).
• Median Sale Price: the median sale price across the county came down only about 5.5% ($450K/$425K)

What does this mean? Well, we certainly have much less demand, more than 20% fewer buyers were actually closing deals this past year... a significant drop. The available inventory however remained pretty much the same... many sellers who didn't have to sell decided to wait and took their home off the market. While the reduced demand didn't impact available supply, it did impact pricing. But I bet you're surprised by the less than 6% reduction in median sale price. Given the national media coverage of real estate, most people assume double digit reductions.

Further price & value erosion is likely to continue during 2009 unless some of the actions being taken by the federal government are able to balance the equation somewhat, but I would invite you to consider that the low interest rates being offered for primary residence conforming mortgages (under $625,000) mean savings that are much, much greater than an anticipated few percentage point reduction in purchase price. If you factor a similar pattern for 2009, we're looking at about a 1/2 % monthly reduction in price ($2500 savings on a $500,000 home) vs. 9% savings with a mortgage rate reduction of 1%.

Translation? Don't be so afraid to jump in the pool! There are many sellers eager to sell and while this may not indicate that a fire sale is taking place, you'll be grateful you locked in to such a low mortgage rate when you did.