Short Sales, Foreclosures and REOs

I created a page that will have updated news on Short Sales, Foreclosures and REOs on Staten Island. They aren’t the sure way to find a great deal these days, but you may find yourself happily saving some money. Short Sales tend to reap the greatest rewards, but you have to analyze the properties on a case-by-case basis.

Keep in mind that lots of other buyers are actively looking for these types of homes and if there is a good deal out there, someone else will find it.

Visit my Short Sales, Foreclosures and REOs page for more info.

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Open House - 100 Graham Blvd

OPEN HOUSE

1-FAMILY CUSTOM HOME

SUNDAY OCTOBER 19TH

12PM-3PM

Off Father Capodanno Blvd

MLS #1047224

Call for More Details - 917-731-6547

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Greenspan Predicts Turnaround in Early 2009

It feels good to have Alan Greenspan back you up. In a recent article published in Emerging Markets magazine, Greenspan predicted the U.S. Housing Market would recover in the first half of 2009. He noted the slowing rate of home prices declining as a positive sign.

The increase in pending homes sales for August supported Greenspan’s (and my) claim. There comes a point when sales and demand (and confidence) will increase due to lower prices. Think about, if you could buy a house for a $1.45, wouldn’t everyone be a buyer? That situation was very, very, extreme and by no means an indication that houses will sell for a few bucks. Nevertheless, home prices are at recent lows but will begin to turnaround in 2009.

This is the bottom… buy while you can.

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Pending Homes Sales Rise

A bit of good news was released last week from the NAR. The National Association of Realtors Pending Home Sales Index rose 7.4 percent in August to 93.4, up from 87.0 in July. This index is a measure of homes under contract across the country.

This news ties in with an earlier post on Supply and Demand. This is a sign that demand is rising from the fallen costs and we are now seeing an increase in sales. As sales increase, supplies will drop and this will have a positive effect on home prices. It’s interesting to note that these stats were for August and that September’s figures will be a good indication of where the market it headed.

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It’s As Simple As Supply And Demand

So Supply vs. Demand is an easy concept. It applies to nearly everything when it comes to prices and quantities sold. This is no exception.

You have a product, in this case Real Estate, i.e. a house, a condo, a piece of land, etc, etc. The corresponding price of the product and quantity that will sell is based on your changes in supply and changes in demand. As we all know, the number of unsold houses has risen and the number of houses sold has drop. Separately, it should work like this…

When the supply of homes rises, the S curve shifts to the right. Over time, the natural order of the world would see a drop in prices and an increase in sales. We haven’t seen that yet because…

With the economy slowing, demand for homes has decreased slightly, so the D curve will shift down. By itself, this would lead to lower average prices and a drop in sales.

What we’ve seen is a simultaneous drop in demand and rise in supply. This is what is driving the market today. At some point the price will be reached where demand will increase. This would be the equilibrium point where the two curves intersect. Unfortunately, this can only result in lower average prices with the quantity sold dependent on how much demand there is. This is what we call a ‘buyer’s market’, since the buyers have more influence on the market.

This is what makes pricing your home correctly so important, but that’s another post…

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Search Staten Island Homes, Land, and More

Just an update to the site

After some tweaking… now you can Search Homes directly within The Real Estate Ledger

Go ahead…. try it!

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Bailout’s Trickle Down Effect to Help Staten Island

If case you haven’t heard about the $700 billion bailout that just passed, I’ll give a quick rundown. The bill was heavily opposed by Main Street (small and/or locally owned businesses) as they felt they were left out and not being helped at all. While that is an issue in and of itself, Staten Island falls into the ‘Wall Street’ category and therefore the points I make regarding Staten Island Real Estate and the bailout will come from this perspective. 

Let’s start with what’s been building up, as the situation we face at the moment is tangled mess.

• Homeowners are unable or struggling to pay their mortgages. This is from adjustable rates, loss of jobs, and the inability to refinance due to falling housing prices.
• Wall Street companies use mortgage-backed securities for business purposes. These banks use these securities as collateral for the short term loans they need to function. With falling housing prices and the need to ‘mark to market’ (an accounting rule that requires you to value the security at it’s present value and not what it could be worth), Wall Street companies have seen their assets deterioriating.
• Wall Street companies layoff employees and cut-back on spending. No, not everyone that lost their jobs lived in Staten Island, but a lot did. This could ultimately lead to more mortgage defaults and in turn falling home prices. And you can’t forget cut-backs on spending. Large companies do use smaller businesses for services, so when large companies stop spending the small businesses feel it too. This leads to a situation where the small businesses might fail as well.

The longer that corrective measures are taken, the worse the problem gets. More layoffs and less spending leads to more foreclosures. More foreclosures leads to lower home prices. Lower home prices leads to less collateral for Wall Street. Decreased securities leads to bank failures, layoffs and less spending. And repeat.

The bailout will help Wall Street get back off the floor and attempt to return to normalcy. While I cannot tell you definitively that it will work, it’s better than nothing. After 2009 rolls in, we should hope to see decreasing unemployment rates and more homeowners with the ability to afford their mortgages and stay in their homes. Don’t forget the mortgage legislation that passed earlier this year that will hopefully allow homeowners to refinance at lower rates.

All of this will ease the housing market on Staten Island.

Housing follows the same basic economic rules of Supply vs. Demand, so what we see across most marekts makes perfect sense. But I’ll save Economics 101 for another day…

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Q & A - New Construction Closing Costs

Question:
I’m looking to buy new construction and I understand that I’ll have to pay more money at the closing. How much more should I be expecting to pay?

- Jerry, Brooklyn, NY

Answer:
Typically, the buyer will be paying the seller’s (builder’s) closing costs when purchasing new construction. On top of the buyer’s closing costs, you will be responsible for NY State Transfer Tax (0.4% of the purchase) and NYC Transfer Tax (1.0 % for up to $500,000; 1.4% over $500,000). So your looking at an additional 1.4% to 1.8% in additional closing costs. There are more costs that are always to be paid at closing. For a more comprehensive list…

I created a separate page that you can access here for NYC Closing Costs.

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Open House - 148 Dubois Ave

OPEN HOUSE

2-FAMILY NEW CONSTRUCTION

SUNDAY SEPTEMBER 6TH

1PM-3PM

Off Forest Ave

MLS #1038947

Call for More Details - 917-731-6547

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Q & A - Binders

Question:
I recently put in an offer on a home and signed the binder. The seller also signed the binder. I thought I was all set, but then the deal fell through. The seller ended up selling to someone else. How could this happen? I thought the house was mine!

- Anonymous, Staten Island, NY

Answer:
Sorry, but the situation you find yourself in occurs far too often. The good news is that you may have a law suit on your hands. What really matters is the content and wording of the binder. Traditionally, a binder serves as a prelude to a negotiated contract of sale, but creates no obligation for either the buyer or seller. Many people sign a binder with this mentality, when it couldn’t be further from the truth. Unless the binder specifically states that ‘the parties do not intend to create a contract’ both sides may be liable to the terms of the signed binder.

However, the question is raised: Why would someone sign a binder if they didn’t intend to sign a negotiated contract? I’m sure there are numerous answers to that, but understand that when you sign a binder it could be the basis for a lawsuit. 

The best advice I could give you is to evaluate how much you desire to purchase the home. If this was your dream home or a great investment that you wouldn’t want to slip away, contact a real estate attorney and explain your case.

Best of luck and I hope everything works out!

- Thomas Ledger

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