Upcoming Foreclosure Prevention Clinics in Hartford

Any of these dates:

  • May 18, 2010
  • June 15, 2010
  • July 20, 2010

Each Seminar will begin at 5:30 and runs for two hours.  They will be held in the Handel Performing Arts Center Community Room at the University of Hartford.  You can get directions here.

They are being presented by the University of Hartford Paralegal Program and the CT Fair Housing Center

In addition to learning about the process and how best to minimize the impact of foreclosure, you will also have the opportunity to meet with volunteer attorneys as well as Paralegal students.

There is no pre-registration required and anyone can attend.

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Rick Schwartz,   REALTOR

Homes for sale in Danbury, Bethel, Brookfield, Newtown, New Fairfield, New Milford, Ridgefield and Redding CT.

Single Family Homes in Brookfield CT: Units Sales Level but Time on Market Way Down

The most recent data in shows that for the three month period ending 3/2010,  the number of single family homes in Brookfield CT that were sold is about level with the same period a year ago.

The time it took to sell single family homes in Brookfield is actually down quite a bit.

Video Tour of Bethel CT

If you haven’t had a chance to drive around and see the sights in Bethel CT, here’s your chance.

There are currently 157 single family and condominiums for sale in Bethel.

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Rick Schwartz,   REALTOR

Homes for sale in Danbury, Bethel, Brookfield, Newtown, New Fairfield, New Milford, Ridgefield and Redding CT.

Bethel CT Craft Fair Saturday 4/24 on Municipal Center Lawn

The Annual “Bethel Blooms Weekend”  Craft Fair will be held this Saturday 4/24 – RAIN OR SHINE.  The Bethel Blooms celebration will be held throughout downtown with artist’s displays along Greenwood Avenue.

Craft Fair, Saturday 4/24

The fair will be held on the lawn at the Clifford J Hurgin Municipal Center at 1 School Street in Bethel.

Clifford J Hurgin Municipal Center 1 School Street Bethel CT

The Risks of Killer Negotiation

I’ve written before on this subject and this may or may not be my final word on the topic of negotiation (you never know what’s going to pop into my addled, old brain at any moment.) It covers the subject of why it may be in your own best interest not to approach a home negotiation with the tactics of your character in Mafia Wars.

What is KILLER NEGOTIATION?

In a nutshell it means putting the other party in a vice until they crack. Pushing them to do what you want not by vigorous “give and take haggling” to make the best deal you can, but by testing the limits at which they will “break” and bend to your will.

This can apply to either side – the buyer or the seller.  In a depreciating (buyer’s) market the seller will typically be the target and in an appreciating (seller’s) market it will most often be the buyer.  Not always – it is sometimes about the market and sometimes it’s just about exploiting the other party’s sense of desperation.

KEEP YOUR EYE ON THE GOAL.

I’m in no way urging that you should pay more or take less for a house than the market or your individual situation dictates.  This isn’t about the results of bargaining – it’s about the tactics. Remember what your objective is and why you put yourself into this position in the first place.  The goal is the same for each side: To make the best financial transaction you can in the best time frame with the least amount of risk.

The part of that statement that everyone always zooms in on is the first part – the price!  The goal, however has more than just that.  It’s about your optimum time frame and minimizing your risk.

RISK?? WHATCHOO TALKIN ABOUT?

I JUST WANT TO BUY (SELL) A HOUSE!

BUYER RISK

Unless you are paying cash for a house and are not selling another house, there are pieces of the transaction that you simply have no control over.

Most moves are part of a chain.  The number of links in the chain can vary. If you must complete the sale of your own home in order complete your purchase then you must rely on the success of your buyer.  If that buyer is also selling something then you must rely on the success of your buyer’s buyer.  And so on. The more links the more places something can go wrong.

The old adage about a chain only being as strong as its weakest link doesn’t have a better example than in a chain of home sales that rely on each other.

In addition, if you are acquiring a mortgage for your purchase there are a million things that can go wrong between the time you and the seller agree on transaction terms and the closing. The work flow of a mortgage is dependent on a number of laws that have specific intervals between critical dates as well as being dependent on the speed, work-ethic and efficiency of any number of employees and third party vendors that the bank may employ.

SELLER RISK

Unless you are selling your home with the idea of renting your next home, staying in a hotel while you travel for a while, or moving in with relatives and you do not need the net proceeds from the sale for living expenses, there are parts of the transaction that you have no control over.

The chain affects you as well – on both ends. In order to close successfully you are dependent on your buyer’s success and his buyer’s success. And so on.  In addition, if you are purchasing another home where  you plan to live, you cannot complete that transaction unless the people you are buying from close successfully – and they are dependent on the people they are buying from. And so on.

THE ULTIMATE DYSFUNCTIONAL FAMILY

Sellers, buyers, downstream buyers and upstream sellers are interdependent on each other for a successful move.   You start out as adversaries and then you all need each other to be successful. I’m not a mathematician so I can’t calculate the degree of risk but let’s just say that the more links in the chain the higher the odds that it will break somewhere along the line.

You cannot control anything that happens upstream or downstream.  You can’t even control much that happens with the two closest links, who are your buyer and your seller.  There is one thing that you can do to lessen some of the risk – at least at the closest point to you. You can control the level of goodwill between you and your buyer or seller.

SOME EXAMPLES

Work with your Realtor and come up with a price range that falls in within market value. Negotiate by making offers and counter offers. Try and learn what you can about the other parties sense of urgency and stick to numbers that you think will be accepted.  Wait them out if you have to.  Don’t go to a number that you don’t think is acceptable.  Go as many rounds as you have to, working with your Realtor’s guidance.

The key is to do it with respect.  (The following items are true – names changed to protect innocent).

  • Unless there is a valid reason – don’t tell your Realtor to inform the other party that if they don’t respond to a counter offer within a few hours, you are pulling out.
  • If you are the buyer and in your initial offer you ask for some item that was not in the listing – don’t press the issue if the seller replies that it’s an important item to them and they need to take it when they move.
  • If you are the seller and you settle on price around the time of a holiday weekend and the buyer can’t get an inspector to come out within 3 or 5 days as detailed in the offer – don’t inform him that his inspection contingency is gone
  • If you’ve gone through several rounds of offer/counter offer and you are now $800 apart on a $400,000 home, and the other party offers to move another $400 if you’ll do the same  – do it! Don’t come back and say you’ll do $350 if he’ll do $450

You certainly have the right to do any or all of the above.  As a Realtor, my job is to advise, but ultimately present any and all offers and demands my client makes.

The odds are, whatever side you are on, there is going to be SOMETHING you’ll need from the other party after the negotiation before the closing (These are all true)

  • A buyer is going to ask the seller to extend the mortgage commitment date in the contract by a week
  • A seller is going to ask a buyer if they can rent the house back after closing for 48 hour
  • Either side might need an extra day to execute the sales contract because their attorney was sick

There are a dozen other examples but you get the idea.  The bottom line is that if you put the other party in a box and squeeze the life out of him at the beginning of a transaction – I can assure you that he will remember.

As with most of things I write or talk to clients about – the operative phrase is “Accurate Expectations”.

The funny part of it is, very few strong arm tactics actually change the outcome of your transaction.  It’s almost never about the original goal (see above). It’s about winning.  As I’ve said before a truly successful negotiation doesn’t have to have a winner and a loser.

FAST FACTS #5: Real Estate Terminology – Average Price Vs. Median Price

When reading data or reports about Real Estate trends or when comparing prices in different markets you will, more often than not, see the term MEDIAN PRICE.

At first glance, if you haven’t been exposed to this term, you might assume this is the same as AVERAGE PRICE.  It is not.

A mathematical median, is the middle point in a set of data.   A mathematical average is a calculation derived by adding up a set of numbers then dividing by the number of entries.

So if there are 200 homes sold during a time period, the median price would be to find the house “in the middle”. There are an equal number of homes priced higher and lower than that house.    That price is the median.

Many mathematicians argue that using a median price will give you a much more accurate way of looking at the “typical” selling price of a group of homes. An average price will likely be skewed by a very high number or a very large number that is in the mix.  Using median, you reduce that risk.

Here’s an example:

Using the following 11 sold homes in ANYTOWN, the average selling price would be $214,000.  The median price would be $219,000.  Not that far off.

LIST #1

$255,000
$252,000
$250,000
$235,000
$220,000
$219,000
$199,000
$185,000
$182,000
$179,000
$178,000

Average = $214;  Median = $219

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This was an easy one – all the house were sold in the price range of $178 – $255.   Allowing for certain market variables, these homes had many similarities.

Suppose that, that two of the homes were NOT similar – they were, instead very high-end luxury homes built a short distance away but had much more to offer: Bigger, more property, extra bathroom, etc.   So take the same list but change the price of the top two homes to $619 and $579.

NOW, your average price jumps up to 276 from $214.   The median remains the same, since it based on finding the house that has an equal number of higher and lower priced houses.

Using the second list, which would give a clearer “feel” of the values of recent homes sold in your town?

List #2

$619,000
$579,000
$250,000
$235,000
$220,000
$219,000
$199,000
$185,000
$182,000
$179,000
$178,000

Average = $276,  Median = $219

Which would give a clearer “feel” of the values of recent homes sold in your town?

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Rick Schwartz,   REALTOR

Homes for sale in Danbury, Bethel, Brookfield, Newtown, New Fairfield, New Milford, Ridgefield and Redding CT.

How Much Should Rising Interest Rates Influence Home Buyers?

Some of the most common questions that get asked of most Realtors are

  • Will Housing Prices continue to go down?
  • Will the appraised value of my house continue to fall?
  • Are interest rates going to stay low?

Fact is, none of us know if appraised values of houses will continue to fall or if interest rates will go up or if the market has bottomed out.

In today’s NY Times, Nelson Schwartz (no relation) did a column entitled  “Consumers in U.S. Face the End of an Era of Cheap Credit. He talks about how we as American have spent the last 30 years or so watching interest rates basically trend downward. While there certainly have been fluctuations, let’s face it, rates, in all areas of credit have significantly lower than they were in the 1970s

I can remember buying my first home in 1979.  We had a variable rate mortgage that started out at 10.5% and had the potential to go up as much as a point per year.  The lender magnanimously capped the loan so that it would never exceed 17%.   We sold that house a few years later – the rate had climbed to around 13%.

This was the norm and we didn’t really think of it as a bad thing – it was just the way it was.

Today – we’re in a huge crisis, part of which is based on the fact that some variable loans have climbed from 5%  ALL THE WAY UP to 9% or so.

Needless to say, our attitudes about interest rates have changed. Mr. Schwartz indicates that many economists are saying these days are over.   Rates have “nowhere to go but up.”

For the last 3 years mortgage rates have gone up and down between the low 5% and the mid 4% range.   At the same time home buyers have been hesitating to buy homes because they are waiting for home prices to “bottom out”.

As of right now, in most markets, home prices are still dropping a bit, so this “wait and see ” attitude is still prevalent among potential buyers.   As a Realtor, I have a number of clients who have been looking at homes with me for more than a year – or more than two years.

Here’s the thing – if you “do the math”  rising interest rates might offset any continued drop in prices.  Here’s an example.

If you were to buy a home today for $250,000 and put $25,000 down you’d be borrowing $225,000. If that loan is for 30 years at current rates of around 5% your principal an interest payments will be $1207 per month.

If you hesitate on your purchase and wait 9 months, the house might indeed go down in price.  Let’s say it drops another 5% and the you can buy the house for $237,500.   If you put the same $25,000  down, your loan would be for $212,500.   If rates go up by just 1 point – to around 6%, your monthly principal and interest will be $1308.

So – in the end, you be buying at a lower price, but paying $100 more per month – and that additional amount is not adding to your equity – it’s all in interest.

Add to that the fact that if you wait and you also have a house to sell, your home will also likely drop another 5% in price.

So – in the end, you will not only not save money by waiting – you’ll actually be paying more – maybe considerably more.

Now – no one really knows what’s going to happen.  Prices could stabilize and interest rates could drop.  It’s all about educating your self on the market conditions and making the best decision you can.

Rick Schwartz,   REALTOR

Homes for sale in Danbury, Bethel, Brookfield, Newtown, New Fairfield, New Milford, Ridgefield and Redding CT.