Lil' Rhody real estate ramblings

Homebuyers Free Question and Answer Session

2008-09-05T11:07:45Z

On September 24, at 6:30pm, I will host a Homebuyers Question & Answer session. Joining me to answer your real estate questions will be Marlene Marshall, a real estate attorney at Marshall & Laffey Ltd and Mike Demarse, a mortgage consultant at Travis Mortgage.

I hope that the Q&A will be a very pleasant and informal conversation about buying property. After some introductory comments, I plan to describe each step in the home-buying process....but it is my hope to be interrupted frequently as the whole point is to answer questions that people might have, whether they be general or very specific.

By having a real estate attorney and a mortgage broker present, I hope that, between the three of us, we will be able to provide detailed answers to most questions that arise. While the focus will be on educating home buyers, I also expect this to be a learning opportunity for us "experts," as we will hear firsthand the concerns of consumers.

If those who attend enjoy themselves, laugh a little, and learn a little, then I will consider the evening to have been a success. I hope that attendees will leave with greater clarity about the homebuying process and will understand the importance of buyer representation. Of course, I will also be happy to discuss the possibility of working personally with buyers in their home search.

Whether you are considering buying your 1st home or have already purchased many properties, come learn more about the home buying process and how you can achieve your real estate goals.

William Hall Library (1825 Broad St, Cranston) on Wednesday, September 24, at 6:30pm.

This is a FREE public service event, and I hope to see you there.

After brief respite, Mortgage – Treasury Spread reaches new peak

2008-08-28T09:18:46Z

Good post by Dan Hartman.

Via Dan Hartman:

The 2^nd quarter of 2008 began on a positive note for mortgage borrowers, as a relative lack of news caused the Mortgage - Treasury spread to narrow from its March 13^th peak at 2.60% to a low of 2.03% May 30^th. The Mortgage Treasury spread is an indicator of relative risk between commonly quoted long-term securities, 30-year fixed-rate mortgages as quoted by Freddie Mac, and 10-year treasury notes. (30-year treasury bonds are not used because 30-year bonds have not been continuously available in recent years). Recent news has been less favorable to the spread, however, as the failure of IndyMac Bank, and worries about the financial stability of Fannie Mae and Freddie Mac have undermined mortgage values. In spite of a 20 basis point decline in treasury yields through June and July, mortgage rates have increased an average of 38 basis points, bringing the spread to a new high of 2.63%

In other words, homeowners now pay 2.63% more to borrow money for the long term than the US Government does. Compare this to an average spread of 1.5% throughout the first half of the decade, and the effect of current market woes becomes quite apparent.

The treasury market has been quite volatile lately, and interest rates have made significant moves both intraday, and day by day. Treasury rates closed sharply lower today on continued worries about the health of the financial sector. While existing home sales results did provide a glimmer of hope, inventory of homes for sale grew further, suggesting that foreclosure difficulties continue to fill the market.

On a positive note, mortgage giant Freddie Mac conducted a successful sale of debt securities, indicating continued investor confidence in the bonds that company depends upon for short-term financing. Freddie, and sister Fannie Mae, underpin the availability of relatively low-cost financing for homeowners, and frequently turn to the secondary market for funds.

FHA mortgages are experiencing an unprecedented increase in demand, with mortgage application share three times higher than a year ago, as government insured loans are becoming a bastion of stability in today's trying market.

Seller's list cont....

2008-08-28T09:14:10Z

4. Listing the Property

We will review and fill out several important documents, including the Listing Agreement, Property Detail sheet, and Seller's Property Condition disclosures. Providing as much detail as possible about the property will help me to market the property effectively, will give potential buyers a sense of integrity about the property, and will avoid potential future liabilities for undisclosed issues.

In addition to the paperwork, I will take room measurements and photographs, taking care to choose appealing but accurate images which will draw people to the property without creating false expectations. To that same end, we will also consider headlines and advertising copy that is most likely to be effective in attracting potential buyers.

5. Marketing

The specific types of marketing will depend on your property and circumstances, but may include any or all of the following:

"For Sale" sign placed on the property, along with take-away information sheets
Placement on the Multiple Listing Service (MLS) -- this is the primary source used by realtors to identify properties for their buyer clients as well as the "feed" for most of the popular Internet property search sites
Open Houses
Flyers that can be posted at your workplace or on public bulletin boards
Print advertising in newspapers and real estate publications

The extent of your participation in marketing details and decisions - e.g. headlines, copy, placement - is entirely up to you. I welcome your collaboration to the extent that you wish to be involved.

6. Showings

While it is important to try to accommodate potential buyers who wish to view your property, we will also try to minimize the disruption to your life by providing as much notice as possible and/or by allowing showings only at certain predetermined times. As a rule, it is best for the sellers to be absent during showings to allow buyers the freedom to explore the property and imagine it as their own. I will make sure to point out important features, answer questions, and note any reactions or feedback that might help us to market the property.

A note on privacy: during showings, it is common practice for people to open closets, medicine cabinets, etc, so please keep this in mind when preparing for showings.

First time buyer's guide to home inspections

2008-08-28T09:01:51Z

Quite often, first time buyers are unsure of what to expect from a home inspection.

The primary purpose of home inspections is to assure that there are no "deficient conditions" that were not disclosed by the seller, specifically anything that would significantly affect the value or safety of the property. The inspection process will also help you to further familiarize yourself with the property and to anticipate minor repairs or maintenance issues that you should address after closing.

The scope of inspections conducted depends on the nature of the property and on your specific needs or concerns. The "physical/mechanical" inspection covers the major structural components (foundation, framing, floors, walls, roof, etc) and the primary systems (heating, electrical, plumbing). Other inspections might include pest infestation (past or present evidence of termites, carpenter ants, etc), septic system & well (if relevant), radon levels, lead paint, and specific inspections of non-standard amenities (e.g. pool inspection). Your agent can help you to determine which inspections to perform.

A thorough inspector will provide you with a report detailing any and all issues discovered, ranging from major problems (e.g. leaking roof, non-functional furnace, etc) to minor flaws (e.g. loose doorknobs, missing trim or molding, etc). Upon reviewing the inspection report, you can choose to go forward with the purchase as is, void the Purchase & Sales Agreement and demand return of your deposit, or request that the seller make specified repairs or provide a credit at closing towards those repairs. Since the definition of "deficient condition" is somewhat subjective, it is common for there to be some negotiation involved in resolving inspection issues.

The (famous) Paul Hodosh Seller's List

2008-08-25T12:00:02Z

Selling in today's market is a challenging prospect. Not only are you competing against a large surplus inventory of homes, but you are doing so at a time when there are relatively few qualified and motivated buyers. It is more critical than ever to carefully plan and manage every aspect of marketing your property.

1. Initial Consultation

During my initial visit to your home we will discuss the specifics of your situation, your motivation for selling, any time pressures or constraints, and any other factors relevant to your selling decision. I'll also ask for a tour of the property and any information you can provide regarding ownership history, construction, condition, important features, and any planned upgrades or repairs. If you have any questions about me or about Epoch Properties, I'll be glad to answer them at this time.

2. Research & Market Analysis

By consulting the public records on your property available at your local Town or City Hall, I will document ownership information, the property description and boundaries, zoning, tax information, liens (e.g. mortgages), and other official information of potential relevance. By reviewing this information now, we can identify any problems or inconsistencies that will need to be resolved prior to the sale of your property.

I will also perform a Competitive Market Analysis (CMA), comparing your property to similar properties that have sold recently as well as to those currently being offered for sale. The CMA is a critical tool in helping to assess the appropriate listing price.

3. Marketing Dialogue

At our second meeting, I will share with you the results of my research, along with my opinions and recommendations for marketing your property. We will discuss the terms of the listing agreement (duration, commission, my obligations to you), the listing price, marketing strategy, and pre-showing preparations (e.g. repairs, upgrades, decoration).

It is also helpful to talk about your expectations as well as a contingency plan if they are not being met. If we are not successful in finding a buyer within a specified period of time, we should be prepared to alter our marketing strategy, reduce the price, or both.

To be continued....

Buyer's Agent: Real or Marketing

2008-08-14T07:33:07Z

We are starting to hear the term 'buyer's agent' more and more these days. Someone asked me if the whole thing wasn't just one more way for realtors to market themselves, especially in such a challenging market.

The answer is no...

A "buyer's agent" is a real estate agent who has entered into a written agreement to represent the interests of a party (or parties) who intend to purchase property. The buyer's agent helps the buyer to clarify his or her specific needs, secure financing, locate appropriate properties, identify and understand needed repairs or maintenance, negotiate the best possible purchase price, hire service providers (e.g. home inspector, closing attorney), and generally guides and advises the buyer through the entire process. The buyer's agent is legally and ethically obligated to look out for the best interests of the buyer, to disclose any and all information about the property or the seller, and to diligently protect the buyer's confidentiality. As a rule, the buyer does not pay a fee for these services.

It is not at all just a marketing tool for agents. In fact, most agents tend to focus on acquiring listings and often don't even adequately inform buyers about the benefits of buyer agency as it is often not in the AGENT's best interests to do so.

When a listing agent enters into a contract with a seller, there is an agreed-upon commission % to be paid by the seller at closing. If the buyer is represented by another agent, the listing agent must split that commission. If an unrepresented buyer contacts the agent directly and agrees to purchase the property without representation, the listing agent keeps the entire commission.

In that scenario, the listing agent owes all of the loyalties described above to the SELLER and is effectively operating AGAINST the buyer's best interests.

Thus, even though agent's are legally obligated to disclose these facts and (in my opinion) ethically obligated to make sure that a buyer understands all of the ramifications, it is easy to see how this is often at odds with the financial incentives. Do yourself a favor, and find an ethical, competent, trustworthy Realtor to act as your buyer's agent before you even begin to look at property!

Selling Your Property - Meeting Challenges

2008-08-12T17:49:18Z

Selling property in today's market is a challenging prospect. Not only are you competing against a large surplus inventory of homes, but you are doing so at a time when there are relatively few qualified and motivated buyers. It is more critical than ever to carefully plan and manage every aspect of marketing your property.

As your agent, I will work diligently to help you get the best price and terms possible for your property. And while every seller and every property are different, the process generally goes something like this:

1. Initial Consultation

2. Research & Market Analysis

3. Marketing Dialogue

4. Listing the Property

5. Marketing

6. Showings

7. Negotiating a Contract

8. Satisfying Contractual Obligations

9. Closing

My goal is to minimize your stress and maximize your positive experience by overseeing every detail and by giving you resources, information, and advice that will help you to make the best decisions.

Final steps in the buying process

2008-08-06T08:57:08Z

And now the moment you've all been waiting for.........

The end of the list........

7. Perform Home Inspections and Settle any Ensuing Issues

With very rare exceptions, I will strongly recommend that you include home inspections as a contingency in the Purchase & Sales Agreement. While the inspections cannot completely eliminate risk, they will substantially reduce the likelihood of encountering unexpected and costly problems after closing. Inspections are generally performed at the expense of the buyer and typically will cost $300-$600 for a residential property, depending on the nature of the property and the specific inspections conducted.

It is important to schedule inspections as soon as possible after signing the P&S, in order to allow adequate time before closing to resolve any issues which might be discovered. As with every other decision, the choice of home inspectors is up to you, though I am happy to provide referrals from which you can choose. In most cases, buyers prefer that I coordinate the scheduling, but I do suggest that you be present for the inspections, as it presents an opportunity to learn further details and to ask questions about the repair and maintenance of the property you will soon own.

Upon receipt of the written inspection report, we will review it together and determine what issues, if any, require attention. If the inspections uncover any issues which would significantly affect the value or safety of the property, you may terminate the agreement to purchase, ask that the seller remedy the problems before closing, or request a monetary credit towards the cost of the expected repairs. Although not obligated to cooperate, sellers are generally motivated to do so to avoid having to put their property back on the market, especially since they are legally required to disclose any known defects to potential new buyers.

8. Satisfy Remaining Contractual and Practical Requirements

You will choose an attorney to represent you at closing. Again, I can provide referrals if needed. The attorney will perform a title search to ensure that the seller has a clear and marketable title to the property and to reveal any encumbrances, rights of way, easements, restrictions and any other matters or conditions which may affect the property. In addition, your attorney will coordinate with your lender and the seller's attorney to prepare all the required documents for closing.

Once the lender receives a copy of the signed P&S, their underwriting department will order a property appraisal and will begin processing your loan. Even though you may have been pre-approved, it is not uncommon for the lender to require additional or updated documentation from you before issuing the loan commitment. You will also be expected to secure title insurance (typically your attorney will take care of this) and homeowner's insurance before the lender will release the funds for your purchase.

During this phase, it is critical that all of the parties involved are cooperating effectively to satisfy all of the requirements for a smooth and timely closing. As your agent, one of my most important roles is to facilitate this process by tracking contractual dates and coordinating the communication in order to avoid unexpected and potentially costly delays.

9. Finalize the Purchase at Closing

Immediately prior to the closing, we will conduct a final walkthrough to verify that the property is being conveyed in the agreed upon condition.

The closing itself will typically take place at your attorney's office, though it can be conducted at any location acceptable to all parties. Your attorney will review with you the deed, the mortgage, and a sizable stack of related documents requiring your signature. Once you have signed all of these documents, your attorney will record them at the local city or town hall, and the title to the property will officially pass to you.

*All material by Paul Hodosh

New Rhode Island Linked In Group

2008-08-02T08:30:40Z

Having just burst onto the social networking scene (ha ha) I'm still trying to learn how to best use all of these various tools for the real estate business. I have found tons of great advice here, and I'm someone who looks first to those who've found success, or failure, and I try to listen and learn. That's easy to do here on Active Rain, but less so on Facebook and Linked In.

With Facebook, it is a bit easier because there really is more of a social (fun) aspect to rely on. But with Linked In, I've been struggling to find ways to make it useful for our particular industry. It seems to be more geared toward freelance workers who depend on connections to line up work.

Having said that, I'm never one to get discouraged (see above for ha ha comment) so I decided to create a group for Rhode Island Real Estate professionals. I'm hoping to have lenders, attorneys, agents, and all the rest. And I'm hoping to find yet another way we can work together to help us get on the other side of this market, with as few scars as possible.

So, without further ado...here is the group information and an invite for all of you.

Rhode Island Real Estate Networking

http://www.linkedin.com/e/gis/154971/2D338D78CBD8

The Buyer's List: Part Two

2008-08-02T08:03:05Z

4. Identify Properties Which Match the Criteria we have Defined

You may know exactly the type of property you are seeking, or you may be starting with only a few vague preferences. In either case, we will prioritize the criteria that you have defined and create a search profile specifically for you. For many people, the process of looking at properties is an integral part of clarifying their needs and wants, so this profile may very well change as we go along.

Based on your profile, I will perform a search and deliver appropriate listings via e-mail for you to review at your convenience. The large majority of listings will come from the Multiple Listing Service (MLS), the official property database of RI Realtors, where 85-90% of all residential property sold is listed for sale. I do also monitor other sources (e.g. Craig's List, various "For Sale By Owner" sites), but encourage you to do your own prospecting as well if you have the time and desire to do so.

While it is by no means a requirement, most people prefer to drive past prospective properties to check out the exterior, the lot, and the neighborhood before scheduling actual showings. Once you have identified those properties that you wish to see, I will make arrangements for us to go view the properties together at a time that fits your schedule.

5. Visit Properties Together and Perform Relevant Research

As we view properties together, I like to give you as much space as possible to look at your own pace and without too much distraction, though I may point out special features or potential problems that you might have missed. Often, the listing agent or seller may be present; while this offers a great opportunity to ask any questions you might have about the property, it is a good idea in this circumstance to try to maintain a "poker face" so as not to compromise your negotiating position should you decide to bid on the property.

Once we have identified a property which seems to be a good fit for you, you may have questions or concerns that need to be addressed before you are ready to make an offer. By making the appropriate inquiries through the listing agent or researching the public records, I will be able to resolve many of these issues for you. In some cases, particularly when a subjective assessment is involved (e.g. "What's the neighborhood like?" or, "How's the school system?"), I may refer you to other resources or make suggestions on how to do the appropriate research yourself.

Prior to drafting an offer on the property, I will gather as much information as possible to help with the decision-making process. This may include public information regarding ownership history, tax records, and recorded liens, as well as data from the MLS about comparable sales and active listings.

6. Negotiate and Execute a Purchase & Sales Agreement

Before putting ink to paper, we will first consider all of the information we know about the property, its market value, and the seller's situation & motivations. We will also discuss the various contingencies that need to be met, including any repairs that must be made, personal property to convey (e.g. appliances, window treatments, furniture), inspections to be performed, existing property that you need to sell, timeframes for closing, and anything else that will affect your ability and willingness to purchase the property. Finally, we will determine a maximum price that you are willing to pay for the property, discuss best strategies, and settle on an initial offer.

After detailing all of the above-mentioned terms in an "Offer to Purchase," we will submit our offer (usually to the listing agent) and wait for a reply. The seller has the following options: accept the offer as written, reject it outright, or (the most likely scenario) make a counter-offer. It is not uncommon for there to be several rounds of negotiation. Assuming that we succeed in reaching an agreement, both parties will then sign a formal Purchase & Sales Agreement (P&S), laying out the terms in detailed legal prose.

At this time, you should expect to deliver a deposit with the Purchase & Sales Agreement, typically 3-5% of the sale price, which will be held in escrow by the listing broker until closing.

To be continued......

More extended FAQ: What is Pre-Qualification?

2008-07-29T09:54:39Z

Virtually any seller of property (or their agent) will require that you submit a letter of pre-qualification or pre-approval along with any offer.

Pre-qualification is a process through which a loan officer assesses your borrowing power based on information that you provide regarding your income, assets, debt, and credit history. Typically, the lender will also pull a copy of your credit report from one or more of the official credit reporting bureaus. Based on this information, the loan officer will be able to tell you how much money you will be able to borrow and at what interest rate, assuming that all of the requirements of the lender's underwriters are satisfied. A pre-qualification is NOT a guarantee that you will be able to borrow the money or secure a specific interest rate, and the quality of a pre-qualification (i.e. the likelihood that it reflects the lender's actual ability to provide a loan to you under the rates and terms discussed) varies significantly depending on the lender and also on the accuracy of the information that you provide. Pre-qualification can usually be done very quickly and often over the phone.

Pre-approval requires that you provide actual documentation of your assets, income, and debts and is a much stronger indicator of your ability to borrow funds, although the lender will still need to approve the specific property before issuing a mortgage commitment. Pre-approval makes you a stronger negotiator when sellers are considering your offer and also reduces the likelihood of unexpected barriers to acquiring your loan.

Neither pre-qualification nor pre-approval obligates you to do business with the lender, and it is wise to shop around. You should request that the lender provide you with a Good Faith Estimate (GFE), based on some agreed-upon assumption about purchase price and down payment, that details expected closing costs, escrow amounts (money that you pay in advance to cover future taxes and insurance), interest rate, and monthly payments. This way, you will understand all of the costs associated with your loan and will be able to compare the programs offered by different lenders.

You should get pre-qualified or, ideally, pre-approved BEFORE you begin looking at properties so that you fully understand your borrowing capacity and all of the costs associated with your eventual purchase.

Paul Hodosh's list for buyers......

2008-07-28T10:23:45Z

I'm a list person. I like lists. I love lists.

I'm also a Realtor, and on my website I have made a list for buyers and how we work together to make the experience positive and rewarding for everyone involved. So I thought it may be a good idea to share my 'buyer's guide' here on Active Rain.

I'll break it up into a few posts. Did I mention I like long and detailed lists?

From my website:

While every buyer and every transaction are different, we will follow this general process:

1. Define and Prioritize our Goals

The greater clarity you have about what you are trying to accomplish and why, the more likely you are to succeed in achieving your goals.

Saving money, investing for the future, increasing living space, modernizing, simplifying, settling in a specific town or neighborhood, moving closer to work or to family, pursuing a vision -- these are just a few of the reasons that people purchase property. Understanding YOUR reasons and their relative importance is a critical first step.

Having this discussion at the beginning of the process will help you to make decisions later and will help me to provide appropriate guidance and support.

2. Determine your Financial Capabilities and Limitations

Before we begin looking for property, it is essential that you have defined the appropriate price range and that you understand the costs and ongoing expenses associated with your planned purchase. You should also be pre-approved by a lender (unless, of course, you are a cash buyer) as virtually all sellers will require this documentation before considering your offer.

In choosing a lender, it is wise to shop around. I will encourage you to discuss your needs with at least three lenders, financial institutions with which you have an existing relationship or referrals that I can provide. In each case, you should ask for an estimate in writing that details all of the costs associated with the proposed loan as well as any contingencies that must be met by you.

The extent to which you choose to involve me in this process is entirely up to you, but the more information you are willing to share with me, the better able I will be to ensure that your best interests are served. Of course, any information that you do provide will be held in the strictest confidence.

3. Discuss and Formalize our Working Relationship

Every buyer's needs and expectations are different, and I consider it part of my job to do my best to accommodate whatever works best for you. To that end, I will ask you to provide as much feedback as possible regarding your preferences as to communication method (e.g. phone, e-mail) and style, property screening, level of advice and guidance, and any other aspect of our working relationship that is important to you.

There is a standard "Buyer Agency Agreement" that we will use to formalize our relationship, the details of which we will review together before signing. While this legal document is necessary within the context of the highly regulated real estate business, I consider my personal commitment to you to be of primary importance. Above all else, we are agreeing to a partnership based on honest communication and mutual respect.

Age old question....is it time to buy?

2008-07-25T07:40:39Z

What is a short sale?

2008-07-19T12:31:16Z

From time to time, I will use my blog to offer up answers to questions that are typically found on an FAQ. This allows me to go into a little more detailed explanation as opposed to the abbreviated for space version. Today, I'll answer a frequent question Realtors are getting in today's market.

What is a short sale?

A short sale occurs when a property is sold for less than the seller owes on their mortgage, and the bank agrees to accept the lower price as full payment of the loan. It is a way for a seller to avoid foreclosure on their property.

Typically, a property will be listed as a "potential short sale" or as "subject to bank approval" when the seller and/or agent has determined that the market value of the property is lower than what is owed and that the seller does not have the resources to pay off the difference.

Once a buyer submits an offer on the property and the seller has accepted the offer, a "short sale package" is submitted to the bank - this package consists of the offer along with a large stack of documentation intended to justify the sale, including documentation of the seller's financial hardship, an assessment of the property's value, and the details of the proposed sale.

Once the bank has received this short sale package, they will thoroughly analyze the property and the situation themselves, a process which can take considerable time. As a buyer, you will need to have a lot of patience, as it can take as long as 2-3 months to get a response from the bank. Neither your agent nor the listing agent has any control over this process - all the parties involved are at the mercy of the bank. Some banks are much more responsive than others.

A few other things to know about short sales:

- While it is still advisable to make property inspections a contingency of your offer to purchase, neither the homeowner nor the bank will make any repairs or price concessions based on the inspection results. If a major problem is found, you will have the right to terminate the agreement and have your deposit returned, but otherwise you must go forward with the sale and handle any problems yourself after the closing.

- You should expect their to be some issues due to deferred maintenance on the property - typically people who are in a financial position where they cannot afford to pay their mortgage have also been unable to afford to keep up their home as well as it should be.

- Once the bank has approved a short sale, the closing date in the contract must be met - if the closing is delayed due to issues on your end (your lender, attorney, inspector, etc), the bank will charge you a substantial daily penalty. Of course, if the delay is because of the bank, you have no recourse against them - not very fair, but that's reality.

Reality

2008-07-15T09:25:39Z

One of the things that is important to me, is to always deal with the facts as opposed to blind optimism. The fact is that we are in a troubled economy. Here is a story from today's Providence Journal that bears this out.

R.I. economy at its worst in 25 years

July 15, 2008 By Lynn Arditi

Economically speaking, Rhode Island is in the midst of the “worst year” in a quarter century, according to a local index released yesterday. After a brief uptick in April, the Current Conditions Index in May plunged back to its lowest value in the index’s 25-year history. Eleven out of 12 indicators deteriorated, as the unemployment rate spiked to 7.2 percent and consumers hit by rising food and fuel prices cut back on spending, causing retail sales to plunge, according to the index’s manager, University of Rhode Island economics Prof. Leonard Lardaro. “Even during the horrible year of the [1991] banking crisis,” Lardaro said, “it wasn’t statistically as bad as this.”

After April’s bump, the CCI index in May fell back to its previous value of 8, where it had been during four of the last five months. Prior to this year, the only time the index fell that low was in April, 1991. The CCI measures the behavior of 12 economic indicators each month and compares them with what they were during the same month a year ago. The changes indicate whether Rhode Island’s economy is growing, contracting or stagnant. Any indicator above the neutral value of 50 means the economy is growing, anything below means it’s shrinking. For 11 of the last 12 months, the index has languished below 50, and during January, February, March and May, the monthly values sank to 8. In April, the index climbed to 17, prompting Lardaro to suggest there was reason to hope that the economy might begin to turn around. Two indicators in April improved, albeit slightly. Retail sales, which had been declining, “squeaked by,” and manufacturing wages also rose, according to the index. But any hope of a near-term recovery was dashed in May when the index fell back to a value of 8.

The housing market meltdown has slowed the rate of house construction, with single-unit building permits down 33.3 percent in May from the same period last year. The building slowdown, however, could be viewed as a “bright spot,” Lardaro said, because it may help the state reduce its bloated inventory of unsold houses. The labor market also continued to deteriorate in May, with layoffs driving up new unemployment claims by 14.3 percent from May of last year, although the number of claims has improved during the past three months. The share of people who ran out of their unemployment benefits — “benefit exhaustions” — climbed 31.9 percent compared with last year. Employment service jobs, a “leading labor market indicator” which includes temporary help, fell by double digits for the fourth consecutive month. (Employment service jobs tend to decline when the economy is contracting and rise when it’s growing.) Government employment also shrank, and is expected to continue to do so as state agencies begin to lay off employees to bring spending in line with budget cuts. Meanwhile, the size of the labor force in May shrank, which suggests that some residents either gave up looking for work or got jobs in other states. Not surprisingly, the weak job market, along with rising food and fuel costs, have caused consumer sentiment to plummet and spending to shrink.

Retail sales fell 10.6 percent in May, although the overall level of sales remained relatively high, Lardaro said. “We’re in the second stage of a recession,” Lardaro said. “This winter it could get even worse…” The only indicator that improved in May — the reason that the monthly index remained above zero — was manufacturing wages. But that, too, could be short lived. Total manufacturing hours in May fell at its most rapid rate since September 2002, as both the work week and employment declined.

This makes it all the more important for people to find a real estate agent who will be their advocate and who will put their best interest above all else, including the sale and possible commission. And it makes it all the more critical for me to be informed so that I will be able to help my clients deal with the reality of this market. Now I promise to find some good news to report. I Googled "Good News" but nothing yet.....

Considering Buying Property...Find a Good Realtor

2008-07-10T10:20:41Z

When I began searching for a house several years ago, I was very defensive in my dealings with realtors, rejecting offhand any suggestions of signing up with an agent as my representative. Having always been very independent in my business and financial dealings, I wanted to maintain control, to avoid being limited or pressured in any way. In retrospect, I did myself a disservice because of my strong bias against "salespeople" and my lack of understanding of the home buying process.

In reality, representation by a competent realtor (known technically as Buyer Agency) gives you MORE control as a buyer. Your agent's role is not to pressure you or limit your options, but to provide you with resources, information, and advice that helps you to make intelligent decisions. A buyer's agent is your advocate through the entire process of defining your desires & options, finding the right home for you, negotiating the best price and terms of sale, and coordinating the steps leading to closing.

Even though you probably have a vision of the home you would like to purchase, a good realtor will ask questions and raise issues that you may not have considered in order to clearly identify appropriate properties to meet your needs and desires. In addition, your agent can help to define your financial options and limitations and can provide references for quality lenders who can pre-qualify or even pre-approve* you for a home loan. It is essential to have a firm handle on what you want and what you can afford before you begin looking at properties.

While there are many resources available to the potential home purchaser (newspaper advertisements, real estate publications, Web sites), only a licensed realtor has direct access to the Multiple Listing Service (MLS), where the large majority of properties are presented as soon as they hit the market. In most cases, your agent will create an automated search, based on detailed criteria that you provide, which will e-mail you new listings as soon as they are entered into the MLS system. Your agent may also monitor other sources for government-owned homes, houses listed for sale by owner, or other non-MLS properties.

Once you have identified properties of interest, your realtor will save you time and hassle by performing the necessary research to answer any questions or concerns you might have before scheduling showings. When actually viewing property, your agent's trained and experienced eye may catch details or issues that you might otherwise have missed.

You should be aware that when you contact a listing agent about a property you may have seen in an advertisement, that agent is legally and ethically obligated to be looking out for the best interests of his client, the seller. You can even the playing field by having a realtor represent you as a buyer, looking out for YOUR best interests.

Once you have found the right property, the next challenge is negotiating the price and terms of the sale. Even if you are an expert negotiator, your realtor's knowledge and experience will prove valuable in assuring that you understand the process and incorporate appropriate contingencies in your offer to protect your interests. By examining similar properties that have sold recently and those currently on the market, your agent can provide you with a competitive market analysis, which will help you to determine the value of the property and to decide on an offering price. It is very common that there are several rounds of negotiation, at first to reach agreement and execute a purchase and sales agreement and later if the home inspections reveal any problems or issues that need to be resolved before closing.

If you are not represented by an agent, you will be responsible for hiring an attorney and various home inspectors, negotiating any necessary repairs or credits indicated by the inspection reports, communicating with your lender, inspectors, attorney, and the seller (or the seller's agent), and trying to resolve unanticipated errors or surprises that can derail a closing. To make matters worse, many of the properties for sale in today's market are bank-owned or potential short sales**, adding another whole layer of bureaucracy to an already complex process.
A realtor cannot eliminate all the stresses of buying a home, but a good agent will provide you with one central, reliable source on which to rely, coordinating communication among all the various parties involved in the transaction and ensuring that all contractual dates and contingencies are met. In the midst of what can be an emotionally trying time, your realtor acts as a steady and rational guide, smoothing the path to prosperous home ownership.

The most amazing part about buyer agency is that you can reap all the benefits of representation without a dime out of your pocket! If you purchase a property listed with a realtor, your agent's compensation comes from sharing the commission paid to the listing brokerage by the seller. In the relatively unusual event that you purchase a home not listed with a realtor, your agent's commission will normally be negotiated as part of the purchase and sales agreement and paid from the seller's funds at closing.

As with hiring any professional, you should use care in choosing a realtor to represent you. Critical qualities that you will want to find in an agent include responsiveness, knowledge & experience, good communication skills, and a strong commitment to ethics and integrity. Perhaps the best way to start your search for a competent agent is to ask your friends, colleagues, and family if they know someone that they would recommend. Before making any commitments, you should meet with your prospective representative for a buyer counseling session, where you will discuss your needs, desires, limitations, and expectations. If you feel uncomfortable or unable to establish a rapport, you should probably continue your search. Of course, you should also not hesitate to ask for references from recent clients who would be willing to share their experience.

Purchasing property involves critical decisions that can have a major impact on your life. While you should always retain responsibility for and control of these decisions, you can greatly improve the odds of making the right choices by first making the decision to engage a competent realtor as your buyer agent.

*Pre-qualification is based on the lender's assessment of information that you provide verbally and does not guarantee that you will be approved for a loan. Pre-approval requires documentation of your assets, income, and debts and is a much stronger indicator of your ability to borrow funds, though the lender will still need to approve the specific property before issuing a mortgage commitment.

**A short sale occurs when the owner of the property owes more to the lender than the sale price. In these cases, the sale must first be approved by the lender, which can add months to the process.