Despite generously acknowledging that my crystal ball is cracked, I cannot help but try to look forward and come up with a few predictions.

This year my crystal ball is not only cracked, it is showing signs of disintegrating!  However, I'm going to give it a try and hope that I'm not so off the mark that I injure myself!

1.  Interest rates will go up.  That's a pretty safe bet.  The current ridiculously low interest rates just cannot continue unless the economy as a whole is completely stagnant.  There are minute signs of economic recovery and a great deal of manipulation of the economy from the government that will ultimately result in higher interest rates.  How high?  Still low is my prediction...look for interest rates to be in the 5's, but low to mid 5's.

2.  Foreclosures will continue.  The rate of foreclosures hitting the market may slow, but there are plenty of homes in pre-foreclosure that will ultimately hit the market.  With the current absorption of properties on the market, we should see bank owned properties continue to come on the market for a few years.

3.  Short sales will continue.  The government has once again tried to revise what I call "rules of engagement" (HAFA), but will that help?  Time will tell.  In the meantime, though, short sales will continue and they will continue to be painful for all parties involved (seller, buyer, agents, banks...everyone!)

4.  The recovery of the housing market is still a ways off.  Jobs are the most important factor in aiding the recovery.  The slight lowering of unemployment is vaguely heartening, but we have a long way to go.

5.  Second home market will see continued improvement.  There are huge bonuses coming out of the financial markets and that money often finds its way into the second home market.  As that's a good part of my market, I'm cautiously excited.

6.  It appears in the southern coastal RI markets, at the very least, home prices have stabilized and are beginning to inch up modestly.  Stress on modestly but up is the right direction.

So, in summary, 2011 should be a bit like 2010.  No appreciable difference.  A little higher mortgage interest,  inventory levels and sales levels about the same as 2010 with maybe an infinitesimal increase in median home prices.

But, remember, my crystal ball has been cracked for a few years!  Here's hoping it will repair itself soon!

The last few weeks have seen the State of Rhode Island and much of southeastern Connecticut devastated by flooding.  The damage to infrastructure, businesses, and homes has been unprecendented.

Here is some helpful information for Southern RI business owners:

The RI Dept of Labor & Training and the RI-EDC will present emergency response sessions to provide information on Disaster Unemployment Insurance Procedures and options for financial assistance for impacted business owners.

Monday, April 5, 2010 from 9 AM to 12 PM

Beechwood Community Center,10 Beech Street, North Kingstown, RI 02852

To reserve your seat, call the NK Chamber 401-295-5566 or RIDLT at 401-462-8724.

Monday, April 5, 2010 from 2 PM - 4 PM

Westerly Chamber of Commerce, 1 Chamber Way, Westerly, RI 02891-2670

To reserve your seat, call the NK Chamber 401-295-5566 or RIDLT at 401-462-8724.

For real estate practitioners and FHA buyers:

FHA has ordered all properties that are being considered for FHA financing to be re-inspected by appraisers if the appraisal was done before the flooding.  They want to make sure that the property suffered no flooding or water damage and is substantially in the same condition.

For real estate practitioners and buyers of property in flood zones:

When Congress adjourned for Easter break, they failed to renew the National Flood Insurance Program so check with your insurance provider to be sure that you have flood insurance in place...or plan to close after Congress is back in session and has dealt with this oversight.

As part of the Making Homes Affordable program (HAMP), the new Home Affordable Foreclosure Alternatives Program (HAFA) goes into effect April 5th.  The National Association of Realtors has the summary of this at www.realtor.org/shortsales.  Under the new program, if a borrower meets the eligibility requirements, they would not have to face a deficiency judgment and would get some cash to move. 

Will it work?  I'm hoping so, but have my reservations.  HAMP was a noble proposal for those who wanted to keep their homes, but, due to unforeseen circumstances, were struggling to make their mortgage payments.  But if you've talked with anyone who has tried to get a loan modification, it is a frustrating and often painful process.  One person I know has re-submitted their application and supporting documents three times.  The typical loan modification process can take up to six months before an answer is forthcoming.  The idea was to offer relief BEFORE a borrower was in default, but that is a rare occurrence.  The program was left in the hands of the lenders to execute and the lenders were and still are ill-equipped to handle it. 

Now the government is asking these same lenders to have their loss mitigation departments learn something new called HAFA to deal with short sales...something that, for the most part, the lenders are not dealing with well now.  Although it goes in effect in two days, my sense is that it will take a while to even be known by the loss mitigation departments, let alone executed.

With short sales, each situation is different.  A FHA short sale differs from a Fannie Mae short sale which differs from a short sale with a first and second lienholder.  They are complicated, time consuming, frustrating and, at times, heartbreaking.  HAFA is a ray of sunshine for those wanting to avoid foreclosure but must sell their home. I'm hoping it will help make short sales take less time to conclude.

If you are considering a short sale, it is in your best interest to work with someone who knows what they are doing.  NAR has a new designation: SFR which stands for Short Sale and Foreclosure Resource.  The Realtors who have this designation have been trained to do short sales and to give advice regarding alternatives to foreclosure.  There is also another designation:  CDPE which stands for Certified Distressed Property Expert.

I'm gazing into the crystal ball and all is murky.  Despite decades of experience in real estate, I cannot tell you how it will be this year.

Never before has there been as much legislative interference in the real estate market.  Homebuyer tax credit.  Treasury buying mortgage backed securities.  Legislation impacting appraisals, lending,...all sorts of things!

Here's what I understand (can't even say know):  The Home Buyer Tax Credit expires April 30th.  Treasury is planning to phase out its purchase of mortgage backed securities by the end of March.  The Home Valuation Code of Conduct is being adopted by FHA (and has been adopted by Freddie Mac and Fannie Mae).  FHA is raising its down payment requirements and tightening its credit requirements.

That's a lot of gibberish unless you look forward and try to anticipate the impact on the real estate market.  Let's take them one at a time and guess (and I mean guess) the impact.

Home Buyer Tax Credit - there are lots of opinions regarding the impact of this on the market.  The general consensus is that it has spurred sales.  There have been more sales this past year as a result of this.  Generally, though, these sales have been bottom of the market sales that have not resulted in much in the way of move up sales.  The middle of the market is still suffering tremendously.  My explanation of this is that a good number of the sales were fire sales - bank owned, short sales, etc. - that didn't result in those sellers purchasing another home.  One off sales, but we'll count them as sales nevertheless.  But you can't help but wonder if a majority of these sales would have taken place even without the tax credit.  What percentage of the sales taking place prior to the first credit were bottom of the market sales?  Most.

The Home Valuation Code of Conduct - this is causing INCREDIBLE problems in getting anything sold.  Recently heard of a property that was under contract.  The appraiser came (from afar), couldn't find anything comparable that had sold in the last 3 months (duh!...we're in a really slow market), so said it couldn't be appraised and the bank refused to loan on it.  End of sale.  More and more, appraisal issues are causing sales to come apart.  The criteria for appraisals is nigh on impossible!  It's not the appraiser's fault...it's the incredibly tight criteria set forth by the HVCC and the underwriters at the lenders.

Purchase of mortgage backed securities by Treasury - When this ends, what are the chances that mortgage rates will start climbing?  Better than good...highly likely.  There goes one of the most attractive things going in the market today...the interest rates.

Let's throw into the mix that more and more buyers are steering clear of short sales because they are excruciating for the most part.  If someone wants to buy a home, they don't want to wait two months to find out whether they can or not buy (actually know of some short sales that are still waiting for approval after ten months...or longer!).  If the buyer is a first timer, can't afford to wait or they will possibly lose out on the tax credit.  So are we going to see more foreclosures?  I think you can bet on it.

Now let's just talk about foreclosures for a minute.  The banks (and governmental and quasi-governmental agencies like Fannie Mae and HUD) have gotten smart.  If they own a property, they don't want to keep it.  So these properties are coming on the market at bargain basement prices often causing multiple offers and selling for more than their list price.  They can be really good deals...but they are impacting the values of everything around them, so traditional sales are suffering and appraisals (see above) are coming back much lower than perhaps they could.

Take all of this (and more) and swirl it around.  Now ask, where is the real estate market going in 2010?  My short answer is that, despite all the optimistic hype, we are in for another rough year.  When will we see a recovery?  Well, that's where the cracked crystal ball comes in.  Never before has there been a time in my recollection where there has been so much governmental meddling in the real estate market.  It is unprecedented.  In the past, you could be looking for some sort of recovery starting about now.  But we don't know.  We've never been here before.  Real estate typically ran in seven year cycles, but I don't think that is going to be the case this time...I think it will take longer for recovery because the valley was so low.

Two other things...unemployment and consumer confidence.  Without job recovery, there will be less real estate sold.  You can't buy a house if you can't pay the mortgage.  And consumer confidence in the future is key - you can't sell investment property (or a house) if there is fear that the market will decline further or fail to recover soon.

There's a big HOWEVER here (always end on an optimistic note, I was told):  people will continue to need to buy and sell real estate.  Marriage, divorce, retirement, larger family...people entering and leaving the housing market.  There will still be these buyers and sellers.  There were when interest rates were over 12%...there will be now.  We just need to keep our expectations low and we will never be disappointed.

It's that time again...the time to make plans, make resolutions and otherwise try to tidy up one's life.  Every year it comes around (with increasing speed!)...and this year, especially, I feel like I have whiplash, it has gone by so quickly.

Last year, I promised to do things differently than the year before (figured that was a resolution I could keep as I got a year older and the dates were different).  I also promised myself to forget about resolving to do the things that are never going to happen (e.g. losing 75 pounds, taking flying lessons, becoming prom queen)...failure is not motivating!

But this year, I want to make more specific resolutions that are achievable.  After all, with each passing year I come to realize that life is not infinite and there isn't as much time to procrastinate as their used to be.  So, here they are:

1. Live more simply - I've started cleaning out all the stuff that I thought one day my kids would want.  The youngest are in their mid-twenties and they aren't the least bit interested in junk that wouldn't bring a buck in a garage sale.  I am ready to lighten the load and get rid of the clutter.
2. Let the people I care about know it more often - Having worked hard and long many years, I have often fallen short in letting my friends and family know that they are important to me.  It isn't enough to assume they know it...it is important to acknowledge them randomly (not just at holidays and birthdays) and clearly.
3. Give up on useless emotions - Among the worst culprits are guilt and anger.  Doesn't do any good to feel guilty about anything...better to use the energy to strive to improve whatever it was that made you feel guilty in the first place.  Anger is also a wasted emotion.  It doesn't solve anything either.  Rather spend my energy resolving a conflict calmly than letting it grow to the point where anger results.
4. Avoid toxic individuals - Whether in business or in my personal life, there are people who should be avoided at all costs!  These are the people who have nothing good to say, are always miserable and negative and suck the positive energy out of a room.  Just fire them!
5. Learn that "no" is a complete sentence! - When the answer is "no", no explanation is required, no backpedalling, no apologies.  Very satisfying, too.
6. Speak don't "tweet"! - In prior decades, my ear would hurt after a day on the phone...but I'm thinking that was better!  Social media may be the way of the world, but I'm seemingly too verbose for the current methods of communication...I can't organize my thoughts into the format available!  And I refuse to give up on good grammar, accurate spelling and the use of the full beautiful breadth of possibilities that the English language affords one.  I've grown with the digital age and consider myself fairly adept technologically, but if I have something to say, I want it clearly stated and written as well as possible.  Oh, and irony and sarcasm, those wonderful things, are lost, if not dangerous, when communicating by e-mail...let alone by text or tweet!
7. Don't just make a plan, execute the plan - I have great plans on paper, then they just get coffee stained.  My plans need to be simpler, more attainable and then I need to do them!  Writing down goals is easy.  Parsing those goals into manageable activities to get to the goals, is hard.  For example, I can say I want to lose 10 pounds, but creating a day to day set of activities that will get done to achieve that goal is not as easy.  See resolutions # 1 through #6 to help along the way!
8. Recognize that time is finite and deal with it - I can't make more hours in the day, but I can use them more effectively.  Maybe then I won't have the feeling of whiplash when another year whizzes by!

So here's to 2009 - you were challenging, character building and unprecedented - and here's to 2010 - may the promise you have hold true and may I look back at these resolutions and claim success!

Without apparent warning, the holiday season comes barreling down on us.  We are always keeping our eyes on the details of our transactions and our clients...time passes sometimes slowly (when waiting for that last detail to fall in place) or so rapidly (when we are under a deadline) that it is always a surprise when we wake up and find it's another month, another season, another year!

 So, it's a little over a week to Christmas.  I have to get the packages in the mail...that means buying the presents, wrapping them and schlepping to the post office.  But I have clients and they need attention, too.  Have to run to two town halls, meet with a prospective seller, help my buyers with information they are needing.  What about that other batch of cookies?  When will I get that done?  Okay, I can work at that tonight.  But what about the research I need to do on the internet?  Or the latest blog entry?  Or checking on Facebook, Twitter, Linked In, Active Rain, Realtor.com, Zillow, Trulia, my website...making sure that everything is as it should be?  When will I get to that?

 Something's got to give!  I need a haircut.  I need a manicure (never mind...I'll do that after the cookies and the internet search).  The floor needs vacuuming, the furniture dusting...never mind, I'll do that later.  Oh, and the tree needs to be gotten up and decorated and the candles in the windows!  I never should have started baking Christmas cookies right after Thanksgiving!  I should have taken a day and gotten ready for Christmas.  But, my sons' birthday is the 14^th and I never like to put the tree up before that...makes it a little more special for them if I don't.  But then I don't get it up until the very last minute, then I have to take it down.

 Just got another e-mail asking me to check something out for a client.  Need to pay attention to those details. Why aren't they out Christmas shopping?  Never mind, I'll get to shopping later.

 So, I have the solution.  I'll find a string of lights, throw it on a chair and call it a tree.  I'll get back to the clients who need attention...oh and finish baking the cookies so I can get those delivered to them before Christmas.  I'll get a big trash bag and throw all the clutter around the dining room into it, throw that in my closet and call it cleaning.  I'll stop at a store or two on my way home from my appointments, wrap tonight (after the cookies, the internet work, ...forget the manicure), box it up and run to the post office on my way tomorrow to the other appointments.  Once it is in my car it is practically to the post office! Wait...there's already a box in my car!  Damn, that was supposed to be mailed in August!  What happened to fall?

 What happened to 2009?  Where did it go?  How old is this outfit?  Twenty years?  Where did that go?  Need a new calendar...hope it will help.  Writing down to decorate for Christmas starting in January...maybe it will get done next year!

Happy Holidays!

I meet people all the time who ask me the question, "What's my home worth?"   My favorite answer is, "It depends." 

We all know the definitions:  market value is the estimated price at which an informed buyer will buy in an arm's length transaction; assessed value is the value upon which taxes are assessed as determined by either a contract appraisal firm or a government official; appraised value is the value that an appraiser given directions as to the purpose of the appraisal (because the purpose matters!) reaches; replacement cost is the cost to replace the existing structure should the need arise.  Heck we can throw in estate value and, finally, sales price.  Then we can ask the question, how can you assign a value to a home when that's the center of your familial and emotional life? 

We didn't actually ask that question in the past unless we were going to sell the house or refinance...because it was our home. Now it's viewed as an investment, collateral, retirement fund...a commodity. 

So, taking into consideration today's definition of home as a commodity, I guess the question really is what do you want to do?  If you want to sell, how soon?  If you want to sell are you willing to invest a bit more to improve the condition or are you selling "as is"?  If you want to sell, how flexible will you be with showings, exposure, etc.? 

Let's take a few real life examples.  A bank owned property was recently priced so attractively that it had over 60 showings in the first three days it was listed and resulted in multiple offers.  The offer accepted was well over the list price.  The listing agent had been directed to price it so it would sell within 30 days, so the price was deliberately lower than anything around it had sold for in the last six months.  The "auction" atmosphere was deliberate. 

Another property that was listed was strategically done.  After a review of all the statistical information available, it was determined that the house should be price just below a price tier (e.g. $300,000 to $399,999, $400,000 to $499,999) that wasn't moving very well.  Although the home could have sold for more over a longer period of time, the seller agreed to price slightly (i.e. $2,000) below the price tier that wasn't moving.  It appeared to be well-priced, was shown quite a few times in the first few days and was sold at list price three days after it was listed.  Again, a type of auction atmosphere was created, but not a frenzy...only those who recognized it for the bargain it was priced below its fair market value. 

And yet another property was listed at a price that the seller wanted to net out of the property.  The price is reasonable based on comparable properties.  It's been listed for six months, is shown rarely (about once a month) and that's fine with the seller.  Their goals were different than the other listings mentioned. 

So, when asking the question, "What is my home worth?" be sure to explain what you intend to do with the answer and the timing that you have in mind in which to take that action.

1. Build your Dream Team first!  Buying a home is a team effort.  Start talking with real estate agents and pick the one that you are comfortable with.  Be sure that they really hear what you need and are knowledgeable about the market.  You will also need to identify a mortgage person, an attorney, a home inspector, an insurance agent, etc. ...your agent can help you find the other team members if you don't know anyone in those fields.  These are the people who will help guide and protect you through the home buying process!
2. Now you turn to your mortgage person...find out how much you can borrow for a mortgage.  Get pre-approved.  This is better than a pre-qualification which you can get from anywhere.  It means you've actually started the application process.  Once you are pre-approved, you can move quickly to make an offer on a house if you want to.
3. Figure out where you want to live.  Whether it is identifying a town, a school district or a neighborhood, it will help you immeasurably to narrow down your search geographically.  Describe your perfect location to your agent...they may know of some neighborhoods that fit the bill!
4. Now, make a list of all of the features you want in a home then prioritize them.  For example, is it more important to you to have a garage or a fireplace?  What styles of homes do you like or dislike? How many bedrooms and bathrooms?  Start with the "perfect house" and subtract from there!  As you go through this process, you'll be better able to identify "needs" versus "wants" to fit your price range.
5. Decide whether you want "move in ready" or are willing to do some work to a house after you buy it.  Everyone will want to do some cosmetic changes (e.g. painting) to meet their own personal tastes, but are you willing to knock down walls or add a bathroom or redo a kitchen?  What is your "rehab tolerance"?
6. With your agent, start looking online at the houses in your price range, in your geographic area, that meet your particular needs and wants.  Get comfortable with the information available.  You will continue to refine your search criteria as you learn more and more about the houses in your price range.
7. All of this behind you, you are ready to actually go out and look at houses!  Don't try to do too many in any given day...confusion results!  Take a digital camera and some paper so you can make notes of your first impressions and likes and dislikes of each house. 
8. You'll know it when you see it!  I know that sounds a little silly, but you will!  If you start to figure out what walls to knock down or how you would reconfigure the entire house, it isn't the house for you!
9. Patience is a virtue, but paralysis is a fault.  If you think that the perfect house is not on the market yet and if you wait, it will come, you may lose out on the near perfect one you've already seen.  And while you wait, interest rates could be going up.  Or someone else may buy your near perfect house and leave you still searching.
10. Oh and the asking price of a home is not necessarily the selling price of the same home...that's where your real estate agent can help save you a bundle!

There are all sorts of ideas about getting your house ready to sell, but the first thing any seller needs to do is decide they are going to sell...not just try to sell it.  The difference in attitude is crucial to getting ready to sell your house.

Once the decision to sell is made, your home now becomes a product and, as such, you need to think about packaging or presenting your product in the marketplace.  Here are some ideas: 

1. Solicit advice from professionals...objective advice is invaluable!
2. Pack up the clutter.  You are going to be moving anyway, so start the packing now with all of the items that are not critical to your day to day living or the staging of your home.
3. Remove personal photos and mementos...they are distracting when people come through to see the house.
4. Walk into your house as if for the first time.  Does the front door need paint?  New hardware?  New welcome mat?  How are the plantings?  First impressions matter!
5. Clean the windows!  We recently saw a dramatic increase in activity (and eventual sales price!) when a seller painted the trim and cleaned the windows in the front of the house.
6. Get rid of the cause of bad odors...don't try to mask them!  Using a floral deodorizer is often much worse than the smell that it is designed to hide!  Whether it is a litter box or teenage boys' feet...be prepared to hear about it and do something about it!
7. Make it sparkle!
8. Figure out where you are going to go during showings...don't plan on being there!  Buyers spend more time looking at the house if the seller isn't there.
9. Take care of all the routine maintenance on equipment...service the boiler, change your air filters, vacuum under your refrigerator, clean your oven...it all shows pride of ownership.
10. Pack up your off season clothing and organize your closets...less clothing makes closets look bigger.
11. Consider a home inspection prior to sale so you will know what a buyer's inspector is going to see...help eliminate surprises.  Many home inspection companies offer pre-inspection reports at discounted prices.
12. When you think you are done, give us a call and we'll give you our uncensored opinion!
13. Now the hard part...keep it neat and clean and ready for last minute showings!

Every time I talk with a customer about Buyer Agency, they always ask "Am I going to have to pay the commission?" My short answer is, you already will be.

Who brings the money to the transaction when a house is purchased?  The buyer does.  Unbeknownst to the buyer, the seller has entered into a listing contract stating how much commission he is willing to pay for the sale of the home.  For our example, let's say 6%.  In that listing contract, the seller and listing agent agree to offer compensation to a cooperating agent (a buyer's agent).  Again, for our example, let's say it's 3% being offered to the cooperating agent.  So the buyer, without being consulted, has agreed to pay a 6% commission...because it is included in the purchase price.

Is the buyer paying any more for representation in this scenario?  Probably not.  But let's cover some other scenarios.

A buyer enters into a buyer representation agreement with an agent and agrees to pay 3%.  The buyer decides to purchase a property where the cooperating agent is being offered 2 ½%.  What happens to the other ½%?  There are several answers to that.  The buyer can ask the seller to pay the difference or the buyer can pay the difference at closing.  If the buyer has to pay the difference at closing, perhaps he would offer ½% less in the purchase price to cover the difference. 

Another scenario is that the buyer wants to purchase a house where NO compensation is offered to a buyer's agent (e.g. a for sale by owner property).  Again, he can ask the seller to pay the buyer agency commission or the buyer can offer less for the property to compensate for the commission that is being paid to the buyer agent.  Either way, it is coming from the buyer's cash at closing!

Bottom line is that the buyer pays no more for representation than without it...and may actually pay more going without representation because there is no advocate for the buyer in the transaction.  Remember, a buyer ‘s agent is working only for the buyer to get the best price possible regardless of the commission offered, implied or sought.