In order to be eligible for a mortgage loan, the ratios of your housing debt and total debts to income must meet the bank’s requirements. These standards have tightened somewhat recently and vary from bank to bank. Historically the typical housing debt-to-income ratio for conventional loans is 25-28%. The typical total debt-to-income ratio for conventional loans is 33-36%. This means that in order to qualify for a mortgage the “PITI” (principle, income, taxes and insurance) must be less than 28% of your monthly gross income. The total monthly expenses (including housing expense) must not be more than 36% of your monthly gross income. Please note that the limit now on conventional loans is $729,500. This limit is expected to be reduced to $625,000. Also, you will need to budget some funds … Read entire article »

Many people think that purchasing a new home is similar to buying any other big ticket items – it isn’t! There are many important steps in home buying: 1. Shopping for a house, deciding on value/ location/budget; 2. Once you’ve chosen the house you like, you need to negotiate a fair price with the seller; 3. At this point, you need to have the house inspected by a structural engineer. This will cost you several hundred dollars. 4. Occasionally, an adjustment is made in the purchase price based on defects found in the inspection. 5. A written “information sheet” is exchanged between the buyer & the seller. This sheet has names, addresses, telephone and fax numbers of all parties, as well as purchase price, deposit due at contract (usually 10%), mortgage contingency & approximate date of … Read entire article »

Fear, uncertainty and doubt (F.U.D.) is an occasional affliction that buyers may contend with in any product area. One of my oldest friends is a prime example of someone with this affliction. When he is shopping for any big ticket item he becomes an expert on it. He reads the latest magazines, checks with the internet, shops around thoroughly, and asks a million questions. He buys the item. Almost immediately, he returns it! Why? The answer is F.U.D. -– which is a variation of buyer’s remorse. He is such a perfectionist that almost no product is good enough for him. I wonder how he EVER bought his old TV, car, etc! The real estate market has its F.U.D. buyers, as well. I pride myself on my ability to answer all their … Read entire article »

When a buyer is getting close to signing a purchase contract, the “word gets out”. This is normal, as passersby notice the buyer (a stranger), the real estate broker, and the home inspector visiting the home. When word gets out about the pending deal there is a chance that somebody will tell the sellers something like, “you could have got more for your home”. This can happen because it does no good for competing real estate brokers to witness a sale in which they will earn no commission. If the competing brokers can “muddy the waters” and prevent the sale from being consummated then they would still have a chance to sell it themselves! Alternatively, competing brokers have been known to reach out to the buyers in an effort to “bad mouth” … Read entire article »

If two houses are almost IDENTICAL in all respects and they are on the same block, then what are they worth? The only difference between these hypothetical houses is the lot size. In my experience, as a GENERALIZATION, the rule of thumb is as follows: the market value between 40×100, 50×100, and 60×100 houses would differ by approximately $100K each. More specifically, if the 40×100 was $600K, then the 50×100 would be worth $700K, and the 60×100 would be $800K. Smaller lots can be a bit more complicated to evaluate. The 30×100 lots usually have different parking parameters – car ports, and/or shared driveways. They tend to be worth about $500K on the scale mentioned above (again, for identical houses). However, price “compression” sometimes occurs on these more affordable homes. This … Read entire article »

CASH BUYERS are scarce and should be CHERISHED. Comparable Sales (“Comps”) don’t affect their deal because there isn’t any bank appraisal (no mortgage needed). The cash buyer avoids the roadblocks which afflict many transactions when the house doesn’t “comp out”. In such cases the buyer can’t obtain a large enough mortgage to complete the transaction. This may necessitate a renegotiation of the contract to a lower price. Alternately, the buyer has to find additional funding. Sometimes the deal blows up with no penalty to either the buyer or the seller –- except for the loss of time, effort, and perhaps some legal costs. Occasionally, some buyers are “almost” cash buyers. They have well above the usual 20% down payment. In such instances, when the house doesn’t comp out, it may … Read entire article »

Remember Jack Webb? He was the star of a popular TV show of many years ago entitled “Dragnet”. His character, Sargeant Joe Friday, was famous for coining the catchphrase “Just the facts, Ma’am”. Here are some interesting facts from a recent real estate listing: the house was in need of A LOT OF WORK. It had been on the market for OVER a year. A very strong buyer emerged who did not care about the house’s condition. The buyer met the seller’s asking price. Guess what? The seller stalled. The seller started calling other brokers (at least two that I am aware of), trying to find another buyer who would pay more! Suddenly, after a year on the market, the seller thought that he/she was going to find ANOTHER buyer – and … Read entire article »

Occasionally, I come across sellers who’ve determined an unrealistically high listing price for their property. Their math could be based upon the cost of the home or old inaccurate comparable sales. Home values in today’s market are determined by “comps” within a recent time frame (3 – 6 months). Even if the seller gets lucky and finds an uninformed buyer, there is an excellent chance that the deal will not close. Why? Any buyer who needs a mortgage would find the bank’s appraisal too low to justify the size of the mortgage needed to complete the deal. Some real estate brokers who are inexperienced in our local market, or very hungry for new listings, are too ready to take these pie-in-the-sky listings. Other brokers may take such listings in an example … Read entire article »

Enough already! For many months one of my competitors has been abusing the word “exclusive” in her advertising. This broker repeatedly advertises many of her listings with the word EXCLUSIVE prominently displayed in describing the listing. However, these listings are exclusive only in the sense that they are nice properties (while they actually might not be so nice either!) According to the New York Department of State, in an exclusive right to sell listing contract the property is listed with only one broker as the agent. On the other hand, in an open listing, the seller allows a property to be shown by one or more brokers. It is misleading and dishonest for a broker to deliberately advertise an open listing as if it were an exclusive listing. Unfortunately, it is hard … Read entire article »

Rockaway is fortunate to have many active homeowners associations. These associations help keep pressure on the various governmental agencies to ensure that necessary services are delivered. Every few years, our community is faced with “threatening challenges”. Old problems include the Neponsit Health Care Facility, development of Gateway National Park, and parking regulations. More recent issues were changes to our residential zoning laws, and the placement of cell phone towers. Any one of these issues could revive at anytime. The neighborhood associations require small yearly dues to cover cost of postage, stationery, etc. The number of dues paying members in an association is directly proportional to its’ political influence. Therefore, it is important for every family to join the appropriate association. As a member you can attend meetings and make your voice heard. If … Read entire article »