Saturday, December 25, 2010

A Short Commentary on Short Sales

Should an agent disclose a Short Sale situation? In a recent court ruling it was determined that "When a real estate agent is aware that the amount of existing monetary liens and encumbrances exceeds the sales price of a residential property so as to require either the cooperation of the lender in a short sale or the ability of the seller to put a substantial amount of cash into the escrow in order to obtain the release of the monetary liens and encumbrances affecting title, the agent has a duty to disclose this state of affairs to the buyer, so that the buyer can inquire further and evaluate whether to risk entering into a transaction with a substantial risk of failure." Currently, about 70% of all Short Sale contracts result in NO SALE.

The key word of course is ‘aware’, and most agents hear no evil, see no evil and speak no evil. Make sure you do your homework, and make sure you are represented by an Exclusive Buyer Agent who will look out for your best interests.

Wednesday, December 22, 2010

Find The Perfect Home Loan and Get Your Financing On Track

Here are 5 really good articles for Home Buyers to help you get better prepared for the purchase of your dream vacation home on Martha's Vineyard.

Visit for more articles like this.

Monday, December 13, 2010

"The World's Gonna Find a Way" but we want it Now -- Today!

Do you remember Ray Steven’s 1970’s hit song, “Everything is Beautiful”?
I wonder how that song would play today.

“There is none so blind as he who will not see
We must not close our minds
We must let our thoughts be free
For every hour that passes by
You know the world gets a little bit older
It's time to realize that beauty lies
In the eyes of the beholder.”

For so many people, everything is not beautiful these days and life sucks. But we keep believing and trying to see the beauty in our lives. We must remain positive and hopeful.

The sing-song lyrics go on beseeching us –
“And we gonna get it all together now
Everything gonna work out fine
Just take a little time to look on the good side my friend
And straighten it out in your mind.”

We thought we were getting it all together but now all you hear is double dip recession, disrespect for our elected President and rancor among the political parties.

Working in real estate, I desperately want everything to be beautiful, but the truth is it is going to take longer than any of us thought before everything is beautiful again.

In a survey conducted by the Cape & Plymouth Business group, they concluded that the majority of respondents who were private business owners felt:
The economy will improve slightly in 2011
Small business owners will not hire additional staff
Businesses will not raise capital and if they do it will be through bank loans and private investors
Businesses will not expand or invest in property or equipment
Housing prices will remain flat
The strongest contributors to the Cape and Island economy will be Tourism/Retail and Health Care
Revenue increases of 1% - 10% are projected through local and regional sources

I guess that means there is hope, but not much confidence. Perhaps, because Cape Cod and the Islands are resort destinations, merchants are hoping people will still need mental health R&R vacations in 2011. I could use one right now, but I live here in paradise so I will simply go for a walk and appreciate what I have around me all the time.

What is not beautiful is the looming Shadow Inventory of foreclosures, and in 2011 it is predicted that nationally there will be a record high volume of foreclosures. According to Inman News, Core Logic reported that the "shadow" inventory of homes likely to be repossessed or already in REO inventory but not yet on the market reached 2.1 million units in August, up from 1.9 million units a year ago. Because home sales have also slowed, that represents 8 months supply, up from 5 months one year ago. Adding the 2.1 million shadow inventory to the 4.2 million homes on the market, causes the total supply to reach 23 months of inventory, almost double NAR's estimate in September. In the markets yet to be affected by foreclosures, prices will go down more but in markets where the majority of foreclosures have already occurred, they may have already bottomed out.

Experts predict that when tallied, 2010 will show fewer home sales than 2009 and the dollar volume will be lower than 2009. Keep in mind that 2009 was a lack luster year for sales. The beginning of 2010 was stimulated by the home buyer tax credits so we might consider that as being a false start. The fact of the matter is that there are better opportunities available right now even without the home buyer tax credit, but people are not jumping to take advantage of those once in a lifetime opportunities. Interest rates will most likely go up in 2011, as they already are right now. I doubt that will affect sales because despite the current record low rates it did not have much impact on sales this year. Without a job, job security or a steady income low interest rates become moot.

2011 will prove to be just more of the same and the housing market will not recover until people have jobs and the confidence to act upon their pent-up desire to BUY a home.

However, since Martha’s Vineyard is primarily a second home market I believe everything could be beautiful for those buyers who keep their finger on the pulse, have financial security and recognize that this is probably the best opportunity in their lifetime to own a piece of The Rock. They recognize to wait would be penny wise and dollar foolish. With 712 properties currently on the market and many properties ‘off market’ but still for sale there is a lot to choose from for a very limited pool of qualified buyers. There is no reason why a savvy buyer cannot find a good deal here. Currently, there are 70 properties either under contract or being negotiated, so some people are still singing ‘Everything is Beautiful’.

Over the years, many Buyers who have contacted me, read through the copious amount of FOR BUYERS ONLY information on my website and subscribed to my Buyer's Basic e-Newsletter have remarked that they perceive my function as one of a consultant and information provider, rather than as a 'realtor'. As an exclusive advocate for buyers I believe educating buyers is a vital part of my job. However, as a real estate professional, my business is consummating the purchase and sale of real estate. If you appreciate the consistent effort I make to bring you 'No Bull' educational information, please contact me when you are ready to buy. I want your business, so please come to me first. I can assure you that I will put your interests before my own and do my utmost to negotiate the best price and terms for you. I will work very hard to discover all the details and hidden secrets of the property you are purchasing so that you will not have any unpleasant surprises.

Keep the faith, “The world's gonna find a way.”

Monday, December 06, 2010

How to Overcome the Fear of Buying a Home In This Economy?

The first questions any buyer must ask themselves today are:
1) Can I afford to buy a home?
2) Can I afford to keep and maintain a home?
3) Can I sell the home quickly if I need to?

Can I afford to buy a home?
Before you get into a car with your buyer agent to drive around looking at homes, do yourself a favor and find out how much home you can afford to buy. That means going to a trusted lender and painting an accurate picture for them of all your finances – how much cash you have for a down payment, the extent of your debts, employment – everything! Do you know your credit score? Today there is more to consider when buying a home than simply PITI (Principal, Interest, Taxes and Insurance), but if you keep this in mind you are now free to begin the fun part, looking for your dream home at a price you know you can afford. Your buyer agent can give you a list of lenders to contact and make sure our excellent local banks are on your list. Prices and terms have never been better than right now.

Can I afford to keep and maintain a home?
You found your dream home and the seller has accepted your Offer to Purchase. Buying a home today means you had better plan on keeping it for at least 10 years. This is going to be a very slow and long recovery. This is not an economic environment conducive to quick money making turnovers. This is the time to buy ‘generational properties’.

This is all the more reason you must factor in repairs and maintenance. Big ticket items like roofs, siding, windows, fuel tanks, heating systems and water heaters all have life spans. If the roof is 25 years old you can probably plan on having to replace it within the first 5 years you own the home. If the oil tank is the old single-wall design it needs to go right away.

As part of any Offer to Purchase contract there must be a contingency for a Home Inspection. The inspection will seek to determine the condition of the home construction, its systems and appliances. Ongoing maintenance and replacement expenses need to be factored into any budget so it behooves you to use a good structural inspector and additional specialists if necessary. You want to find out as much as you can about the house before you buy it. If the structural inspection shows significant deficiencies see if you can negotiate concessions with the seller to offset the repairs, or if the onus becomes yours at least get repair estimates to determine if you will have the funds to make the repairs yourself. This way if you won’t have the additional funds, you are still able to reconsider your purchase so you don’t get yourself into a bind.

Can I sell the home quickly if I need to?
Location, Location, Location. The majority of buyers today begin their search for a home on the Internet, but what does the Internet tell you about location, very little. Advertising and marketing is all about selling the sizzle. Even though false advertizing is against the law and also violates the REALTOR® Code of Ethics, we see subtle prevarications all the time. So, don’t believe everything you read about a property on the Internet. Google is not enough. You need to get up and get out and get educated. The purchase you are about to make is too big to have a casual armchair attitude about it.

Martha’s Vineyard is a complex market and one that most buyers know very little about. That is why you want a real estate market expert who will advise you about the area you are considering for your purchase. You want someone who does the research and will give you accurate information. What is good about the area? What is bad about the area? Is there any forecast for change in that area? Knowing about an area will give you a good idea of how easy it would be to sell a home should you have an unexpected emergency?

As I said before, it is going to take years for the real estate market to recover, which is not to say you should not buy a house now, but do your homework and wait for the right house at a price you are comfortable with.

Thursday, December 02, 2010

ADVICE TO SELLERS – Not from me, a Martha’s Vineyard Broker, but from a nationally renowned ‘Expert’.

If you have ever watched the NBC Today Show and their ‘Today’s Real Estate’ segment, then you have listened to the self-professed real estate expert and mogul, Barbara Corcoran who has been in the biz since she was in her early 20’s. Her latest advice to Sellers is as follows – and I totally agree with her.

1) If you have listed your property for sale and it is not selling at the listing price, lowering the price in small increments does not get noticed and never gets attention. It is better to take a one-time big chunk off the price. That will get noticed.

2) If you list your property with a seller agent, stick with them unless they have done something absolutely awful and unethical. Changing agents only serves to confuse the market, and since agents sell 90% of the houses, you don’t want to confuse the agents either.

Here on Martha’s Vineyard, and throughout the national real estate market overall it has been common practice for seller agents to accept overpriced listings.

In some cases seller agents have given unrealistic inflated opinions of value in order to charm the sellers and get the listings. Or even more often, the seller agents let the uniformed and biased sellers price the property contrary to the studied opinion of value offered by the professional seller agents.

I have argued this point with some of my colleagues here on Martha’s Vineyard for years, but I do respectfully – and I do mean ‘respectfully’ understand their point of view. Why do they take an over priced listing instead of walking away from it? Their usual defensive response is, “If I don’t take the listing someone else will.”

Come on SELLERS, get real.

Do you want to sell NOW? Be honest, do you need to sell and cut your loses? If you price your property correctly it will sell, and if you don’t price it correctly just assume that you have not listed it. Matter of fact, the only purpose your property will serve is to help sell comparable properties that are priced correctly.

If you don’t have to sell, relax, sit back and wait. Don’t worry; the market will recover some day soon.

Friday, November 26, 2010

What is all this talk about Assessed Value and Appraised Value? What is the difference and what is Fair Market Value?

Today more and more, we are hearing many seller agents say their listed properties are priced "well below Assessed Value". What does that say about the listing price? Does that mean the listed price is a 'good deal' price? Is that the Fair Market Value? Absolutely not, and quite frankly the assessed (tax) value has little relevance when it comes to the actual market value of a property which can be below, at, or above the listing price.

The Assessed Value of a property is arrived at by a cursory unscientific look at properties in an area. Most of the time the Assessor does not actually visit the property, and if they do, 99% of the time they never set foot through the front door to inspect the interior (i.e. floor materials, appliances, fixtures, level of trim and finish, etc.). A home owner does not have to allow an Assessor inside to inspect their home. The Assessor gathers and tabulates as much information as possible about a property and then they use that for their valuation. Opinions on value are always based upon the subjective interpretation of the information available to the Assessor at the time of the assessment. Assessment information is usually 12-18 months behind the market which is one more reason the information cannot be used as a true barometer for current market value.

The Home Appraisal is much more thorough, detailed and timely. When preparing a Full Narrative Appraisal for a property the Appraiser will inspect the property inside and out and compare the subject property to as many comparable sales as possible. Since no two properties are the same, they will make specific adjustments for as many items as necessary. If too many adjustments have to be made then the comp is not a good one and it is removed from the equation. After the adjustments are made and values are established for each comparable, the numbers are averaged and a market value is established for the subject property. It sounds complicated and it is, but it is not scientific. Appraisal analysis is considered an art form and the opinions of the Appraiser are understood as being subjective, even though this is the most accurate method to establish market value we have today. Today Appraisers must be licensed and undergo continual and extensive training.

You will notice I did not say ‘Fair Market Value’. In appraisal analysis the correct term used today is ‘Market Value’. Okay, so what is Market Value? Market value is the price at which a buyer is ready and willing to buy and a seller is ready and willing to sell in an open market arm’s-length transaction between strangers. Both parties have reasonable knowledge of the property and are not under any compulsion to do business. This now rules out any form of distress sale as a way to establish market value.

Here on Martha’s Vineyard market value is heavily biased and distorted by emotion which creates ‘intrinsic value’. I have always said that if you as a buyer try to value a property according to the numbers, you will end up very frustrated because many sellers as well as buyers place an intrinsic value on properties based on their own preferences and circumstances. Quality of life creates an intrinsic value as does hearing the roar of the ocean or watching the sunsets from the comfort of your deck chair. I would have to say in general ‘Market Value’ on Martha’s Vineyard is intrinsic even though it is not the same for everyone. I believe making a purchase on Martha’s Vineyard is ultimately an emotional decision. My goal is to get you as close as possible to a fair deal price as possible and to make sure you know as many details about the property as possible. My responsibility is to protect you from as many unpleasant surprises as possible, but I cannot make the final decision as to whether the purchase you are making is a good deal. If you are making a fully informed decision that makes you feel good and is good for your family then you can say you are making a good deal.

Tuesday, November 23, 2010

New Requirements Regarding Failed Septic Systems

Within the last month legislation was passed mandating any lender financed property with a failed Septic System to have the repair installation completed prior to any closing of a purchase transaction. Prior to this legislation transactions could close as long as money was held in escrow (usually 1.5 times the estimated cost) and the system would be installed post closing. Lenders are now prohibited from closing a transaction with a failed system. This is going to lead to a lot of delayed closings. Title 5 inspections are usually not completed until just a week or two before closing. Cash deals are not subject to this requirement.

Saturday, January 30, 2010

The Elephant in the Room

These days I am sure we are all paying attention to the nation’s recovery report card, the stock market’s daily mood swings, the price of gas, the staggering unemployment numbers, and oh yes, the foreclosure market that has been like a wild fire in the Southern California hills; it just keeps growing and spreading. The GDP appears strong at a fourth quarter annual growth rate of 5.7%, but home sales in December were down 7.6%. Does that make sense? Oh sure it does, because December is always a slow month for sales and there was that hiccup in the home buyer tax credit program. I’m not forgetting about unemployment, but why talk about it even though it is the biggest elephant in the room. Well, I guess we have to talk about it because our local flagship newspaper needs a sensational story to fill column inches.

Much to the displeasure of the real estate community, the Gazette once again decided to paint a most negative depressing picture about the real estate market, and the overall state of our union all in the name of truth penned by its resident editorial curmudgeon. The front page headline reads, “Foreclosures and Joblessness Up”. Sure we have about 24 bank owned properties in Dukes County that we are working to absorb, and there will surely be more on the way during this year. However, the writer insists on going on and on about the column inches all the foreclosures are taking up in print, and now we can put a number on unemployment predicting 50% over the next couple months, compared to about half that in normal times. With no new home starts, everyone counting pennies, only buying essentials and eating at home instead of going out to dinner, is this really breaking news?

The good news in this editorial according to Chris Wells, president of MV Savings Bank is petitions to foreclose are not nearly what they are in the rest of Southern New England and the median sale prices in some towns actually increased from 2008 to 2009. West Tisbury shows a 2% increase and Edgartown a 14% increase in median sales prices. According to Mr. Wells, in the other three Island towns, Oak Bluffs was down 27%, Tisbury was down 19% and Chilmark saw the greatest reduction at 43% median sales price.

Martha’s Vineyard continues to bravely soldier on, its citizens doing all they can to make ends meet and keep a stiff upper lip. We have always been a hot and cold running Island with jobs for everyone during the tourist season and one of the highest, if not the highest unemployment rates in the Commonwealth for what amounts to 8 months during the off season. The Island greeting has become variations of “we’re hanging in there” and assurances that “we are all in this together”. Whew, I feel better already. What we all look for every day is some good news, news that will inspire us to keep on because we know summer is coming and with the sun we look forward to greeting all those visitors who love what Martha’s Vineyard has to offer, a simpler way of life.  Oh by the way, bring your checkbook and support the Island economy.

Monday, January 25, 2010

The Nationwide Mortgage Licensing System and Registry launches NMLS Consumer Access Website

The Office of Consumer Affairs and Business Regulation announced that the Nationwide Mortgage Licensing System and Registry (NMLS), a mortgage licensing system operated by state financial regulators including the Massachusetts Division of Banks, launched the “NMLS Consumer Access”. There hope is that it will help protect mortgage shoppers from unscrupulous loan originators.

NMLS Consumer Access is a fully searchable single-source consumer access website that allows the public to verify state-licensed mortgage lenders, brokers and individuals currently licensed through NMLS. Future updates to NMLS Consumer Access will provide a record of applicable disciplinary actions taken against a licensee by any jurisdiction in the country.

The NMLS Consumer Access website was finally launched in January 2010 and the NMLS Resource Center, claims the website will bring greater transparency to the mortgage industry and compliance with provisions of the SAFE Act.

The database of companies and individuals will be updated nightly and will tell consumers whether the person they're working with has had their license suspended or revoked in another state, and will list any aliases the individual has used since the age of 18. It will also seek to discover whether that person is engaged in other sidelines and what that person’s license status is in other jurisdictions.

You can download a .PDF pamphlet of Information about NMLS Consumer Access prepared by the NMLS Resource Center.

Sunday, January 24, 2010

Is Your Real Estate Agent a Spy?

Is your agent a spy? What kind of question is that; it's an important question spawned by the constant controversy and confusion about AGENCY. Who does an agent represent and how do they represent them? The answer to that question can mean thousands of dollars in or out of a buyer's pocket.

I try my best to illustrate the nuances and various types of Agency to consumers on my website, but no matter how I explain the differences, I find most people just don’t get it. However, I really don’t blame them because it is the real estate industry that prefers to keep the smoke screen smoldering to allow for maximum personal gain.

The organization I belong to, The National Association of Exclusive Buyer Agents (NAEBA), continues to lobby for a clearer definition or distinction and separation between those agents that proclaim loudly that they can represent buyers as exclusive buyer agents, yet under their breath slide in the disclaimer or, more appropriately, the caveat, “with the right to transition to dual agency”. That is where the true distinction lies and dual agency is the problem. Attorneys and those in the know think dual agency is a double standard and fertile ground for suspicion and potential favoritism ultimately resulting in litigation. Some states already prohibit the practice of dual agency.

I was reading an article in a trade news publication where a consumer was buying a home and wanted to know how the process would work if the home she was interested in was being offered by a real estate agent who would be working as what the buyer ironically called a “double” agent? In other words, working for both the buyer and the seller. What was really interesting was the choice of words since what she was talking about was a “dual” agent. Subconsciously, she viewed the agent as a double agent. The definition of double agent is “A person pretending to work as a spy for one government (company, etc.) while actually working as a spy for another government (company, etc.).

To pull this back into the real estate vernacular let’s look at this as what is called single-agent dual agency, that being a relationship where one agent represents (?) both the buyer and the seller in the same transaction. That agent can no longer offer the same fiduciary responsibilities to either party as if they were representing one exclusively. The dual agent cannot provide Undivided Loyalty. This is an important point because as a client fiduciary an agent representing a buyer or a seller exclusively is sworn to treat the client’s best interests above their own. Other obligations that cannot be met in a dual agency arrangement are Obedience, Reasonable Care and Diligence and Full Disclosure. The dual agent is required not to disclose any confidential information about both parties. But let me ask you this; in 99% of cases, who do you think the (seller) agent has had the longer term relationship with? You, the buyer or the seller they have the listing agreement with? As a buyer, did you tell your agent the maximum amount you are willing to pay for the property or any other tidbits you would not want to the seller to know about you? Do you think the seller told their agent what their bottom line is or why they are selling? If the agent divulges any of that privileged confidential information without authorization, it is an actionable offense. There is one important point to note and that is that you as a buyer have the right to say no to dual agency when signing an exclusive buyer agency agreement, but that means your buyer agent cannot show you properties listed by their broker agency. The same holds true for a seller.

Most people entering into the Martha’s Vineyard real estate market do not live here and are usually from another part of the country. They know nothing about this market and if they are wise they realize they will need help, not just with looking for the right property or formulating a negotiation strategy, but most importantly with all the due diligence that is essential between the Offer to Purchase and the day of Closing. They need to be exclusively represented 100% of the time.

NAEBA continues to advocate for a clearer explanation of the differences so the public can be better protected. I was speaking to a web advertising sales representative yesterday and asked him why they cannot change the category headings in the real estate agency listing section to read SELLER AGENCIES and BUYER AGENCIES, instead of SALES AGENCIES and BUYER AGENCIES. Wouldn’t that make a little more sense? I doubt we will ever see two distinct categories --- BUYER AGENCIES and EXCLUSIVELY BUYER AGENCIES, because the National Association of REALTORS® continues to allow for the oxymoron labeled as Exclusive Buyer Representation with the right to transition to Dual Agency, but Brokers who believe in my business model will continue to educate the public about the advantages of being represented “Exclusively”.

Saturday, January 02, 2010

Traditional Real Estate Agencies Rarely Sell Their Own Listings!

Did you know most listings are not sold by the agency representing the seller? The national average a number of years ago was around 13%. However, I was speaking to the principal broker of a large real estate agency not too long ago and she told me her company probably sells only about 5%-10% of their listings in-house. Isn’t that interesting?

I think this is actually a good thing for consumers and real estate professionals alike; it avoids a very precarious situation known as Dual Agency which means neither the buyer nor the seller are represented. The listing agency always represents the seller’s best interest and cannot assist a buyer unless unilateral consent to Dual Agency is given. Therefore, for those who think they can get a better deal by going directly to the listing agency, that is generally a false assumption. Undisclosed Dual Agency would be breaking the law. That is why buyers should find a buyer agent who knows what they are doing, has good relationships with seller agents and is a good negotiator.

Here on Martha's Vineyard, most seller agents realize their listings are overpriced, but they have to appease their seller clients who think they know better. The good-guy, bad-guy dynamic created by the separation between seller agent and exclusive buyer agent usually produces a much more advantageous outcome for all concerned. To be safe and have full access to all properties for sale, I suggest you always hire an EXCLUSIVE Buyer Agent. That way there can be no necessity for creating a Dual Agency relationship and the possible conflict of interest. To be blunt, you want SplitRock Real Estate on your side, and if you need representation in another part of Massachusetts or another part of the country, I will help you get the best exclusive buyer representation.