By Peter C. Fyler - Exclusive Buyer's Agent
The other day I was having a slightly heated yet healthy discussion with a prospective client; she was arguing against making a contractual commitment to an Exclusive Buyer Agent. It was her belief that she would stand a much better chance negotiating a lower purchase price for a property if she dealt directly with the listing agent. Obviously, my argument was to the contrary as I tried to explain to her about fiduciary responsibility, seller agency, buyer agency, dual agency, designated agency, transaction agency and the nature of the beast in the real estate jungle.
I explained to her that a listing agent works exclusively for the seller. Therefore, it is the listing agent’s explicit duty and responsibility to get the highest and best possible price and terms for their seller, and that is exactly what they will strive to do. “Isn’t that what you would want and expect from your agent if you were selling your house?” I asked. A seller’s agent cannot and will not advise a buyer on creating an offer that works against their seller’s best interests.
I challenged her by asking, “If you walked into a real estate office and presented yourself as a ready, willing and able buyer, expressed an interest in a listing that was controlled, marketed and advertised by that office, do you really believe the agents in that office would advise you on how to negotiate to your best advantage?” Furthermore, real estate is a business and it is a costly business to operate; therefore, the more money an agent can make for the seller, the more they also make for the office, and for themselves.
I went on to describe a recent real-life experience I had in hopes of further illustrating the need for exclusive buyer representation. I told her I was communicating with a broker/co-owner of a small office in another state. I was trying to find an exclusive buyer agent to represent my son in a home purchase. I did a search through the professional exclusive buyer agency organizations I belong to. Unfortunately, exclusive buyer agency is still a relatively new concept, and not practiced in many smaller communities. I told the broker I was looking for an exclusive buyer agent. She perked up and said, “That’s me!” I responded quizzically, “You represent sellers by taking listings so how can you represent buyers exclusively? What happens when someone is interested in one of your properties? Don’t you have to become a disclosed dual agent?” She exclaimed, “Oh no, we don’t do that, we don’t believe in representing both parties in the same transaction.” “So” I asked, “then you become a transaction broker or facilitator and represent neither the buyer nor the seller?” “Yes,” she proudly proclaimed, “That’s right, and we have a b-i-g safe where we lock everything up.” Not being at all familiar with the market in that area, needless to say, her assurances did nothing to further my comfort level. I was looking for someone to advocate for my son, someone with his best interests at heart who would guide him through the process of buying a home. I hung up the phone wondering to myself how many people have the combination to that b-i-g safe.
Getting back to the outcome of my conversation with the prospective client, when I was finished explaining all the nuances of agency law to her, she looked at me like a stunned deer does at night when a car’s headlights shine into its eyes. She said, “Wow, that sure is complicated, but I see what you mean. I would be much more comfortable knowing that my relationship with an agent was going to stay the same until after I bought my new home.” I presented her with my contract, explained it in detail and together we crafted it to fully satisfy her needs. She happily signed it and together we will find the right home for her.
In all of my marketing materials I stress the fact that finally buyers have the opportunity to be represented and to have their interests protected. In order for that representation to be 100% Exclusive 100% of the time, that buyer agent cannot represent the seller in any way. As an Exclusive Buyer Agent, I am committed to working very hard for my buyer clients and I know one day consumers will “get it”. They will truly understand the concept and seek out exclusive buyer agents. I was reading an article by Ilyce Glink, an award-winning, nationally-syndicated columnist, television reporter, radio talk show host and best-selling book author. She said, “A good buyer's agent earns much more than the 2%-to-3% commission. That's because buyers don't have the deep knowledge of neighborhoods, comparable homes and current prices of an experienced agent.” She went on to say,”Your agent is more than just someone who drives you around. Your agent is supposed to be your eyes and your ears, helping you sift through what information is valuable or not when constructing an offer." Now don’t worry, that commission Ms. Glink is referring to is usually offered by the seller and we accept it, so it should not cost you any extra to have exclusive representation.
If you want to buy real estate on Martha’s Vineyard and you want to do the responsible thing, start out by engaging an Exclusive Buyer Agent. Contact SplitRock Real Estate for professional and knowledgeable service. You’ll be glad you did when you’re sitting at the closing table.
Sunday, March 12, 2006
Monday, February 20, 2006
Modular Home Invasion
By Peter C. Fyler - Exclusive Buyer's Agent
I read an article in the Real Estate Section of the New York Times back in January 1999 that peaked my interest in Modular Homes. It reported on the new wave of modular homes filtering in to some of the most affluent upscale communities in the Northeast. The article described an 8900sf 23-box modular home construction in Greenwich, Connecticut of all places. Another large modular home was being put together in Armonk, New York. Up to this point my understanding of modular homes was limited to what was called a “double-wide”, those ugly little ranch houses that look like trailer conversions or two trailers tied together up on blocks. I was soon to learn this was no longer true. I went to visit one of the companies named in the article, Westchester Modular Homes in Patterson, New York. I inspected their model homes and spoke with a friendly factory representative. Westchester Modular Homes has their factory in Wingdale, New York, so I went over there and took a tour. The factory is like a huge football stadium and everything is done indoors in a controlled environment. It was amazing. Some of the other manufacturers interviewed for that New York Times article were Excel Homes in Liverpool, Pennsylvania, Homeworks Modular Homes in Ronkonkoma, New York, New Era Building Systems in Strattanville, Pennsylvania and New England Homes in Greenland, New Hampshire. I learned that when considering a modular home, it is the dozens of available upgrades that will drive up the price. The final finish work after the boxes are installed on your site is what defines the visual quality of the final product and we have many excellent finish carpenters on Martha’s Vineyard who are real craftsmen.
Ever since my experience at Westchester Homes in 1999, I have been a great believer in modular home construction. My appreciation is partly due to seeing the level of quality, or lack of quality, produced during the 80’s when anyone who could hold a hammer came to Martha’s Vineyard to cash in on the boom. Unless you are fortunate enough to engage one of the top builders, many of whom are committed to projects 6 to 24 months in advance, you may be at the mercy of poorly managed construction crews that create inferior products with numerous inconsistencies. It has been my observation that quite often workers spend more time running back and forth for nails and coffee than time on the job, or they disappear for no apparent reason not to return for many days. Excavators, framers, masons, electricians and plumbers work in weather that even the seagulls would seek shelter from, but in many cases it is not their fault. Stick-built construction takes a lot more time and most clients want everything yesterday. If you are going to have your home stick-built, you have got to be patient.
Today we see more and more modular homes being constructed on Martha’s Vineyard as the harbor and roads are choked by these monsters being maneuvered to their final resting place.
I read an article in the Real Estate Section of the New York Times back in January 1999 that peaked my interest in Modular Homes. It reported on the new wave of modular homes filtering in to some of the most affluent upscale communities in the Northeast. The article described an 8900sf 23-box modular home construction in Greenwich, Connecticut of all places. Another large modular home was being put together in Armonk, New York. Up to this point my understanding of modular homes was limited to what was called a “double-wide”, those ugly little ranch houses that look like trailer conversions or two trailers tied together up on blocks. I was soon to learn this was no longer true. I went to visit one of the companies named in the article, Westchester Modular Homes in Patterson, New York. I inspected their model homes and spoke with a friendly factory representative. Westchester Modular Homes has their factory in Wingdale, New York, so I went over there and took a tour. The factory is like a huge football stadium and everything is done indoors in a controlled environment. It was amazing. Some of the other manufacturers interviewed for that New York Times article were Excel Homes in Liverpool, Pennsylvania, Homeworks Modular Homes in Ronkonkoma, New York, New Era Building Systems in Strattanville, Pennsylvania and New England Homes in Greenland, New Hampshire. I learned that when considering a modular home, it is the dozens of available upgrades that will drive up the price. The final finish work after the boxes are installed on your site is what defines the visual quality of the final product and we have many excellent finish carpenters on Martha’s Vineyard who are real craftsmen.
Ever since my experience at Westchester Homes in 1999, I have been a great believer in modular home construction. My appreciation is partly due to seeing the level of quality, or lack of quality, produced during the 80’s when anyone who could hold a hammer came to Martha’s Vineyard to cash in on the boom. Unless you are fortunate enough to engage one of the top builders, many of whom are committed to projects 6 to 24 months in advance, you may be at the mercy of poorly managed construction crews that create inferior products with numerous inconsistencies. It has been my observation that quite often workers spend more time running back and forth for nails and coffee than time on the job, or they disappear for no apparent reason not to return for many days. Excavators, framers, masons, electricians and plumbers work in weather that even the seagulls would seek shelter from, but in many cases it is not their fault. Stick-built construction takes a lot more time and most clients want everything yesterday. If you are going to have your home stick-built, you have got to be patient.
Today we see more and more modular homes being constructed on Martha’s Vineyard as the harbor and roads are choked by these monsters being maneuvered to their final resting place.
I do not agree with some of the statements made in the following article published in the February 19, 2006 Real Estate Section of the Boston Globe, because I have been told by manufacturers that prices for stick-built and modular are about the same if you compare them apples-for-apples. I do not agree that the construction price on the Island starts at around $200 per square foot. We have not seen that number in a few years; it is more like $350 per square foot today and ranges up to $550 per square foot at the high end. However, the article is interesting, so I offer it for your edification.
Click here to read article -> Modular Home Invasion on Martha's Vineyard
Saturday, February 18, 2006
Is owning a Condo on Martha’s Vineyard the right lifestyle for me?
I have never been a fan of condos on Martha’s Vineyard. People think condo living is easier than maintaining a home. That may be true in America, but I believe maintaining a home on Martha’s Vineyard is not as difficult as you might think. Nevertheless, for those who really want a condo, here are some suggestions that could prevent painful mistakes when purchasing a condo.
If by chance you have a choice of units, which rarely happens here, compare unit locations. Consider not only the compass location as it relates to the seasons, but also noise producing factors like proximity to the community pool, tennis courts or playground, club house, or main roads and bike paths. Where available, second floor units are usually quieter, but not as convenient for senior citizens.
The price of owning a condo does not end with the mortgage. I cannot stress this enough: There can be numerous fees. Some of those fees are basic, while others are hidden and undisclosed or pending but not due until after the closing. You need to attach a dollar value to all those amenities and conveniences and evaluate exactly what you are receiving for the fees you are paying. Is it all worth the price? In most cases, fees that are due prior to closing are the responsibility of the seller but disclosed fees due after the closing are the responsibility of the buyer, so make sure you have a clear picture of all finances that could effect you. Is there a HOA emergency fund account and how much is in it? Are there any major maintenance projects being considered for additional assessments? These are all questions you should be asking.
Get copies of all documents current to the date of closing. You want to review the minutes from the Home Owners’ Association (HOA) meetings and the Condominium Documents and Declarations. These documents as well as additional information like the public offering statement which outlines the Conditions, Covenants and Restrictions are available from the Registry of Deeds, the condominium management company or the law firm representing the property owner. When reviewing the documents, pay close attention to voting rules as well as current and proposed changes in the budget. Be sure you know how the responsibility for common areas is handled. You want to know how many parking spaces are attached to your condo ownership and where they are. You want to know the rules and location of additional parking when you have visitors. You want to know what your storage area looks like and where it is located. Be sure you are clear on any restrictions that could limit your use of spaces outside your unit, as well as limitations and restrictions regarding rentals, both in terms of income and time period. There are also sure to be restrictions regarding ownership of pets. One of the best ways to know what life is going to be like in your new condo is to talk to people who already own condos so don’t be shy, knock on doors and approach people.
Martha’s Vineyard is first and foremost a vacation area and one of the main businesses here is taking care of the homes of seasonal residents. Most properties require minimal maintenance and caretakers charge very reasonable rates. The choice is yours, but for my money I want to own the dirt.
If by chance you have a choice of units, which rarely happens here, compare unit locations. Consider not only the compass location as it relates to the seasons, but also noise producing factors like proximity to the community pool, tennis courts or playground, club house, or main roads and bike paths. Where available, second floor units are usually quieter, but not as convenient for senior citizens.
The price of owning a condo does not end with the mortgage. I cannot stress this enough: There can be numerous fees. Some of those fees are basic, while others are hidden and undisclosed or pending but not due until after the closing. You need to attach a dollar value to all those amenities and conveniences and evaluate exactly what you are receiving for the fees you are paying. Is it all worth the price? In most cases, fees that are due prior to closing are the responsibility of the seller but disclosed fees due after the closing are the responsibility of the buyer, so make sure you have a clear picture of all finances that could effect you. Is there a HOA emergency fund account and how much is in it? Are there any major maintenance projects being considered for additional assessments? These are all questions you should be asking.
Get copies of all documents current to the date of closing. You want to review the minutes from the Home Owners’ Association (HOA) meetings and the Condominium Documents and Declarations. These documents as well as additional information like the public offering statement which outlines the Conditions, Covenants and Restrictions are available from the Registry of Deeds, the condominium management company or the law firm representing the property owner. When reviewing the documents, pay close attention to voting rules as well as current and proposed changes in the budget. Be sure you know how the responsibility for common areas is handled. You want to know how many parking spaces are attached to your condo ownership and where they are. You want to know the rules and location of additional parking when you have visitors. You want to know what your storage area looks like and where it is located. Be sure you are clear on any restrictions that could limit your use of spaces outside your unit, as well as limitations and restrictions regarding rentals, both in terms of income and time period. There are also sure to be restrictions regarding ownership of pets. One of the best ways to know what life is going to be like in your new condo is to talk to people who already own condos so don’t be shy, knock on doors and approach people.
Martha’s Vineyard is first and foremost a vacation area and one of the main businesses here is taking care of the homes of seasonal residents. Most properties require minimal maintenance and caretakers charge very reasonable rates. The choice is yours, but for my money I want to own the dirt.
Friday, February 03, 2006
When real estate agents get together, what do they talk about --- Real Estate!
By Peter C. Fyler - Exclusive Buyer's Agent
I was chatting with some of my colleagues the other day regarding their perception of today’s market. There is an old saying in real estate; your first offer is usually your best offer. That advice should be given to sellers when they ponder the question, "If I hold out, will I receive a better offer?".
I think this is an opportune time for buyers because sellers are not sure how solid this market is. One of the seller’s agents I was speaking with said he believes sellers are becoming surprisingly willing to engage and negotiate offers far below their asking price. They are anxious, impatient and driving the seller agents crazy with their #1 question, “Why am I not getting any offers on my property?” This all confirms my belief that this is a good time to get into the market, although I can tell you the market is very solid on Martha’s Vineyard despite the fact it has slowed down.
I believe for the next few years we will experience single digit appreciation opposed to the double digit gains we have realized for the last few years. These numbers are nothing like what we saw in the mid 80’s but speculators are still over extended. In the late 80’s, speculators got arrogant and kept on investing in more and more properties and/or building more and more houses. When the bubble burst they were left holding a big bag. Once again I think they are “feeling” stuck and they are panicking. However, this time the stakes are much higher as property values have at least doubled to perhaps tripled in some areas and the houses are equally large.
Panic is good; it translates to my belief that if you want to get into this market and make a long-term investment, now is the time to do it. However, I want to be perfectly clear; you have to approach the market with finesse if you want to succeed. This means “low ball” is not the operative game plan, but bold realistic offers are what could make you a winner. In my opinion the smart strategy is to approach the process with the mindset, 1) you cannot be emotionally attached because you may be buying a stepping stone which means it might not be the perfect scenario or your permanent vacation home, and 2) you have to be willing to walk away and move on to the next property if the seller does not accept your offer. As my mother and some old guy used to say, “Faint heart never won fair maid”. Another clichéd phrase is “nothing ventured nothing gained”. You can always revisit your offer another day, shall we say, after the porridge has cooled down.
I will close by relating my own experience when I wanted to buy a home in Florida. My wife and I looked and looked, and every time we went to Florida the prices were higher. Finally, I said we had to do something or we would never get into that market. We bought a property that has gone up practically 100% in two years. I realize our gain is only on paper right now but the market is still strong in the area and when we are ready to move to the property we really want, we will have this property as our foothold and margin builder. I don’t know if that makes sense to you but I think we did the right thing.
I was chatting with some of my colleagues the other day regarding their perception of today’s market. There is an old saying in real estate; your first offer is usually your best offer. That advice should be given to sellers when they ponder the question, "If I hold out, will I receive a better offer?".
I think this is an opportune time for buyers because sellers are not sure how solid this market is. One of the seller’s agents I was speaking with said he believes sellers are becoming surprisingly willing to engage and negotiate offers far below their asking price. They are anxious, impatient and driving the seller agents crazy with their #1 question, “Why am I not getting any offers on my property?” This all confirms my belief that this is a good time to get into the market, although I can tell you the market is very solid on Martha’s Vineyard despite the fact it has slowed down.
I believe for the next few years we will experience single digit appreciation opposed to the double digit gains we have realized for the last few years. These numbers are nothing like what we saw in the mid 80’s but speculators are still over extended. In the late 80’s, speculators got arrogant and kept on investing in more and more properties and/or building more and more houses. When the bubble burst they were left holding a big bag. Once again I think they are “feeling” stuck and they are panicking. However, this time the stakes are much higher as property values have at least doubled to perhaps tripled in some areas and the houses are equally large.
Panic is good; it translates to my belief that if you want to get into this market and make a long-term investment, now is the time to do it. However, I want to be perfectly clear; you have to approach the market with finesse if you want to succeed. This means “low ball” is not the operative game plan, but bold realistic offers are what could make you a winner. In my opinion the smart strategy is to approach the process with the mindset, 1) you cannot be emotionally attached because you may be buying a stepping stone which means it might not be the perfect scenario or your permanent vacation home, and 2) you have to be willing to walk away and move on to the next property if the seller does not accept your offer. As my mother and some old guy used to say, “Faint heart never won fair maid”. Another clichéd phrase is “nothing ventured nothing gained”. You can always revisit your offer another day, shall we say, after the porridge has cooled down.
I will close by relating my own experience when I wanted to buy a home in Florida. My wife and I looked and looked, and every time we went to Florida the prices were higher. Finally, I said we had to do something or we would never get into that market. We bought a property that has gone up practically 100% in two years. I realize our gain is only on paper right now but the market is still strong in the area and when we are ready to move to the property we really want, we will have this property as our foothold and margin builder. I don’t know if that makes sense to you but I think we did the right thing.
Wednesday, February 01, 2006
Come to the Vineyard and enjoy an Uplifting Experience!
By Peter C. Fyler - Exclusive Buyer's Agent
It's a new year up-lifting real estate theme: take a
look at how easy it is to lift up a house on Martha’s
Vineyard. You may find the perfect house in the perfect
location with the only negative being the foundation
--- a crawl space or a severely compromised block or
stone foundation. It is considered routine and common
place here to lift up a house and put an entirely new
poured concrete full foundation underneath the structure.
The costs can range from $30K up to $50K or more depending
upon the size of the house. So, do not be scared away
from your dream location just because a perfectly good
structure or Vineyard classic home has an inadequate
and outdated foundation.
It's a new year up-lifting real estate theme: take a
look at how easy it is to lift up a house on Martha’s
Vineyard. You may find the perfect house in the perfect
location with the only negative being the foundation
--- a crawl space or a severely compromised block or
stone foundation. It is considered routine and common
place here to lift up a house and put an entirely new
poured concrete full foundation underneath the structure.
The costs can range from $30K up to $50K or more depending
upon the size of the house. So, do not be scared away
from your dream location just because a perfectly good
structure or Vineyard classic home has an inadequate
and outdated foundation.
Baby Boomers and estate taxes
For we baby boomers who are concerned about our estates, the matter of the Federal Government repealing the estate tax has led to some prognostication; however, many believe that Congress will just freeze the UNIFIED CREDIT EQUIVELENT at some set amount. The amount of exemption has been steadily increasing over the years: In 2002 it was $1mm; In 2004 it was $1.5mm and beginning this year it is $2mm. In 2009 it is projected to be $3.5mm. What this means is the first $2,000,000 of your estate at death is not subject to Federal estate taxes. Anything over $2,000,000 is taxable.
Also, since 1981 the ANNUAL GIFT TAX EXCLUSION remained at $10,000. In 2002 it was increased to $11,000 and for 2006 the annual gift tax exclusion has increased from $12,000. This is a good way of gifting portions of your property to your children. You can do this in conjunction with establishing a Trust. You must remember to have a professional appraisal done every two years.
Also, since 1981 the ANNUAL GIFT TAX EXCLUSION remained at $10,000. In 2002 it was increased to $11,000 and for 2006 the annual gift tax exclusion has increased from $12,000. This is a good way of gifting portions of your property to your children. You can do this in conjunction with establishing a Trust. You must remember to have a professional appraisal done every two years.
January 13th sale sets new record
One of the record breaking sales I told you would occur in 2006 has closed. The Waggaman property sale in Edgartown for $22,500,000 has broken the previous record set in 2001 when the Sharp property on Starbuck’s Neck in Edgartown sold for $21.5m.
Rental Bookings look strong for Summer 2006!
Some of my colleagues who specialize in vacation rentals are telling me bookings have been above average and very strong for this summer season. What that tells me is that there is still a lot of interest in this Island and many of those people who are here will be looking and possibly buying real estate. I think with the playing field becoming more level and some of the arrogance vaporizing from sellers, this will be a better year for sellers than I expected, but also a good years for savvy buyers --- that means you!
SplitRock RE welcomes Benjamin Onega as Sales Associate
I am extremely proud to announce that Benjamin Onega has joined SplitRock Real Estate. I have been looking for someone that would understand what is most important when it comes to representing Buyers --- SERVICE ABOVE SELF. Ben is a professional appraiser; he is knowledgeable in carpentry and construction and does a lot of volunteer work. I believe he will be a great asset to clients working with SplitRock Real Estate.
Misguided perception and advice from Seller Broker
As I am sure you know that producing this blog is not an easy task. It requires a lot of market awareness and research, but that is why you look to SplitRock Real Estate. I am realizing with the beginning of this new year and the paradigm shift created by actual and perceived changes in the market, as well as extended time on market coupled with the limitations of our MLS system, it is becoming more difficult for me to keep track of accurate information regarding properties for sale.
In particular, I am concerned about what I consider to be a misguided perception on the part of Seller Brokers. They advise sellers to remove their property from the market during what they consider to be the slowest period in the market, thereby erasing the time-on-market paper trail in the system for that property listing. In other words, they think they will have fooled the buying public into thinking the property is brand new and hot to the market. I know I have educated you to realize 1) in recent history it is most likely the seller who prices the property and, 2) the broker and seller have agreed that after a certain amount of time on the market the seller will acquiesce and reduce the price. The MLS system only records two price changes and after the second price change, the first one drops off the system. Once a property has been removed from the market it loses its history because in most cases the property will not be recorded as having been “off the market” at one point.
What I am trying to say is that I will always do my best to recall and report accurately on the changes in the market but, in particular, I must change the way I report “Price Changes”. Going forward I will primarily report the date of the last price change instead of the total period of time the property has been on the market. I cannot guarantee the sequence of events as it pertains to numerous price changes. However, as long as my flimsy memory holds together and I can remember properties that have been on the market before, I will alert you to that fact. I strongly suggest that you track the history of, and keep notes on, any property you are interested in.
As always, please visit my web site SplitRockRE.com for the most up to date information and to sign up to receive my Inner Circle e-Newsletter.
- Peter Fyler
In particular, I am concerned about what I consider to be a misguided perception on the part of Seller Brokers. They advise sellers to remove their property from the market during what they consider to be the slowest period in the market, thereby erasing the time-on-market paper trail in the system for that property listing. In other words, they think they will have fooled the buying public into thinking the property is brand new and hot to the market. I know I have educated you to realize 1) in recent history it is most likely the seller who prices the property and, 2) the broker and seller have agreed that after a certain amount of time on the market the seller will acquiesce and reduce the price. The MLS system only records two price changes and after the second price change, the first one drops off the system. Once a property has been removed from the market it loses its history because in most cases the property will not be recorded as having been “off the market” at one point.
What I am trying to say is that I will always do my best to recall and report accurately on the changes in the market but, in particular, I must change the way I report “Price Changes”. Going forward I will primarily report the date of the last price change instead of the total period of time the property has been on the market. I cannot guarantee the sequence of events as it pertains to numerous price changes. However, as long as my flimsy memory holds together and I can remember properties that have been on the market before, I will alert you to that fact. I strongly suggest that you track the history of, and keep notes on, any property you are interested in.
As always, please visit my web site SplitRockRE.com for the most up to date information and to sign up to receive my Inner Circle e-Newsletter.
- Peter Fyler
Wednesday, December 21, 2005
Peter's Pick - December 21, 2005
Martha's Vineyard Real Estate Pick of the Week
| West Tisbury Unique Location ~ $850,000 |
 |
| This property is within walking distance to Alley’s General Store as well as the Tisbury Great Pond. If that sounds good for starters, I can tell you more. Inquire with Peter. |
Friday, December 16, 2005
Martha's Vineyard Real Estate Value of the Week - December 16, 2005
Peter's Pick of the Week: EDGARTOWN ~ $2,350,000
I am usually not impressed with the new spec houses that have been going up in Edgartown. However, this 3,600sf 4-bedroom, +4-bath house wowed me. Contact me via my web site SplitRockRE.com or by calling me 508-696-9009. I'd be happy to talk with you about this Martha's Vineyard investment value.
- Peter Fyler
I am usually not impressed with the new spec houses that have been going up in Edgartown. However, this 3,600sf 4-bedroom, +4-bath house wowed me. Contact me via my web site SplitRockRE.com or by calling me 508-696-9009. I'd be happy to talk with you about this Martha's Vineyard investment value.
- Peter Fyler
Tuesday, December 13, 2005
Negative Amortization Loans
(By Peter C. Fyler, Martha's Vineyard Buyer Broker on the web at SplitRockRE.com)
As 2005 draws to a close, Comptroller of the Currency John C. Dugan has singled out negative amortization loans (NAL’s) as a primary concern of the Treasury Department; they may not be as readily available in 2006.
Negative Amortization loans are also known as payment-option loans, and therein lies the problem. In order to afford the loan the mortgagor will need to make reduced payments. The amount of the loan subsequently increases due to a build-up in principle and interest caused by the low monthly payments. Theoretically, what protects the mortgagor is the assumption that a property purchased today will appreciate significantly within the life of the loan, say 5 years, and the loan will not out pace the value of the property. At the end of the term the payment plan adjusts and if the mortgagor cannot refinance the mortgage, the “payment shock” could be devastating as the loan payment amount could potentially double.
Why was this product created? One reason is to allow people to purchase properties in high-cost areas, like Martha’s Vineyard or California where they would need to assume huge mortgages. Although there is very little one can invest in that will realize a better return than real estate because of the low interest rates and high property appreciation percentages, negative amortization loans can still be a trap even for the more sophisticated borrower. Who are the best candidates for negative amortization loans? Borrowers with impeccable credit backgrounds and solid incomes who are able to make a substantial downpayment are subject to the least risk.
On Martha’s Vineyard we have experienced a very healthy run during the last 5 years and some say we have hit the wall. Prices have consistently increased, although not at the hysterical rate they did during the 1980’s. I still believe our market is alive and well and real estate appreciation will remain steady despite a slight adjustment in the current market. The Vineyard is one of those special and unique destinations that remain widely popular both nationally and internationally. Given the right property in the right location at the right price, the chances are pretty good that your investment will remain safe despite bumps in the economic road.
For more information on buying or investing in Martha's Vineyard Real Estate, please visit our informative web site at SplitRockRE.com.
As 2005 draws to a close, Comptroller of the Currency John C. Dugan has singled out negative amortization loans (NAL’s) as a primary concern of the Treasury Department; they may not be as readily available in 2006.
Negative Amortization loans are also known as payment-option loans, and therein lies the problem. In order to afford the loan the mortgagor will need to make reduced payments. The amount of the loan subsequently increases due to a build-up in principle and interest caused by the low monthly payments. Theoretically, what protects the mortgagor is the assumption that a property purchased today will appreciate significantly within the life of the loan, say 5 years, and the loan will not out pace the value of the property. At the end of the term the payment plan adjusts and if the mortgagor cannot refinance the mortgage, the “payment shock” could be devastating as the loan payment amount could potentially double.
Why was this product created? One reason is to allow people to purchase properties in high-cost areas, like Martha’s Vineyard or California where they would need to assume huge mortgages. Although there is very little one can invest in that will realize a better return than real estate because of the low interest rates and high property appreciation percentages, negative amortization loans can still be a trap even for the more sophisticated borrower. Who are the best candidates for negative amortization loans? Borrowers with impeccable credit backgrounds and solid incomes who are able to make a substantial downpayment are subject to the least risk.
On Martha’s Vineyard we have experienced a very healthy run during the last 5 years and some say we have hit the wall. Prices have consistently increased, although not at the hysterical rate they did during the 1980’s. I still believe our market is alive and well and real estate appreciation will remain steady despite a slight adjustment in the current market. The Vineyard is one of those special and unique destinations that remain widely popular both nationally and internationally. Given the right property in the right location at the right price, the chances are pretty good that your investment will remain safe despite bumps in the economic road.
For more information on buying or investing in Martha's Vineyard Real Estate, please visit our informative web site at SplitRockRE.com.
Monday, December 12, 2005
Martha's Vineyard experiences a "Wintercane"
Yesterday mother nature bestowed upon this little Island the worst weather that I have seen in years. Early in the day, the forecast was panning out as predicted with steady mild to torrential rains soaking the Island. Then a little after mid-day, the sun blazed through the clouds and everything was calm and bright for about 30 minutes. But the mood quickly changed as huge flakes of snow began to fall and the wind really started to amp up. Snow squalls increased and finally it wasn’t snowing vertically, it was all horizontal. I estimated the wind velocity to be about 60-70 mph with gusts well above that. Later I learned that gusts were clocked at over 90 mph and average winds were 73 mph, which is still not considered hurricane strength. The power started to flicker and I finally shut my computers down as businesses all over were throwing in the towel sending their employees out to wind their way home through what was becoming an increasingly treacherous obstacle course. At about 3PM the flicker turned into a permanent outage and we were in the dark until about 10PM. It has been estimated that about 150,000 NStar customers were without electric service yesterday and 25,000 are still without service today. Huge trees fell all over the Vineyard taking with them vital power and communications lines --- it was a mess. The weather people are calling this phenomenon created by the convergence of two fronts a Wintercane. Today we are back to a typically beautiful day and there is no snow on the ground, just tree limbs.
There are constant weather links on our web site, SplitRockRE.com
There are constant weather links on our web site, SplitRockRE.com
The special Holiday Spirit of Martha's Vineyard
Today is December 7th and 64 years ago 2,300 Americans died in the blink of an eye. Have you ever been to Hawaii? To the Pearl Harbor Memorial? Don’t miss it, it will make you cry.
My wife and I were walking along the streets of downtown Edgartown the other night after appreciating an electrifying experience at a standing room only concert gifted by the Island Community Chorus at the Old Whaling Church. We were admiring the serenely tasteful saturation of twinkling lights and evergreen wreathes presenting from the stately and classic bleached white houses. What came to my mind was that I have not lived in or been to a place like this where an entire community --- an entire Island community gets together to celebrate the holidays the way people on Martha’s Vineyard do. I imagined myself hovering in space that night high above the Island watching the exodus of lights from the epicenter on Main Street as people wound their way back to their nests in all six towns of this tiny Island. If you love the Vineyard you have got to come here during the off-season but I warn you, pack your inner resources and leave your aggressions at home.
Best Holiday wishes from SplitRock Real Estate!
My wife and I were walking along the streets of downtown Edgartown the other night after appreciating an electrifying experience at a standing room only concert gifted by the Island Community Chorus at the Old Whaling Church. We were admiring the serenely tasteful saturation of twinkling lights and evergreen wreathes presenting from the stately and classic bleached white houses. What came to my mind was that I have not lived in or been to a place like this where an entire community --- an entire Island community gets together to celebrate the holidays the way people on Martha’s Vineyard do. I imagined myself hovering in space that night high above the Island watching the exodus of lights from the epicenter on Main Street as people wound their way back to their nests in all six towns of this tiny Island. If you love the Vineyard you have got to come here during the off-season but I warn you, pack your inner resources and leave your aggressions at home.
Best Holiday wishes from SplitRock Real Estate!
Friday, October 07, 2005
Bubble? Froth? Fermenting opportunities for the Buyer!
by Peter Fyler, October 7, 2005
I've been saying all along that I do not believe we are in a “bubble”, and it is Fed Chairman Alan Greenspan who is now coining a new word to describe activity in the housing market --- “frothy”. I was reading an interesting article the other day about the national real estate market. I wanted to share some of it with you here.
A survey by RBC Capital Markets, an international corporate
and investment bank, determined that nearly 60% of U.S. homeowners are confident that the value of their homes will increase
at least 5% annually during the next seven years. They have little concern for a so-called housing bubble. However, as we are seeing in the New England area, there is a slowing down of real estate gains as well as falling housing prices, ultimately affecting people’s spending habits.
NAR (National Association of Realtors©) stats show the index
in the West rose 7.6 percent to 136.7 in August and was 8.7 percent higher than August 2004. The index in the Midwest increased 2.8 percent to a level of 119.4, and was 0.5 above
a year ago. In the South, the index rose 2.2 percent to 142.1, and was 7.6 percent higher than August 2004. The Northeast index declined 0.5 percent to 108.5 in August, and was 2.2 percent lower than a year ago.
Greenspan recently said, over the past decade the market value of owner-occupied homes consistently rose at an average annual rate of about 9%. Home mortgage debt associated to these homes rose at an even higher rate. I think the real concern; according to Jim Kennedy of the Federal Reserve Board is that discretionary borrowing of home equity accounts for about four-fifths of the rise in home mortgage debt. The gap has narrowed in terms of loan to value ratio and that is of critical concern should mortgage rates go up. The unprecedented low level of mortgage interest rates has been the driving force behind this discretionary borrowing caused by a confidence in the dramatic rise in home prices in many areas of the country. The low interest rates have also fueled the increase in new housing starts as well as the increased turnover rate in existing homes.
I though it was interesting to note that they are saying a substantial part of the increased turnover rate is due to purchases in the second home market. The majority of these purchases being for vacation or investment purposes. Home Mortgage Disclosure Act (HMDA) statistics show that mortgage originations for second-home purchases increased from 7 percent of total purchase originations in 2000 to twice that at the end of 2004. It is suggested that second home purchases are more speculative in nature and not limited by concerns of owner relocation. More of these homes are paid for wholly in cash. It is believed that the number of second home and investment sales is at unprecedented levels and that is what is contributing to the rise in home prices.
What does all this mean? Who knows, but to me it means --- you as a buyer may have an opportunity at this moment resulting from the perceived slowdown in speculative purchases and seller’s fear that we are at the top of the market and they are not going to realize their anticipated gains.
This article is the express opinion of Peter C. Fyler and may not be reprinted or used without his permission.
by Peter Fyler, October 7, 2005
 "That's right, I said it: Frothy!" |
A survey by RBC Capital Markets, an international corporate
and investment bank, determined that nearly 60% of U.S. homeowners are confident that the value of their homes will increase
at least 5% annually during the next seven years. They have little concern for a so-called housing bubble. However, as we are seeing in the New England area, there is a slowing down of real estate gains as well as falling housing prices, ultimately affecting people’s spending habits.
NAR (National Association of Realtors©) stats show the index
in the West rose 7.6 percent to 136.7 in August and was 8.7 percent higher than August 2004. The index in the Midwest increased 2.8 percent to a level of 119.4, and was 0.5 above
a year ago. In the South, the index rose 2.2 percent to 142.1, and was 7.6 percent higher than August 2004. The Northeast index declined 0.5 percent to 108.5 in August, and was 2.2 percent lower than a year ago.
Greenspan recently said, over the past decade the market value of owner-occupied homes consistently rose at an average annual rate of about 9%. Home mortgage debt associated to these homes rose at an even higher rate. I think the real concern; according to Jim Kennedy of the Federal Reserve Board is that discretionary borrowing of home equity accounts for about four-fifths of the rise in home mortgage debt. The gap has narrowed in terms of loan to value ratio and that is of critical concern should mortgage rates go up. The unprecedented low level of mortgage interest rates has been the driving force behind this discretionary borrowing caused by a confidence in the dramatic rise in home prices in many areas of the country. The low interest rates have also fueled the increase in new housing starts as well as the increased turnover rate in existing homes.
I though it was interesting to note that they are saying a substantial part of the increased turnover rate is due to purchases in the second home market. The majority of these purchases being for vacation or investment purposes. Home Mortgage Disclosure Act (HMDA) statistics show that mortgage originations for second-home purchases increased from 7 percent of total purchase originations in 2000 to twice that at the end of 2004. It is suggested that second home purchases are more speculative in nature and not limited by concerns of owner relocation. More of these homes are paid for wholly in cash. It is believed that the number of second home and investment sales is at unprecedented levels and that is what is contributing to the rise in home prices.
What does all this mean? Who knows, but to me it means --- you as a buyer may have an opportunity at this moment resulting from the perceived slowdown in speculative purchases and seller’s fear that we are at the top of the market and they are not going to realize their anticipated gains.
This article is the express opinion of Peter C. Fyler and may not be reprinted or used without his permission.
Tuesday, June 07, 2005
Welcome to SplitRock RE's MV Real Estate Insights
Thank you for visiting our weblog about Martha's Vineyard Real Estate.
A major topic these days on various people's minds here is "the bubble".
What's "the bubble"? It's the trend of rising value and price of real estate around the country. That's particularly true of Martha's Vineyard, where prices and inventory continue to rise. We saw this trend in the 1980s, and when that bubble burst, it was a canyon that the island fell deeply into.
Then again about 1999, real estate on the island seemed to double overnight, and it's continued to climb.
Many owners have placed their properties on the market looking for the high payout on their investment, and many have realized it. The question is: will this trend continue? Or will "the bubble" again burst and real estate values tumble?
That's one of the many topics we are set to discuss here. Feel free to chime in!
A major topic these days on various people's minds here is "the bubble".
What's "the bubble"? It's the trend of rising value and price of real estate around the country. That's particularly true of Martha's Vineyard, where prices and inventory continue to rise. We saw this trend in the 1980s, and when that bubble burst, it was a canyon that the island fell deeply into.
Then again about 1999, real estate on the island seemed to double overnight, and it's continued to climb.
Many owners have placed their properties on the market looking for the high payout on their investment, and many have realized it. The question is: will this trend continue? Or will "the bubble" again burst and real estate values tumble?
That's one of the many topics we are set to discuss here. Feel free to chime in!
Subscribe to:
Posts (Atom)