Two Sides of the Mortgage Interest Deduction

The deficit commission is leaving no stone unturned it its search for solutions to our country's crushing debt problems. Recently scrutiny has been given to the nearly 100-year-old tax Mortgage Interest Deduction (MID). It is the one of the largest deductions in the U.S. tax code and is projected to be valued at $131 billion in 2012, according to White House estimates. Response to this idea has been vigorous on both sides of the issue. Here are two perspectives to consider, then you make up your own mind:

1. FOR eliminating MID
2. AGAINST eliminating MID

Interest Rates on the Way Up

From Realtor(R) Magazine: 'The average rate for a 30-year fixed loan increased to 4.61 percent in the week ended Thursday, Dec. 9, from 4.46 percent the previous week. The average 15-year rate rose to 3.96 percent from 3.81 percent.' Buyers who have been waiting for 'the bottom' may have actually missed it. Realtor Magazine theorizes that this could be a stimulus to get foot-dragging buyers to pull the trigger.

For more, follow this link: REALTOR® Magazine-Daily News-Rising Rates Could Get Buyers Moving

2011 Opportunities in Cape Cod Real Estate

As we wind down a hopeful but subdued 2010, the question everyone is asking is: Is the recession over? The short answer for Cape and Islands real estate is yes. For the most part. There are some lingering symptoms and uneven progress, but there are definitely opportunities for both buyers and sellers in the coming months.

For Buyers:

• Better Selection: As happens every year, a big batch of new inventory will come on the market in January. What's projected to be different this year is an improvement in the quality of those listings.
• Entry Level Bargains with Great Financing Options: If you’re not afraid to swing a hammer, keep an eye out for HomePath properties; they represent almost guaranteed sweat equity. This is a great solution for working class Cape families and investors.
• Discounted Luxury Properties: Some high-end homeowners burned through their backup money banking on a more robust recovery and are now stuck with a property they can no longer keep. Expect to see an increase in luxury properties in the short sale/foreclosure market.

For Sellers:

• Hit the Ground Running: Gone are the days of the sleepy Cape Cod winter. It may come as a surprise, but according to Google Analytics,  January is the biggest month for online searches for Cape Cod real estate, second only to July. Six weeks to shop, six weeks to close, six weeks to fix up and furnish and you're at Memorial Day. So make sure your property is ready for this market.
• Second Homeowners: Even though discretionary spending is expected to be down, second homeowners are still shopping. The Cape properties that will fare best are near popular summer attractions, have wood floors, modern kitchens, garages and ample storage. They're even more attractive with a first floor master and laundry. 
• The Price Is Right: Today's buyers are extremely savvy and will not overpay. But even in this market, if a property presents a compelling value proposition there are bidding wars, houses selling over asking price, and some very short days on market. A good agent will tell you what number you need to be at; a great one will tell you why. Make sure you understand the market.
• Cut Your Losses: We all took a beating in the recession. If you bought or refinanced during the boom (2004-2008) and have to/want to sell now, it could be years before you see that kind of value for your property again, and longer for actual appreciation. Come to terms with the loss and move on. Talk to your accountant; there may be some small consolation for your loss in the form of tax benefits.

To Sell Is Human

Sales is a natural, organic and beneficial part of human society, and the driver behind all evolution. Humans are creative, resourceful beings. When we have a need, we seek a way to satisfy it. Necessity is the mother of invention. But we don't have the time (or frankly, the wits) to creatively solve all of our own problems/meet all of our needs. Fortunately all we humans have pretty much the same needs (food, shelter, love, etc.) so at any given moment there are a number of folks working on the same problem. At least one of us is eventually going to find a really terrific solution. If I can get access to that solution, it enables me to live a better life and go on tackling my next problem. Sales is the means by which solutions are introduced and conveyed to the folks with the problems. This is a valuable service, and depending on the perceived urgency of the problem and the degree to which it can be satisfactorily resolved, folks will pay a premium for that solution.

Shadow Inventory

Don't feel bad. I've been hearing the term for months but didn't have the guts to have it explained to me until yesterday. At our sales meeting , Ed Barrett (the unofficial King of Customer Service from Salem Five) came and gave our agents a little mortgage primer/2011 forecast. One of the opportunities he highlighted for the coming year is the shadow inventory.
Described loosely, shadow inventory refers to the properties that are not actually on the market yet, but probably will be soon. Specific to our market here on the Cape, Ed's prediction is that much of our shadow inventory is distressed property (i.e. short sales, foreclosures and other troubled mortgages). This was a little surprising to me, as Cape Cod has already started to demonstrate evidence of economic recovery. However,  as Ed pointed out, foreclosure numbers lag behind other economic indicators like unemployment, etc. According to other experts, Cape Cod's upcoming distressed sales are more specifically going to include more luxury properties than in the past.
Having familiarity with the concept of shadow inventory (or any other economic phenomenon), sellers can tune into what kind of competition they can expect, buyers can position themselves in such a way as to take advantage of unique opportunities, and Realtors can appropriately target their marketing and education efforts. Knowledge is power, and ignorance has an easy cure.

New Toys!

GOSH I really love technology. I just listened to one of the many incredible courses that I downloaded from the National Association of Realtors Conference in New Orleans. This one was called Real Estate Road Warrior, by Shannon W. King. AWESOME.
Technology is transforming the way I do business and the way I think. I notice that I've always carried the assumption that to 'take things to the next level' required a serious investment of capital, but truly, some of the most powerful tools out there are FREE or very inexpensive: Xobni, Homefinder.com, GoogleDocs, etc.

Gratitude Rocks

Recently as a way to close up 2010 and prepare for 2011 I took the advice from an article I read in Realtor Magazine and conducted a systematic polishing and organizing effort for my business. I cleaned out my database, analyzed the year's accomplishments and made plans for the next. One of the steps included in the guide was to acknowledge the people who helped make your year a good one.
I got started thinking about all of the people who helped me overcome challenges, achieve goals, and make all aspects of my life, both business and personal, generally terrific. I sent thank yous to clients, family members, my boss, the cleaning lady, my pastor, my kids' teachers, the babysitter, my workout buddy...the list goes on and on.  It cost me about $.45 per thank you, and was worth every penny. Judging by the responses I got you'd have thought I'd been sending out $100 bills. People really appreciated the acknowledgment, and I felt great to have surprised them with such a pleasant thought. I don't know or care what impact this has on my business, but I know that I will do it again.

Get Ready for a Jump in Inventory (Quantity and Quality!)

Recently Bank of America and GMAC resumed foreclosure proceedings on 100's of thousands of properties it had suspended earlier in the year. There are many implications of this move, but what the overall market will notice most is a fresh influx of new listings at bargain prices. Since the recession we've been seeing plenty of discounted properties, but mostly in the mid- to low-range. Something we haven't seen quite as much of yet is discounted luxury properties. The higher-end folks have done a decent job of keeping up appearances for the past 18 months, but for some this is the end of the line.

This is good news for buyers, not so good news for sellers. If you're already on the market, make sure you're priced competitively. This may mean putting the house at a price that is a lot lower than you had hoped to sell for. If that's too much for you to swallow, do some math. Our area (Cape Cod) is heading into a period of rational growth (as opposed to the recent irrational decline, which was preceded by irrational growth), so if you use a rate of 3-5%, figure out how long it will take until the FMV of your home matches your desired sale price. Is it worth the wait? If so, then pull your house off the market immediately and take good care of it for the next few years until you can market it again. If you're not willing or able to wait that long, get a reputable Realtor, find out what the real, live market value of your house is in today's market, and price it right there or slightly lower, and cut your losses.

If you are considering putting your house on the market in this atmosphere, you must be realistic. Look at the very recent (as in 1-3 months) comparable sales in your area (short sales count!), look at your competition, and make sure you are a couple of percentage points less expensive than your lowest-priced competition. If this process leads you to a price that breaks your heart (or your bank), get back into your head and do the math I talked about above. And consider the consequences of over-pricing your house--languishing on the market and suffering 'death by a thousand price cuts'.

We are definitely on the road to recovery, but there are still some tough times ahead for sellers. Those who will fare the best will price their houses with the market and prepare their homes for the stiff competition that is just getting stiffer.

REALTOR® Magazine-Daily News-B of A and GMAC to Resume Foreclosures

Recovery Remodeling - Fine Homebuilding Article

Recovery Remodeling - Fine Homebuilding Article

Many people are starting to feel a loosening of the financial grip they have been under for the past couple of years, and are contemplating some long put off projects around the house. This article does a great job helping you decide which things to do and when, according to whether you plan to stay in the house or sell it in the near future.

Take Your Best Shot Now

Everyone knows that selling a house is all about conveying a compelling image to your customers, most importantly through visual means. Good pictures, and plenty of them, bring in more buyers. It's amazing how many people underestimate this fact. We've all seen listings with  dark, out of focus, and crooked pictures, or worse--NO pictures.
But there is one variable even the best photographer can't remedy--frosty, desolate landscapes in the dead of winter. Nobody buys a house on Cape Cod thinking about how much they'll enjoy a long, dark New England winter. The image buyers are seeking is full of sunshine, sand, flowers and life.
If you are even considering putting your house on the market in the next year, get out now (May and June) and start taking pictures of your exterior. Chances are your lawn is still spring green, the leaves on the trees are healthy and robust, mulch is still fresh, and flowers and shrubs are blooming. If you have hydrangeas (a classic Cape Cod summer flower) shoot the house in July when they are in bloom. Shoot the pool now, while it's open and blue.
Next to July, January is the busiest shopping month for Cape Cod real estate. It also happens to be the grayest. But with bright, summery images in your listing, you can list your house in the dead of winter and set yourself apart from all of the other properties by capturing the attention of the summer-minded buyers.

Yee Haw!

In an effort to spark things up a little in the dead of winter, our broker Kim organized a couple of first quarter sales contests. The first was a Listings Contest and the second was an overall Activity Contest (buyer contracts, listings, continuing ed, open houses, closings, etc.). When she first announced them I was the first to balk. To even qualify for the listings contest you had to get at least 5 listings. No way! And for the activity contest, the big points were in closings and new listing and buyer contracts. I had no really good prospects and was feeling a little discouraged. But Kim had faith in us all, so I just got busy.
WELL...to my own great surprise and delight, not only did I qualify for the contests, I WON both of them! In 3 months I signed up 8 new listings, 3 new buyers and even closed one of the new listings (another one is currently under agreement). What's really cool is EVERYONE in the office jacked up their production during this time. The energy here is electric. If we were able to create something so amazing out of what at the time appeared to be nothing...I can't WAIT to see what we do next!

The Secret of Success

I've started 2010 with a bang; business is better than ever before, and I'm ecstatic. The crazy thing now is people are asking me what the secret is. It wasn't that long ago when I was tracking down top producers, clamoring for the same answers.
I remember calling Sandy Magner up out of the blue. She didn't know me from Adam, but I knew she was one of the most successful agents in the area. Sandy is a great conversationalist. She can sit down for hours in a row and make dozens of cold calls. She also holds open houses like they're going out of style.
Next I asked Donna Gemborys, the queen of Eastham real estate. She sends out thousands of pieces of direct mail annually and has a paid assistant who manages the tedious aspects of the job.
Did they reveal the 'secret' to me? Well, I'm not sure. I'll call up the occasional homeowner if I know I can sell their house, and I do my open houses, but honestly I often sub them out to other agents in my office. And I send out postcards with every new listing and closing, and I'm even starting to 'farm' a couple of neighborhoods. If you were to ask me what I do that brings me the most business I would probably talk about my online presence and my person-to-person connections. But would that be my advice to you?
It's true; if you are phone prospecting for an hour a day, doing 2 open houses every weekend, cranking out a monthly mailing, hiring an assistant, hob-nobbing and blogging your brains out, it will be hard to fail. But I don't know anyone who does all that all the time. Not Sandy, not Donna, and certainly not me.
So then what's the damn secret??
It's actually not that mysterious. It's a lot less sexy than you might hope.
The 'secret' to success as I see it is: find the things that you are good at, that you like to do. And then do them--really DO them, with passion, persistence and vision. When something works, do it even harder. And for pete's sake, when something stops working, STOP DOING IT. Don't judge yourself by someone else's yardstick; chances are you're better than them anyway. Keep raising your own bar.
And blog. Definitely blog.

Spring is Sprung

Last week I saw my first crocuses of Spring 2010-- a big swath of them on 6A in Brewster. A few days later I read in the paper that the right whales are back in Cape Cod. Then last night--my favorite spring sign of all--I heard the peepers in the pond across the street! Woo hoo! I've got forsythia branches forcing in the dining room. Next up: start watching for seagulls over the herring run.

Realtor Gone for the Weekend

Writing from an Amtrak car this morning on my way to NYC for my daughter's gymnastics meet. Funny, the last time I rode a long-distance train I was with the same daughter, except we were in China and had only known each other for a few days.
In this job of real estate, I'm often on the clock when my clients and most normal people are off. This means my job often happens on weekends, holidays and evenings. One of the hardest parts of my job is drawing boundaries. No biz calls after 6, delegate some percent of open houses, etc. But even if clients aren't calling, there's work to be done 24/7 and it's hard sometimes to stop and just be something other than a realtor.
Like, say, a mother.
Yeah, I gotta go now, we're almost at Penn Station. Have a great weekend--see you on Monday!


- Posted using BlogPress from my iPhone

First Quarter Bodes Well for 2010

Whenever I introduce myself as a Realtor, one of the first questions I get is, "How's business?" For a while now, that question has been puncutated with a little wince (from both of us!). No doubt, it's been a challenging 18 months or so.
However, from the word go in 2010, my response to that question has changed to, "Fabulous!" Here at 12 Bridge Street the recovery of the housing market is in full swing. Here are some of my stats in this first quarter so far:

• Buyers whom I haven't heard from in 2 years are contacting me and getting back into the market.
• Six new listings with 3 more in the works
• One of those listings already SOLD (closed yesterday) from an offer that came in 6 days after it was listed
• One more listing under agreement, from an offer that came in 2 days after it was listed

A lot of this activity is driven by the Federal Homebuyer Tax Credits. Existing homeowners stand to gain $6,500 at the closing table for buying a new primary residence. First time homebuyers can expect up to $8,000. This is not chump change!

 

May and June will be busy with closings, then we go into July, the busiest shopping month for Cape Cod real estate. Here's hoping that the activity we're seeing in the first part of the year will create enough momentum to get us back up to cruising altitude by the summer!

Complacency Kills

Holding a commission-based position in an industry whose failure charcterized the worst recession in decades was (what gratitude I feel using the past tense) painful and demoralizing. It darn near did me in. But never once did I stop working my tail off, learning, keeping my chin up. Isn't that what they tell you to do? 'When the going gets tough the tough get going.' 'Invest in your future.' 'You will reap what you sow.'
Well I'm here to tell you the same thing. I lived through one year with zero closings. Then just last year I had two small ones in January, one in June and NOTHING til middle of December. Never mind my two front teeth--all I wanted for Christmas was to keep my house!
But now...holy cow. The first two properties I listed this year each sold in 6 days or faster. In the past 3 weeks I've had 8 listing appointments. At press time I've put 2 of those live, and it appears that 5 others will follow suit. The last one, partly on my advice, has elected to hold off until next year.
The abundance is humbling and electrifying. But more importantly I realize that this is not a time to rest. How easy it would be to kick back and soak it all up. But I have to remember that tomorrow's success is the dividend of today's investment. Success is unsentimental. It doesn't care who you used to be. I used to run a sub-25 minute 5K. I don't expect the field to slow down so I can place like I did in the past. If I want to keep winning, I have to keep running fast.

- Posted using BlogPress from my iPhone

Sales 3.0

Sales 3.0

A Good Problem to Have

If you wanted to buy a $500,000 house and you had the choice of paying with cash or a mortgage, what would you do? Why?
A lot of people go the cash route. After all, you worked hard for that $500,000, why give extra money to the bank if you don't have to? Plus, there's a lot of peace of mind and pride knowing that this significant asset is paid for. No monthly mortgage payment to be tied down to, all that equity to leverage.
But think about this: once you hand over that $500,000 it's gone. Yes, you have a house free and clear, but you don't have as many options as you did when you had the cash. And the old adage holds true: you can't take it with you.
These days, with interest rates at 50-year lows, taking a mortgage actually makes a lot of sense. With interest rates at or even below 5% and deductible interest, it's really only costing you somewhere around 3.75% . You might even be able to reinvest the unspent cash for a net growth.
First of all, when you take a mortgage and hang on to your money you now essentially have both a house AND money to enjoy. Ask yourself: Why did you work so hard for that money in the first place? To USE it. SHARE it. LIVE with it, ENJOY it. Also, when and if you decide to sell or refinance the house you always have the ability to shop around and negotiatiate for the best deals.
Now, I am not advocating reckless squandering of your savings. And if you lack the discipline and/or guidance to manage that wealth (think college-age heir), it might make a lot of sense for you to put every penny right into the house. However, if you have the wisdom to prudently handle your funds, you might like to keep at least some of that money available.
Consider the things you could do: travel with your spouse, friends or family; help a grandchild with college; reinvest; contribute to a favorite cause. You could even pay off that mortgage!
Ultimately, the decision how to manage your money is very personal. But before you surrender all of your savings into one place, think of what you want from your money and all of the different ways you can go about achieving that.

Do You Know Your Home’s Assessed Value?

Why does it matter?
Your home’s assessed value is the number by which your town calculates your property taxes. The assessor’s office uses a variety of objective and subjective measures to come up with that value. And it is susceptible to errors, lags and omissions. Realtors and bank appraisers know that assessed value is only one piece of information that should be used when determining the actual market value of a home.

You Mean My Assessed Value Isn't Accurate?
Your town’s assessor’s office has to keep track of every single piece of property in your town; improvements that were made, damage that was incurred, changes in use or zoning, sales that transpire, market fluctuations, etc. It’s not a perfect science. A few of the disparities I have seen:

• A 4-bedroom, 3-bath property is currently listed as having only 3 bedrooms, 1 bathroom and about 500 fewer square feet of living space than what was actually there. This homeowner has effectively enjoyed a 10-year tax break.
• An unbuildable lot was assessed as if it were buildable. For almost 3 decades this homeowner had been paying close to 10 times the amount of tax that they should have been.
• With my own home it took the assessor’s office a year to catch up with an addition and new garage that we added. That was just fine with us.
• Certain land values in part of one town recently sprang up by 40% (while most values uniformly have been declining in the past 2 years). When I checked with the town they told me that the increase was initiated by the state but couldn't explain why.

For the town, these discrepancies all probably come out to a wash. But, as you can see, for the individual homeowner the consequences can be significant.

How do I find my home’s Assessed Value?
Assessed values are public record, and most towns put their database online. Google the words ‘online assessor’s database’ and your town name. Depending on the town you can search by name, address, map and parcel number, etc.
What comes up is called the Field Card. Inspect it carefully. Check the footprint sketch and measurements that are shown, the number of rooms and bedrooms, square footage, etc. There should also be record of any improvements you made for which a permit was issued.

What if I find an error?
If you find that the town has overvalued your property and is thus overcharging you for taxes, you can apply for an abatement. You can also ask for a reassessment if the town has undervalued your property. A possible reassessment scenario would be a homeowner who is trying to justify a high asking price on their home. However, this reassessment could result in higher than expect taxes for a prospective buyer (or the homeowner if they don't sell). Most folks just let sleeping dogs lie.
Monitoring your property’s Assessed Value is a lot like monitoring your credit score. It can have a big impact on your finances. The system works pretty well most of the time, but at the end of the day it’s run by human beings just being human. Nobody is more invested in its accuracy than you so it is your responsibility to keep the records straight.

Why Cape Cod Real Estate?

Good question for both of us. What are you up to? Are you finally going to do it, get that second place by the beach? Or maybe it's time to find a beautiful, quiet place to settle down once and for all. For some of you it's a little less romantic. Perhaps you're trying to sell it before they take it away. Goodness knows Cape Codders are not immune to struggle. You might also be a lifer--the Cape has always been home to you, whether it was just summers or year round. Against all common sense you insist on living, working and raising a family here on the peninsula. Good for you. I'm doing the same thing.

My egocentric reasons for going into Cape Cod real estate came primarily from the fact that it gave me the ability to have some control over my income. Work hard and well and you will be rewarded. Slack off and go hungry. I have stayed in the field partly for that reason and partly because I've found that some of my natural talents and even quirks seem to be well-suited to a career like this, and that is very satisfying. I'm bold, intuitive, smart, and bore easily. I thrive on connecting with people and 'getting' them. And like all good salespeople, I identify real needs and fill them as quickly and thoroughly as I can.

If you want to know more about my experience and education I suppose I will find a place on this blog to publish it. However, I think you'll get to know me better just by reading my posts.