Tricks (and Traps) of the Trade – Buying a Home in NJ

Often, as a real estate professional, I make assumptions about what my clients do and do not know, prior to the onset of a transaction.  For any first time home buyer – or even a buyer who hasn’t done so before in NJ or in the past few years, can find the process to be a bit of a mystery.  There are a number of tips that I feel are incredibly useful – to help your transaction move along just a bit more smoothly…

Contract details can be very important, and while I am sure your agent is very good, there are a couple of things to watch out for, as a rule of thumb:

1)    Make sure that you have adequate time to obtain your mortgage commitment – 3 weeks is pushing it, and with any non-conventional loan, you may need 4-5 weeks at least – so make sure you have enough time to get your paperwork in and have the appraisal done by the bank.

2)    Additional provisions in a contract can be useful, especially to protect buyers from difficulty.  One way to ensure the ability to negotiate is adding an appraisal clause – so if the home does NOT appraise, there is a clearly outlined ability to cancel the contract if you choose not to continue with the transaction.

Inspections are a vital part of the home buying process:

1)    An average home inspection for a single family home in NJ should take about 2.5 to 3.5 hours, including the termite and radon.  Inspectors should take the time to speak to you about issues, as well as of offer tips for safety and maintenance.  Oh, and anyone that is charging more than $600 (including radon and termite) is taking you for a ride.  As a matter of fact, most inspections will cost less.  Don’t be dazzled by price – it isn’t necessarily an indication of quality.

2)    If you have a fireplace, you may want to consider bringing in a chimney inspector – you have to pay for it, but worth the money if there are expensive issues that can’t be easily seen.

3)    Tank sweeps are vital – an unexpected underground oil storage tank is a potential liability.  For any house with a live underground oil tank, make sure to test for particulates and that the owner has tank insurance.

Mortgages:

1)    The first thing I always tell me clients is “SHOP AROUND!”  The large banks are great, but individual mortgage brokers can have access to loan products that others don’t – and also have creative ideas on how to keep your costs down.  The one question to ask the broker is “DO YOU ORIGINATE YOUR OWN LOANS, OR DO YOU SELL THEM THE DAY YOU CLOSE THEM?”  This is important, because for any broker that sells immediately after closing, there can be a delay as they find a buyer for your loan. 

2)    Don’t lock your rate in to end on the proposed closing date for your home!  On the off chance that there are unforeseen delays, try to hold off on your rate lock to anticipate potential issues – much easier than trying to scramble for a rate extension, or having to pay points last minute.

3)    Make sure that you pay attention to your mortgage commitment expiration date – once again, no last minute scrambling.

Looking for the right attorney:

1)    Do they call you back?  They better call you back in a timely fashion.

2)    Flat fees – really no more than $1200-1400 for a transaction.

3)    Most importantly, are they a full time real estate attorney in NJ?  Don’t pick a trial litigator that only does real estate on Fridays – you won’t get the customer service that you need for a smooth transaction.  Trust me on this one!

So, just a few notes on things that might make your transaction a little easier – after, buying a home is stressful enough…

NJ Real Estate - Statistics for Buyers and Sellers

Statistics and I are NOT friends.  While I do have the innate, super-geeky, left-brain need to explore and appreciate the minutia that is statistics, I despise its chameleon like qualities.  Politics, for instance, clearly shows that the SAME set of facts, put through the filter of any specific agenda, can skew the data to anyone’s favor.  So therein lies the rub…who is most objective? 

Well, as it turns out, I TRY my best to be as objective as possible, so there are some sobering statistics I have heard that would like to share with you.  The following are some information distributed by the Otteau Valuation Group, Inc – a real estate valuation and consulting firm with a focus on accurate market analysis.  The can be found at www.otteau.com.  In the meantime, here are some recent snippets they have released:

• For every $10,000 over accurate market value a sellers lists their home, they are likely to eventually sell fro $4000 less than said market value. 

• The rate of decline on home prices sits around ½% to 1% per month. 

• It is likely that home prices, while they will start their recovery sooner, peak prices are likely to return around 2020.

• For every 1% rise in the mortgage interest rates, it translates to roughly a 9% rise in home price over the life of the loan.   

Okay, so what does this tell sellers?  First, if you must sell your home, then do NOT overprice it – you will eventually get less in the long run if you do.  Today’s buyers are savvy enough to be able to tell when a home is overpriced, and stay far, far away from it.  Eventually, you might get low-balled by a bargain hunter, who will simply move on to the next house if you “hold out for more.”  For anyone who is looking to hold out on selling their home until the “market recovers,” you will be waiting a LONG time.  This is a long, slow recovery folks – waiting 18 months isn’t going to bring back the numbers to 2006 levels.  All it does it hold up your life and the choices you want to make to be happy.  If you aren’t underwater, and you decide that moving to Maine is your dream, then you might as well make your move – luckily, while you will sell your house for less, you will be buying for less on the other end, too.

Now, what about you, buyers?  WHAT THE HECK ARE YOU WAITING FOR?  Prices and interest rates are both low right now – this is a historic time!  Don’t you watch CNBC or listen to NPR or read the WSJ?  In January, existing home sales went up again by 2.5% or so…January, which is usually NOT a huge month for sales.  If home sales do increase, the interest rates will rise, so do NOT lose out the ability to get more house for your money at this time.  Interest rates have already moved from 6 months ago…don’t miss out in the great deals…

Over the next few weeks, I will spend a little more time hammering out some of the statistics that we use to evaluate home prices in this area – hopefully, it will be information that helps potential buyers and sellers make the best choices with their homes. 

Welcome to the Punchline State: What Do End-of-2010 Economic Indicators Mean to the Early 2011 Housing Market?

Yeah, the title is so sexy, right?  Well, see for youselves...okay folks, let’s talk turkey about the housing market – for those of you that own homes in the NY/NJ area…and for those that are THINKING ABOUT buying a home here – you may want to read this.  What the hey, information is a good thing, right?

 

First of all, a very Happy New Year to you all – 2010 was a tough year for many of us – I myself had a very symbolic end of year moment.  A couple of days before Christmas, a neighbor of mine had a severe car accident and lost his life – a terrible tragedy that saddened our entire community.  Two days after Christmas, a friend of mine delivered a beautiful baby, and I couldn’t help feeling like life was delivering all too much for my emotions to process – great joy and such sadness, all turning on a dime.  And I think my psyche may have just had enough – because this is what my year has been like.  This is what it has been like for all of us – as …Americans in this mudslide of an economy.  The ups and downs have us reeling and we just need to slow down the ride so we can catch our breaths and make the room stop spinning.

 

So this posting is a quiet look at some statistics and what we may think they mean for the housing market in NJ/NY – not because I am such a great predictor of the economy, but because trends and statistics offer insight into the way things MAY be going…and like I said, more information is NEVER a bad thing, right?

 

Statistics of interest:  Reuters & Forbes are reporting a 12-15% increase on online holiday sales in 2010.  This is good new, because most importantly, it is not to the detriment of in store holiday sales – the posting for November sales statistics are starting to arrive, and we have some great results for lots of stores that traditionally carry holiday items.  Barnes and Noble, Target, among other big box, wholesale to public and mall based clothing stores are up anywhere from 4%-14%.  Oh, and if those numbers feel arbitrary, at least we know that spending may be up in general, as Mastercard reports holiday spending up 5.5% from last year. 

 

Also, according to the National Retail Federation’s BIGResearch Christmas Holiday Consumer Intentions and Actions Survey, there was a slight increase in Americans’ intended spending habits for the holidays this year over last year.  This, if nothing else, seems to indicate a little more pocket money, perhaps better budgeting and planning with money, or at least a perception that things are improving ever so slightly:

Average Amount Consumers Planned to Spend For Gifts:  $688.87 (2010) / $681.83 (2009) / $694.19 (2008) / $755.13 (2007)

Average Amount Consumers Planned to Spend for Holiday Decorations:  $41.51 (2010) / $40.70 (2009) / $42.90 (2008) / $46.01 (2007)

Total Amount Consumers Planned to Spend for Winter Holiday-Related:  $688.87 (2010) / $681.83 (2009) / $694.19 (2008) / $755.13 (2007)

 

Now, let us discuss – holiday spending is just that…for the HOLIDAYS, so we should expect an immediate slump in retail numbers for the first quarter of 2011 – people usually tighten up their belts after the holidays anyway – we diet with our budgets as much as we do with our food intake.  The question is going to be do we see a stable spending number as the winter months pass and people need to purchase for commercial holidays (like Valentine’s Day) and simply because they need to replace and purchase new retails goods.  We’re not looking for the numbers to shoot up – just stay on an even keel. 

 

On the job front, according to the US Bureau of Labor Statistics, 39,000 jobs were added in November of 2010, although those may be holiday based.  And as Friday, December reports will be out and apparently, if you believe ADP, 297,000 jobs were added in December (seasonally adjusted)!  Because employment tends to be a lagging indicator of the market, we have to hope that it stablilizes over the next 18 months – once again, let’s just hope we don’t lose more jobs,  and maybe even continue to add them.  Initial jobless claims are down, and the word on the street is that big banks are hiring again and are adding 6000+ jobs back on the roster.  Lastly, according to CNNMoney.com, there has been a 2% increase in childcare employment – an unofficial sign that people may be returning to work and therefore require more childcare. 

 

On the home sale front, November 2010 existing home sales jumped 5.6%, according the National Association of Realtors (although that followed slumpy sales July-October).  I know that with many buyers, there is a sense of wanting to find a home before the interest rates threaten to rise.  I have clients right now who are eagar to find a home quickly in order to lock in lower interest rates for their mortgage – this sense of urgency seems to have driven a tiny boost in the fall market.  I do think that we will have a winter slump (as per the season), but I do anticipate that spring will bring us a decent market for sellers and buyers.  And with a tiny 0.4% increase in median home prices in November, there is a glimmer of hope for the spring.  I think NAR would argue that low home prices, stable family incomes and low interest rates make this the perfect time to buy a home.

 

I have decided that statistics, in some ways, are meaningless.  While they seem to provide us with a sense of hopefulness for 2011, they still indicate a lengthy journey back to our “days of wine and roses.”  Our perception of homebuying has been distorted from years of homeowners using their homes as primary investments – looking for short term gains buying and selling, renovating and flipping.  Homeownership traditionally has been about the decision to set your roots in a community to live – I say, you buy a home when you need one – if your life takes you down that path.  A home is, after all, a place to live your life and raise your family, celebrate memories and feel safe.  You get a tax break for your mortgage interest, and we should all be so lucky if we make some money from the home in which we have invested our time, love and lives.

 

If you or anyone you know is searching for a home in the NJ area, please don't hestiate to contact me at http://us.mc328.mail.yahoo.com/mc/compose?to=nancychu_homes@yahoo.com or 917-992-3098.  And if you want to check out the most updated home search website, have a look at http://nancychusellsnj.findbestnjhomes.com/.