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…

Don't Miss the SUPER SALE on NJ Homes!

There is no doubt that you have noticed an increase in homes on the market - many sellers waited out the spring market to gauge recovery, and because of the home buyer tax credit, etc., we had a bit of a false positive on the state of market recovery.  So many would-be sellers, anticipating a good summer/fall season, put their homes on for sale.  The result was a mini-glut of homes, some priced to sell, others priced to sit...some priced to sit until they became as stale as last week's bread.

Increased home inventories in our local towns seem to have had a strange effect on the local buyers as well - with so many homes on the market, all sense of urgency to buy is gone.  The few buyers that are qualified to buy are reveling in towns with inventories of 4 to 8 months worth of homes for sale - nearly double the amount of inventory as we are accustomed to.  So...the result?  Buyers take twice as long to wade through the inventory...and even then, they seem to be suffering a little of the "gotta be a cheaper gas station at the next rest stop" syndrome.  Without any sense of urgency, they pass on beautiful, lovely homes in the elusive search for the "PERFECT" home (I know I can get a 2 car garage, master suite AND a full finished basement if I just look hard enough...I can wait...).

Now, I, as a real estate agent, am all for buyers getting what they want - I myself stalked my current house for 6 months before making a move, so I know the impulse.  But there are a few caveats to this strategy that will help us to balance the delicate need to find a home we love, as well as "play the game" to our advantage in price:

1) Do not let "PERFECT" become the enemy of the "GOOD" - buyers remember, this part of NJ is full of sturdy older homes - if you are looking for a house with a master suite walk-in closet, unless someone has chewed up a second bedroom to make it, it probably doesn't exist.  When these houses were built, no one had 50 pairs of designer sandals, so you aren't going to find the storage for them in your room.  Temper your expectations in a reasonable fashion in relation to the kinds of homes in the area, and if you choose to live this close to NYC, you might have to choose between a family room and a 5 minute stroll to the train station.

2) Record LOW interest rates not appealing enough for you?  Conventional wisdom says that they will stay low through the November elections, after which, historically, there is a bump in rates.  While a quarter of half point bump doesn't do a lot of damage to your buying bottom line, for first time home buyers, it can seriously affect what you can afford.  Remember, a 1% increase in interest rates means a reduction in your home buying power by 9%.  And with interest rates already well below 5% for most qualified buyers, this is the time to borrow - money has never been cheaper, and no, I don't see them dropping further.

3) Oh, let's not forget the record low home prices.  In this area, we thank our lucky stars for the proximity to NYC because we know that we didn't lose value like Nevada or Florida or Michigan.  Homes have lost on average between 10%-25% of their values from the height of the market, and if you want to get a good price on a home, offer strategically and make an evaluation of why the seller is doing so.  It will help you to get the best price for a home - of course, that is why you work with a realtor, too - to help you make these decisions and negotiations.  And please note, around here in northern NJ, there are towns that still have bidding wars on homes, so don't think we aren't still somewhat strong as far as housing markets go.  Oh, and all the experts (Case-Schiller index for instance reported that prices were up slightly in September in the top metro areas, which does include north NJ), say that prices are trending back up -  the overall national average for September is up 4.2% over this same time last year.

4) Motivated sellers - enough said.  It's a buyers market.  We all know this.

5) Motivated lenders - underwriting standards seem to finally be settling down from the subprime disaster, and fund are available.  If you have a job (with decent credit) and can afford the payments, chances are, you can afford a mortgage.

Have you ever noticed that when there is a table of shirts for sale, no one seems interested unless you see another shopper thumbing through them with a stack of shirts that they are considering buying?  And then all of the sudden, that microfiber lightweight windbreaker that woman has in her hand is "just what you were looking for, too...oh, and it's the last one..."  We all understand the law of supply and demand - if the demand goes up as it does in the spring, supply will go down, and prices will start to inch up.  Don't miss the clearance sales going on right now!

We shall see what this fall brings - I have a handful of hardy, intrepid buyers that see the value of buying now, not only because of the rates and prices, but because they see the market over the next few months being especially fruitful as sellers may look to get out before the holidays and winter.  I know these buyers are going to get a great deal on a home...and I am going to make sure they get the most for their money.  Because in the spring, as always, there will be a bump in prices - small or not, a bump is a bump.  Come check out the sale table while you can...

Clark, NJ...fabulous place to live...well, according to Bloomberg...

The eternal question for those of us who are tied to NYC through jobs and general culture is: where do I go if I choose to leave the city?  How do I maintain a short commute to NYC, not only for may daily commute for work, but also to see shows, have dinner and enjoy urban life and all the enriching culture that comes with it still?  We want the best of both worlds - good schools, affordable housing, space to grow our families or to retire in peace...all within a 30 minute drive to the most exciting city in the world (okay, rush hour traffic aside...). 

For those of you looking to make the move, Bloomberg BusinessWeek published a recent article highlighting an often over-looked community, Clark, NJ.  With a population under 14,000 and a median family income just under $100k/year, this is a town that has managed to maintain lower taxes (5k-9k/year), while still having excellent schools, relatively low crime and pollution, lots of green space in relationship to developed space as well as have a fair commute to NYC if you need it.  It doesn't have its own station, but nearby stations do provide train access.  There is a handful of newer construction homes that top almost $1M in home price, but there are also a large number of reasonable starter homes that range between 300k-550k.  These prices, coupled with a lower tax rate, often make for more affordable living, as well as a nice community vibe (town pool, small schools, golf & tennis, parks, etc.).

Check out the article for more information:  http://realestate.yahoo.com/promo/best-affordable-suburbs-in-america-2010 

LOSING MY "MOVING FROM THE CITY" BLUES

So a client and good friend confesses to me last week that after being in NJ for two years, he is finally getting used to it and feeling more positive and upbeat.  He, like most of us in Montclair, Glen Ridge, Maplewood/South Orange, and other Essex County towns are NYC transplants - those who discovered that trying to fit ourselves and children into our 800 square foot 2 bedroom apartments in Brooklyn was cruel, both to them and us!  So we look west to the Garden State, and discover that the American Dream is available in dutch colonial form on lots of 60x150, and if you are lucky, a family room on the first floor...and oh, those hardwood floors...gotta love that!

My husband dragged me kicking and screaming out here several years ago - after dealing with arbitrary fits of "subway rage" on the 1 train, and having a moment where I "outcrazied a crazy" on the streets, Raf decided he had had enough, and that it was time to find some space and to feel some grass under our toes before I ended up on NY1 as a tragically amusing headline story.  We made the move out to Maplewood, NJ, to Plymouth Avenue, a street that some might objectively call "the NICEST street in the world."  You may think I am exaggerating for effect, but really only slightly - on the day our two 24-ft trucks pulled up to the house, neighbors emerged from picturesque red doors and from behind trim rows of evergreen hedges to welcome us with smiles, stories and a variety of nut-free, glutenless confections.  It was overwhelming - we couldn't understand why they were being so NICE.  What did they want from us?  Was this a cult?  Some more crunchy version of the Stepfords?  I was intrigued, but wary.

Fall rolled into winter, and 3 months of bitter cold and snow kept most people indoors, and I fell prey to the winter glumness that many feel seasonally.  I spent my days working long hours, trapped indoors during the precious daylight hours, and trudging through the filthy winter streets of NY, where I was still working at Bellevue Hospital (yeah, that's a cheerful place).  I started to feel isolated from my friends, most of whom were still in the city.  I missed Central Park and the zoo, Ollie's Noodle House, the Museum of Natural History and the bustle of the theatres in Times Square.  I was depressed enough that I began to look at apartments in NYC again - thinking maybe we needed a little city studio for all those nights I would work late and need to meet friends and colleagues for dinner or drinks...or what about that romantic weekend in the city we could have once a month, rigtht?  huh?  sound good?  I was planning my grand return to urban fabulousness, much to my husband's chagrin.  He made me a wager - if I still felt this way after 1 whole year, we would consider moving back to the city.  I knew this was a bet that I would win...after all, I never lose.
Well, it's a bet I lost. 

One early spring afternoon, I looked out my window and saw something for the first time....new sun that is indescribably bright - perhaps because your eyes had grown accustomed to the greyness of winter.  Kids rode their bikes in the street and cars drove slowly past and waved.  Neighbors emerged from their houses, magically pregnant and with new haricuts to herald the arrival of spring!  It turns out the park across the street was a weekend magnet for little league games and spontaenous local soccer matches, with a tennis court to boot for all to use (well, I only used it once - let's not get into my ankle-twisting clumsiness on the court...ahem).  It took a little bit for us to let our guards down, but by the time they asked me to tag along for a dinner trip to Bunny's Pizzeria in South Orange with a group of families on the block, I was hooked.  These people were friendly, and I wanted more.

Getting involved with the neighborhood association, getting involved in the Preschool at Sharey Tefilo and even joining the public library are all things that have helped me to find my roots in this community.  I've made wonderful new friends and am looking forward to a post-holiday regifting potluck next weekend - there'll be lots of new people to meet there, and I can't wait to pawn off this really silly electronic gadget that we got from a cheap uncle who seems to think I am a teeage boy (I am sure one of the dads will love it).  So now I enjoy the Turtleback Zoo in West Orange and get my noodle soup at Cafe 88 in Livingston.  I get my culture from the Newark Museum and Montclair Art Museum, and music or theatre I want, I get from the South Orange Performing Arts Center or the Papermill Playhouse in Millburn.  I can't wait for my son to play Little League, and moms night out at Diva Lounge in Montclair in February is on my calendar...woo hoo, bring on the multi-coloured girly drinks!  Oh, and Central Park?  Who needs Central Park when I can swing from a hammock under the giant, ancient maple trees in my backyard?  My husband was right...I just had to give it a chance...

PS - we got rid of the studio.