Listening to NPR the other day, the commentators were wondering what to call the current economic crisis. It isn’t a garden variety recession; it isn’t just the Credit Crisis, the Sub-prime Meltdown, or the failure of Freddie Mac/Fannie Mae. They mentioned that people are now texting the letters “ITE” to shorten “in this economy” the way they abbreviate IMO for “in my opinion.” Recession is too weak. It isn’t a depression. What are we in? 

Well, the Dow has corrected to around 8,000 from a high of 14,000. Home prices have corrected to about 20-30% lower in most places. The prior highs of price and value for property and securities were often labled unsustainably high and have corrected. I would therefore humbly suggest that we call the current economic condition that we are going through the Great Correction. It is a little ironic, a play on words, and certainly an apt term. 

Use it with my permission. 😉

Hopefully, growth going forward will be sustainable, realistic, and devoid of irrational exuberance & poor judgment. 

 

According to the NY Times, minority homeowners are three times as likely to be foreclosed on than the norm. The NAACP is actually suing lenders over what they perceive as a new kind of redlining- giving minorities inferior and unsustainable loans. I made the following comment on the article on the Time’s website:

As I have often written, I list and sell short sales all over the metropolitan New York area. I still see the effects of predatory lending and poor decision making. But the common theme is a betrayal of trust. Many people assumed that because they had something in common with their agent or loan officer, that “they were one of them,” they wouldn’t get hurt. But get hurt they did, because greed is colorblind.

 

The government has moved to increase the incentive for lenders to allow short sales on their defaulted loans. I welcome this, although there is nothing specified as to how they’ll hold banks accountable for streamlining the process, which is rife with red tape, bureaucracy and long waits. If they truly want to make short sales happen more frequently to help more distressed homeowners out, they would mandate a maximum of 6 weeks for a short sale approval.

The current system, which varies from lender to lender (negotiator to negotiator, really) is unsustainable. I did a successful, relatively fast short sale with Option One in 2007. The 2009 closing was a year-long nightmare that required heroism. Same lender. Go figure. 

The administration has banned the insidious practice of lenders cutting the commission on short sale brokers, which I applaud. This is another good sign, and I hope they continue their efforts with a push to make the approval process shorter and simpler than the current disaster most transactions now are. There was a reference in the Inman News report that they want the lenders to give the sellers at least 90 days for the short sale, another positive sign. 

Short sales in Westchester County are now part of our vernacular; moreover, the stakes are high. Often, the prices are the among the highest in the nation. A deficiency judgment in Rochester could be $10,000. In Westchester, it could be $200,000. People that make a good faith effort to do a short sale should not have their ordeal magnified by an inefficient system. 

I am encouraged by this move. 

 

I was emailed this question:

Hi Philip, I am a first buyer interested in homes in the city of XXX. I was interested in using you for my home purchase and have a question regarding buyer’s commitment to agents. If I see a property through an agent, am I required to submit an offer through that agent? I was told that typically, using a different agent can lead to commission disputes and I would like to clarify your policy regarding this. Thank you for your time and consideration.

That got my radar up. What I’d like to say and what I will say are very, very different.

If he is referring to using a different agent than the listing agent, whoever gave this guy that advice is out to lunch. 13 years in this business and I’ve never had to arbitrate a commission.

If he’s referring to a different agent from the one who showed it, yes, that could cause issues. If this person saw a home with Agent A and then submitted an offer through Agent B, that would invite a commission dispute, not prevent it.

.

My reply was the following:

I don’t know who gave you that advice; I have been in real estate for 13 years and never had a commission dispute with another company. I don’t see how a commission dispute could arise if the agent that showed you the home was the agent that wrote the offer. In general, agents like myself work quite hard (as you can see, I am starting my day at 5am) and that unless we were somehow inept, that morally the right thing to do would be to use that agent to represent you through that purchase. It would also seem to me that, logically, the way to invite some dispute would be to switch agents in the midst of the process. Staying with the agent who showed the property would not give any impetus for a dispute. Involving more than one agent certainly would.

At any rate I am quite familiar with the XXXX market and would be happy to help you. My contact information is below.

Best regards

Phil Faranda

I will leave what first came to mind to your imagination. I don’t know if this guy is warning me of duplicity or is an overthinker. I googled him and he’s a scientist, so that might mean the latter, rendering this more of an  innocent question. You never know, this might turn out to be a great client.

The $400 toilet seat has always been the symbol of government waste, but now it is the TARP (Troubled Asset Recovery Program, or, better known as the “bailout”) funds that banks are, in my view, squandering. What I personally experienced below is the tip of the iceburg.

• 225 West Lovell, Mahopac, NY: Offer of $225,000 rejected by Countrywide in September, 2008. Home sold for $137,000 by referee in March, 2009. A very nice young couple lost their home and credit in this case despite our best efforts. With carrying and legal costs, the lender squandered $100,000 easily.
• 37 1/2 William Street, Ossining NY: Multiple offers of $270,000-$280,000 were brought to Ameriquest (now defunct-go figure). The negotiator, some guy in California named Rivas, insisted the house was worth over $330,000 because of an appraisal from 2005. They foreclosed, and relisted it in August 2007 for exactly the same amount they were offered when I had it listed. It sold in April, 2008 for $219,000 over a year after they had offers of $60,000 higher. These clients were smart enough to talk to the press about the predatory lending and bait and switch they experienced with the lender in this article. Because the bank didn’t accept the earlier offers, they had a nonperforming loan for another year. These are the people to whom you entrust your paychecks.
• 442 Park Hill Avenue, Yonkers: Lender was offered $475,000 short sale in July 2007. They rejected it and later auctioned the property instead in March 2008 for $316,000. They couldn’t discount it $25,000 for an owner occupant but did whack $150,000 off for the investors at auction. This is the only house that I didn’t lose a commission on, as the investors re-listed it with me. Good for me, bad for my old client.

Our tax dollars at work, folks. We go to work every day and pay taxes to subsidize thousands of stories like the three I personally experienced.

This is a national disgrace. Write your congressman. Make noise. Make government accountable for the money that goes to the lenders, and make those lenders act with common sense. Otherwise, we’ll be at the same dance in another 20 years.

Mr. Cuomo, this happened on your watch. President Obama, what are you going to do about this?

This may be a touchy subject to some, but many people sabotage their own efforts to sell their home because of how their house smells. The source is most often a food or pet odor, and in both cases it is relatively preventable, especially as the warmer weather is upon us. This is probably the under-discussed issues among professionals, and that might be rooted in the rather intensely personal nature of the culture of our food and pets. 

This post isn’t about how to eliminate odors; it is about creating a dialogue. 

Today, I walked into a home with buyer clients and we were incredibly distracted by a pungent food odor. It was hard to concentrate. 

Later, we saw a home that clearly had a big dog- bones, dishes, and a large crate in one of the rooms. But there was no pet odor-none. Having been in homes that smelled like a kennel, I know this takes some work. 

The first home we saw with the bad food odor would have been perfect- the price was right, the work needed was manageable, and the location and layout were fabulous. Food odor killed their interest. Most people know if their house smells a little funky, and it should be part of the sales preparation process to fix that. If the agent doesn’t address the matter, no matter how uncomfortable that may be, they are derelict in their duties to the seller. 

I would address it to clients diplomatically of course, but my appeal would be to their bottom line rather than their lifestyle. 

 

One of my agents has a listing in a very desirable part of her town. It expired not long ago, and we will put it back as active once some projects has been finished. In the interim, the sign has remained up, per the seller’s preference. 

An agent from out of town drove by, saw the sign, looked it up, saw the listing was expired, and instead of calling us, called the seller directly. Do I have a problem with that? Nope. I would do the same thing. 

The seller is, shall we say, a non-conformist. He got her voicemail message. 

He called her back at 1am. 

And she called us to complain! 

Now that takes a set. 

 

Did you know my home’s assessed value is $30,000? Or that my last home was assessed at $25,100? Over in Congers I have a listing at $589,900 which is assessed at $177,800. In nearby Pleasantville I have a listing priced at $599,900 which is assessed for only $6600. I think the last year a home sold in Pleasantville for $6600 Eisenhower was president. I could be wrong; it could have been Truman.

All over Metropolitan New York, the taxing authorities have assessments on property that run the spectrum of crazy numbers, but the one thing they have in common is this: they aren’t really the estimated market value of the homes. Supposedly, there is a law that they should be, but the governments are focused on more important things, like what color to paint the lines in municipal parking lots and how to handle the fiends (you know who you are!) whose gutters and downspouts don’t conform to code.

I shouldn’t complain. Tax revenue is never wasted, right? They just spent who knows what in downtown Briarcliff on a gazebo and clock tower that says “Briarcliff Manor” because, as we all know, it is a public good to help all those disoriented people wandering downtown who don’t know where they are or what time it is. I mean, there are none, but there could be. And if there were, we can finally help. Ossining put in a new artificial turf field at the high school. How did we ever live without it?

Of course, if you think your home is valued at $700,000 or $450,000 and the assessment is $5200 or $96,350, you could always call the assessors office and they can share with you the mathematical formula they use to translate the assessed value, and more often than not, you’ll hang up the phone with a pit in your stomach once you hear the answer: You are over assessed. The fig leaf the assessor wears is a letter they send out one day a year. It’s buried in there somewhere.

In the spike of home values in the earlier part of the decade, assessed values remained frozen but the tax bills and the formulae used to translate the assessments to true market estmates rose incredibly. The assessors went on a feeding frenzy at that time, raising values in the back room, but keeping the numbers on the sign out from the same. It’s a funny thing about assessments; they have an easy time raising them in hot markets but they don’t bother to lower them in corrections. You have to ask. Politely. One day a year.

I’m not a conspiracy theorist, but I think they know that if they published the true estimate and not the bogus assessed value of homes that the taxpayers would storm the Bastille. More people grieve their taxes now than 5 years ago, but if people truly knew how nuts it really is they’d be inundated on appeal day, and that one day a year they allow grievances would be stretched out to a month. Regardless, the towns and cities need to do the right thing and assess homes at true market estimates, and not those ridiculous factors. It would make government more transparent, it would ensure that people pay their fair share of taxes, and it would force more fiscal responsibility on those who allocate revenues to the public good.

I’ve blogged about this house before. It is a stunner. The Program was CNBC’s “On the Money” with Carmen Wong Ulrich. One of the panelists is Dolly Lenz, Vice Chairman of Prudential Douglas Elliman Real Estate, a respected expert and extremely nice person. The segment with my listing starts at 1:30 of the video.