Like anyone else, I love it when I get a cash offer on one of my listings. That is rare, but it is also nice when we get an offer that has terms including a healthy 20-30% or larger down payment. That doesn’t happen all the time either. What is keeping the lights on in Westchester real estate is the FHA mortgage, which was unheard of 5 years ago, but is now more common than any other program for starter and medium homes. 

The minimum down payment on an FHA loan is 3.5%. For the math-challenged, that means the buyer will be financing 96.5% of their purchase. In a county where FHA loans were once as rare as hens’ teeth, this causes some consternation among some attorneys who have grown accustomed to picking the low hanging fruit for decades. I always shake my head when we have a perfectly good offer torpedoed by the seller’s attorney simply because they have never closed an FHA loan. Here are some of the stupid things these lawyers say:

• How can these people qualify for a loan if they are only putting 3.5% down? 
• I can’t let us get tied up under contract with buyers with no money. 
• I won’t send contracts to anyone putting less than 20% down. It is irresponsible to get in bed with such a risky loan. 

If one were to do a heat map of population density for Westchester, Putnam and the Hudson Valley, they would discover an amazing fact about Philipstown- of all the river communities from Westchester to Poughkeepsie, Philipstown -including Cold Spring and Garrison- is the least populated and perhaps most pastoral river town for 60 miles. 

That’s a good thing. That’s a great thing. That means you can live on the Hudson line, commuting distance from New York City, close to the river, but not be in a crowded place. 

Philipstown has two school districts, and this market report for the 3rd quarter of 2011 will center on Haldane schools. Garrison will be forthcoming. Haldane includes the Cold Spring post office, which is mostly the village of Cold Spring, neighboring Nelsonville, and the town of Philipstown. 

For the 3rd quarter of 2011, Cold Spring and the surrounding area had 9 single family homes closed at a median price of $459,000. 

Two homes are under contract at a median lst price of $239,900. 

57 homes are available with a median asking price of $549,000. 

Buyers have incredible choices. There is village living in Cold Spring, or an outstanding, more pastoral lifestyle in Philipstown with Cold Spring close by. But more than just that, the high inventory makes this a unique opportunity for buyers seeking quality of life at enticingly affordable levels. I seldom speak in superlatives. But the facts are hard to argue. Buyers are in a great position, and the options before them in Philipstown are awesome. 

One good example is this home in Philipstown. It is a 4 bedroom ranch on a private 8 acres with its own pond- stunning! It is only $499,000. Click on the photo for more details, or for a walk through video, scroll down. 

Not far away is the village of Cold Spring and all it offers. To see this and more home in Philipstown, register for a free Listingbook account and search the MLS database of homes effortlessly. 

The October real estate closing statistics in the Ossining School district indicate a drop from October of the prior year. 

In October 2011, 7 single family homes sold at a median sale price of $410,000. 

In the same period last year, 11 single family homes sold at a median sale price of $535,000. 

Obviously, this is a precipitous drop in both volume and median price. However, there is an explanation: The number of homes under contract ballooned from 19 last month to a whopping 37 this month. Buyers are indeed signing contracts; they just aren’t closing yet.

This could be due to delays on the lender side, which is something I am seeing more frequently in this environment. The pending transactions could also be short sales, which take much longer to close than typical deals (we often say that short sales should be renamed “long sales”). There could also be title issues delaying closings, which would again indicate caution on th part of the lender, the buyers, or both. In years past, buyers might turn a blind eye to a finished basement or a deck without permits. That is no longer the case.  

The median price of the 37 pending deals is $449,000, which is a healthy number. 

121 homes remain on the market as active and available at a similar median list price of $399,000. While buyers still have quite a few choices, that is a rather low number for Ossining, which typically has 150 homes in inventory, but it also indicates a lull in the sales cycle. Some people are taking their homes off the market until after the holiday season. 

Prior posts on Ossining.

Find a home in Ossining with the Listingbook Home Search!

All information is for single family homes and is sourced by the Empire Access MLS, a wholly owned subsidiary of the Westchester Putnam Association of Realtors. 

In the current economic climate where deals die so often that we sometimes have to “sell” a listing twice or three times just to get to the closing table, more due diligence and evaluation of buyer qualifications is a serious mandate. Twice in the past month I have seen instances where a pre approval was not worth the paper it was printed on, and that punctuates the need to evaluate buyers with more scrutiny. They don’t always like that; but they need to understand the times we live in. 

The Dubious Down Payment. We are in the midst of a White Plains short sale that was approved in early August and now on its 3rd extension because the buyer’s down payment source was the refinance of his current residence. This was not disclosed until we needed the first extension. If the pre approval does not take into account liquid available funds and is predicated on an undisclosed other loan, it is worthless. That will never happen to me again. I will always ask the lender to disclose the source of down payment funds. 

The Out of State Mom and Pop Shop. If I call Mortgage Shack to verify some things on the preapproval and I get voicemail all day Monday and a return call from the loan officer that night with the distinct impression that this is a part time operation out of his basement, my seller may not have much confidence in your qualifications- even if you may in fact be a great borrower. Get a more credible source to vouch for you. It doesn’t have to a be Big Box Bank of Beelzebub. A local community bank, direct lender or credit union work fine. 

The Unresponsive Loan Officer. On a rehabilitation project in Mount Vernon, a buyer for my listing is facing losing their deposit because their lender approved them for the wrong loan. They needed a specific type of rehabilitation mortgage, known as a 203k, and were instead underwritten for a different type of 203k. Their inept, unresponsive and arrogant loan officer was a red flag not long afterward. Not only does this buyer face loss, my seller client has to undergo either a costly wait or a costly return to the open market. Never again. If a loan officer won’t respond with specifics to me as a colleague on a collaborative transaction, it will disqualify the buyer. 

The Un-thorough Loan Officer. Easy one. This was also an eager bidder on a listing of ours in southern Westchester County. I asked the loan officer one question: Did you run your conventional loan applicant through your conventional loan underwriting software, known in our area as Desktop Underwriter, or DU in fancy circles. The answer was no, which translates that he has a prospect making offers who is not truly vetted as well as they could be. DU is the industry standard. It is not the extra mile, It is the minimum before a buyer should be making offers. 

The Ill-Conceived Plan. We are given an offer with a pre approval. The offer is conditioned on the sale of the buyer’s current property, in which a buyer has been found. It isn’t under contract. It isn’t even listed. A relative is going to refinance their place to buy the prospective buyer’s place, who will then buy our place. But only in one spouse’s name. But they have a preapproval based on this awkward row of dominoes, none of which is disclosed on the preapproval. And this is the guy tho didn’t run them through Desktop Underwriter (above). Pass. 

In this economy, we are seeing more and more creative ways to get around the new reality of strict underwriting from the lenders. Parents have lost money in the market and can’t gift down payments to their children. Compensating factors no longer count. Debt ratios are more strict. Buyer agents are just glad to have a warm body to drive around. Separating the prospects from the suspects is crucial. And in Westchester, where property costs are higher than average and deals take longer to close, you can lose 3 months or more, and tens of thousands of dollars if you make a mistake choosing your buyer. 

The takeaway for the buyers in Westchester and the surrounding areas is this: A listing agent doing their job is going to go through your qualifications with a fine tooth comb to avoid a catastrophe. A pre approval can’t just be based on a credit report and verbal assurances. We now have to verify down payment funds, employment, credit, know that you have been underwritten to truly assure our sellers that it is OK to tie the house under contract with you. To the lay person this may seem thorough; it is moreso than years past, but it is absolutely necessary to ensure a trip to the closing table with a minimum of drama. 

In Westchester and the surrounding counties of New York, quite a bit can happen between the acceptance of an offer and contracts being signed. Once an offer is accepted, the buyers still have to do their home inspection and settle those matters before memos go out and contracts are drawn. Even then, there is still the back and forth between attorneys on verbiage and pet riders before signatures and deposit. It can take weeks. And in those weeks, another offer can come in and change the game. 

But if a higher offer comes in, is the seller obligated to take it? Should a seller switch horses to an unknown quantity when they have already been through inspections with buyer number 1? And isn’t there a risk in switching, because if the new deal dies and the old deal is alienated, isn’t that a great way to go from 2 offers to zero? These are things we face frequently in Westchester that seldom happen elsewhere. 

First, the seller does NOT have to switch to a higher offer when an accepted offer is on the table. They often do, and it can screw things up if it doesn’t work out, but there are many reasons why a seller might choose to stay with their first accepted offer, even if a higher offer comes in. The key is not simply price. It is also terms. 

• The higher offer might be caught up in the competition. 11th hour high bids often get remorse once they leapfrog over other offers and stall or back out. People want what they can’t have. When they get it, they sometimes lose their inspiration and flake out. We have observed that people who don’t ante up by the deadline are a reversion risk after it passes. 
• The higher offer might be monopoly money. Simply put, they might not qualify for the higher number. I have seen bids that were not accepted in favor of another come in a week later and assure us that they could in fact qualify for full price or close to it. Some do. But some don’t. It was wishful thinking, borne of competition and wanting to “win.” 
• The higher offer might still be selling something. This is especially a concern when the buyer is selling a co op, which is common in New York. Co ops can take 3 months to close, and there are instances where the buyer gets their mortgage but is turned down by the board, killing the deal after a long wait. But deals on other properties also die. I often hear buyer agents, when they present an offer, make it clear that their client “has nothing to sell.” That is wise to emphasize.
• The high offer might take longer to close. The end of the year is coming, and some people want to close before the end of December. Time is money. A buyer with a higher offer might not want to close that soon- their lease might not be up until March. They are planning a wedding. It can be anything. Long waits tempt fate. 

What matters to sellers, sometimes more than mere price, is certainty. More money might not be worth it if it is riskier, or if it adds to the stress of the transaction because of a longer wait. Certainty has value. This is why some believe that a cash offer might be more attractive than a bid with a mortgage contingency. Time is indeed money, and sometimes there is a premium for cash. Certainty has value. Even if offers come in simultaneously, the higher offer may not be the right one. 

Price does not occur in a vacuum. There are other factors, such as timeframe, terms, certainty and plenty of other variables that might make a lower offer the better choice for some sellers. Sellers and their agents would be well advised to evaluate context and the Big Picture before making a judgment based on raw numbers alone. 

Last month I posted on the shrinking disparity in transaction totals in Westchester County comparing 2010 to 2011. This year has been playing “catch up” with last year’s totals, and each month 2011 has been closing the gap. It was my theory that 2010 started out hot due to the stimulus but that 2011 would catch up by year’s end.  Last month, we were just 139 closings for single family homes through the end of the 3rd quarter.

Well, October wasn’t a good month for closing the gap. We are now down by 157 transactions, 3463 in 2010 to 3306 for this year. 

Here’s the breakdown:

In January through October of 2010, Westchester had 3463 single family home closings at a median sale price of $640,000. 

In January through October of 2011, Westchester had 3306 single family home closings at a median sale price of $620,000. 

Breaking it down by month:

October 2010: 285 closings at a median price of $576,500
October 2011: 266 closings at a median price of $517,500

October sucked. The sad thing isn’t that buyers aren’t buying. They just can’t get to the closing table for a variety of reasons. The data on pending sales shows a ton of deals on the 1-yard line that can’t get into the end zone. Here is what I said last month:

A whopping 656 homes are under contract or pending right now, but the median asking price is $499,000. If only half of those close, 2011 will easily surpass 2010 in transaction total but take a body blow with median sale price. I’ll bet the lion’s share of those 656 deals are actually short sales. If so, that could clog up the timeline. 

I hate to be right, but we still have 674 deals under contract or pending sale at that same median price of $499,000. 190 of them are pending, meaning they should close in the next week or two. But they won’t. 

The caution I am seeing in the marketplace is incredible- and paralyzing. Looking at my own pipeline, I have buyers refusing to sign contracts unless minor title issues are cleared (these things are typically addressed once we have a contract). Attorneys are killing deals over title issues. Banks are getting stingy about underwriting minutaie. We have one house where the owners paid taxes on both bathrooms and assumed they were legal, but the 2nd bath had no certificate of occupancy (CO), delaying things. Loans are getting denied.

Whatever can go wrong, is going wrong routinely. Add to that the high level of caution by buyers, and you get pipeline constipation. Plus, there are a ton of short sales a long way from approval and closing. We have one short sale approved since August and are on our 3rd extension because the buyer is having financing issues. 

Will we catch up to 2010? We may, but it will take a coordinated effort on the part of lenders, attorneys, and ever more importantly, the municipalities in approving permits expeditiously. Again, the deals are in place. They have to close though. 

Look for a photo finish! 

 There are deals out there with autumn and the holidays here. Get yourself a free Listingbook account or log onto WestchesterDreamHome.com. 

In light of recent events, such as Market Leader’s newest investment in Active Rain Corp. and other developments in Seattle, there has been one area of the company’s operations that has been been conveniently ignored, and it is for the reader to decide if this is oversight or clever obfuscation. But those of us who have been  rising in point totals over the years do deserve full disclosure from management. 

This morning, I passed the 666,000 point total when I logged in, making me 2/3 of the way toward Active Rain Millionaire status. For more information on your own points, if you don’t know already, I would direct the reader to click on 

ActiveRain.com>My Home> Point Total (in lower left sidebar). 

One has to wonder what the real value of our point total really is. 

When I first became active on this platform, Lenn Harley was the high point leader with something in the order of 700,000 points. There were no million point people, and 100,000 tallies were considered the “point affluent” if you will. There was no automatic 100 points for logging on, no contests to speak of, and you have to earn them the “hard way” but producing content in the form of a blog post or comment.

Today, we have what might be considered point inflation. You get points for logging on. For contests. For the best caption on a Facebook photo.  New Registrants get bonus points for their first blog and checking their score of all things. It is decadent.  It is a little known fact that I earned 15,000 points at the Atlantic City Raincamp for an event that will remain between myself, Gettysburg Gerry, and certain staff at Caesar’s. The less said the better. 

Moreover, the number of AR “millionaires” has exploded to almost half the first page of the leaderboard. 

Which leads me to the question: How are Nikesh, Market Leader, and other higher ups in management in Seattle accounting for the inflation of Active Rain points? Is it a zero sum model where point totals increase but the per unit value decreases? Or is it a “growing pie” where they are actually borrowing more points from a non domestic source, such as a foreign nation like China, creating a debt that membership cannot make good on? Are the points each backed by an infinitesimal scrap of silicon (and if so, where is it?), or are we to simply rely on the full faith and credit of ActiveRain Corp.? 

The changes in managment give me a grave concern about backroom deals on the matter or deliberate withholding of material information from membership. And what of insurance? We need to know that if we need our points, they are there and that they have equity. I hereby demand a transparent accounting from Active Rain Corp. on the points -our points- so that we can sleep at night. 

This morning in New Windsor, New York, I had the privilege of witnessing the Orange County Association of Realtors overwhelming vote in favor of merging their association with WPAR (Westchester-Putnam) and ROCBOR (Rockland) to form the new Hudson Gateway Association of Realtors. This was the third and final “yea” vote between the three boards, and paves the way for an offical merger commencing January 1, 2012. 

OCAR’s leadership did an outstanding job of educating the membership on the merits of the merger proposal, from a well done YouTube video by president Ron Garafalo to office meetings, informational mailings and even social media. No one could say they didn’t know the details unless they really weren’t paying attention. And from the discussion I saw, membership clearly paid attention. 

I should mention that in 2005 when I started the company, I joined OCAR before joining the then Westchester Board of Realtors. There was a thought that Ann and I might move our family to Washingtonville or Goshen. I have worked in Orange County and been a member of the Greater Hudson Valley MLS ever since. We remained in Westchester, but I know firsthand that the association is an excellent group with strong leadership, and it will make HGAR better. 

I have written previously on the Westchester and Rockland votes posts why I believe this is good for the public. I’ll indulge in a selfish motive of why I was so in favor of the merger: in the future, when the respective contracts run out with the vendors, the two MLS systems will be consolidated into one Multiple Listing Service. With the natural crossover between our market areas, this will benefit all brokerages, but for firms like mine that pay for two separate MLS systems, it will make a positive difference in managing overhead. The best reason for consolidation is economics. This is smart economics for sure. 

I like nice people. You probably like nice people too. Nice people are…nice. Given the choice, I prefer to do business with nice folks. Especially here in rushed, rude, New York and occasionally aristocratic Westchester County, nice people are such a breath of fresh air. Of course, in business, being nice isn’t enough. People want to get from point A to point B, and if all they get is nice with no result, they get frustrated. 

For example: You might have had the experience of dining in a well-known bistro and been greeted by a cheerful, perky, awesomely-flared server who was wicked nice. They were really super neato charming. They ask all about you and you learn all about them, and, sometimes, you might feel a slight urge to stuff the center table ornament in their mouth and tell them to go get your food. 

That doesn’t make you a bad person. It makes you “hungry.”

In my bartending days back in the Mesozoic era, people would come in and enjoy my company greatly. However, they only enjoyed my wit and charm after I made them “not thirsty.” Then we’d be nice together until Ted Koppel came on the TV. Of course, throughout the process, I made sure their glasses were full.

Here’s the real estate lesson. Recently, one of my clients was fortunate enough to get an offer on his property on a Friday. We had quite a few showings scheduled for the weekend, and the buyer graciously agreed to wait until Monday for us to evaluate any other interest that might arise until Monday. We received another offer on Monday. The second offer was informed of a competing offer on the table, yet their offer was significantly lower than the first. Even though they knew they had competition, they still made an uncompetitive bid. 

When my client and I discussed the merits of the two offers and it was clear that the second offer would not get the nod, he expressed sorrow for the losing bidders. “They were such nice people,” he said.

I told him they could have been $35,000 nicer. In business, nice may get your foot in the door. But if you don’t deliver, nice is not enough.