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. 

Get a pre -approval before you make an offer on a new home. Here’s why. 

85% of my business is on the listing side representing sellers. There is no setback in real estate as devastating as the “deal dying.” Typically, when a deal has died in my experience, it has been because the buyer was unable to perform. In many cases, the buyer meant well and was sincere, but either they, their agent, or both were unaware of conditions in their income, credit or cash position that prevented them from being able to close.

There is nothing that can be done to prevent the loss of a job. But there are many things that can complicate your approval process that you may not be aware of. Thinking you have good credit and some cash isn’t enough. You might not have been in your 1099 job 2 years yet. Your debt to income ratio may be off because you co signed for someone. Your FICO score might be lower than you think it is. Your overtime may not count as much as you think. Need I go on? 

If you submit an offer on one of my listings, my seller will not take the house off the market into contract for you until we have absolute assurance that you have been to the bank, had all your information and assets verified, and have been issued a Desktop Underwriting approval. DU is the software that mortgage professionals use for most conventional loans to evaluate borrowers before they issue a pre approval. Otherwise, an accepted offer in July could turn into the house going back on the market in the Autumn with the holidays around the corner. In cases where timing is crucial, this can be a horrible setback. 

Getting pre approved takes 15 minutes. You shouldn’t be insulted that you are asked to be pre approved before an offer is accepted, and if you are you’ll actually attract suspicion. Given the simplicity of the process and all that is at stake (In Westchester County, my local market, the median sales price is still well over a half million dollars), it only makes sense to “show them the money.” While questions about your ability to buy may seem intrusive, given the stakes, they are needed. Moreover, if you are competing against other offers, the one with the pre-approval will be taken far more seriously than one without. Just do it. It gives you leverage as a buyer, and it assures the seller what you know all along, which is that YOU are the person with whome they should do business. 

If you are an agent, you should not go very far with any buyer until they have gone through the pre approval process. Otherwise, you run a high risk of being an expensive tour guide. 

Just Listed!

Price Reduced!

Must Sell!

New Price!

Open!

Buzz off.

You know who you are. I spend $200-300 per month on my primary MLS and then more money on programs to match buyer clients to listed properties. Simply put, if your listing matches my buyer, I’ll know before you do. If you just reduced your price, I’ll see it on the hotsheet. Same for open houses. I don’t need you to email me. 

You know what I think when you email me your listing? I’ll tell you. I think “that listing must be an overpriced turkey because the agent is reduced to being a carnival barker.” Seriously. Nothing says “dog” like an email begging me to show a house.

We get an email every 5 minutes. Some require action or a thoughtful response.  Sifting through the spam of agents who are pacifying nervous sellers is a time-consuming nuisance. Time is money. 

And don’t tell me that what the delete button is for. That’s like sneezing on my and saying “that’s what medicine is for.” I respect your time. I don’t spam you. You know about my listings because you show them, and I didn’t email you about them either.

It gets REALLY hairy when I search for an important email and some similar word puts your overpriced bow-wow in the search findings. Or when I accidentally delete an important email whilst purging your tripe. OR WHEN THE LISTING IS IN A STATE I DO NOT LIVE, WORK, OR HOLD A LICENSE IN BECAUSE YOU BOUGHT A SHITTY DATABASE OF EMAIL ADDRESSES. Aren’t we professionals? Do lawyers spam the crap out of each other? Do Radiologists? Architects? Then why do you? 

Do not spam me. Do not waste my time. Do not hinder my efforts to earn my living.

Have a nice day.

PS- Don’t fax me either.  

As more inventory enters the spring market, over half of my new listings are upside down. I list and sell many short sales in Westchester County and beyond, so they tend to find me, but that still speaks to the fact that there are still billions in toxic assets & lots of people underwater out there.

In some cases, the properties are tenant occupied. They unwittingly participate in the problem, for which they have my sympathy. However, sometimes they are also like the UAW in the respect that they negotiated the landlord out of business. For instance, in one single family home, the tenants renegotiated their lease to 

• lower the rent 25%
• have the landlord pay for heat/electricity

 

You can search the MLS like an agent here.	See J. Philip’s New York Photo Blog Here.
J. Philip Faranda is New York’s Premier Short Sale REALTOR. Read Phil’s short sale blog here at http://NYShortSaleBlog.net.	J. Philip Serves Briarcliff Manor, Ossining, the River towns , Westchester County & the bedroom counties of New York City.

This building is one of the biggest enigmas in Westchester. It is located in a very affluent area (in the Edgment section on busy Central Park Avenue), but has been derelict for years. More information here and  here. One of the real neat pieces of architecture you’ll see in southern Westchester, it sits, year after year, with little more than the lawn mowed. This is one prime piece of real estate, and it will be a shame if and when the land is developed to replace this unique, albeit under-appreciated building. 

 

I was working all day Saturday and didn’t get to see the Kentucky Derby; my wife replayed it for me this morning on DVR. For those of you who ran track or perhaps participated in rowing in college as I did, you’ll know that races involve more than speed; they require strategy. The basic underpinning of any strategy is belief. The horse could not have won without jockey Calvin Borel, who absolutely believed in him. 

A few observations on the race:

• In a 2:02 race, the announcer didn’t speak the name of the winner until about 1:55.
• Mine That Bird, the 2009 Derby Champion, came back from about 8th place from my observation in the final quarter of the race. The final quarter.  And he won in a blowout. 
• The horse was either too stupid or too fast (or maybe just too BUSY) to realize it was customary to bail out with a deficit that large. My vote is busy. 
• The jockey absolutely believed the horse was capable of winning or he wouldn’t have dangerously pushed it through a crowded field on the inside rail. 
• There was a small opening that was exploited. 
• Once that horse got the lead, it’s energy was limitless.
• The horse’s entry in the race was a 50-1 afterthought.  

128 days ago, I sat at a dining room table in Putnam Valley, New York, just north of the Westchester County border with a young couple who were listed 4 times previously with 3 different brokerages in unsuccessful attempts to sell their home. Along the way, they got behind on their payments due to loss of income and had all but lost hope that they could avoid a foreclosure. 

One of my agents, Tom Ricapito, had found these nice people quite by accident, and told them to talk to me before giving up. This was the first time they had ever heard of a short sale. I told them I had closed dozens, and they listed with my company with Tom as their agent. He later told me that our meeting gave them new hope. It is funny how these people found us quite by random chance, and not through our regular marketing. When you specialize in New York short sales, they sometimes find you. 

The home was priced to reflect market conditions, and an offer came soon afterward. We prepared the selling broker for eactly what to expect- the wait, the process, everything. Nothing was left to ambiguity or chance. We communicated regularly. Less than a month ago, the short sale was approved, to the seller’s relief and the buyer’s pleasant surprise. They had been prepared for a far longer wait. 

So, 128 days from the day they listed, the short sale closed successfully. In Westchester and Putnam counties, 128 days is relatively fast for regular listings, let alone short sales. They don’t all work out like that for sure, but we can feel good when they do. 

We will remain in touch with these people. Since the only problem they incurred on their credit was just some late payments instead of bankruptcy, foreclosure deed in lieu or deficiency judgment, they will be ready for to buy again in a couple of years (perhaps sooner) so long as they keep their noses clean. We intend to sell them their next home and help them avoid the pitfalls which contributed to their recent challenges. My hat is off to my agent Tom, who stayed on top of his file and made sure that he headed off any potential issues with the buyers or their agent at the pass. Communication is key. 

Thankfully, there wasn’t any big obstacle or memorable roadblock to this story,as there almost always is. We’ll take it!

 

At the heart of doing business in good faith is representing accurate information. This doesn’t just go for square footage, what appliances convey, or when the roof was replaced. It also applies to compensation. Actually, in my opinion, it especially applies to compensation. 

Charles Stallions has written a thought-provoking post on the re-negotiation of a sales bonus which is going to arbitration. At the heart of the matter is a large bonus promised which was taken off the table by the seller when the offer came in (SHOCK) less than full price. Imagine that in this market. 

A similar thing just occurred with one of my agents. The seller, a licensee selling her own home, offered a $3000 bonus to the selling agent. No other stipulations were on the MLS. When my agent submitted an offer on behalf of the buyer client, he was told by the seller than she had just reduced the price and meant to modify the bonus to $500. He advised her that the printout he had was the most recent price with a $3000 bonus, that was what was in writing, and that was what should be paid. They settled on a $1500 bonus mainly due to the fact that losing a sale for our client over compensation isn’t exactly listed in our fiduciary duties. 

I’m not happy about the settlement, but I will abide by the agreement between the 2 agents. It isn’t about the money- my split of a bonus won’t make or break the company- as a matter of fact I have, in the past, allowed my agents to keep their entire bonus. What bothers me is the bait and switch. That agent should know better. 

The MLS is an offer of compensation in exchange for cooperation. If you cooperate and I pull the compensation rug out from under you, that isn’t doing business in good faith. 

I don’t just see this with bonuses, either. More and more, I see sellers attempting to cut the commission as a bargaining chip as well, and when I am the listing agent I adise my seller client that this could land me in arbitration.  

Simply put, if you are going to offer a certain fixed bonus amout or percentage of the sale price to a cooperating agent, then that is what you should pay at closing, period. The only way out in the case of a bonus is if the bonus stipulates that it will be paid only for a full price sale.  “$1000 bonus for a full price offer that closes” is good verbiage for something like that.

Other than that, your word, and that of the seller client, should be your bond. Good faith has to trump economic convenience-if you make a promise, you should deliver. 

Driving around New York with a digital camera has yielded some pretty neat photos that I can’t put on the MLS. There was the time a herd of deer dropped in on the photo shoot of a new listing, for instance.

So, I have started a photo blog, exclusively to post all the neat things I have seen in my travels. You can see it here: http://NYPhotoblog.net. There is also a link to it in my sidebar.

I have a backlog of cool things to start with, and I’ll update it as I run into new sights. There is plenty of material around here. 

 

When I posted Spring photos yesterday the cherry blossoms weren’t ready, but they greeted me this morning. 

Of course, two family members had to beautify the photo in a “where’s waldo” kind of way. 

So, there they are. Posted a day late but just as pretty. 

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You can search the MLS like an agent at http://jphilip.listingbook.com.

J. Philip Faranda ranks among New York’s premier short sale REALTORS specializing in short sales in Westchester, Rockland, Putnam & Dutchess Counties. www.NYShortSaleTeam.com. Read Phil’s short sale blog at http://NewYorkShortSaleBlog.wordpress.com.

J. Philip Serves Briarcliff Manor, Ossining, Croton on Hudson, Pleasantville, Sleepy Hollow, White Plains, Yonkers, Peekskill, Cortlandt, Tarrytown, Yorktown, Montrose, Hawthorne, Thornwood, Valhalla, Hartsdale & all of Westchester County, New York.

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