Posted by & filed under Buying, Selling.

While national foreclosure rates rose 15% during the first half of 2009, in New Jersey foreclosures are dropping. NJ foreclosures are down by 30% for the first six months of 2009 compared to the same period in 2008 according to Realty Trac. In May, the New Jersey Judiciary announced foreclosure activity for the first 4 months of 2009 was down by 20%. These figures certainly point to an improving housing market in New Jersey.

A lot of credit is being given to the programs New Jersey brought out in January to help homeowners avoid foreclosure. A special foreclosure mediation website was put up just to help owners avoid foreclosure by the State with a toll free hotline. The Star Ledger reported that although few homeowners were helped, public awareness occurred.  Because the public has been made aware of this issue by these programs, many homeowners took stock of their situation.  The impact was significant.  Many homeowners too action to avoid foreclosure.

Another aid has been historically low interest rates.  Low rates have allowed people to refinance their mortgage into a more affordable loan. Supporting this is the fact that the New Jersey housing market hasn’t depreciated as badly as elsewhere.  Our house values have performed better than national averages.

According to Jeff Otteau, the renowned analyst of  New Jersey’s housing market, this makes quite a difference. “The reason that borrowers walk away and mail in the keys is because not only are they having a hard time making their payments, but their houses are worth less than their mortgage balance,” Otteau said.

Bergen County foreclosure rate, as reported in The Record on July 16th, are 1/206.  The foreclosure rate for New Jersey is 1/146 and for the US it is 1/84. As usual, Bergen County outperforms the general real estate market.

We can’t predict the future but it’s safe to say that the future will be brighter.   it’s also true that a 30% drop in foreclosures will certainly stimulate consumer confidence in NJ housing and that is huge. Any time foreclosure rates are down the impact on real estate will be positive.  For Bergen County homes, with it’s consistently superior performance, this is even more the case.

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Real estate appraisal rules have changed in major ways.  The changes are a response to the financial crisis.  It’s an effort to avoid issues in the future that created havoc.

When the Home Valuation Code of Conduct went into effect by Fannie Mae and Freddie Mac on May 1st, appraisal protocols for mortgage loans changed. To protect consumers, loan officers, mortgage brokers and real estate agents can no longer choose appraisers.

Why is this so important? Because the mortgage bank and the home buyer rely on an appraiser’s determination of value; a lot of abuse and fraud has been uncovered. If, for example, an appraiser sets a home value to fit the sales price, that’s obviously wrong.

I just had a short sale listing close; the bank took nearly a 50% loss on a $1.8 million loan. The homeowner had been building a new home for himself. When he gave me his loan amount, I was stunned. There was no way to justify that mortgage loan and yet it happened.

To comply, banks no longer have their own appraisers; they use real estate appraisal services with pools of appraisers from which appraisers are randomly selected. This creates an added expense for the mortgage process and increasingly results in appraisers valuing homes who’ve never been to the area before and aren’t members of the local MLS. Recently my office experienced this.

An office listing had an appraisal that was ridiculously low. Both buyer and seller knew this but the bank, which had to use the appraisal, could no longer justify the mortgage. The appraiser had never been to the area before and used the wrong MLS. Bergen County homes are listed in the New Jersey MLS; the appraiser used the Garden State MLS which has only a few Bergen County listings. Without expert knowledge of the local inventory and no access to all the data, he wasn’t able to do a correct valuation.

Eventually things will straighten out but until it does, there will be higher costs to obtaining a mortgage for home buyers and for both buyers and sellers, there will be appraisals that unfairly cancel mortgages.  We did need a change in appraisal rules but I feel it could have been better done.

Posted by & filed under Homeowner Tips, Selling.

Bergen County homes have done better than most housing markets in the US.  They may have done better but they have not escaped the economic collapse.  As a result our home values have depreciated over the past few years. For many homeowners this has created a horrible situation.  Their home is not worth what they paid for it.

For homeowners who need to sell their home, many find it impossible to do so.  For others no longer can afford the mortgage payment they don’t have enough equity to refinance or sell.  Depreciation has made their home worth less than the current market value.  Because of this they are faced with foreclosure or a short sale.

To solve this problem with home values the Federal Government has created a solution for some homeowners.  This applies to owners who have not dramatically lost value.

On July 1st HUD Secretary Shaun Donovan announced that Fannie Mae and Freddie Mac will begin refinancing mortgages with loan-to-value ratios as much as 125%. This means you can be 25% negative in the value of your house and still refinance. The idea is to try to match the loss of equity to avoid a distress sale.  This will work for homeowners who’ve been paying their mortgages and have good credit.  The objective is to keep them in their homes.

Keeping people in their homes has a major social impact.  It helps to maintain neighborhoods and to stabilize the local real estate market.

While this is just part of the Bergen County housing market, it allows many people to keep their home and helps stabilize real estate values by avoiding foreclosures and short sale transactions.

If this works for you or someone you know, get in touch with a licensed mortgage banker. You need a top level loan officer’s help to qualify for this program; if you need a recommendation, just let me know.  With falling home values it’s best to act now before it’s too late for you.  Call me at 201-741-8490.

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Affordable Dumont rocks!  It truly is a Bergen County value for buyers.  I’ll explain why.

Crunching numbers to analyze the real estate market has taught me a lot. Over the years, I’ve found that the relationship between the number of homes for sale and under contract is a great indicator of how the housing market is doing. When that ratio is 2:1, the housing market is strong.

Ok, I know, it’s 2009 and the sky is supposed to be falling but it sure isn’t in Dumont. Right now Dumont has 50 homes for sale and 31 under contract which is way better than 2:1. Plus the time it takes to sell a home has improved dramatically – 72 days for under contract and 93 days for the 25 sales we’ve had over the past 4 months. No matter how you look at it, Dumont homes are rocking! There are several reasons for this.

Dumont is affordable. Property sizes are not too big and not too small which results in a moderate sized house. Dumont typically has what most of us would call a normal sized yard with a normal sized house. This means Dumont real estate works for most of us.

Dumont’s school district is very good with a lot of parent participation and a broad range of programs. The town has excellent community services as well. The Borough of Dumont’s Official Website is worth a look – it has a lot of information and shows you the strong community spirit that’s here.

The business district is very active with a good mix of retail stores, services and offices. Major retailers have invested in Dumont such as a CVS drug store, Wachovia Bank and Stop N Shop supermarket.

NYC transportation is great – there are plenty of express buses at rush hour and you don’t have to make any changes. Just grab a seat and read the newspaper on the way to work.

Dumont has everything that most people want, is affordable for first time buyers, can handle the more affluent move up market and is a great place to live. No wonder the real estate market is doing well. This does not, however, mean that prices are going up. They aren’t but they’re not sliding down either. If you’re thinking of making a move into Dumont, as a home buyer you’d be smart to do it sooner than later. Things here have turned positive.

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Home Inspections in New Jersey

Buying a home should always include a home inspection. Even if the home is new construction, it’s best to have the guidance of a professional home inspector. In New Jersey, home inspectors are licensed by the State but there’s also another resource for you – the American Society of Home Inspectors known as ASHI.

ASHI was started in 1976 by a group of home inspectors who wanted to set standards of practice and create a learning center for inspectors, buyers, sellers and real estate professionals. Every member of ASHI must take a Standards and Practices training module and agree to abide by their Code of Ethics. Today ASHI is the largest trade organization of home inspectors in the US. I consider ASHI to be a wonderful organization and only recommend home inspectors who are both licensed in New Jersey to perform home inspectors and members of ASHI.

BTW, when you’re on the ASHI website at, be sure to check out the Virtual Home Inspection

You should always attend your home inspection. It’s one of the most important parts of buying a house plus you’ll learn a lot about your new home. The average inspection takes around 3 hours but this varies on the size and condition of a home. Be sure to bring a pen and pad so that you can take notes during the inspection. The inspector will tell you about the home’s condition and teach you how to maintain various aspects of it.

Home Inspections for Sellers

If you are selling, it’s a good idea to inspect your home before it’s for sale. Pre listing home inspections uncover problems you never knew existed.  It gives you an idea of what a buyer will hear too.  This is very important for a seller.  A major cause of failed contracts is the home inspection.  Issues found can frighten a buyer and sellers it personally insulting.  This is not the best environment to negotiate to a place that’s fair for both sides.  As a result, contracts fail.

Because of this it’s smart for a sellers to use pre list home inspections to fix issues first.  Then market your home for sale.  Let me know if you need help or have questions.

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You need Bergen County homes sales data from the New Jersey MLS so you’re on top of the market.

The New Jersey MLS is the primary multiple listing service for all of Bergen County. They do a simply outstanding job in so many ways. There is comprehensive information on homes for sale as well as statistics on all aspects of the market.

The sales data shows an improving market for homes in Bergen County. The number of days it takes to sell a home has been decreasing since March. If you take a look at the NJMLS Average Days on the Market Graph you’ll see this very clearly. While it’s still taking more than 100 days to get a home sold, we’re closing in on this number. I bet we’ll be under 100 days to get a home sold very shortly.

Take a look at the Average Sold Prices Graph. It shows a definite move up although this time it begins in April. However, this makes sense because almost all first quarter sales come from contracts written during the prior year. What this graph shows it that we’re moving toward an average home sale of $500,000 and that’s positive.

I’m not saying that house prices are going up – prices for homes are not going up. They will actually continue to go down for a while yet but you can only get a rise in the average sales price for a home when more expensive homes are selling. That happens when the real estate market is getting better throughout all price ranges.

First time home buyers have been kept in the market by such things as the First Time Home Buyer $8,000 Tax Credit which, one week ago, was added to FHA backed loans and low mortgage rates. As everyone knows, it takes the first time home buyer to get things moving and it sure looks like this is happening. At least that’s what the New Jersey MLS data shows.**

**These graphs are time sensitive and so the links are no longer active.

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On January 27, 2009, a home at 221 Churchill Road was listed for sale at $1,590,000. This was an extremely well kept original ranch on a gorgeous acre lot. It was listed twice – as a single family home and as a building lot. Tenafly East Hill original homes are in high demand.  Their acre properties are sought after by builders as building lots.  Builders knock these homes down to construct a new luxury home.

A short while after being listed, the house was reduced to $1,425,000. It took only 2 weeks more to negotiate an accepted offer on February 23rd. This is notable because the buyer looked at this as a building lot transaction.  Therefore it demonstrates the strength of demand for new high end construction.

What happened next is even more intriguing.  It confirms the demand for Tenafly East Hill new construction.

On May 22nd the home came back on the market for sale. I called the listing agent to find out what happened.  She told me that the sellers were purchasing a short sale property out of the area.  They had thought they were nearly at the end of their short sale purchase.  However, this was not the case.  As a result, the builder buying 221 Churchill cancelled his contract because he needed to get on to another option.  He simply couldn’t keep waiting.

Short sale transactions can take many many months.  It can be as long as one year. If you are buying a short sale and your buyer is not prepared to wait 6-9 months, it’s not going to work in most cases.  221 Churchill thought they were within 30 days of closing when an unexpected issue popped up.

The home went back on the market on May 22nd at the start of the Memorial Day Weekend. I am sure you will agree that holiday weekends aren’t the best time to start marketing a house.  What did happen was multiple offers almost immediately.  The house accepted offer and was in Attorney Review again in 5 days.

This tells you that the market for luxury homes on the Tenafly East Hill is still strong and that the market is stronger now than it was at the end of February. But wait, you say, if things are so fine and dandy on the Tenafly East Hill, why are there so many homes for sale? Because they are not marketed correctly. It really IS as simple as that.

The listing agent for 221 Churchill Road had it marketed as both a residential home and a building lot.  High end homes that are in original condition are the weakest part of the market.  Luxury home buyers want it done.  They don’t have the time or the inclination to renovate.  As a result, those homes on the Tenafly East Hill are all building lots. That’s how they sell and that’s how they should be marketed.

The homes sitting on the Tenafly East Hill are mis-marketed.  Those agents, in my opinion, are telling the owners the fairy tales they want to hear.  So the homes sit and sit and sit.  I see something else too.  Those homes are not being marketed using modern advanced methods.  They are just dumped in the MLS system, put in shiny brochures and advertised in high end magazines.  Frankly that’s not how it works.  I come from a very wealthy family.  No one bought an estate because they saw an ad on Unique Homes.  And they didn’t buy a Rolls from the Robb Report either.

Demand for new construction on the Tenafly East Hill is strong and getting stronger.  If you have a home on the East Hill that’s more than 5 years old, don’t listen to the fairy tales if you want to move.  Call me.  You’ll be surprised at what creative modern marketing can do for you.

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A FHA tax credit for home buyers has just been announced.  This is truly great news for the real estate market.

U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan announced yesterday, May 29th, that the Federal Housing Administration (FHA) will allow home buyers to apply the Obama Administration’s new $8,000 first-time home buyer tax credit on FHA mortgage loans. Previously the tax credit only applied to conventional mortgages. The only catch is that the tax credit cannot be used towards the minimum 3.5% down payment. But, this is still terrific and a great help for people who need to use a FHA insured mortgage loan.

Secretary Donavan said that the objective of this FHA tax credit is to help stabilize the housing market.  The hope is that this new FHA tax credit will stimulate more home sales across the US.  It should certainly do exactly that because it makes buying a home easier. With the ability to apply the tax credit to purchase costs, buying a home now becomes affordable for thousands of people and affordable enough to get thousands to jump off the fence and into a house.

FHA loans are extremely popular with first time home buyers because qualifying for a FHA mortgage is a lot easier than qualifying for a conventional loan. The ratios are easier and the down payment can be as little as 3.5% although I must tell you that I do not approve of buying a home with such a low down payment. What I tell my home buyers is to wait until you’ve saved up at least a 10% down payment.

Interest rates moved up and down this week.  We’re still in the 5-5.5% range for what most people really qualify for in a mortgage. Its been like this all year and projected to continue into the New Year.  As a result, rates are not a problem.

The reason the first time home buyer market is critical to the housing market is because this is where the housing domino chain begins – when a home buyer buys a house, he buys it from someone who often moves on to a bigger house and so on and so on. The entire chain of transactions begins with the first house that is sold and that’s your first time home buyer.

If you look at the real estate market the picture you see is a pyramid.  The the least expensive homes are the majority on the bottom and the fewest are the most expensive on the top.  Homes on the bottom are almost all first time home buyer purchases.  The real estate market would collapse without first time home buyer purchases.  As a result the new FHA tax credit is important for the strength and stability of real estate.

Posted by & filed under Buying, Selling.

absorption rateWhen people decide to buy a home they naturally start to look at the real estate market, do some number crunching and find statistics which explain the market trends. Lately, a statistic on homes that’s been quite popular is the absorption rate.

Absorption rates simply put tell you how long it will take to sell off the existing inventory of homes. This shows you how properties are selling; it’s measured in months as in how many months it will take to sell all the homes for sale. Understanding market activity is important but I think that looking at absorption rates this early in the year can be misleading.

No matter the economy, the housing market has a unique rhythm of it’s own. Most homes for sale go on the market during the early part of the year and are sold during the summer so statistics for the first few months of the year that track the relationship between sales and available inventory can be tilted in the wrong direction. In fact, absorption rates at this point can be very confusing if you look at the report appraisers use when they do an appraisal on a house. This is the 1004MC Report.

Let’s look at Tenafly, NJ. If you go back 12 months from today, the Tenafly real estate market for homes really looks weird. For example, take a look at the number of Active Listings – it looks terrible doesn’t it? Well, what would you expect for this time of year? It’s always larger now because more houses are on the market between March and June. At the same time, how long a home is on the market for sale is currently half what it was previously. That is extremely important. In truth, Tenafly houses are selling very well. Tenafly homes are always in strong demand. The New Jersey MLS 1004MC Appraisal Report for Tenafly is here for you to see:

PLEASE NOTE:  This report ties into the active inventory of the New Jersey MLS at the time and since we are past these dates it defaults to a blank state.  I am leaving this article in the blog to at least introduce you to this report.

absorption rate

Using the absorption rate isn’t always the best idea until you’re further into the year.  So look to the 1004MC Appraisal Report to give you a better over view now.

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Beware of short sale fraud.  This is a growing problem in the short sale market.

There is a new thief who preys upon homeowners who must put their home on the market as a short sale. Simply put, a short sale occurs when a homeowner can no longer pay his mortgage, has no other assets and the loan amount is greater than the home is worth. As a result there is a shortage between what’s owed on the home and it’s market value. The only way a homeowner can sell his home is by getting the bank to accept this shortage, thus the term “short sale.”

These new thieves market themselves as having all the solutions to your problems because they have a “special” ability to negotiate a short sale with the bank. Nothing could be farther from the truth. What really happens is that a desperate homeowner is taken advantage of by these horrible people because the truth is that they are completely unnecessary.

Realtors do short sales all the time. If you must put your home on the market as a short sale, your listing agent can do the work and negotiate with the bank on your behalf. You can also ask your attorney to do this for you and many people do. What you don’t need is to encumber yourself with an unnecessary expense by hiring one of these charlatans. They are today’s version of the proverbial “snake oil salesman.”

I have worked on short sale transactions successfully. It is a tremendous amount of work and takes a long while. Everyone involved needs a lot of patience but eventually things do work out. Buying a home that is a short sale means a long wait for the buyer. Sometimes a buyer will cancel his contract out of frustration – it takes months and months to see if the mortgage bank will accept the buyer’s offer. But, hiring one of these thieves will not help you – it only wastes your money on these frauds. Every bank has it’s own unique process and no one can make a bank move any faster.

Don’t allow a predator to hurt you – if you have any questions, email me and if I don’t know the answer, I’ll find someone who does.