Monday, August 6, 2007

Visiting Cape Cods in Summer

Over the weekend Christina and I took a little trip to look at some Cape Cods on Burch Drive in Morris Plains. We were recommended to go check out one that needs some TLC by the our realtor. Coincidentally or perhaps by the shear fact that there are a lot of houses for sale, two other Cape Cods were also hosting open houses on the roughly 1/4 mile road. It really turned out like the dating game: three eligible homes, with one lucky contestant (well, technically there were two of us but whatever).

House #1
25 Burch Dr. listed at $425,000 (Realtor was trying to play matchmaker)
Rough around the edges, been hurt before, but a cheap date

House #2
19 Burch listed at $517,800
Big, bold, motivated, a little awkward, but a pretty smooth operator

House #3
48 Burch listed at $519,900
Family-minded, motivated, with a touch of country

First thing we realized is even when buying a little house there is a big check to write. We were both taken aback by how expensive even small homes have become in Morris County. It made the jagged pill of our mortgage a bit easier to swallow when we realized we bought a property with two little homes a year ago for roughly the same price as the more expensive listings.

Second, buying for the sake of saving a few bucks to DIY isn't always the best idea. After seeing termite damage, two bathrooms that would need to be gutted, and smelling the musty basement of House #1, we realized we couldn't afford the face lift. House #2 had a large expansion, a gourmet kitchen, a huge lot in comparison and was listed at less than 100k more. I honestly think Bob Villa would have trouble making that money up if he went with House #1.

Third, the good sign for us as buyers was competition seems to be getting more fierce out there. Sure it is August and there is nothing but bad news about real estate out there but this was the first I saw people so quickly moving to action to drop their prices. House #2 chopped the price 10k after less than a month. House #3 cut his price twice in a matter of two months and will soon be listed at under 5. They also hired a realtor after initially going the FSBO route. The price drops were probably to compete with House #2 since its competitor in my opinion was a much better buy except for an upstairs bathroom that only a Hobbit could love.

At the end of the day, we lived, we learned but never loved. In the indelible song of Kermit the Frog in The Muppet Movie, "I hope that something better comes along."

Wednesday, July 25, 2007

US June existing home sales fall 3.8

WASHINGTON (Thomson Financial) - Existing home sales in the US fell even faster than expected in June, although median existing home prices rose from the prior year for the first time in nearly a year, according to the National Association of Realtors.

Existing home sales fell 3.8 pct in June to a 5.75 mln unit annual pace, much lower than the expected pace of 5.85 mln units. That puts June existing home sales at the lowest pace since November 2002, when the annual pace was 5.73 mln units.

The Realtors revised May existing home sales to a 5.98 mln unit pace.

Despite the continuing drop in existing home sales, the median existing home price in June increased 0.3 pct from June 2006 to 230,100 usd. This is the first year-over-year increase in median existing home prices in 11 months.

NAR senior economist Lawrence Yun said this could be a sign the falling inventories are allowing prices to rebound, although he cautioned that the June figures are just a single month's worth of data that should be viewed cautiously.

June inventories of existing home sales fell 4.2 pct from May to an 8.8 month supply. This is the same as the revised May supply of existing homes, which was the highest level since early 1992.
Yun said the overall decrease in existing home sales is likely caused by rising mortgage rates. 'Mortgage interest rates have risen recently, and tightening lending standards are continuing to hamper sales, but fewer risky loans will put the market on a healthier path,' he said.

Tuesday, July 24, 2007

Realtor or FSBO

Here is the age ol' real estate question, "can you sell it on your own?"

I think one of the main reasons people shy away is the negotiating stage of selling the home. That's understandable but if anyone has the backbone to go out on their own to sell their house, they probably have the smarts to balk at an insulting offer. If you are really intimidated by the thought of handling the process of negotiating and meeting with prospective buyers, it probably isn't a good idea from the start.

On the flip side, if I am comfortable with that and I decide tomorrow to sell my house what do I need to do.

My first step would be to get an idea of the market. I can use Web sites like to identify recent area home sales, visit open houses locally to see what comparable homes are selling for, and even meet with some local Realtors to get their take. After a little leg work, you should roughly have a $10,000-$15,000 window to work with.

Let's say for the sake of argument that we determine the range to be $495,000 to $505,000, which hits the easy to work with midpoint of $500,000. Now considering that is a competitive number, we will be very happy to receive our listing price and net $470,000 after paying $30,000 for commissions to realtors -- if we list with a realtor our price is less 6% (3% for listing agent and 3% for buying agent). Now that being said, wouldn't listing the house at $490,000 on your own make sense?

Every Realtor blog I ever read says "it is all about price!" so why do they matter? If we low-ball the market and list competitively aren't we set to win?

Here in lie the problems: 1) Many Realtors don't like dealing with FSBOs because they will not be making the deal with a realtor 2) Buying Realtors are not guaranteed a commission. They will either have to arrange commission with their client or with the seller. Likely they will ask the seller if they will honor a 3% commission if their client makes an offer. 3) These two combined reasons lead to less foot traffic to your home as Realtors may choose to shy away...

But with the Internet and flat fee prices for MLS listings for roughly $500, the ability to post your home on free classifieds like Craiglist, and online marketing tools for everything from virtual tours to newsletters, to forums and blogs -- aren't home owners going to get more comfortable going "FSBO" than ever?

I suppose only time will tell but I plan to talk about in upcoming posts...

Monday, July 23, 2007

Speedwell Redevelopment

Today there was an article in the Daily Record about the 12-acre redevelopment area on and around Speedwell Ave. The article was interesting as I wasn't familiar with the plan previous; however I would have liked to have a better understanding of what is going to happen at the site. For instance, how are homes in the redevelopment still on the market? Are those homes being purchased by the development company? etc.

Also, I wonder how much development is too much in Morristown at one time? Obviously this low-income construction isn't going to compete with Vail Mansion or the other townhouses going up but is there really the demand for this change? Any thoughts?

So it begins...

So what is the scoop on real estate in New Jersey. Everywhere you look someone has their take, "don't buy the market is plunging," or "time to get in, opportunity is now." Who really knows? ...that is exactly what I am hoping to find out.