What Do Your Five Senses Have to do with Real Estate?

Looking at property online certainly has its advantages.  It’s easily accessible, on your own schedule, and the options are nearly endless.  Some agents are very good at marketing their properties.  They use professional photography, enhanced lighting, optimal staging, and more just to showcase the property in the very best ways.  It can be easy to fall in love with a property based on these photos, only to be extremely disappointed when you finally see the property in person.

The opposite is also true.  An agent may be in a hurry and simply snap some quick photos with their cellphone.  In these cases, a very nice property can easily be overlooked simply because the agent didn’t take the same time and money to present the home in its best light.

When searching for property online, buyers rely so heavily on photos, it’s the nature of the internet.  It is not unusual for buyers to eliminate multiple homes or even entire areas based solely on their “internet perception.”  But the truth is, perception is not always reality, and that is why I always suggest a “boots on the ground” approach to looking at properties.

Think about all the things that photos can’t tell you.  They can’t tell you things like layout, smells, neighbors, water damage, and more.  I believe that you need all five senses engaged when looking for a home.  What if your neighbor has a huge dog that constantly barks?  You won’t know that from photos.  What if your land is near a sewage plant and there is a constant stench in the air?  What if an area that you think is really safe and family-friendly turns out to be a little less than desirable? 

So get your winter boots on and see some properties in person. You won’t regret it.

Foreclosure Explained

Foreclosure happens when a loan is defaulted on and the lender recovers the amount owed by selling or taking ownership of the property.  In plainer words: You stop paying and the bank takes the house back and you lose possession. Keep in mind that the foreclosure process can vary from state to state, but there is a general cadence to the process. The purpose of this article is to give a very broad overview of the process itself and not considered advice of any sort.

Now that that is out of the way, we can continue…

So in the event a payment is missed, the lender will reach out via letter or phone and there will be a late fee added.  If a second payment is missed, the lender will likely follow up by phone and often to make arrangements with the borrower to prevent falling further behind. Contrary to popular belief, the bank DOES NOT want your house. They want the mortgage to be serviced (meaning you pay it) and they collect their interest.

After the third month of missed payments, a letter called a notice of default (NOD) is sent.  It is a public notice that gives the borrower 30 days to remedy the past due payments before formally starting the foreclosure process.  Most lenders will not send a NOD until the borrower is 90 days past due, and generally federal law prohibits a lender from starting foreclosure until the borrower is more than 120 days past due.

Next, paperwork is filed with the necessary courts to formally start the process since a foreclosure is essentially a legal action more than a financial one.  The lender’s attorney or foreclosure trustee will schedule a sale of the property and the sale is advertised by the lender in the weeks leading up to the auction.  The timeline from the NOD to the auction date can be as quick as 2-3 months.  It is still possible at this point for the borrower to contact the lender and make payment arrangements or pay the amount due (including attorneys fees).

If arrangements can’t be made and the sale proceeds, the property is placed for public auction and will be awarded to the highest bidder who meets all the requirements.  Once the deed is awarded to the highest bidder, the property is then owned by the purchaser, and they are entitled to immediate possession.  If the previous owners are still living in the property, they are issued an order to evacuate, which demands that anyone living in the house must vacate immediately.  If needed, local law enforcement can step in to remove the occupants and impound any remaining belongings.

Throughout the foreclosure process, most lenders will make several attempts to make arrangements for the borrower to get caught up.  It is in everyone’s best interest to try to work something out before getting too far down the line of this process. After the housing crisis of 2009-2010, the mortgage companies are looking for ways to keep people in their homes. It costs money for them to hold the properties and they are usually in a rather distressed state.

If you should find yourself falling behind on payments or missing ones here and there, the best place to start is talking to your lender. A call to your realtor doesn’t hurt either if you wanted to strategize on how to approach. Always here to help my friends.

The Power of My Network

Short and sweet one this week, folks. 

I have been in this industry for quite some time now and I pride myself on the lasting connections that I have maintained with people in various niches.  I don’t just help people buy and sell homes; I can point them in the right direction for a magnitude of other things. An extension of my love for guiding people through a real estate transaction is to help them with their lives when they’re not buying and selling homes.

Here is a quick list of referrals and contacts I have at my fingertips:

  • Other agents
  • Brokers
  • Attorneys (Business, Family, Estate, Personal Injury)
  • Appraisers
  • Inspectors
  • Mortgage officers
  • Financial planners
  • Handymen
  • Insurance brokers
  • Heating & Cooling
  • Lenders
  • Contractors (Roofers, Painters, Flooring, Exterior)

The list could go on and on.  Using these professionals, I am able to continually help my clients with whatever they may need.  Our relationship doesn’t end at settlement, I am always just a call, text or email away.  Don’t hesitate to reach out and ask questions, you can quite literally Ask Seth Anything.

Three BIG Reasons You Need an Agent for New Construction

If you are getting ready to start house hunting, the allure of new construction is undeniably attractive.  You get to be the very first ones to live in the home, it’s full of brand-new appliances, and all the finishes and treatments are hand-picked to your liking.  Also, no need to worry about structural or cosmetic upgrades for years.

When buying new construction, the builder will have an agent that is able to help you through the process.  But don’t make the mistake of not having your own agent from the very beginning, since the builder’s agent will obviously be keeping their client (the buyer) in mind.

IMPORTANT: If you are working with an agent, make sure you tell them before going to a new construction site or registering on their website. If you don’t mention your relationship with your agent, they can essentially represent both you and the builder which is never optimal for a transaction. It’s great for the new construction agent because they get paid twice! Any questions about this, please contact me and I can explain.

It may be tempting to just sign the deal that the builder’s agent presents, seems easy enough, right?  But trust me, you’ll want someone there who is able to represent your side of the deal.

Here are my three BIG reasons why you need your own agent.

  1. You’ll have your own negotiator and advisor.
    With the way the market is right now, new construction sales have slowed down considerably.  This could work strongly in your favor, because the builders may be more motivated to make a deal.  Your agent will be able to strategize and negotiate on your behalf to get you the best deal possible
  1. Making sure selections are appropriate for resale.
    When it comes to new construction, a ton of details are left up to you.  Things you may never have thought much about before, like locks or cabinet finishes.  While it is of course going to be your desire to pick out things that are most aesthetically pleasing to you, having an agent oversee your choices could save you a lot of hassle down the line.  An agent can help you pick timeless options that are most optimal when it comes time for resale.  Your agent can also guide you with major decisions like layout, which is going to be a huge factor someday when it’s time for reselling.
  1. Market and process knowledge.
    The process for new construction is not the same as a typical home purchase.  There are different things to consider, the timeline is different, the paperwork can be different – knowing what to look for and how to structure the deal in an optimal way will greatly benefit you.  Also, knowing and understanding the market is key – where the market is now, where it has been, and the trajectory of where it is going, this is all vital information that you are going to want to know before committing to anything.

Having your own agent in a new construction deal can save you considerable time in numerous ways.  It’s always smart to have an agent with your best interests in mind in any real estate transaction.

Think it’s a buyer’s market? Don’t be that buyer.

It’s true that we are not in the peak of the market boom we were in the past couple of years.  But that doesn’t mean buyers suddenly hold all the power like some seem to think.  In fact, there are still a lot of markets (like Philly, for example) where the market is still hot and it is certainly still a seller’s market.

A mistake that I am seeing right now is that buyers are getting a little ahead of themselves, cocky even.  Buyers are thinking they hold power again and are coming to the table with lowball offers, expecting them to be accepted without any sort of push-back or possible bidding war situation.

We are not in a market where we can assume that sellers don’t have any leverage. Part of the problem is many read their Yahoo! or Google news feeds with their blanket statements and cover-all observations and assume that represents their local market. This is a BIG country folks and additionally, the writer of those articles are incentivized to provide content that gets clicks.

Speaking for Philly specifically, the market for houses in the range of 300-850k is still very hot.  Buyers still need to come in with strong offers and prepare for a bidding war.  You still need to be interest rate conscience, level-headed and don’t make assumptions that it’s going to go in your favor automatically, you likely still face steep competition.

All this to say, don’t be that buyer who gets cocky and loses out on something because your offer isn’t strong enough.  Know your specific market, or at least take your agent’s word for it if they are telling you that your offer is weak.  While you are at it, stay off Yahoo.  If you are feeling uncertain or want to talk about the market, give me a call.  My team is ready and equipped to lead you through the process, no matter what the market looks like.

Florida: Its Own Real Estate Beast

Florida is notably an attractive destination for tourists and home buyers alike.  Largely because of its sunny weather and year-round warmth, Florida brings in a lot of people from colder climates.  It is a top place to visit, relocate to, or retire to.  But buying a home in Florida can come with some added requirements you may not know about.

First of all, we all know that Florida has some of the country’s most beautiful beaches.  But have you thought about the laws that surround owning ocean-front property in Florida?  For example, certain vegetation cannot be removed.  Also, you may not be able to use outdoor lights during turtle nesting season (yes, really).  And have you considered that beaches are owned by the state?  Meaning you may not be able to do anything about people being on certain parts of your property that are technically considered state beach domain, even though to you, it just feels like your front yard.

The biggest concern with Florida, as we have just seen, is the weather.  Hurricane Ian was devastating to Floridians and has made an already tight housing market even more scarce.  If you are considering purchasing in Florida, it is crucial to consider weather events like hurricanes when purchasing homeowners’ insurance.  Standard homeowners’ insurance won’t cover flooding, so you’ll need to take out separate flood insurance or risk a potential loss.

Closing costs are also going to be higher in Florida.  In fact, closing costs in Florida are among the highest in the country. 

Don’t forget about the down payment.  Florida is home to a lot of foreclosures, which means that private mortgage insurance for conventional loans is not available or may be more expensive in many areas.  This means you will sometimes need at least a 20-25% down payment on a single-family home to even get approved.

Listen, Florida is an attractive destination and is growing in population and popularity.  But if you are interested in purchasing an investment property or a primary residence there, it’s important to know what to expect.

Buying a short-sale property? Read this first..

Everyone seems to have an opinion when it comes to short sales – they’re too good to be true, they’re a nightmare, they’re a great deal, don’t even bother…. No matter what you’ve heard, the bottom line is this: buying a short sale home is a complicated process.

A short sale is a sale for which the lender is willing to accept less than the amount still owed on the mortgage.  This usually means that the homeowner must be so far behind on their payments that they cannot catch up.  Also, the housing market must have gone down so much that the house is worth less now than the remaining balance on the mortgage.  In most cases, the lender (and homeowner) will try a short sale process in order to avoid foreclosure.

Speaking of foreclosures, what is the difference between short sale and foreclosure?  For one, the homeowner initiates the sale of their home in a short sale.  Potential buyers will deal with the homeowner during the short sale process, and then the lender is brought in to approve the sale.  However, even if the owner and the potential buyer agree to terms, the lender may not approve it.  This is partly what can make this process so lengthy and frustrating.

But what is the actual process of a short sale?  When a homeowner falls significantly behind on their payments, they may submit a short sale package to their lender, which essentially proves to the lender that they are not capable of making their payments and have no assets that would allow them to catch up.  The homeowner then works with their agent to have the property listed.  Once a potential buyer is found, the agent will execute a sales contract which is then sent to the lender.

The lender can respond in one of a few ways –  by rejecting the offer, or they may reject the offer but outline terms to which they would agree to, or they could approve the offer, or in some cases they may not respond at all.  Nothing.  This leaves the agent, the potential buyer, and the current owners all hanging in limbo.

Understand that the process can be very slow and very unpredictable. You’ll likely have to buy the house “as-is” so make sure to have a home inspection done, even if the lender doesn’t require it.  There may be instances where a short sale really is a great deal, but that won’t always be the case.  Work with an agent who is experienced with short sales, and do your research. 

Appraisers: Demystified

Some have compared appraisals to a report card for your house.  Banks and lenders want to make sure that lending you money is a good investment for them and ensure the home is what it seems.  On the other hand, sellers are interested in appraisals because they ultimately impact the asking price.

The process of getting an appraisal is pretty straightforward.  Your lender will contact a licensed or certified home appraiser near you, the visit takes about 15-20 minutes depending on the size of the home, and what they look for can depend on what the lender specifies for them to inspect.

Generally, appraisers inspect these factors:

– Meets housing codes for health and safety specifications
– Total square feet and count of bedrooms, bathrooms, and kitchens
– Overall living condition of the house
– Appliances and utilities throughout
– How functional the layout is
– State of the HVAC and plumbing systems

– Age of the house and overall construction quality
– Integrity of the roof, foundation, siding, and gutters
– Location of the house, the neighborhood, and where the property site sits
– Driveways and other parking

After examining the physical house, appraisers use market data from the surrounding area to help prepare their report.  They’ll sometimes look into things like public records, previous sales, rental leases, land and new construction costs, but comps (comparable properties) are usually the huge factor in this process.  Recent sales or currently listed properties with similar features help to predict the final appraisal report.

After all of this data is collected, the appraiser completes the final opinion of the value, and the lender then receives the report. If the appraiser deems it worth the investment, the lender will typically be satisfied with that opinion.

Could empty office buildings bring down home prices?

What if I told you that some of the country’s most desirable real estate locations are currently sitting mostly un-utilized? What if I also told you that these places could be a key to opening up more opportunities for homebuyers, senior citizens, etc. More opportunities means more housing.  More housing means more supply. More supply means lower prices.

Introducing the mostly abandoned office parks across the country!

Thanks to COVID, numerous office buildings located in urban downtowns and prime suburban locations are sitting empty, with employees opting to continue to work remotely. In fact, as of the end of August, offices nationally had only 43% occupancy rates. Whoa!

Some high-profile companies, such as Apple, are requiring workers to return to the office at least three days a week, whereas other companies like Twitter are allowing their workers to remain fully remote if they choose. The effect is a downsizing (or at least a hard look) at office space across the country.  Think about it, why would these companies continue to pay for space they aren’t fully utilizing or even aren’t utilizing at all?  They have to pay to heat and cool the space, clean it, provide electricity, technicians, office supplies, machinery, etc.  It’s sometimes unnecessary in this post-pandemic new normal we are in.

So this begs the question: What are we to do with all this space? Many have started to answer this question in the form of developments that contain a combo of housing, entertainment, and dining.  Some buildings have been retrofitted into schools, senior centers, or other community spaces.  Last year, more than 8,000 apartment units were estimated to have been created from former office buildings, with more than 13,000 units expected to become available this year.  The majority of these units are in Philadelphia (my hometown), Washington D.C, Los Angeles and Cleveland.

Sounds like a great solution, right? Sounds like it would be a major growth sector if the office space continues to languish. There’s just one major problem. Businesses generally lock in office leases for anywhere from five to more than 20 years.  So a firm that signed a new lease or recently renewed a lease before the pandemic may be locked in for nearly two more decades.  Ouch.

Another hurdle with trying to repurpose these types of buildings into housing is that these areas tend to have higher costs, a lot more regulatory barriers, and long timelines for getting projects done.  The cost of conversion coupled with the challenges of high labor and supply chain problems, on top of zoning changes that would be required, we are looking at a number of years until completion. As we know, the wheels of government and bureaucracy are slow to turn…

But with these largely vacant office buildings already being equipped with sewage, parking, loading docks, etc., it would be insane to NOT repurpose these spaces into living quarters. Something else to consider are the vast parking lots which wouldn’t be needed any longer since you don’t have a bunch of workers showing up every day.

Perhaps a pool complex? Tot lot? Park?

Hmmmm… interesting. Starting to sound like a great place to live!

Does Pre-Qualification Mean I’m Approved?

When it comes to mortgages, pre-qualification and pre-approval may seem interchangeable, but they actually mean different things and hold different weight when it comes to submitting an offer on your dream home.

Mortgage pre-qualification helps lenders to understand how much you can borrow by asking you a few questions about your finances.  For example, they will ask about your income and whether or not you have a down payment saved up.  They may or may not ask you other basic info about your credit score or monthly debts.

They then review this info, usually without ever actually verifying it, and give you a quote that is based on estimated figures.  This is a quicker process than pre-approval, but that is because it is only an estimate and not actually factual. This is the weakest kind of financial assurance a buyer can convey to a seller in a real estate transaction. Pre-qualification can be used a guide to help you narrow down your price range, but aside from that, they aren’t good for much more.

Pre-approval, on the other hand, is a much more robust indicator of your ability to secure a home loan.  This process goes a step further by verifying your credit and financial documents, including pay stubs, W-2 statements, and sometimes 1099 and tax returns.

This process will help to determine a debt-to-income ratio which tells the lender exactly how much you can borrow.  Along with the pre-approval, you will also get an itemized estimate of interest rates, closing costs, monthly payments, and the maximum amount you’d be approved to buy.

Having a pre-approval is the lender confirming that you are a fully approved buyer.  Pre-approval can mean the difference between getting an offer approved on a home or losing it to another buyer.  Real estate agents know or at least they should), that pre-approvals mean more than pre-qualifications (and they’ll rarely look down on an offer that doesn’t include a pre-approval letter), especially in this market we are currently in.

Then finally there is the underwritten pre-approval which makes a buyer as close to cash as you can get. This is where a lender essentially uses their letter as a commitment to lend. This essentially says: they’re underwritten and fully vetted and as long as they remain employed, can get insurance, the home appraises and they pass a final credit check, they’re approved. As you can see, the lending world and these letters can get tricky. My team and I only use lenders who issue the last option. It makes a big difference when competing for property and one of the reasons I push so hard for my buyers to use certain lenders. Technically, I can’t dictate who buyers use, but after I explain this to them, they usually fall in line with using someone who issues more serious approvals.