Closter Market Seminar


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Closter Market Seminar

  1. 1. Making Sense of the Real Estate Market of 2009 Weichert, Alpine/Closter’s Market Seminar A complimentary service of Weichert, Realtors Each WEICHERT® franchised office is independently owned and operated. ®
  2. 2. Agenda <ul><li>The Market </li></ul><ul><li>Strategies for Buying </li></ul><ul><li>Strategies for Selling </li></ul>
  3. 3. What are you hearing about the economy?
  4. 4. The ‘recession’ officially started in December 2007 Source: Federal Reserve
  5. 5. What about the Housing Market…?
  6. 6. Real Estate is Local! Know the Market!
  7. 7. <ul><li>GOOD NEWS!!! </li></ul>
  8. 8. Market Confidence Meter <ul><li>The monthly value of homes increased for the first time in nearly three years according to data from the Case-Shiller index. </li></ul>
  9. 9. Market Confidence Meter <ul><li>Housing construction rose in August to the highest level in nine months. In the Northeast, housing starts rose by 23.8 percent. </li></ul><ul><li>The National Association of Home Builders’ housing market index rose in September, to the highest reading since April 2008, reflecting growing optimism in the industry about rising home sales. </li></ul>
  10. 10. Market Confidence Meter <ul><li>The U.S. Department of Commerce reported that new home sales jumped 11 percent, the largest increase in more than eight years. </li></ul>
  11. 11. Market Confidence Meter <ul><li>According to the Mortgage Bankers Assoc., mortgage applications surged 17% the first week of September. Some were re-financings taking advantage of low interest rates, but purchase loans were up 9.5%. </li></ul>
  12. 12. Market Confidence Meter <ul><li>The average 30-year, fixed rate mortgage for buyers with 20% down-payment and good credit, was just over 5% with 1.23 points. </li></ul>
  13. 13. Sample Market Absorption Rate Calculation 108 current active listings 12 reported sales in last 30 days = 9 months absorption rate Anytown, NJ 5-6 Months Market Absorption Rate indicates a normal market.
  14. 14. Market Absorption Scale (Absorption Rate in Months) 5-6 months absorption rate indicates a normal market.
  15. 15. Market Scale for Supply & Demand High Supply/Low Demand Low Supply/High Demand Normal Weichert has been studying market conditions for more than 3 decades and has found a direct correlation between market absorption and property values. As absorption rates increase beyond a normal market level of 5-6 months, property values depreciate annually. Beyond 12 month’s absorption rate, we cannot statistically validate the annual depreciation in a market . Market Absorption in Months 1 2 3 4 5 6 7 8 9 10 11 12 Normal
  16. 16. % Appreciation in 5 Year Increments Source: Brookings Papers 9/08
  17. 17. Available Listings <ul><li>12/31/07 5785 4933 2078 </li></ul><ul><li>12/29/08 5969 4742 1963 </li></ul><ul><li>01/05/09 5576 4394 1863 </li></ul><ul><li>02/02/09 5737 4419 1912 </li></ul><ul><li>03/02/09 6008 4464 n/a </li></ul><ul><li>04/06/09 6464 4557 2073 </li></ul><ul><li>05/18/09 6725 4615 2149 </li></ul><ul><li>06/01/09 6697 4609 2121 </li></ul><ul><li>07/06/09 6604 4558 2136 </li></ul><ul><li>08/03/09 6563 4524 2135 </li></ul><ul><li>09/07/09 6258 4412 2106 </li></ul><ul><li>09/14/09 6265 4442 2110 </li></ul><ul><li>09/21/09 6272 4485 2111 </li></ul>WEEK ENDING BERGEN HUDSON PASSAIC
  18. 18. Foreclosure Totals <ul><li>12/29/08 2434 2134 2114 </li></ul><ul><li>01/05/09 2382 2119 2104 </li></ul><ul><li>02/02/09 2714 2034 1912 </li></ul><ul><li>03/02/09 2791 2307 1822 </li></ul><ul><li>04/06/09 2768 2639 1593 </li></ul><ul><li>05/04/09 2678 2478 1259 </li></ul><ul><li>06/01/09 2488 2224 931 </li></ul><ul><li>07/02/09 3761 2940 3314 </li></ul><ul><li>08/03/09 3935 3112 3428 </li></ul><ul><li>09/07/09 4486 3412 3728 </li></ul><ul><li>09/14/09 4576 3464 3793 </li></ul><ul><li>09/21/09 4588 3445 3763 </li></ul>WEEK ENDING BERGEN HUDSON PASSAIC
  19. 19. Where is the bottom of the market?
  20. 20. 1. Real Estate is Local Top Five Rules for Understanding the Real Estate Market: 2. Real Estate is Local 3. Real Estate is Local 4. Real Estate is Local 5. Real Estate is Local
  21. 21. We’re Here to Help <ul><li>The Entire Process is reviewed by Legal Council. </li></ul>Peter Lafaris, P.C. Attorney at Law
  22. 22. Sara Jane Brine, Manager Strategies for Buying
  23. 23. 1. Understand the Local Market That You are Buying into…
  24. 24. Sample Market Absorption Rate 107 current active listings 4 reported sales in last 30 days = 24.3 months absorption rate Anytown., NJ 5-6 Months Market Absorption Rate indicates a normal market.
  25. 25. Market Absorption Scale (Absorption Rate in Months) 5-6 months absorption rate indicates a normal market.
  26. 26. Understand the Market That You are Buying into… I want to live in Closter because of the schools and the easy commute to NYC
  27. 27. Market Absorption Rate 77 current active listings 8 reported ‘pending’ sales in last 30 days = 9.62 months absorption rate Closter, NJ 5-6 Months Market Absorption Rate indicates a normal market.
  28. 28. Market Absorption Rate 56 current active listings 8 reported ‘pending’ sales in last 30 days = 7.0 months absorption rate River Vale, NJ 5-6 Months Market Absorption Rate indicates a normal market.
  29. 29. Market Absorption Rate 52 current active listings 18 reported ‘pending’ sales in last 30 days = 2.8 months absorption rate Dumont, NJ 5-6 Months Market Absorption Rate indicates a normal market.
  30. 30. 2. ‘I am going to time the Market and buy at the peak inventory level and when no one else buys…’ Source: MLS
  31. 31. 3. ‘I am going to wait until the price comes down further and then make an offer…’ Source: MLS
  32. 32. Factors to consider when buying and selling… Source: MLS Inventory(supply and demand) Interest Rates
  33. 33. Interest Rates Remain Low Source: otteau
  34. 34. Seeing the Opportunity.
  35. 35. Seeing the Opportunity. <ul><li>Q. If this were 2005, where would you place the Price and Rate dots? </li></ul>Prices Rates High Mid-Range Low A. In 2005, the V would look somewhat like this one, where prices were on the high end of the scale and rates were in the lower range.
  36. 36. Seizing the Opportunity. <ul><li>In recent history, there has never been an opportunity like this, with low prices and low rates. In real estate, this circular area at the bottom of the V is called the “Buying Zone” – it’s an unbelievable time to buy. </li></ul>Prices Rates High Mid-Range Low
  37. 37. Ryan Delia, Gold Services Manager/ Loan Officer Financial Benefits and Process of Home-Ownership.
  38. 38. As of 10:00 a.m. today , there are just 65 days, 14 hours until the expiration of the $8,000 first time buyer tax credit!
  39. 39. Many buyers say…. ‘I don’t want to buy a house and then watch it drop in value!’
  40. 40. The Real Estate Market is not like the Stock Market. If you buy $400,000 in stock you need $400,000 in cash. If you buy a $400,000 home you need only $14,000 down-payment.
  41. 41.   Purchase Price $329,000 Loan Amount $281,000 Down Payment $11,515 Monthly P&I $1,590 Appreciation/Depreciation Home Value 1st Year -3% $305,970 2nd Year 0% $305,970 3rd Year 1% $309,030 4th Year 3% $318,301 5th Year 5% $334,216 5 Year Appreciation/Depreciation $5,216 Tax Benefit   Rent @ $1600/mo 1st Year $5,000 $19,200 2nd Year $5,000 $19,200 3rd Year $5,000 $19,200 4th Year $5,000 $19,200 5th Year $5,000 $19,200 5 Year Total $25,000 $96,000 Total $30,216 Create Equity v Pay Rent
  42. 42. Incentive From the Government First-time homebuyers can receive a tax credit up to $8000!
  43. 43. Tax Credit Overview Amount Ten percent of the cost of home, not to exceed $8,000 Property Any single family residence that will be used as a principal residence Refundable Reduces income tax liability for the year of purchase Income Limit Adjusted gross income of $75,000 single or $150,000 joint tax returns First-Time Must not have owned a principal residence in 3 years prior to purchase
  44. 44. Tax Credit FAQs <ul><li>Can individuals with incomes higher than the income limits still benefit from the tax credit? </li></ul><ul><li>How does a tax credit work? </li></ul><ul><li>How do I apply for the credit? </li></ul><ul><li>Is there a way to get the credit before I file my tax return? </li></ul><ul><li>How does the repayment work? </li></ul>
  45. 45. How much house can I really afford?
  46. 46. <ul><li>The first step is to meet with me! </li></ul>Establish Your Buying Power
  47. 47. Sara Jane Brine, Manager Strategies for Selling
  48. 48. Understand the Market That You are Selling Out of … I live in Norwood
  49. 49. Market Absorption Rate Comparable Properties 52 current active listings 6 reported ‘pending’ sales in last 30 days = 8.66 month absorption rate 5-6 Months Market Absorption Rate indicates a normal market. Norwood, NJ
  50. 50. ‘ Great speech but does it really work?
  51. 51. 2 . The Effect of Staging on the Value of a Your Home .
  52. 52. The process of preparing homes for sale regardless of Price, Location, or Condition To achieve the maximum sales price in the minimum marketing time. The GOAL is to appeal to the broadest range of BUYERS .
  53. 53. Non-Staged The Way You Live In Your Home…
  54. 54. … And The Way We Market And Sell A House Are Two Different Things. Staged
  55. 55. “ The Investment in Home Staging is Always Less than Your First Price Reduction!”
  56. 56. Non-Staged Buyers Only Know What They See …
  57. 57. … Not The Way It Is Going To Be. Staged
  58. 58. Why Promote Home Staging ? The average increase in sales price of an ASP Staged vs. non-Staged home is 6.9% . That is an additional $31,050 on a $450,000 sale.
  59. 59. The average marketing time of an ASP Staged vs. non-Staged home is 80% less . Why Promote Home Staging ?
  60. 60. 3. The Effect of ‘ Pre-Inspection’ on the Sale of Your Home.
  61. 61. What is ‘ Pre-Inspection?’
  62. 62. Home Inspection WHAT DOES PRE-INSPECTION INCLUDE? The standard home inspector's report will review the condition of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems; the roof, attic, and visible insulation; walls, ceilings, floors, windows and doors; the foundation, basement, and visible structure.  
  64. 64. All Negotiations, including real estate, are all about negotiation and control. Who is in control? Right Price Right Staging All Repairs are done in advance. Offer a Home Warranty to the buyer..
  65. 65. PRE-LISTING Home Inspection Data on where most sales fall apart: attorney review, home inspection. Fall Thru Percentage 2007: 26% Fall Thru Percentage 2008: 10.2% .
  66. 66. Home Improvements I am moving out of the house, I do not want spend too much money to move. Or I just spent $$ on a new kitchen, I want $$$$$$ back on that investment when I move.
  67. 69. Reality of today’s market is that you will see the return on your investment not in an inflated sales price but in retaining the highest percentage of your list price and staying on the market the fewest # of days. Please consult with your Realtor & staging professional as to which improvements you should finish to make your home the most salable.
  68. 70. “ Solving Today’s Market” Foreclosures, short sales and the buyers market A complimentary First-Time Home Buyer Seminar hosted by Weichert, Realtors ® Each WEICHERT® franchised office is independently owned and operated. Weichert, Realtors ® Alpine/Closter Office Are there real estate opportunities that are right for you now?
  69. 71. Definitions <ul><li>Short Sale * – Short sales are defined as a transaction where title transfers; where the sale price is insufficient to pay the total of all liens and costs of sale; and where the seller does not bring sufficient liquid assets to the closing to cure all deficiencies.   </li></ul>*Defined by NAR
  70. 72. Definitions *Defined by NAR <ul><li>Foreclosure * - The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt. </li></ul>
  71. 73. Definitions <ul><li>REO * – An abbreviation for R eal E state O wned, and is industry jargon for foreclosure property repossessed by banks or lenders. If a lender or bank is the highest bidder at a foreclosure auction — or if no third party bids at the auction — the property reverts back to the lender and becomes an REO. REOs are owned by banks. </li></ul>* Defined by
  72. 74. Short Sales and REOs <ul><li>In today ’ s market, short sales and REOs make up more than 40 percent of sales nationwide and far more than that in areas such as Southern California and Florida, where home prices have dropped significantly in the last two years. </li></ul>Source: Realtor Magazine online 3/09
  73. 75. Timeline for Short Sales, Foreclosure and REO Sales Homeowner defaults on loan (60 or more days in arrears) Lender sends Homeowner Notice of Default Property goes to Sherriff Sale/Auction If no other winning bids, Bank buys back property at Sherriff Sale/Auction Property is now Bank Owned (REO) and listed for sale. A short sale or loan modification may happen within this time period, stopping the property from going into foreclosure. Pre-Foreclosure Foreclosure REO
  74. 76. It’s All Relative… <ul><li>As a buyer, how would YOU define </li></ul><ul><li>a “good deal?” </li></ul>
  75. 77. A Good Deal? <ul><li>Will you get the best deal by purchasing a Short Sale, Foreclosure or REO property? </li></ul>The answer is not so straightforward. It is a personal preference based upon the conditions you may find acceptable.
  76. 78. <ul><li>Short Sales </li></ul>
  77. 79. Are You a Good Match to Purchase a Short Sale? <ul><li>Are you willing and able to wait for 3rd party approval to close? </li></ul><ul><li>Do you have a home to sell before you can purchase? </li></ul><ul><li>Are you willing to invest in a home inspection and counsel from an attorney before 3rd party approval is granted? </li></ul><ul><li>Are you willing and able to make home repairs? </li></ul>
  78. 80. Considerations for Purchasing a Short Sale <ul><li>Timeframes for purchasing Short Sale properties can be lengthy. </li></ul><ul><li>Short Sale properties typically sell “as is.” </li></ul><ul><li>While contingencies protect you, as a buyer, lenders may not look favorably upon offers with contingencies. </li></ul>
  79. 81. Tips for a Successful Short Sale Transaction <ul><ul><li>An experienced and qualified Weichert sales associate will be able to show you short-sale properties for sale, help negotiate your short sale purchase, and smooth communications with the lender. </li></ul></ul><ul><ul><li>An experienced title representative can perform an initial title search on a short-sale property to see all the liens attached to the property. </li></ul></ul>Source:
  80. 82. Tips for a Successful Short Sale Transaction, cont’d <ul><li>It is recommended to obtain competent legal advice from a real estate attorney. </li></ul><ul><li>Obtaining competent legal advice can make or break a deal. </li></ul><ul><li>A local real estate attorney who is familiar with the short sale process is key. </li></ul>Source:
  81. 83. After You Make an Offer <ul><li>The Seller makes the initial decision. </li></ul><ul><ul><li>All offers are first presented to the Seller who makes a decision. </li></ul></ul><ul><li>If applicable, Attorney Review still applies. </li></ul><ul><ul><li>Attorney Review runs its normal course before Lender approval. </li></ul></ul><ul><li>A completed short sale package is submitted to the Lender for approval. </li></ul><ul><ul><li>In order to facilitate a smooth approval process with the Lender, some attorneys may suggest that the Buyer complete home inspections before Lender approval. </li></ul></ul>
  82. 84. The Lender’s Response <ul><li>The Lender can do one of several things: </li></ul><ul><li>Refuse the offer, either with or without an indication of what net proceeds would be acceptable. </li></ul><ul><li>Ask the Seller to bring some or the entire shortfall to escrow.   </li></ul><ul><li>Approve the offer. </li></ul>
  83. 85. Why Might My Offer Be Rejected? <ul><li>Many conditions will factor into your offer including, but not limited to the servicer of the loan, location of the property, outstanding loan balances and current market conditions. </li></ul>Source: Realtor Magazine online 5/08
  84. 86. Opportunity <ul><li>In the past 6 months, we have seen an average short sale list price at 15% below the average list prices of non short sale properties. </li></ul><ul><li>Let’s look at some examples… </li></ul>
  85. 87. Defining the Market <ul><li>32 Halsey Lane </li></ul><ul><li>3 bedrooms, 2 baths </li></ul><ul><li>Average list price of comparable properties: $530,333 </li></ul><ul><li>List price for this short sale property: $419,000 </li></ul><ul><li>Sold price (if applicable) for this Short Sale property: $355,000 </li></ul>Example #1 This represents a possible discount of 33% below market value Source: MLS
  86. 88. Defining the Market <ul><li>87 Cedar Lane </li></ul><ul><li>4 bedrooms, 2 baths </li></ul><ul><li>Average list price of comparable properties: $699,000 </li></ul><ul><li>List price for this short sale property: $499,00 </li></ul>Example #2 This represents a possible discount of 28.4% below market value Source: MLS
  87. 89. Defining the Market <ul><li>54 Fairview Avenue </li></ul><ul><li>5 bedrooms, 3 baths </li></ul><ul><li>Average list price of comparable properties: $899,000 </li></ul><ul><li>List price for this short sale property: $799,900 </li></ul>Example #3 This represents a possible discount of 11% below market value Source: MLS
  88. 90. Purchasing Foreclosure Properties
  89. 91. Considerations for Buying a Foreclosure Property <ul><li>The minimum bid at the Sheriff sale may be comprised of mortgage loan balance, accrued interest, and attorney fees. </li></ul><ul><li>A non refundable deposit may be due upon close of auction at the Sherriff sale with 30 days to bring the remainder of funds and close. In some regions, the entire purchase price may be due upfront, at the close of the Sherriff sale. </li></ul><ul><li>Ownership may come with possible unclear title; back taxes, liens and eviction responsibilities. </li></ul>
  90. 92. Considerations for Buying a Foreclosure Property, cont’d <ul><li>The properties may be occupied after foreclosure and evictions can take up to 6 months. </li></ul><ul><li>Unless the occupant is cooperative, property is sold in “as is” condition, sight unseen; bidder could spend hundreds of thousands of dollars without seeing the inside of the property. </li></ul><ul><li>Foreclosed owners may have a right of redemption (timeframe varies by state). </li></ul>
  91. 93. Foreclosures Can Be Scary!
  92. 94. Beware… <ul><li>Many foreclosure properties sold at Sherriff Sale have not been maintained and may have various issues. </li></ul>
  93. 95. What About REOs? <ul><li>Now let’s look at REOs… </li></ul>
  94. 96. Advantages of Buying an REO over a Foreclosure <ul><li>Access to property for inspections.* </li></ul><ul><li>A quick sale is possible. </li></ul><ul><li>Clear title is likely to be conveyed upon closing. </li></ul><ul><li>No redemption timeframe. </li></ul>* Bank will typically only address repairs needed by the municipality and/or buyer’s lender to settle.
  95. 97. REOs: Seeing the Property <ul><li>Unlike Foreclosure properties, buyers have access to an REO property and the ability to have a home inspection. </li></ul><ul><li>The condition of REO properties may reflect some neglect and the need for repairs. </li></ul>
  96. 98. REOs: Seeing the Property
  97. 99. Considerations for Buying an REO Property <ul><li>The process is bureaucratic and the approval process for offers can be slow. </li></ul><ul><li>Be prepared for, but not afraid of, the additional paperwork involved. </li></ul><ul><li>Prepare for “as is” and how that may effect the transaction. </li></ul>
  98. 100. Opportunity <ul><li>In the past 6 months, we have seen a average REO sale price at 10% below the average sale prices of non REO properties. </li></ul><ul><li>Let’s look at some examples… </li></ul>
  99. 101. Defining the Market <ul><li>15 Gary Road </li></ul><ul><li>5 bedrooms, 4 full, 2 half baths </li></ul><ul><li>Average list price of comparable property: $1,660,000 </li></ul><ul><li>List price for this REO property: $1,175,500 </li></ul><ul><li>Sold price (if applicable) for this REO property: $1,100,000 </li></ul>Insert Picture of property here Example #1 This represents a possible discount of 33.7% below market value Source: MLS
  100. 102. Defining the Market <ul><li>365 Demarest Ave </li></ul><ul><li>4 bedrooms, 1 bath </li></ul><ul><li>Average list price of comparable property: $450,955 </li></ul><ul><li>List price for this REO property: $339,900 </li></ul>Example #2 This represents a possible discount of 24.6% below market value Source: MLS
  101. 103. Purchasing in Today’s Market
  102. 104. A Good Deal? <ul><li>Short Sales, Foreclosures and REOs present an opportunity for a good deal. </li></ul><ul><li>However, conventional listings, owned by informed and motivated Sellers, along with Sales Associates skilled in negotiation, may provide an equally good or even better deal for a Buyer. </li></ul>
  103. 105. Weichert Family of Companies What will a real estate company do for me?
  104. 106. Making Your Purchase as Smooth as Possible Buying a home involves the careful coordination of many people. Choosing a real estate team you can count on will make the process smoother and easier.
  105. 107. <ul><li>Time is money. </li></ul>The Weichert Difference <ul><li>Stress kills. </li></ul><ul><li>Time is life. </li></ul>
  106. 108. <ul><li>Educate You. </li></ul><ul><li>Negotiate on your behalf. </li></ul><ul><li>Offer advice on due diligence. </li></ul><ul><li>Manage all aspects of the transaction process. </li></ul>What Will a Weichert Agent Do for Me?
  107. 109. We’re Here to Help <ul><li>The Entire Process is reviewed by Legal Council. </li></ul>
  108. 110. Resource and website list: <ul><li> </li></ul><ul><li> </li></ul><ul><li>NAR. </li></ul>
  109. 111. Resource and Website List <ul><li>http:// </li></ul><ul><li> </li></ul><ul><li> </li></ul>
  110. 112. Resource and Website List: <ul><li> </li></ul><ul><li> </li></ul>
  111. 113. Resource and website list: <ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul>
  112. 114. Good Luck with your Move!