Phipps Realty Rhode Island

Should I list my house in the fall or winter?

2011-10-30T12:37:00.007-04:00

As we step firming into fall, in that space between Halloween and Thanksgiving, many sellers ask the questions does it make sense to try to market a home this time of year. It classic ambiguity, that depends: There are buyers who purchase year around. Rhode Island knows that reality, but we are more seasonal than many other areas. The majority of sales occur between 1 March and October 31st of every year. That is always prime season. But there are in fact a good number of buyers who engage in the pursuit between 1 November and 28 February. What is encouraging is that most of the buyers who are looking in the less active time of the year, and in fact much more serious. The majority have an immediate NEED, not a desire to purchase. For a seller this means that there are likely to be fewer showings and interested parties, but the ones that do happen will have a greater chance of leading to a sale. So it if you are serious about selling, it makes sense to engage.

HOWEVER, the market is driven my one primary element and that is price. Regardless of the time of year that you place your home on the market, it is very important that you price well. Do not price where you want it to be price it just below where market really is. You will sell more quickly.

A real life question for August 2010: Should I refinance or should I move?

2010-08-28T07:46:00.002-04:00

30 year conventional mortgage rates are now in low 4 percent range. That really requires repeating: 30 year conventional mortgage rates are now in the low 4 percent range. When I first started in real estate full time in 1980 conventional 30 year mortgage rates were at 18.5% or HIGHER. No that was not the credit card rate it was the interest rate for mortgages. What was amazing is that people actually purchased homes and took out mortgages. It is also true that they refinanced to lower the rate and the month payment. (Generally when they refinanced they did not take any additional equity.

While we are engaged in a debate about renting versus owning, that debate is really in response to people who purchased homes who cannot afford them. People who should not have been approved for mortgages. People who could not afford to stay in the homes. People purchased on one of three assumptions: prices would go up, the property could be easily flipped, or that payments would go down. Notice that none of the assumptions assumed that they would keep the property long term. Now we are back to the world of conservative lending and common sense. In real estate jargon: we are in a market of 'sustainable ownership.' Very simply, people should purchase what they can afford to maintain over time. It is the prudent approach to home ownership. It is great advice.

For many people that raises a really good question. If you currently own a home that has an interest rate in the 5 or 6% range it probably makes sense to refinance. There are lots of important factors to consider: Is your employment situation strong? Do you plan to be in the area longer term? What is my equity situation? Do I owe more that the property is worth? What is my overall financial health like?

What is encouraging is that lower cost mortgage money is available even if you are in a negative equity situation. There are programs available that will allow you to refinance up to 125% of your homes equity. One critical note, you will need to pay back the mortgage.

Many people have real equity in their home, but have seen that amount reduced. The market has corrected so they have less equity than when they paid for the house. For some people this fact causes them to ignore a great question: Should I buy another home rather than refinance? The answer to question is family specific, that is what is 'right' for your family? If your housing needs have changed, you need a larger house, you need a smaller house, you want a lower mortgage payment, you want more land, you want a newer home, you want a townhouse, etc; then you should engage in the conversation. It may make sense, with interest rates at the lowest level in the past 50 years to make the change.

Some of my clients are concluding that the lower prices of homes, the large number of choices and the interest rates are compelling. They are making the decision to sell and purchase another home. In some instances, they are doing that although they are coming up with cash to pay off their existing mortgages. What they are doing is looking at their financial situation and the family shelter needs and making a measured, strategic decision. Yes they are selling their existing home and yes they are getting financial advice and real estate advice. They looking at the big picture and making prudent decisions.

If you are in the same place, do not hesitate to call your neighborhood Realtor for some real estate advice. I am available at 401 640 7097.

Real Estate Summer 2010: The New Normal

2010-08-08T22:55:00.003-04:00

It has been a bizarre summer in real estate. We have seen very good activity as we complete the sales of the early summer. The median price in Rhode Island has moved up to $220,000. Closed sales are in fact also up, but there is a new normal. It is much more difficult to obtain mortgage money. The lenders have over reacted to the experience of the time of 'easy money.' The new reality is that virtually all of the commitment letters being issued to buyers are to extremely well qualified people. In an absolute way this is appropriate. The real estate market and the country need a housing market of 'sustainable home ownership.' Sustainable home ownership is a concept in which people are qualified and purchase properties that they can afford to own for the long term. We used to call this 'common sense.' It is the way it should be: People should only purchase what they can afford to own.
The challenge is in the details. The lenders have increased the standards from rigorous to highly rigorous. Some of the requirements are over the top. It is fair that the 'chain of flow' of the deposit should be documented. Where is the money for the down payment coming from? A friend of mine in Maine shared with me a story about that concept applied to the ridiculous. A young couple, with whom she was working, had received $8000 in wedding gifts from about 80 quests. The originator wanted gift letters from each of the guests indicating how much they had given. To my Realtor friend's credit, she had the young couple give the money to each of their parents and then provide two gift letters and two checks, each in the amount of $4000. When I share this story with other Realtors....no one is surprised.

This is the new normal.

When I started working in real estate 30 years ago, once a sales agreement was signed, it was likely to close in 99% of the time. Now we are seeing between 10 and 15% falling apart because of inspection issues, appraisal issues, or underwriting issues. It means that sellers are waiting until contingencies are satisfied before making other commitments. This is appropriate. As we are having 'issues' at all price points.

This is the new normal.

One of the hardest things to get used to in the market now is in negotiation. Historically a buyer would make an offer expecting a counter. It would be normal to have a couple of 'back and forth.' In this market the buyer will make an initial offer. If the counter is not compelling, and sometimes even if it is they step away. Negotiations are over, and buyer moves to another house. This can be extremely frustrating for sellers. How do you negotiate strategically in this market? Knowing as much as you can about the buyer and how she, he or they think is important. Having an advocate, a Realtor, is becoming more important not less.

This is the new normal.

Finally, the reduction in the number or real estate licensees in amazing. Every two years. holders of real estate licenses, salespersons and brokers, must complete 24 hours of continuing education to obtain 'the state authority' to sell real estate. This year the number of sales person dropped from just over 7000 to approximately 3500. It is a drop of half. Brokers licenses dropped as well, but not as much. Most sales people work on a contingent fee. It is a difficult way to make a living in a soft real estate market. It also means that lots of new Realtors have moved into other fields. This is unfortunate. What is true is that this will pass . A different market will find us.

This is the new normal.

The Realtor Future: Authors or Objects

2010-08-07T05:32:00.004-04:00

In early June I traveled for the Leadership Team out West, first to California’s Legislative meetings and then to the Resort and Second Homes Meeting at Lake Tahoe, Nevada. It was a special trip and very inspiring.

In each of my public presentations, one message was central: The future will be written, and we REALTORS® have a choice: We can be authors of our future, or the object of the future. In other words, we can engage and write our future or we can be spectators.

For the past several years, we have “involved” ourselves by providing solutions to the housing crisis. However, now, there is a new approach REALTORS® across the country are embracing: action and engagement.

Maybe it was wishful thinking (or blind optimism) that led us to believe that the market would self correct and mortgage money would be available to credit worthy consumers. After the bailout of the “Too Big to Fail” banks, REALTORS® assumed that these companies would step up and begin to provide the life blood to our market – mortgage money. We also assumed that the government would step in and solve the problems. I’m not sure why we believed that everyone else would step up and make it right, but we did. And, to be fair, steps were taken, but it has not been enough and it is not right.

The change for us to be more active is a good one. We are relying upon ourselves – our hands and our ingenuity – to figure out the solution AND take control, rather than allowing some else to resolve the problems.

Your NAR leadership team is working within this new understanding and focus. We are no longer stepping. We are marching and running.

Specifically, we are working to create channels of communication between REALTORS® and the big banks. Right now the five largest banks are responsible for 73 percent of all of the mortgages written in the United States. While that fact may be disturbing, particularly considering that 30 years ago the top five banks were responsible for 25 percent of mortgage lending, it does have value. We only need to communicate with those five to resolve many issues in the market.

We have decided we need to be authors of our relationship with these banks. It is easy to blame, but creative problem solving requires focus and discipline. These are skills, traits that REALTORS® know well. We are working to write and define the “new normal.”

Some people suggest that leadership should not tell you what we are attempting to do, but rather tell you after the success has happened. I disagree. By sharing our agenda, we make sure that we are representing you. It is also a way to make leadership accountable. Most importantly, sharing gives you the responsibility and the opportunity to work together to come up with effective solutions.

After all, who has a better vantage point than you, the neighborhood REALTOR®? So, please, share your thoughts and ideas with us.

This initiative is a reach. We are looking to redefine the flow and availability of mortgage money. But our industry cannot operate without it. We need to ensure that the global financial system has a steady, competitive, reliable, and available source of mortgage money.

The American Dream, when realized, is a great thing for American families. While re-thinking what people can afford is appropriate, re-thinking cannot be allowed to eliminate homeownership entirely from the national consciousness.

As authors of our future, we must insure that the American dream is the right size, but still very much a real part of the American experience.

For Whom the Bell Tolls: The Tax Credit

2010-03-20T17:48:00.001-04:00

The Federal Government extended and expanded the first time home buyer tax credit last fall. The National Association of Realtors was very aggressive in its effort to forward tax credit. The main reason was that the credit is one of the few ‘stimulus programs that directly benefits the average American Family. One of the intended consequences is that the tax credit has helped to stabilize markets, meaning average price, as we work through a huge inventory. For the average American, most of his or her wealth is ‘stored’ within the value of their home. The market correction has seen a significant reduction in that value. It is true that the value is only really ‘set or calibrated’ when one sells or refinances. Otherwise the value is a rough metric. It is also helpful to remember that the metric ebbs and flows just life the tide. It may be worth less today than yesterday, but will probably be worth more next year, etc.
The tax credit has been most effective and many new buyers have entered the market. In the first phase of the program, last year approximately 350,000 ADDITIONAL buyers made purchases. The second phase has produced similar numbers so far.
The second phase of the tax credit has a much broader reach. First time home buyers who are in sales agreements by 30 April 2010 and close by 30 June 2010 can receive a credit of $8000 for the purchase of a primary residence. There are family income limits; $125000 for individuals and $225,000 for married couples. The tax credit also has a repeat buyer provision which allow people who have owned a primary residence for three of the past five years to qualify for a $6500 credit. The income limits are the same and both credits have reduced benefits for individuals up to $145,000 and families to $245,000 of annual income.
Condominiums and single family both qualify, but second homes and non owner occupied investment properties typically do not. There is also a maximum purchase price of $800,000.
The important message now is that we have a month and a half to complete the search. That is you must find, negotiate, and have signed sales agreements by 30 April 2010 to qualify. You do have until 30 June to close, so you can move you family at the end of the school year if that is optimum for you and your family. It is very rare that the federal government gives its citizens money or land. This may be the first time since the land grants out West in the 19th century that the government is ‘giving away’ such value. Incidentally, granting land for compensation in lieu of cash is not new. In 1735, the King of England ‘paid’ many of colonial soldiers with land grants in East Greenwich. Do you notice a pattern, every hundred years, or so, there is a real gift from the government. This gift is significant, but the hour glass is almost out of time. Do not let the bell toll for thee or thee’s tax credit!

Make It So: Star Date 16 March 2010

2010-03-16T20:12:00.004-04:00

Here is my NAR Officers Blog entry:

Growing up Star Trek was one of my favorite television shows. Although I never caught the Trekee virus, the story line and the characters were imprinted in my mind and most of 1960’s America. If you watched television as a kid, you watched Star Trek. Each program had a message: courage, team work, trust, the need of the whole versus the individual, and more.

Among the lines that developed in later Star Trek episodes, was the line from Captain Jean Luc Picard: “Make it so.” It is such a direct phrase that carried so much weight. It is a simple, clear command.

As of this Star Date, I am almost half way through the thirty-six month leadership cycle. Specifically, this is month seventeen. It is actually helpful that you have two years of internship, to prepare to be president of the association, because the National Association of REALTORS® is a large, multi-faceted, complicated organization. There is much to learn and understand. To be honest, it is overwhelming at times.

What is clear for me today is the mission of the organization: Serve the member.

For many organizations the customer is the focus. What truly distinguishes NAR is that the REALTOR® is not simply a customer, rather he or she is the ‘purpose’ of the organization. As decisions are made, the leadership team, and our professional staff, led by CEO Dale Stinton, consistently ask one question: “What is in it for the member?”

The Second Century Initiatives are a bold direct answer to that question: It is all about the member. From Right Tools Right Now to REALTORS® Property Resource, from Game Changers to House Logic, from the REALTOR® Federal Credit Union to the next series of programs to be introduced, one universal truth is present: it is for the member. Think about the fact that 800,000 of our members used ‘tools’ from the Right Tools Right Now initiative. Think about the fact that RPR is going to have 147 million records and analysis for REALTORS® to better serve customers and clients, at NO cost. Being about the member actually is more than just member focused. It is about providing the members with resources and tools to make more money. It is about business.

When Dale Stinton talks about competencies of NAR, he identifies a pyramid of skills: scale, leadership, and brand. NAR is ‘large’ enough to be effective, which is the scale side of the pyramid. NAR is courageous, industrious, disciplined, creative, forward thinking, outcome driven and bold. This answers the leadership side. The third side of the triangle is the REALTOR® brand. It is recognized, understood, and respected. Our association has mastered these competencies.

Now it’s our turn to do so in our own businesses.

What NAR does is make it possible for us to reach to the stars. It makes it possible for us to dream, think and realize BIG things. It makes it possible for us to say “Make it so,” and know that we will. – Posted by Ron Phipps, 2010 NAR President-Elect

Cold Winter, But Hints of Spring!

2010-01-28T23:11:00.002-05:00

Cold Winter Winds, but hints of a Warm Spring

The swamp Yankees among us do not put much faith in predictions unless they are in farmer’s almanac, and even then they are suspicious. Truth be told, there is wisdom in their cynicism. It is a product of generations of experience in dealing with harsh elements of New England weather. (Good preparation for the Patriots implosion on January 10th). So with that appropriate ‘disclaimer, it is appropriate that we talk about the real estate market in Rhode Island.

“Average price showed an increase in December 2009, the first increase since mid 2006.
That has been three and half years since the average increased in a single month. Over 40 months of reduction has finally ended. Secondly, the number of sales increased by 17% in December 2009 over December 2008. It is true that it was helped by extension/ expansion of the tax credit. Low interest rates and good housing choices are other enabling factors. But there was one macro economic fact: housing prices, or rather housing values, reach equilibrium. In other words, housing prices become so competitive, that they became compelling. To quote. Business Week, if you do not buy a house now,” You are either broke or stupid.”

Much has been made about the importance of the high Rhode Island unemployment rate and the significant number of short sales and foreclosures. But we are seeing real estate fundaments more clearly: Prices and supply are coming into a balance.

So what does this mean for the up coming spring market. It is encouraging.

The goal of the extension of the $8000 tax credit and its $6500 expansion for repeat buyers is to prime the spring market and stabilize values. The important note is that the credit ends with sales agreements signed after 30 April. You have until 30 June to close the transaction and qualify, but you must have the agreement signed, valid prior to 30 April 2010. So as a buyer it is important to start searching soon to benefit from the credit. For sellers it makes sense to put your house on BEFORE the spring market. We are recommending you do it now. There are fewer houses on the market so competition among houses is less intense. Furthermore, the buyers who are out looking now tend to be very serious. That means that you will not necessarily have a lot of showings, but those that you will have, will tend to be serious.

Additionally, buyers are the most researched and informed that we have ever seen.
They know the comparables, market conditions, and the ‘nuances’ of the market.
They are, generally looking for homes in superior condition, at below market prices.
As sellers, there is no patience within the market for poorly priced houses. It you are priced over the market, you are wasting your time. This market is all about price. (Sound familiar). What is making the price issue even more important is the difficulty with appraisals. Anyone who is getting a mortgage will need an appraisal as part of the approval process. If the appraiser values the house at less than sales price, which has happened a lot this year, then the transaction can fall apart. In order to keep the transaction together, the seller may have to adjust their price. It is a real challenge.

One other observation, we are moving back to a normal market. That is prices are now compelling and seller and buyers, particularly in the market below 350k, are in what most Realtors would describe as normal. Neither really has the advantage.

Finally, pre qualification of buyers is critical for buyers and sellers. Most sellers will not negotiate unless they ‘KNOW’ the buyer is qualified. Buyers should be qualified for financing BEFORE they start to look at housing. There is little value is looking at houses that you cannot afford.

Let us know if we can help you sell your property or purchase a new one.

It's Not Kansas Anymore!

2010-01-28T23:04:00.003-05:00

We are not Kansas anymore! Or better yet maybe it is back to the future. Two weeks ago, just over 20,000 Realtors met in San Diego at the 2009 National Convention. It had all of the elements of a regular convention: a trade show, governance meetings, entertainment, and recognitions. It is the event for the orderly transfer of leadership. The 2009 President, Charles McMillan to 2010 President, Vicki Cox Golder. Among the highlights of the meeting was the General Session: It is the main event. All of the State Realtors of the Year, including Rhode Island’s Alice Kleczek, were honored. Additionally, five Realtors who do great charity work receive awards. Every year, their stories bring tears to my eyes.

This meeting was unique as it marked a new beginning. Real Estate is changing in a revolutionary way, and November 2009 is the turning point. It is not just a change of date, of time or a place. It is a change of understanding and essence. In many ways it was a commencement. The implosion of real estate over the past several years was a catalyst for the change. As an industry, we have been forced to look at ourselves objectively and critically. That self analysis led to major changes in the real estate business and our association. You can see the industry changes: More reliance on the web, less reliance on print media; consolation and streamlining; additionally, strategic alliances and surrender.

The Realtor Association responded in bold ways. We rolled out the ‘right tools right now’ program to provide our members with ‘tools’ to make them more productive and profitable. We delivered over 11 million dollars of product to our members at limited or no cost. We worked legislatively to get the first time home buyer credit expanded and extended. We worked to get banks out or real estate permanently. We were able to get the higher loan limits extended for another year, ending December 2010.

But where the real revolution is occurring is in the web/technology area. We rolled out www.houselogic.com. It is a consumer resource website. It will not be selling the consumer; rather it will be informing and educating the consumer. Topics include everything from home improvement values, to neighborhood crime watches, to property right issues. It is just starting, but the content is amazing. We are building an online community for these country’s 75 million home owning families.

The second major announcement was RPR: Realtor Property Resource. The Association is setting us an online data base for all 147 million parcels of real estate in the United States. Access will be limited to Realtors, but it will be revolutionary tool that will enable Realtors to provide phenomenal information to their customers and clients. It will have property histories as well as price trends. Its information will include zoning, utilities, title, ownership, mapping, legal disputes, etc. It will ultimately have psycho graphics, the new marketing term for the behavior profiles of the residents. In short, it will be an amazing tool. Incidentally it will have privacy policies.

These are part of the revolution occurring in the Real Estate Industry. Their impact will be similar to that of the founding of Multiple Listing Services 100 years ago. MLS’s purpose, to provide for the cooperation and compensation among brokers, was a radical, revolutionary concept. One hundred years later, we are opening our second century, with equally important news. Your Realtor has brought great value to you in the past; you will be amazed what they will be able to do for you in the immediate future.

Realty Bytes October 2009

2009-10-27T00:21:00.004-04:00

The “Truth” about Listings:

Recently a Realtor shared a silly saying with me: “It is best to be, the First Born, the Second Wife, or the Third Realtor.” The third Realtor is listing Realtor. The third usually has the advantage of getting the property at the best price and with the most motivated seller. There is some truth in the observation.

For more than 30 years I have made my living representing buyers and sellers in real estate transactions. There are many compensation alternatives in the real estate market. In my experience, compensation has almost always been as the result of a success fee, a contingent fee. If one identifies a ready, willing and able buyer and they are able to close, the listing agent has earned his or her fee.

Most people do not understand the process involved in ‘getting the listing, in the marketing process, and in the challenges of getting the property closed. In other words, earning a fee,

Let’s preface the entire conversation with the absolute truth, that all real estate fees are independently negotiated between the client and the brokerage firm, the real estate company. Each company determines it own fee schedule. Part of that structure is what they will pay cooperating companies if they are the listing company.

First truth: There is competition to obtain the listing. Agents and their companies compete to have sellers list with them. This competition is very intense. There is also competition within offices among agents to get the listings. While many teams work on a cooperative basis that is misleading. Within the Multiple Listing Service there is an agreement by the listing broker to agree to cooperate and compensate other brokers.
Generally listing brokers prefer to sell in their own office, because they would earn both pieces of the brokerage. (There are alternative compensation structures), Sometimes a potential listing agent may say the other agent can always sell it. While that is true it ignores reality. Listing agents try to sell the listings of the owners who have hired them, not their competitors’ listings. When I am hired those sellers can reasonable expect that
I will give them my primary focus.

Second truth: if the fee structure is on a success fee, there is no value in making the process long. Sometimes it takes a long time to sell the home. Since a success fee is outcome driven, then it is best if it is sold quickly. Most listing agreements do not charge on fee basis, i.e. charge for each showing or telephone call. They charge only if they are effective in getting seller, buyer, lender, attorney, to the closing table.

Third truth, the price matters. The best agent, with the most effective marketing strategy, will not be successful if the price is not reasonable. In this market it is more important than a ‘normal market’ Prices need to be compelling, not competitive. Also, price needs to be compelling the first day of the listing. If you continue to drop price by small amounts, rather than listing competitively upfront you are following the market. It will take longer and will likely result in a lower price.

Fourth truth, house must be available for showing. Buyers will not buy a house if they do not see it. Some sellers, and frankly some agents, make it very difficult to set up showing appointments. This is stupid. There are so many houses on the market, the buyer will move on if they do not obtain an appointment. Make your home available for showing, and make certain your agent or their team member is equally available.

Fifth truth: all transactions in this market are tentative. Between inspection issues, buyer’s remorse flu, appraisal issues, and closing logistics, it is not done until it is closed, recorded, and funds dispersed. In other words, it is not sold until you have the money in hand.

Sixth truth: the agent matters. Some agents are better than others. You should compare and evaluate. Experience, designations, marketing strategy, and chemistry are all important. It is fair to ask for a list of sales and clients. Some of my future clients interview past clients. At minimum, you should have confidence that the agent will be effective. In my opinion it would be unwise to hire anyone who is not a Realtor, particularly given the Code of Ethics.

These are challenging times. Choosing an effective agent is important. It can be the difference between a sale and no sal

The Picture of Health (Reform) NAR's Officer's Blog

2009-10-16T07:18:00.002-04:00

It is the 13th of October and I am writing from the 13th State. Yesterday, the Senate Finance Committee voted to forward a health care plan. The vote was 14 to 9 with Olympia Snow, Republican from Maine, voting with the Democratic majority.

The self-employed and small employers, such as REALTORS® and realty firms, would benefit from the significant changes that the amended Finance bill makes to traditional insurance underwriting and rating practices, including bans on the use of pre-existing conditions, health status and a number of other rating factors that have made coverage costly or unavailable. Self-employed individuals would be given an added advantage in that they could choose to purchase private health insurance as an individual or as a small business through the new health insurance exchanges.

Before the Finance measure goes to the Senate floor, it will be melded with the Senate Heath, Education, Labor and Pensions Committee bill, which passed earlier this year. The melding will be done by the Senate and committee leadership. Once melded, the combined bill will go to the Senate for a vote. Then, the House has three committee versions of its bill, HR 3200, that are also going through the melding process so that a single House bill will emerge for approval by the entire House.

In short, the legislation is moving forward, but has many steep hurdles to clear before it becomes law. It is important to remember that we are still in the early innings of health reform, which means the actual language that will be in any final bill is very fluid right now. Because of this, your National Association has not taken a position on the bill.

What your Leadership Team and staff have done is to work through the entire process, without a respite, to make sure that any legislative proposal includes provisions that take into account the unique challenges of the self-employed and independent contractors. Moreover, NAR has also been both visible and vocal about its opposition to any proposal that would limit the mortgage interest deduction (MID) as a means of "paying for" health reforms. You can be sure that we continue to be vigilant in that commitment.

We understand how important this issue is to the members. Last week, I traveled to the Maine Annual Convention in Rockport. Much of the conversation focused on health care. What was striking is the calmness of the conversation and the desire to understand and be understood. Over 20,000 people in Maine have lost their jobs over the past year. Its economy is a mirror of much of the country. Generally, the perspective was one of value. If we are going to have a national health insurance program it should have cost controls, be portable, be available to people with pre-existing conditions, and provide quality care. It should have ‘common sense.’ Does this sound familiar? It should. These are the National Association of REALTORS® priorities on health care reform.

All of this was in contrast to my personal experience in Rhode Island. Our small office obtains health insurance through Blue Cross/Blue Shield of Rhode Island. This month’s premium is $3,600. Over the past two years we have cut our overhead by 50 percent, but our costs of health care have increased by 25 percent. This has been necessary and I am confident you have been engaged in the same process. It is frustrating to see my premiums increase in part to fund a beautiful new glass skyscraper in Providence.

Nevertheless, please know that NAR is actively engaged in bringing common sense to the conversation. As Brokers, agents, support staff and Americans, this is a critical debate. -- Ron Phipps, 2009 NAR First Vice President

It's A Small World

2009-09-22T22:43:00.002-04:00

We have spent the past week here in Greece attending the CEREAN (Central European Real Estate Association Network) annual conference, held is Thessaloniki. It has been a most educational and productive trip.

First, people are people. Regardless of language, race, color, heritage, baseball teaming branding, people are people. We were warmly received by our Eastern European hosts. It seems that a smile needs no translation. It was surprising to hear many of the attendees
tell us that they were impressed that we were so human, open, and engaged. (We are REALTORS®…that is what we are.) Dale Stinton and I both did formal presentations. As we talked translators simultaneously spoke in Greek and Russian. At first it was distracting, as you wondered how precisely your words were communicated. After listening to English translations of other presenters’ Greek and Russian presentations, it becomes ‘normal.’

Secondly, the importance of engaging international partners became so obvious. The earth may not be getting smaller, but the globe is. The Ukrainians were expressing frustration about buyer’s agents being able to collect a fee. The Romanians were complaining about government interference in real estate transactions. The Bulgarians were frustrated about the lack of mortgage money and credit. Does it sound familiar? One of the best parts of the conversation is it reminds one of how great our ‘system’ of real estate works.

In many parts of the world, there is no MLS system. There is no system of ‘cooperation and compensation.’ The lack of licensing, training, code of ethics, are challenging in the ‘emerging profession.’ It is to our advantage to share our systems and experience to benefit our members. It would be great to know that a referral to Greece would result in a referral fee. It would great to know that the investment our buyers are making in other markets would be with reliable professional advice. The international market is a huge market with exceptional opportunities for our members.

Finally, the international interchange of our organization leads to trust and understanding beyond real estate. It leads to understanding among different people. Its advantage goes way beyond real estate. – Ron Phipps, 2009 NAR First Vice President

To Loud to be Heard: The Health Care Debate

2009-08-22T08:39:00.003-04:00

On Wednesday night, my Congressman Jim Langevin, held a constituents’ meeting on health care reform at the Warwick City Hall. The City Council chambers hold 475 people. Every spot was filled and more than 100 people assembled outside. In an effort to educate the public, Congressman Langevin presented a power point presentation. To his credit, he remained civil, patient and attentive. It is not easy to stay on message when people are yelling and screaming at you. It is also not easy to engage in real discussion when people come with an agenda of disruption and distraction.

Obviously, health insurance reform is a major issue for this country. It requires serious, open discussion. For REALTORS®, health insurance reform is about having access to affordable health insurance policies. Our status as independent contractors or self employed limits many agents to purchasing individual policies with high out of pocket costs, or simply to have no health insurance at all. Our membership survey found more than 300,000 REALTORS® have no health insurance at all, countless more have less than comprehensive policies and are at risk of losing coverage due to increased costs. It is a real challenge, in fact, a hardship for many of our members.

As a result, the National Association of REALTORS® is actively engaged in the conversation. We are working toward prudent, effective health care reform that recognizes our unique income situation as independent contractors or being self-employed. Also, we have been arguing for insurance reform and cost control. As Americans, we are involved in the conversation. As an Association, we seek a dialogue that addresses the needs of our members and staff. Know that we are doing that. I should also mention that NAR hasn’t endorsed ANY of the health care proposals floating around on Capitol Hill. And we won’t until a clearer picture of the final package emerges. That is why we are listening, learning and discussing. The issue and our membership require it.

You should expect that there will be more loud public forums. That is the way of public discourse now. It is a way for people to share the intensity of their position, but it would be very helpful to listen and learn before reacting. The majority of sound bites shared by the media demonstrated a total lack of understanding of the proposals. Ideology is important, but it should be argued with accurate information, not innuendo and propaganda. This applies to all sides of the issue. While it would be naïve to expect a change in process, it would be encouraging to work toward resolution of the issue with information and common sense. It is too important an issue to ignore or minimize. – Ron Phipps, 2009 NAR First Vice President

Realty Bytes August 2009

2009-08-17T16:31:00.002-04:00

Realty Bytes August 2009:

Why is the bottom of the market so elusive?

The Rhode Island Real Estate market turned down in late 2005. Yes we have been in this market correction for almost four years. The rest of the country has been in this cycle since late 2006 early 2007. Obviously, all markets are local and there are exceptions to these general observations. Some markets like Detroit have been weak for a longer time, and other markets like North Dakota have not seen any down turn at all. Unfortunately, that is not the case in Rhode Island. From the market price peak of over $275,000 to a mean value below $200,000, the change in the market has been huge. Many people have no equity, or ‘negative equity.’ They owe more than the property is worth.

The most common question that we as Realtors are asked: “Are we at the bottom?” In all candor, we really do not know. We would like to think we are, or are on either side of it. The recent numbers of sales activity suggest that the market is improving with more sales, although the prices have continued to lower. Additionally, we will not know that we have hit bottom until we are beyond it. It is a rear view mirror event. Only after you have passed through it do you really know that you have reached it.

The challenging question is not whether we have seen bottom, but rather why is it so elusive? Why has this cycle been so long and the distance between peak and trough been so great?

The answers to both questions are intertwined. Because we had gone so high, as the result of inexpensive and easy credit, the correction is greater than it might have otherwise been. Anyone could get a mortgage and credit was so free flowing that you really did not need to be able to afford the mortgage. The assumption was that prices would continue to escalate, or your income would go up, or your lender would reduce payments. Rarely was there a conversation of ‘ability to afford to pay for the property long term. If you could not afford the month payment, you would just flip it. Obviously those assumptions were and are not sustainable.

With that as a backdrop, we had market and value exuberance that resulted in very high average sales prices. The peak was really high. When we began correcting the lenders process for underwriting mortgages became so rigorous, the majority of people would not qualify to refinance. Then we have the new appraisal rules, requiring direct comparables within 90 days. Mortgage denials became the norm, not the exceptions.

In Rhode Island almost 40 percent of our sales currently are distressed sales, either foreclosures are short sales. This has further reduced average price. Also short sale is an oxymoron. It should be called a LFS; Long Frustrating Sale. The average conventional transaction closes in 45 to 60 days. It takes, on average 9 and half weeks, to get a simple response to a short sale offer. That response could be a rejection or a counter instead of an acceptance. It takes months longer to close.

If is difficult to have price stabilization with so many short sales in the market that are never resolved. There is conversation within the industry that prices would stabilize more quickly if we have a 7 day response time for all offers. Cut the buyers loose and let them purchase something else. It is a total lack of common sense.

Appraisal issues continue to retard any stabilization. Many transactions are falling apart because the underwriters and credit managers are questioning the appraisals. It is difficult to find perfect matches that are only 90 days old. Then when the transaction falls apart, there is one less closed sale to use in other appraisals. It is a downward spiral.
Another lack of common sense.

Many potential buyers are also on the sidelines, wanting to make sure we hit bottom before they purchase. This is understandable and difficult to accomplish. Where is the bottom? Is this the time to buy? Historically low interests, low prices, huge inventory and the $8000 first time home buyer tax credit are all strong incentives. With all of those elements, some buyers are still waiting.

So far we have discussed the challenges in the real estate market. We cannot ignore the larger economic climate. The unemployment rate is a huge challenge. Over 70000 Rhode Islanders are looking for work. Those people need jobs to stay in their homes, much less buy other homes. Job creation is key to recovery.

It is our observation that MBTA rail service to Green Airport, (and Wickford later), will do a lot to stabilize price. Average price in Boston is approximately $373,000, in Rhode Island it is approximately $200,000. That is a huge difference between markets an hour apart. We are confident the rail service will go a long way to stabilize price.

So there you have it. It is elusive, but on the horizon. We are just not sure how far the horizon actually is.

Home Staging Video

2009-08-04T16:14:00.002-04:00

New Fox Providence "House Talk" segment on staging

The Grand Canyon between Sellers and Buyers.

2009-07-18T15:21:00.004-04:00

As a student of real estate markets and trends, one cannot help but see a growing delta between buyers and sellers in their perspectives on the market. The average buyer has become a critical shopper. He, she, or they spend much time looking at sold comparables, websites like Zillow and Trulia, BEFORE they actually start to look at specific properties. It maybe simply a characteristic of the latest generation of homebuyers… Yet as a group they are extremely analytical. Furthermore, they are surgical in their approach to home acquisition. They learn, and know value. They purchase based on value. The best measure of value is price, or more precisely initially ‘list price,’ but ultimately ‘sale price.’ The current home buyer is looking for great value. The list price must be compelling not competing. Many of the buyers I am working with now spread sheet their search. It is empirical. It is not emotional. It is also based on closed sales, not based on the list prices of competing properties. Buyers know and understand absorption rates… (The number of months, it will take to sell all of the listings on the market, at the current rate of sales.) Also, the ‘average buyer’ is in his. her, or their mid thirties. (The average seller is significantly older). The National Association of Realtors just released a new statistic that 94% of buyers between 25 and 40 use the web as their first and primary source in the home finding/acquiring process. This is amazing. ‘Pretty pictures’ in magazines or newspapers are not as effective as online photos, floor plans, videos, etc. The typical buyer speaks a different language and engages the process in a totally different way than the typical seller. The generation difference is amplifying the void between sellers and buyers. For buyers, this is a ‘strategy’ to find a great value. Sellers are trying to sell their ‘home.’ Most buyers are simply more objective.

The sellers are as a group, well intentioned but somewhat misinformed. The sellers are in most cases genuinely committed to selling. They firmly believe that their house or their neighborhood is better than the recent comparables and competing properties. In many instances they never view any of the competing properties. How do you make an informed decision without ever looking at the competition, (at least online)? Often sellers have only one or two Realtors give them a marketing presentation. The single largest mistake that they make is that they hire the Realtor with the highest recommended list price. What about record of sales, experience, and understanding of the market. I recommend that my potential sellers look at their home’s assessment, Zestimate, and Trulia value before we meet and discuss price. Many sellers are unwilling to discuss the absorption rate. As an example: in East Greenwich, for example, there are 14 houses on the market over 1000000. One is pending above a million and 2 have sold in the first half of the year. 3 total in six months is an absorption rate of 1 house very two months. With 14 listed it will take 28 months to sell the existing inventory. North Kingstown is more challenged. 1 sale, nothing pending and 20 properties above $1,000,000. A normal market would be 6 to 7 months of supply. The buyers know this: many sellers simply ignore this. The pattern and trend is the same in the lower price points, but fortunately not as severe. One of the contributing factors is that competition among listing agents to get the properties listed overwhelms the need for realistic price setting.

I have been speaking of buyers and sellers as universally the same. In fairness, they are not. The effective buyers are buying value and quality, not necessarily luxury. The effective sellers are learning the language of the buyer: it’s called value. With a significant oversupply price will come down. In Rhode Island, there is a herd mentality among sellers. One bases price on the other competing listings that are NOT selling. The price needs to be based on closed sales. This is a very difficult market. Prices continue to adjust downward. If you do not need to sell and want premium value, take your house off the market, and try again in a few years. If you need to sell, price it to be competitive. You should be one of the best two or three ‘values’ in the price point. Do not follow the sellers’ herd blindly over the cliff.

If you do this well as a seller, you will be able to be a BUYER.

Fixing Health Care for REALTORS®

2009-07-18T13:06:00.002-04:00

NAR Officers' Blog Entry:

Last Thursday, July 9th, Senator Mary Landrieu, chair of the Senate Small Business Committee held a roundtable on health reform and its impact on Small Businesses. Senators Olympia Snowe, Chris Bond, Ron Wyden, Jeanne Sheehan, and Kay Hagan attendaned for a conversation with 9 ‘stakeholders.’ I was honored to represent REALTOR® stakeholders. This was my second visit in the past two weeks to Washington, DC to meet with health reform decision makers. The process of government is very ‘deliberate.' Two general observations, first, people in Washington are generally well intentioned and are trying to do right by their constituents and the country. Second, it is amazing that anything gets done given the first observation.

In real estate, we have an industry specific vocabulary: PITI, FISBO, HUD-1s, CMAs, BPOs, etc. Washington also has its own vocabulary and the health reform conversation its own vocabulary. (Our Washington Staff does an exceptional job with preparation for each of the meetings. Jerry, Jamie, Marcia, and Ken all met with me to review our policies and to teach me the ‘nuances.’ There is a lot to absorb. In my case they give me a list of vocabulary words to use AND a list of words to avoid). Among the recommendations that I shared with the Senators is the need to use plain speak, understandable language, in the deliberations on health reform, but more importantly with the actual program. It is important for Americans to be able to understand the choices they have in language that they can understand. When I am involved in the conversation, I find it necessary to listen with a very precise ear to actually understand what is being said.

The main message I delivered was the nature of REALTORS® and our business models. The demographics are telling: The average REALTOR® is 54 years old, up 2 years over the past two years, 60 percent of REALTORS® are female. The average REALTOR® earned just over $36,000 before $5,800 of business expenses. More than 300,000 of our 1.2 million members have NO insurance. A significant portion of the remainder have limited, non-comprehensive insurance. Over lay the fact that most REALTORS® are independent contractors. As REALTORS®, we have a need for affordable, portable, comprehensive insurance. You can review the balance of our ‘principles in the health care reform conversation at www.realtors.org/healthreform.

One of the other messages that we have delivered is that health care reform should be funded and paid for from insurance reforms, and cost savings. It should not be funded from any housing related taxes. Our comments are clear: “Do not ask us to choose between health care and home ownership.”

I concluded my comments with the observation that REALTORS® are making economic ‘triage’ decisions right now. Many REALTORS® are forced to make choices between paying their mortgages or health insurance. Obviously, many forgo comprehensive health insurance and rely on the HOPE Insurance program: Hope I do not get sick.”

Among the industrialized countries, the United States spends more of its Gross Domestic Product on health care than any other country, and yet the outcome of that investment is an inferior medical delivery system. REALTORS® want what is good for Americans, but they are pragmatic. Make sure that what is spent has value. Make sure that the costs reflect rather than belie the value. -- Ron Phipps, 2009 NAR First Vice President

Real Estate Metrics: Numbers Sellers NEED to Know

2009-07-14T10:02:00.004-04:00

Sellers are trying to understand the market. Buyers have figured it out. Buyers have the upper hand. In some instances, they have the only hand. Rather than expound on the obvious, (it is a buyers market), it makes sense for seller’s to learn what the fundamentals are.

For the past forty plus years, most sells relied more on competing properties to determine value. Clearly sellers needed to look at closed transactions, but the philosophy was price ‘to’ your competition. The assumption has been that there is demand and that the delta between demand and supply was always within realms of reasonable. Some markets were sellers markets and some were buyers’ markets. This market is so extreme that the approach of pricing ‘to’ your competition is now obsolete.

Sellers must price to the price that will generate a sale, not traffic (showings) or interest. In the Rhode Island market generally, distressed sales, foreclosures and short sales, make up almost half of the market. Simply stated, sellers are competing against foreclosed and short sale properties. This means that prices will be lower. In many neighborhoods prices have continued to go down. That makes pricing very difficult.

So what are the numbers that a seller needs to know to price his or her house: First, he or she needs to know about the recently (90 days) closed properties. The absorption rate, how fast are houses selling, is also important. It is usually ‘figured’ in terms of months. How many months will it take to sell all of the properties currently listed and the current rate of sales?

The interest rate is very important. The mostly buyer of your home is going to have a mortgage. Need to understand what the mostly type of buyer your home will appeal to. If it is a first time homebuyer, it is mostly that the loan will be 90 or 95%. Take the time to determine want the potential buyer need to pay on a monthly basis. Most sellers ignore this step, ‘the price is the price.’ But in a market with higher unemployment and limited wage growth, what the buyers can afford to pay will have a profound impact on the sales price. The number you need is the monthly cost of Principle, Interest, Taxes and Insurance (PITI) for a buyer with a 10% down payment. This is what it will cost the new buyer to live in your home.

Two numbers are very misleading: days on market and the list price/sales price ratio. Days on market are difficult to us as each listing agreement starts at day 1. So if a house has been listed three times, the totals days on market may be 430, but the MLS reports that days on market are at 76. You want to look at the ‘property history’ to get a true picture of the total days on market. List price sales price ratio is also difficult and distracting. First because of the multi listing agreement situation just described, but also because of the price adjustments during the listing. If a property was originally listed at 475k and was reduced to 425k and sold at 400k…Which numbers do you compare? Clearly you need to build into your price room to negotiate. You will get there much sooner if your original list price is at or below other sold properties, not other competing properties. (There are still a number of sellers who are shopping for their price. Even if you find a naïve buyer the appraisal process will prevent the buyer from being able to over pay. So as a seller you need a naïve cash buyer to have a chance of selling above the market. Those buyers are 1 in a million.)

Ultimately, you need arrive at a list price that is not competitive, but compelling. You need that price that says to a buyer, we are a great value, not simply a fair value. We have a significant oversupply; price is the only ‘cure.’

One final number you need: a phone number to your local Realtor. This market is uncharted. You need expert advice to analyze and interpret the numbers. Many Realtors, including this one, work on a contingent fee. If successful in selling the property, he, she or I am paid. That is a really pro consumer model. Get professional advice. According to the National Association of Realtors, unrepresented sellers end up netting 16% less after success fee (commission) than represented sellers. Make sure the Realtor you hire is a full time, experienced licensee with a record of sales in this market. It is also appropriate to interview more than one Realtor to represent you. Finally, ask about the success fee (commission). It may be more competitive that you expect. Ask if the Realtor has a variable rate fee, which can be other, (most often lower), if both ‘halves’ of the sale, seller half-buyer half, are completed by the listing firm. That will also involve a conversation about agency and representation. Who represents whom?

You have enjoyed the shelter that home ownership has provided. Make sure to ‘capitalize’ as much as the market will allow when you sell. But that requires that you be realistic and reasonable.

The Numbers the Sellers Need:

1. Sales Price of Comparables (90 days)
2. Absorption Rate (Months)
3. Interest Rate
4. Monthly Payment (PITI)
5. Realtor’s Phone Number

House of the Month: 259 Forge Road, North Kingstown, RI

2009-07-14T09:57:00.004-04:00

Just over the Greene River, past the entry to Pojac Point, one will find a meandering driveway that leads into the woods: 259 Forge Road. Five acres of treed privacy ‘wrap this grand estate residence. Originally designed and built by Jim Malm and his team in 2005, this home is a fresh interpretation of the American Shingle Style exemplified by the Tennis Hall of Fame in Newport. In harmony with its setting, the generous use of cedar shingles and native stone in a dramatic, classic statement is ‘of’ its site, not on it.

One of the main design features is that of ‘purposed space.’ As a time when energy efficiency and function have become more critical, 259 Forge Road is a creative application of this philosophy. Each space is large and open without being massive. Each space is versatile and functional: Each space is ‘purposed.’ The main gathering space, the two story great room, is dominated by stone fireplace that is engineered to store heat for the home, (from the boiler). Aesthetic and function in balance. The room enjoys a wine decanting station. The formal rooms are elegantly finished with high details and exquisite craftsmanship. The floors are Brazilian cherry.

One of the most amazing spaces in the house is the kitchen. The cabinets are locally crafted in birds-eye maple. The granite countertops are expansive. The appliances are exceptional and include a GE Monogram gas stove, Advantium oven, warming drawer, two dishwashers, etc. Among the unusual features of this kitchen is the soft drink tap system. The breakfast area has a herringbone pattern in the floor as well as a huge curio buffet.

The main level includes a sumptuous master suite. From the walk closet to the Japanese ‘soaking tub’ this is truly over the top. The marble floors are heats and the shower has multiple shower heads. The sleeping chamber is generous and welcoming.

One reaches the second level via a grand stairway. Hand turned spindles and the mahogany railing are woven together in a breathtaking manner. The terminus of the stair way is a living loft, ideal for causal conversation, reading, or relaxing. Three bedroom suites on this floor are served by two marble bathrooms. The bedrooms themselves have built out closets, window seats, and high tech electronics.

The lowest level is a great surprise. The recreation room is focused on a grand fireplace with a ‘sitting hearth.’ This is one of those places to share family stories and create new memories. The floors are also heated on this level. The full gym has a full bath for showering after exercising. The office is bright and open.

For the engineer in the family, the systems are impressive. From the smart boiler to the communication systems, this is a great example of innovation and execution.

The backyard involves a swimming pool with waterfall, decks, patios, a fire pit and rock outcroppings. This is one of the rare homes that embrace its setting rather than ignoring it. The swimming pool waterfall flows from the natural stone into the man-made pond. Once again there is a balance between the natural and the human.

Now that you know that this is a special home, you are probably asking: Why would anyone leave this home? The family is looking for a new adventure. The house before this one was going to be their last. It is time ‘to do another.’ So if you are looking for spectacular, check out 259 Forge Road, North Kingstown.

Facts:

Constructed 2005
Land Area: 5.06 Acres
Above Grade Living Space: 4034 sq. ft
Total Living Space: 5200 sq. ft.
Bedrooms; 4
Bathrooms: 4 and a half
List Price: $1,750,000.

NAR Officer's Blog: Father's Day and Leadership

2009-06-23T06:52:00.003-04:00

My father’s best leadership lesson:

It is Father’s Day 2009 and I am so aware of my great fortune. I have been blessed with an exceptional family and three awesome children. Each shared his or her best wishes, love and thoughts with me today. It was touching and heartwarming. Being a father is the best part of my life: it is the rainbow, the sun, the moon, and the breath of my being. It is who I am.

Yet, I feel hollow today because I miss my father, who passed away five years ago. In between two open houses, I visited my father’s gravesite. We talked, or rather I talked and he listened. It is really hard today to hear him. He was an exceptional father who taught each of children to be people who lived lives of service to others and to do ones absolute best. He was one of those rare people who understood that teachers are most effective when they live the lesson they teach. He did.

This past May, I was voted in as the 2010 President-Elect by the NAR Board of Directors, and I will become President the following year. People who know me well commented on how proud my father must be. I agreed with them, but I still wanted to celebrate the accomplishment with him. He was a procuring cause. He encouraged this fulfilling journey.

In leadership, you realize that you achieve as the result of great mentoring and teaching. No one gets into leadership without lots of help. In truth, my teacher and mentors are numerous. My father’s best lesson was to find the best teachers and mentors, then study them and learn from them. Give them a stake in your progress. It is a great life lesson. You cannot become a NAR national leader without lots of help.

This past week a small group of REALTOR® leaders met to make 2010 Vice Chair of Committee selections. The challenge was to choose just one person for each position when so many capable and talented people had applied. We are working to complete the process. I cannot help but think about the example of my father: pick the best person for the position. We are working hard to do that, but how do you do that when you have so many ‘bests.’

It is also a privilege working with such a talented group of people on the leadership team. They teach my father’s lesson by example: be the best. Moreover, Charles McMillan, Dale Stinton, Vicki Cox Golder and I all have sons getting married on the 25th of July. Who says that the stars do not line up? It is my prayer for each of our sons, that they know unconditional love from their wives and children. We are part of a very special, extended family, the REALTOR® family. Our family includes all of YOU.

Thanks, Dad.

Navigating Rough Seas and Fog: The Summer 2009 Real Estate Market

2009-06-23T06:46:00.003-04:00

The most common question most Realtors are asked, particularly in the back slapping among friends: Are we at the bottom of the market, yet? Almost every Realtor wants to say it is here. In truth, we do not know. There are sign of stabilization, and signs of further price reduction. Additionally, you do not know that you have been to the true bottom until you begin to climb out of it. It can only been ‘seen’ with clarity in ‘hind sight.’ What makes it more complicated is that the market is not a single market: In real estate, we talk about all real estate being local. In the advent of a global economy, and a global recession, that seems almost counter intuitive, but it is not. The condo market in Providence is very different from the suburban real estate market in East Greenwich. Furthermore, the markets are very different in the brackets of price points. The first quarter MLS statistics showed a significant drop with the ”average” single family price for East Greenwich, from $474,000 to $323,600. The average price house did NOT drop by a third. Yes there was a significant drop in prices overall, but not as extreme as the numbers suggested. There is a reason, not a rationalization, for the change. More less expensive homes were sold. That is more homes some in the 100-400 range than sold in the upper price point, so the average was much lower than it should have been. What you really want to know is what is the true change in price for a specific property. Naples Florida is now given market information bases on price points: 100-350k, 351-500k, 500-1000k, and up. This is not a rationalization, but rather a long explanation, to the importance of looking at like kind homes to get a ‘true’ picture of the real value of the home. A four bedroom Moorehead colonial is worth more in Signal Ridge than Cindy Ann Farm, overall. All real estate is local, even by neighborhood. You need to compare like kind with like kind to determine true value.

As a seller you need to analysis the properties in your immediate neighborhood. What has sold recently, what is pending, and what is on the market? You need to look at the absorption rate, how many houses are selling each month, and how long will it take to sell the entire inventory at the current rate of sales. A healthy market is about 6 months. Right now we are at 10.2 month nationwide. We are much higher in the upper bracket, above 750k, in East Greenwich. Once you complete this analysis, you need to price in a COMPELLING way, not a competitive way. To be effective, meaning to sell quickly and close to real value, you need to price aggressively low.

As a buyer you need to do the sale process to identify the best buys in town. It is also helpful if you have two are three choices when it comes time to negotiate. The market has an oversupply, and a noteworthy oversupply of overpriced properties. Sometimes the overpricing is the result of the existing mortgage balance, sometimes the result of poor-inexperienced agent advice, and sometimes seller’s exuberance-nostalgia: “My house is the best in town.” Many buyers are attaching a list of the comparables to offer to purchase package. Some sellers are still ignoring the comparables. As a buyer, it makes sense to move on to a seller who is realistic.

What you need to know about this market, very simply is that price matters. You can have the best landscaping, the most expensive kitchen appliances, and the most awesome home theater, but your price has to be competitive to encourage a buyer to make an offer.

Now if the dynamics of the market are not enough to persuade you, be aware of the new appraisal underwriting requirements. In an effort to curb potential mortgage defaults, most lenders have adopted new appraisal guidelines. One of the most challenging elements is called ‘bracketing.’ In truth it is really not new, but now the rule is applied in all cases. Very simply, an appraisal my have comparable sold properties below and ABOVE the value of the subject property within the neighborhood. It makes it very difficult to obtain a mortgage for the most expensive sale in the neighborhood. The result has been that many transactions have been RE-negotiated after the appraisal.

To say it, yet again, price matters. Price where the market is, not where you would like it to be. Otherwise, wait until the market recovers. The cold hard truth is buyers are careful and strategic right now. They will not overpay, even if they are from New York, Boston, or Los Angles.

National Association Leadership Model

2009-05-24T17:22:00.004-04:00

Team Leadership

As the newbie on the leadership team, I have lots to learn! Much of what happens in leadership is process driven. In an organization of the size, 1.14 million members, and complexity of ours, there is a lot to do and a tremendous amount to study. While engaged in that process, you cannot help but notice how great the ‘system,’ works.

Specifically, there is an amazing collaboration between the volunteer leaders and our professional staff. Each year the volunteer leaders change, people leaving the team, people joining the team. These include, the President (Charles Macmillan), President-elect (Vicki Cox Golder), First Vice-President (me), Treasurer (Jim Helsel), and Immediate past President (Dick Gaylord), Vice President of Committees (Steve Brown), and Vice President of Government Affairs (Gary Thomas). The annual transition happens seamlessly. That is the result work the professional staff does. Dale Stinton, is the Chief Executive Officer. who with his equally amazing team, forwards the ambitious agenda and critical mission of this organization. This is not an easy task…You cannot help but smile when you think about the different personalities of the volunteer leaders that pass through leadership. As soon as the professional staff gets used to one presidential personality, a new one is in office.

What is amazing is that it works and no one sees or knows of the challenge. (Sometimes staff protects leadership from itself). It is always a balance. The volunteer leaders are responsible to map the strategic course of the organization. Dale and his staff work with us on the plan, but they are responsible for the execution of the programs.

Also amazing is the ‘espirit de corps.’ that develops among the leadership team. You have friends, mentors, and co-leaders. Each one is so committed to doing right by the organization and the membership. Sometimes we commiserate. Sometimes the challenges are overwhelming, but the team members support each other. When we need to fill in for each other, we do. When we deliberate issues, it is issue centric not personality driven. It takes time to create that level of trust and respect.

The Right Tools, Right Now program is a great example of the effectiveness of the model in place. Last fall, the leadership team meeting included a discussion of how bad our individual members were faring. This was as the result of an email sent by Realtor member from North Carolina. As leadership, we were listening, but” felt” unable to do more that encourage people to simply ‘bear it.’ After the first of the year, Dale and his team stepped up and came up with the Right Tools, Right Now program. More people have used it than we would have imagined. It is the effective.

The leadership team model works. Leaders listen and things happen.

Real Estate Questions and Answers APRIL 2009

2009-04-14T07:04:00.005-04:00

Right now everyone seems to be asking the same questions. Some have answers, some will have answers, but everyone seems to be asking the same questions:

1. Are we at the bottom of the real estate market? The best answer is we really do not know. You can not know if you have passed through the bottom until you have. In other words it is a rear view mirror event. Only AFTER you have begun to climb out can you say with accuracy that we have passed through the bottom. There are strong signs; both locally and nationally, that we are on either side of the bottom. Many areas have seen improvements in the number of properties sold. More homes are being sold, albeit it at lower prices. Additionally, the number of pending sales is up. While the supply of homes remains fairly high, the absorption rate is going down. The adsorption rate is indicated by the number of months it will take to sell all of the house currently on the market at the current rate of sale. A normal market here would be about 6 months. We have been as high as 18 months. Right now we are closer to a year. Sum total we are witnessing some encouraging news, but we need to see if it is sustained.
2. Is it a good time to buy right now? The best be answer is qualified. One needs to look at his or her situation. Is the employment situation strong and reliable? Is credit in order? Have you been pre-qualified? Are you likely to be in the location for several years, that is longer term? Assuming the answers to these questions are all yes, and then it does make sense to buy now: First inventory will provide you with lots of choices, even if you are particular. Secondly, prices have come down, so there are in fact better values. Third interest rates are the lowest in 50 years. (Less than 5%, when I started in the industry it was over 18% for fixed rate mortgages). Fourth, there is a home mortgage interest deduction on your federal taxes. (Mortgages below $1,000,000 qualify). Finally, there is an $8000 first time home buyer’s credit against your Federal taxes. In short, there are good reasons to seriously consider buying now.
3. What are the details of the $8000 tax credit? While it is described as a first time home buyers credit, people who have not owned real estate for the past three years might also qualify. Income limits do exist with phase outs beginning at 75k for people filing individually and 150k for married couples. If you owe less than the $8000 the Federal government will issue you a check for the difference: You owe $5000. You will receive a credit for the full $5000 and then receive a check for $3000. There is a ‘recapture’ feature if you sell your home in less than three years at a profit. This is to discourage flipping. Finally, you must purchase, close and occupy the house by 30 November 2009 as the program ends 1 December 2009
4. What does a home seller need to do to sell in this market? Many sellers are still nostalgic for the prices of 2006. While this is understandable it makes the market worse and reduces the chances that the seller will sell. First, you should get expert advice from a Realtor who knows your town and neighborhood. He or she can educate you on the market and effective strategies to sell your home. Secondly, and more critically, you need to price the house to be compelling, not just competitive. In a market with an oversupply, you want to stand out, not just on condition and presentation, but on price. Is your price one of the best values on the market? Think of price like an SAT result. Certain schools will not look at you if you do not have the minimum test results. If your house is priced to high, no one will even look at it. This is the real estate equivalent of an invisible, but tangible REJECTION letter. Buyers are rejecting your house based on price. Also, the MLS tends to amply the importance of price per square foot. Your price needs to be compelling not just overall but also on a price per square foot. In a community like East Greenwich the range is very broad, but $200 a square foot is a fairly good ‘rule of thumb.” Obviously, you need to look at your own market area and situation. Waterfront will be higher…
5. Should I try to buy a foreclosure of a short-sale? The answer is maybe. This should be a long term investment. Buy what works for you and your family and pay attention to the most important rules of real estate, starting with location, location, location. Assuming you find the right property, it may make sense to buy a ‘distressed property.” Incidentally, this is a misnomer. Most often the property was not distressed, the owners were. You need to be very cautious and want professional advice, particularly from a Realtor and an Attorney. Make sure to investigate the condition, structure of the property. Distressed properties are sold in ‘as is ‘condition and most sellers will not make any repairs. Foreclosures tend to be easier than short sales. They can generally close much more quickly. Short sales are transactions in which the owner still owns the house but owes more than the house is worth. Say the house is listed for 150k, but the owner owes 200k. The owner will be short when paying the mortgage off. Therefore it is the lenders decision whether they will accept less than full value of the outstanding mortgage. Thus the term ‘Short sale.” These are challenging, because they can take months to get responses to offers and longer to close. As a potential buyer, you must be very patient.
6. Does homeownership still make sense? As with everything, it depends on your personal situation. It you are going to be moving out of state in the next year, and then it would be unlikely to make sense. If however, you are likely to be hear long term, then it may well, the average homeowner in the United States has a net worth that is 38 TIMES more than the average renter. The important observation is that the criteria must be long term. The demographics also suggest that values will come back over time. More households are being created than homes for them. Finally, shelter is a basic human need. We all NEED a place to live. In addition, if you pay your mortgage off over time, you will live in your home at a very modest cost in your later years. For most people, it does make sense to own your home.

So contact a Realtor, and get some expert advice on your situation.

Ron Phipps, ABR,CRS,GREEN,GRI,ePro

Bright Lights in the Economic Night: Ron Phipps's February NAR Entry

2009-02-28T07:39:00.006-05:00

Bright lights in the Economic Night

This past week was a turning point. This week, Richmond Virginia was my port of call. Virginian Realtors are tenacious and gracious. Challenge does not dissuade them, it emboldens them. And yet, they do not loose any of their grand sense of hospitality. The meeting in Virginia went well for the Association, Realtors, and their legislative Agenda. All ten of their bills were approved by the State Legislature. It was turning out to be a great week.

Then two bright stars lit the night: First, Charles Macmillan NAR President and Dale Stinton, NAR Chief Executive Officer, introduced the Right Tools, Right time initiative. It is brilliant concept: For over 100 years Realtors, with the effective stewardship of our professional staff, have invested in the Association Reservoir. As a result, the Association has significant resources: tangible, fiscal, human, and strategic. The Leadership Team with the concurrence of the Finance Committee approved the NAR plan to put tools back into member and Association hands to provide assistance through these difficult times. Tools will be delivered to Realtors and Associations, (local and State), to provide direct benefit during these times. I was reminded the old Chinese proverb: Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for the rest of his life. We are re-tooling and re-teaching our membership. We are lighting up the darkness with not just hope and compassion, but rather the tools to help our members actually survive. It is as if we are letting water out of the Association reservoir to make the electricity to power our Realtor business and light, heat our homes. It is the right program at the right time. It maybe viewed as one of the most pivot decisions for our Association in the past twenty years.

With star shinning brightly, the Congress finally approved the economic stimulus package to send to President Obama. What is amazing is that we obtained three of our four goals: Rates are 150 basis points below where they were a half year ago. Conforming loan limits have been reset at the higher 2008 numbers. The 7500 credit was increased to 8000, (we had hoped for 15k), and there is NO repayment provision. By every measure we met those three goals. The final element, the prohibition of banks in Real Estate is still being pursued.

It these two stars were not enough to lit the night sky, we are about to hear the next phases of the Administration Housing Recovery plans. We have not had a lot of light in this economic night, but now we have two North stars to help us navigate out of the darkness and into the life.

Realty Bytes February 2009

2009-02-28T07:33:00.003-05:00

Some Light at the end of the Tunnel:

For the past 18 months, the news has been negative. Inventory is up, prices are down, continuing to fall, and many people are facing foreclosure. It has been nothing short of discouraging. In Rhode Island, sales, (the number of units), dropped by 12.8 percent and the average price dropped by 20% over the prior year. Unemployment is now over ten percent. The numbers are serious.

The question everyone is asking: Are we at the bottom yet? It is a great question. Some answers, however, are only available after the event. Or in other words are only visible in the rear view mirror. We will know the bottom after we have passed through it, or at least when prices stop going down. We are not yet there. Hopefully it will be very soon.

So with this sobering information why would anyone anticipate improvement in the market? Very simply is there are a few encouraging signs and events. The signs include the fact that the end of the year reported an increase in pending sales over the end of the prior year. Prices appear to have reached a level that is causing demand to INCREASE. First, inventory overall is down. In truth, this is not due to a huge increase in sales and a reduction in new listings, but rather a combination of slightly more sales and reduction of unsold listings. A good number of unsuccessful sellers have taken their homes off of the market. Unrealistically prices properties will not sell in this market and nostalgic sellers are getting the message. Second, interest rates are now hovering around 5% which is 1.5% BELOW where it was early last year. For a $400,000 mortgage the payments will be $500. Less per month at 5% versus 6.5%. That is a huge savings. Among the most encouraging events it that Congress has passed and the President has signed the Economic Stimulus package. This will be good for employment in Rhode Island and for infra-structure, but it also contains an incentive: an $8,000 tax credit. The credit is available for first time home buyers which also includes people who have not owned real estate for the past three years. The credit is a true credit against taxes owned in 2009. The credit is ten percent or $8000 which ever is less. If you own $5000 in Federal Tax you will owe nothing and you will get the balance ($3000.) in the form of a check. There is an income limit of $75,000 for a single filer and $150,000 for married files. Additionally, the credit is subject to a three year recapture. This means that if you sell the house within three years, the government gets the $8000 credit back. This initiative will definitely produce some additional sales. Another encouraging event is the Treasure Departments new Foreclosure mitigation program which is being rolled out shortly. The goal is to modify mortgages so that the families can stay in the home. The program has had various names, but we will see some real progress. The final event is that we have a new President. While we wait to see what this will mean, it is a positive sign to have a new and different approach to the housing crisis. History will evaluate effectiveness, in the interim; it is a bright light of encouragement, particularly for the State of Rhode Island Real Estate.

Inauguration January 20th 2009

2009-01-28T11:04:00.004-05:00

January 20th, 2009 Inauguration, Washington, DC

It was a day of great contrasts. Winter in Washington can be bitter and raw. This was one of those days. Yet there was warmth of heart that ignored freezing toes, noses, ears and fingers. The number of people in attendance was amazing. Yet each of us was an individual witness. It was historic yet in noteworthy way it was an ordinary day; extra-ordinary and ordinary in the same moment.

The day before, my Susan, our daughter Caite and I were at the recently reopened Museum of American History. We were there to see the Ft Henry Flag and the Ipswich House. Those were both interesting. Do know which states were the 14 and 15th States admitted into the Union. The flag had 15 Stars during the War of 1812. (Ok I knew Vermont was one of them, but I guessed several others before finally coming up with Kentucky).

We spend a significant amount of time in the Lincoln exhibit. It was striking how human he was. We saw the hat he wore when he was killed. Our 16th President was amazing. He was tortured by the effort to keep the union together. The emancipation proclamation might not have ever been issued. He needed a victory in the War. Thank God that Antietam gave him the divine sign he sought. It was powerful to watch the people studying the exhibit and the document.

Before we left we stopped at a strange exhibit. It was a Woolworth’s coffee counter.. The same kind that we remember at Newport Creamery. Four swivel seats. They looked ordinary, unremarkable. But these were ‘white’s only’ seats. Four young Africa Americans sat in these seats waiting to be served as a protest. They held vigil, (less than fifty years ago), for 6 months before they were finally served. It is embarrassing that this was our country such a short time ago.

These two exhibits were the perfect preface to the inauguration of the first African America President: Barack Obama. We arrived at the security lines on Tuesday at 8:30 and waited in lines until about 10:30 to take our seats. Security was present everywhere, but we all felt safe. The process was polite, but not efficient. (Keep thinking they should hire Disney every four years to make it ‘visitor friendly’ and quick). This day there were very few complaints. We had a seat at a watershed event in the history of our nation and our people. Strictly on the surface, it was note worthy. The President of the United States, for the first time, is an African American. Racial shackles that precluded opportunity have been unlocked and discarded, forever. The Dream of American Opportunity, that any one could one day be President, was realized. You could not help but think the Martin Luther Kings, a American Martyr, was smiling in heaven. He had poured his last measure of life into this cause and into us. Now the ultimate symbol of achievement had been earned by an African American.

But then when you overlay, the gift of this person Barack Obama, it was almost surreal. It was overwhelming This was a man, a high educated thinker, who embraced discourse and science over belief. He understood the brilliance of founding fathers vision.

Everyone in the crowd was excited about the change. When President Bush and Mrs. Bush were introduced a wave of boos and jeers emanated from the rear by the Washington Monument, and like a wave moved forward. It was awkward.

The formal program was beautiful and spiritual. From Aretha Franklin's singing of the national anthem to the benediction, it was inspiring. The speech will be discussed for decades and has been etched into the American psyche. Barack reminded us that we are American, not just Democrats or Republicans. Christians, Jews. Muslims… Non believers. What was most powerful to me, was the line: “we have chosen hope over fear.” This is particularly meaningful for us here in Rhode Island. Remember: we are the 13th State and our motto is hope. Maybe the confidence of our new President can empower and encourage us to make our State a lighthouse in these perilous times. Just a thought.

The New Interview Questions before Hiring a Real Estate Agent to Sell Your House:

2009-01-06T05:45:00.001-05:00

We are stepping over the threshold of 2009 and real estate has changed yet again. This is the most challenging market that many of us will EVER see. While rate are matching those of fifty years ago, prices have changed dramatically. Nationally we are down almost 29% from the highest point of the market in mid 2006. Furthermore, 45% of the closed residential properties in October required money from the seller to sell. These are ‘tough realities.” For Realtors these times are also challenging, particularly given the fact that most real estate listing contracts are written as contingent agreements: If the property does in fact sell, then, and only then, does the agent earn and collect his or her previously, independently negotiated fee. If the agent works for a year and it does not get to closing, then he or she does not earn any fee. This has put great stress on real estate agents trying to earn a living.

With these facts and the stage, it is very important that you hire an effective and proven agent. Several questions will help you determine who that agent is?

1. First and foremost, what is the agent’s license number and are they licensed in the State your properties is located in? Is the firm licensed in said State? Is the agent a Realtor? Realtors must ascribe to the Code of Ethics. Have there been any disciplinary actions taken by the Department of Business Regulation or the Board of Realtors against the agent and/or firm? Are there any pending complaints?

2. What is the agents record/experience? How long has the agent and firm been in business? How many properties have he or she sold in the past year? Is he or she part of a team? What kind of back up does he/she have? Is the agent selling real estate full time, or is this a part time position? Does the agent actually live in Rhode Island year around, or does he or she spend the winter in Florida? What other States is the agent licensed in?
Does the agent use a lockbox? If he or she is going to be showing the property, is he or she available and reachable by cell?

3. How does the agent/company market property? With 87 % of all buyers using the web to search for properties, how does agent market in web centric world? How does agent differential the sellers property with so many listings in the market? Is print advertising important in the Strategy? Based on sources of buyers it should not be, particularly if you believe in “greening’ the marketing process. What is company web site like? Is it central to the marketing plan? Does agent use any video and television? Does agent use social media? If so how? Will agent provide specific marketing plan?

4. How often does agent provide feedback and updates for seller? Generally it should be a least once a week. In additional, the agent should provide feedback in the manner, vehicle that the seller prefers: cell-phone, text, email, snail mail, etc. Communication is key for the process.

5. How did agent arrive at value? Particularly in a declining market, how did agent determine price? What is delta between list price and sales price? How long should it take to sell property? When does the agent anticipate revisiting price if it does not sell right away?

6. Who follows up on closing details to make sure property gets to closing? Smoke inspection; follow up on mortgage approval, coordination of closing attorney, water meter readings, etc.?

7.How much do you charge? How much do you offer cooperating agents? Do you have any referral fees that you are paying from the fee? If there is a dispute with the deposit and the buyer does not ultimately perform, what is your fee?

8.If you are not satisfied with the performance of the agent, is there a cancelation fee and if so, how much?

9.Finally, have the agent provide a list of prior, clients. Finally, call them for feedback and advice.

Good luck!

Ron Phipps, CRS, ePro, GRI, GREEN

How long before it sells? Hard to say

2008-12-22T06:42:00.001-05:00

Providence Journal December 21, 2008

How long does it take to sell a house in today’s chaotic real estate market? Although potential sellers can get plenty of advice — most of it centered on setting a realistic price at the beginning of the process — there is no definite answer.

According to statistics collected by the Rhode Island Association of Realtors for the third quarter of this year, the median “days on market” numbers for all three categories of residential properties were up from the same period last year, including single-family and multifamily properties (88 this year, 72 last year), and condominiums (124 this year, 102 last year.)

Most agents agree that, at best, the statistic is a ballpark figure; overpriced houses will linger on the market much longer than average, and properties priced right will sell most quickly.

But even the president of the Realtors’ association acknowledges that the statistics have very little real-world usefulness given the way properties are listed and relisted when contracts expire, prices drop or sellers change real estate agents.

“It’s not a true statistic,” said president Paul Leys.

The “days on market” statistics may have had had a bit more meaning when market conditions were better. When the market was booming, many properties would be under contract well before a 60-day or 90-day listing contract would expire. But today, it is not uncommon for houses to sit on the market for many months, or even for more than a year.

Frustrated sellers are more likely to change agents and/or engage in multiple price cuts, actions that could result in their property appearing in the Statewide Multiple Listing Service as a “new listing.”

In the MLS, the “days on market” clock is reset when properties are relisted after a previous contract has expired, according to Donna McGinn, administrator of the Statewide Multiple Listing Service.

For example, if a house had been listed by Realtor A for 90 days, then listed with Realtor B for another 90 days, and the seller then signed a new listing contract with Realtor B for another 90 days and the house sold 15 days later, the statistics could show that the house sold in 15 days.

As a practical matter, however, real estate brokers and salespeople, and others who have access to the MLS database, can find the listing history of individual properties, including how long it has been for sale and how many times the price has been cut, Leys said.

Buyers who want to know this information can ask any agent for it. (Brokers and salespeople could risk losing their state real estate licenses if they misrepresent facts to buyers, even when they are representing sellers.)

“Buyers should know how long a property has been on the market,” Leys said. “It’s the reality.”

“If you want to track a property, an agent can provide that tracking for you,” said broker Ron Phipps, owner of Phipps Realty of Warwick. But he added that “as an agent, I want the timeline to be reflective of my listing agreement.”

Although the current system has its flaws, Phipps said, the days on market can provide information on how long a property takes to sell at a certain price point. For instance, if a property priced at $500,000 sat on the market for five months, but was relisted at $425,000 and sold within one month, the statistic reflects the marketing time based on the “real market price,” he said. “At 500, they weren’t really on the market in a realistic way.”

Phipps said the high number of distressed properties in today’s marketplace is affecting the average time on market. In the case of a short sale, in which the lending bank has to approve a sales price that is below the outstanding mortgage, many extra weeks of delays are common, he said.

“I’ve got a couple of properties that are upside down,” Phipps said, referring to a case when the mortgage is higher than the current market value. Problems and delays are occurring “not [due to] a lack of offers, but an unwillingness of lenders to work with us,” he said. It can take a lender 30 to 45 days to respond to an offer on a short sale, Phipps said, and that would count as extra “days on market.”

Leys and McGinn said the association has been thinking about altering the way relistings are handled. McGinn said the Statewide MLS may get a computer program that would automatically add plat and lot numbers to properties, and this would give each listed property an “individual identifier.”

Theoretically, if someone takes a property off the market for the winter, after it’s been on the market for 200 days, the “days on market” clock could stop when it was taken off the market and restart at 201 when it went back on the market in the spring.

But for Phipps, and for many agents working to sell real estate, the attraction of relisting long-marketed properties as “new listings” is the hope that this action will bring fresh attention from the market, even if the “new listing” moniker isn’t exactly accurate.

“My job as a listing agent is to sell the property,” Phipps said. “…At the end of the day, price really matters. If it’s well priced, it’s going to do well….The average time on market, frankly, is a distraction.”

Real Estate Bytes December 2008

2008-12-22T06:37:00.004-05:00

It is December 11 and already after 6 pm. It is cold, rainy and dark. Like many Realtors across the country, I am at my desk putting in a long day to pull some transactions together, keep others together and identify some new business. (Sometimes I feel like a real estate transaction janitor). For almost 30 years, real estate has been my job and my passion. The cyclical economics of real estate remind me of the weather in New England. We have seasons: seasons of planting, harvesting, tending and hibernating. We have seasons of wet springs, warm summers, bountiful autumns, and raw winters. We know this in our bones. Furthermore, this economic winter is chilling us to the bone, but we will as we have get through this.

It has been a challenging year for everyone, with few exceptions. Whether you are a homeowner, a renter, a Realtor, it is a rare person who says this year has been easy. However, there are some rainbows out there if we look up. Interest rates are great. Think about it: You can obtain a 30 year fixed rate, conventional mortgage for less than 5.5%. The average price of a single family home has come down to under 218k, making housing more affordable for more families. Condominium sales were down this year, but average price went up a few thousand dollars. Additionally, the number of pending sales is up and inventory is down. There are some great deals out there and some investors are scooping them up. In short, these are encouraging signs in the middle of the real estate storm.

One important element is becoming apparent. There are fewer full time Realtors working now, but their value is becoming more obvious. Whether pricing, negotiating, staging, positioning, marketing, closing etc, professional experience will make a real difference. This is true with both the buying side and the selling side. Even in so called normal, traditional transactions it has become an exercise of immense patience, and persistence to complete the sale. Selecting a home is easy. Obtaining the financing and getting it closed is very challenging. Sellers are beginning to understand this new real estate reality, too: The interview questions have changed lately when making listing presentation. Pricing is still important, but many sellers are asking more questions: What do you do to stage? What is your marketing plan, specifically? The question of what is your experience has changed to how many houses have you sold this year? It is also strange as a couple of homeowners have asked if this is my full time job. Both buyers and sellers are asking about professional designations and what they suggest.

Finally, in a market with so many foreclosures and short sales, we are reverting back to a caveat emptor, buyer beware. These homes do not have completed seller’s disclosures. Often there is no water, heat or electric. They are very difficult to inspect and research. If those facts were not enough, add the fact that this category of property takes so much longer to negotiate and acquire. While there may be great opportunities, there are great challenges.

It is New England, so we will bundle up and get through the winter.

NAR Installs 2009 Officers

2008-11-14T08:36:00.000-05:00

ORLANDO, Fla., Nov 10, 2008 /PRNewswire via COMTEX/ -- Charles McMillan, a Realtor(R) from Irving, Texas, was installed today as 2009 president of the National Association of Realtors(R) at the association's Board of Directors meeting during the REALTORS(R) Conference & Expo here. More than 20,000 Realtors(R) and guests from the United States and abroad attended the annual meeting this year.
(Logo: Logo: http://www.newscom.com/cgi-bin/prnh/20080923/NARLOGO)
In 2008, McMillan was NAR president-elect, and he was NAR first vice president in 2007. He also served twice as NAR Region X vice president, which comprises Texas and Louisiana. A Realtor(R) for more than 20 years, he is a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. McMillan was president of the Texas Association of Realtors in 1998, and named Texas "Realtor(R) of the Year" in 2000. He was president of the Greater Fort Worth Association of Realtors(R) in 1991, and was selected as GFWAR's "Realtor(R) of the Year" in 1986.

Vicki Cox Golder, a Realtor(R) from Tucson, Ariz., is 2009 president-elect. A Realtor(R) for 35 years, Cox Golder owns Vicki L. Cox & Associates in Tucson, specializing in commercial, farm and land brokerage, as well as building and development. In 2005, she was NAR's Region XI vice president, representing Arizona, Colorado, Nevada, New Mexico, Utah and Wyoming. Cox Golder was president of the Arizona Association of Realtors(R) in 1994, and served as president of the Tucson Association of Realtors(R) in 1991. She was named "Realtor(R) of the Year" by her local peers in 1989.

Realtor(R) Ron Phipps from Warwick, R.I., is 2009 first vice president. A Realtor(R) for more than 30 years, Phipps is broker/president of Phipps Realty in Warwick, specializing in residential brokerage. In 2003, he was NAR's Region I vice president; the region comprises Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. Phipps was president of the Rhode Island Association of Realtors(R) in 2000. He was also president of the statewide Multi-Listing Service (MLS) in 1993. He was named Rhode Island's "Realtor(R) of the Year" in 1995.

James L. Helsel Jr., a Realtor(R) from Lemoyne, Pa., remains as NAR treasurer in 2009. A Realtor(R) for 34 years, Helsel is a partner with RSR Realtors(R), a full-service real estate company in Harrisburg, Pa. He served as NAR 2002 Region II vice president, which comprises New Jersey, New York and Pennsylvania. In 1994, Helsel was president of the Pennsylvania Association of Realtors(R). In 2001, his state peers named him "Realtor(R) of the Year."
Gary Thomas, a Realtor(R) from Orange County, Calif., is 2009 vice president and liaison to government affairs. A Realtor(R) for more than 30 years, Thomas is president of RE/MAX Real Estate Services in Orange County, specializing in residential brokerage. In 2001, he served as president of the California Association of Realtors(R), and was also awarded the "Realtor(R) of the Year" by his state peers. Thomas was president of the Saddleback Association of Realtors(R) in 1987, now known as the Orange County Association of Realtors(R).
Steve Brown, a Realtor(R) from Dayton, Ohio, is 2009 vice president and liaison to committees. A Realtor(R) for more than 30 years, Brown is broker-owner of Irongate Inc. In 2005, he was Region VI vice president, which comprises Ohio and Michigan. In 2002, Brown was president of the Ohio Association of Realtors(R). At the local level, Brown was president of the Dayton Area Board of Realtors(R) in 1995, and was selected Broker-Owner of the Year by the board in 1998.
NAR's 2009 regional vice presidents are:
Bonnie Guevin, Manchester, N.H., Region I (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont); Joseph Canfora, East Islip, N.Y., Region II (New Jersey, New York and Pennsylvania); Dale Ross, Potomac, Md., Region III (Delaware, District of Columbia, Maryland, Virginia and West Virginia); Jane Cox, Lancaster, Ky., Region IV (Kentucky, North Carolina, South Carolina and Tennessee); Russell Grooms, Jacksonville, Fla., Region V (Alabama, Florida, Georgia and Mississippi);
Cathy Sherman Bittrick, Grand Rapids, Mich., Region VI (Michigan and Ohio); Stan Sieron, Belleville, Ill., Region VII (Illinois, Indiana and Wisconsin); Scott Louser, Minot, N.D., Region VIII (Iowa, Minnesota, Nebraska, North Dakota and South Dakota); Doug Smith, Little Rock, Ark., Region IX (Arkansas, Kansas, Missouri and Oklahoma);
Connie Kyle, Baton Rouge, La., Region X (Louisiana and Texas); Keith Kelley, Las Vegas, Nev., Region XI (Arizona, Colorado, Nevada, New Mexico, Utah and Wyoming); Jim Johnston, Pocatello, Idaho, Region XII (Alaska, Idaho, Montana, Oregon and Washington); and Toby Snitkin Bradley, Santa Barbara, Calif., Region XIII (California, Guam and Hawaii).
The National Association of Realtors(R), "The Voice for Real Estate," is America's largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the Web site's "News Media" section in the NAR Media Center.
REALTOR(R) is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS(R) and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS(R). All REALTORS(R) are members of NAR.
SOURCE National Association of Realtors

Translating the Real Estate Numbers: What do they mean October 2008

2008-10-24T10:56:00.000-04:00

The National Association of Realtors just released the housing numbers for September. Believe it or not, there is actually some good news. Seasonally adjusted, national sales of homes improved and were sold at an annual rate of 5.18 million. This is above the 4.9 rate that we had seen this summer. This rate is up 5.5%, which is great news. The reason that we are finding ‘a floor’ on the volume of sales is that we are finally moving from attractive prices to compelling prices. The average price moved from $210,500 in September of 2007 to $191,600 September of 2008. This is a drop of 9.0%
One of the main reasons for this significant drop is the mix of houses being sold. A significant portion of homes being sold are ‘REO’s” (Real Estate Owned, by banks, typically foreclosed) and short sale. If 1 in 4 or 5 houses fit in the distressed category, price will come down. Obviously this is what has happened in Rhode Island. But the result of lower prices has been an increase in the pending index of homes in the Ocean State. In 2008, the number of house pending increased by 9% over September of 2007. This is also encouraging news.
One other really important fact in the report is that over 80% of the purchases in September were owner occupied. This is a much higher than normal percentage.
This means that the people buying are purchasing for shelter and will in fact occupy the home. This is a strong stabilizing trend. It also suggests that these buyers will be re creating neighborhoods and taking better care of their properties.
What is also absolutely apparent is that the numbers range broadly across the country and here in Rhode Island. We tend to look at the national numbers and assume they apply directly to our city/town and or neighborhood. This is not the case. As all real estate is local, you need to look at the data for your immediate area to really know what is going on. A Realtor can provide the data and the analysis. Get the advice. The real estate rule which has been: location, location, location is now “all real estate is local.”

To Recap:

What do the number mean?

There is a floor for the number of houses sold just over 5 million nationally.
Prices are still correcting.
Inventory is dropping which will help stabilize the price.
1 in 4/5 Houses in Rhode Island is a foreclosure or a short sale.
Most buyers are in the market to buy a home to occupy for them selves.
Buyer Purpose for buying: shelter.
We really are in a global economy.
Yet all Real Estate is LOCAL.

Home sales, prices decline in Northeast cities

2008-09-25T06:27:00.001-04:00

Existing home sales in the Northeast tumbled nearly 19 percent in August from last year, while the median sales price in the region fell 3.8 percent to $271,000, the National Association of Realtors said Wednesday.

Compared with the country as a whole, home sales were a bit weaker in the Northeast, but prices held up better. Nationally, sales -- without adjusting for seasonal factors -- were down 15 percent in August from a year ago, while the median price slid 9.5 percent to $203,100.

The Associated Press-Re/Max Monthly Housing Report, also released Wednesday, showed August sales dropped by more than 20 percent in seven of the nine Northeast metro areas tracked. The report analyzed home sales recorded by all real estate agents in those areas, regardless of company affiliation.

But barring a national economic meltdown, the Northeast is likely to emerge from its housing slump before other regions in the country, said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies.

The reasons are twofold: The region didn't experience the ambitious overbuilding plaguing the Southwest, California and Florida and the Northeast also isn't suffering from a severe economic downturn like the Midwest.

"I can see the Northeast working through its excess of inventory and trolling around the bottom for a while," Retsinas said. "I can't even think about when that will begin to happen in those other areas of the country."

Retsinas pointed out, though, that job losses on Wall Street could eventually hurt home sales and prices surrounding New York city. In August, sales fell nearly 26 percent, the AP-Re/Max report showed, while the median price slipped less than 5 percent to $460,000. The numbers include Suffolk, Nassau and Westchester counties, but not New York city.

For the second month in a row, Pittsburgh recorded the worst sales decline at 32 percent from August 2007. But the city's median price posted the smallest drop in the region at less than a half-percent to $131,400. Even better for the market, the supply of unsold homes shrunk by a quarter last month.

"I think the economic conditions are leading some people, the traditional move-up buyer, feeling that maybe this is not the right time to put my house on the market," said Tony Mete, president of the Realtors Association of Metropolitan Pittsburgh.

He expects sales to continue to lag in September but more inventory to drop off. Mete hopes the possible $700 billion bailout of the U.S. financial system that Congress is debating this week would free up more mortgage money for buyers.

Only the most creditworthy buyers are qualifying for home loans as lenders have raised the bar for borrowers to qualify for a mortgage.

Those stricter credit standards have cut out about a quarter of potential homebuyers in Philadelphia, said Harry Caparo, chairman of Coldwell Banker Preferred in Philadelphia.

"The general condition of the mortgage market and uncertainty of the buyer are the issues today," he said.

Philadelphia also recorded a median price dip below 1 percent in August. Home values fell to $235,000 during the month, while sales activity declined 28 percent. The supply of homes on the market shot up by almost 22 percent.

Caparo expects September sales to be down another 20 to 25 percent after a "substantial drop" in pending sales in the last few months.

MaryAnn Sgobba, president of the Passaic County Board of Realtor, also laments that buyers don't think they can get a mortgage, so they're discouraged from even looking.

The number of sales fell almost 20 percent in the greater Passaic, N.J., area, including sales from the nine surrounding counties. But prices dipped just under 6 percent to $399,900 last month, a welcome adjustment compared to other cities, Sgobba said.

"We're not unhappy with August's stats," she said.

But the supply of unsold homes is ballooning in the Passaic area. Inventory jumped 26 percent in August from a year ago, which could put more downward pressure on prices if sales don't keep up.

More people are contacting Sgobba about current listings, a good sign she said, which could lead to more sales in September. She also hopes the housing rescue plan passed in May, which includes a credit of up to $7,500 for first-time homebuyers, will boost sales.

Foreclosures are the largest obstacle for Providence, R.I., where nearly one of five sales are distressed properties, said Ron Phipps of Phipps Realty in Warwick, R.I.The discounted properties are weighing on values too. The median price plunged by nearly 15 percent last month to $230,000, the largest drop in the Northeast, the AP-Re/Max report showed. Sales there also fell 22 percent in August.

"We've gone back to 2004 pricing which was pre-housing boom," Phipps said. "I'm looking very much to bottom in prices this fall or winter."

The median home price in Augusta, Maine, posted the second largest decline last month. Values there lost nearly 13 percent to $141,500 as the volume of sales slowed by almost 30 percent. Inventory was nearly unchanged.

"We're still in an adjustment period so we'll be down through 2008," said Bill Sprague, a partner at Sprague and Curtis Real Estate in Augusta. But he expects sales to perk up next year

J.W. ELPHINSTONE

The Associated Press September 24, 2008, 3:02PM ET

www.phippsrealty.com

Realtors soldier on in down market

2008-09-25T06:22:00.001-04:00

For real estate agents coping with Rhode Island’s struggling housing market, last week’s meltdown on Wall Street was hardly welcome news. Nothing that threatens to undermine buyer confidence or the availability of credit is ever good news for the real estate business.

But as the fall real estate market gets under way, most brokers and salespeople, already used to new market realities, are continuing to soldier on, according Rob Scaralia, president of the Rhode Island Association of Realtors.

“We’re still working our way through it,” Scaralia said of the market downturn.

Turmoil on Wall Street has the potential to hurt consumer confidence, he said, “by creating some uncertainty” for buyers.

But the inventory of residential properties for sale in Rhode Island was down across the board this month compared with September last year, according to the association. There are 6,693 single-family houses for sale, compared with 6,874 last year; 1,536 multifamilies for sale, compared with 1,864 last year, and 1,762 condos for sale, compared with 1,793 last year.

“The candid answer is we’re not sure yet if it will have any impact on us,” Ron Phipps, of Phipps Realty, of Warwick, said of the financial crisis on Wall Street. Phipps is a former president of the Realtors’ association.

In his own office, “we had a major closing [last Monday], and two more closings scheduled at end of September,” Phipps said. “I think people are doing what we need to do.”

Phipps said the challenges at this point are all the foreclosed properties that have flooded the market and the credit crunch.

“When one in every four or five transactions is REO [real-estate owned, or foreclosed properties], that makes it particularly difficult,” Phipps said.

Bargain-savvy buyers can’t help comparing prices of market properties with the distressed ones. And the sale of distressed properties — including foreclosures and short sales — “take forever to resolve,” Phipps said.

Lenders often take weeks or even months to respond to an offer to buy a foreclosed or short-sale property, Phipps said.

These delays have become legendary in recent months as lenders’ loss-management divisions have been overwhelmed with the sheer numbers of foreclosures and requests for short sales.

Tightened credit is an issue, Phipps added. “The demand is fairly strong,” he said. “…The problem is access to the money … We need to create true liquidity.”

“I think that the days of all of those funky no-doc loans, and the crazy loans that were out there, and the risky loans, we’re not going to see them for a while to come,” said Stephen Tetzner, an owner of HomeStar Mortgage Inc., of Providence, and one of the directors of the Rhode Island Mortgage Bankers Association. Tetzner said the government takeover of Fannie Mae and Freddie Mac earlier this month “did wonders for mortgage rates,” delivering the lowest rates since April or May of this year.

“There is a credit crunch,” Tetzner admitted. But people with good credit, who can document their income, “can get financed,” he said. Low down-payment programs are still available through FHA, and Rhode Island Housing is still able to help qualified first-time buyers with 100-percent financing, he said.

Tetzner added that condominium financing is more difficult in this market because “mortgage insurance companies are scared about the values” in the condo market. Many condo financing programs now require a bigger down payment, he said. And he said that condo conversion projects with less than four units “are not insurable” under HUD guidelines.

But the Fed’s decision last week to hold off on a further cut in interest rates “is not necessarily a bad thing,” Tetzner said. “Just because the Fed lowers rates doesn’t mean mortgage rates will go down.” Fear of inflation can drive up mortgage rates even after the Fed cuts rates, he said.

This market, as difficult as it is, “is not as challenging as it was in the early 1980s after the credit union crisis,” Phipps said.

Phipps said he strives to be honest when buyers ask him to “guarantee that the price won’t drop” by admitting that it is a possibility.

He said he tells buyers that although property may lose some value in the short term, “in the interim you’re going to be in the house you want.”

But for people who plan to stay in a house only for a year? “Maybe you ought to rent,” Phipps said.
Christine Dunn, Providence Journal September 21,2008

www.phippsrealty.com

Ron Phipps Testifies at Congress

2008-09-19T09:14:00.000-04:00

WASHINGTON, D.C. - September 18, 2008 - (RealEstateRama) — Homeowners who are struggling to make their mortgage payments must have more options available to them to avoid foreclosure, particularly in the area of short sales, according to National Association of Realtors®‘ testimony before the House Financial Services Committee today.

“When people lose homes to foreclosure, our communities, the housing market and our economy all suffer,” said Ron Phipps, 2009 NAR first vice president nominee. “Expanding the use of short sales would benefit consumers, lenders and the surrounding community.”

A short sale is a transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on the loan. The lender often receives a higher amount of the remaining loan balance than it would from the sale of the property after a foreclosure. This helps support home values in the surrounding community. Short sales also help homeowners maintain some level of credit.

“Short sales can be used to avoid foreclosures, and can be less costly than a foreclosure to the lending institution,” Phipps said. “Unfortunately, many Realtors® are increasingly encountering roadblocks that prevent troubled homeowners from taking advantage of short sales. We hear that lenders are often taking a very long time to decide whether to accept a short sale, often resulting in the loss of the home buyer and the sale, and negatively impacting the neighborhood and the community,” said Phipps.

Realtors® cite many reasons for the difficulty in completing a short sale. These include burdensome paperwork, appraisals that do not consider the sellers’ duress or number of foreclosures in the community, over-burdened loss mitigation departments, and the complications created by second mortgages.

NAR has created a working group to examine the problems and difficulties surrounding short sales and to educate its members on how to best work with their clients through this process. NAR is also reaching out to its partners in the housing and mortgage industry to encourage adoption of principles and practices to streamline the short sale process. “We are asking all lenders and their servicers to deliver a clear answer, in writing, within a reasonable timeframe,” Phipps said.

“Our nation faces significant challenges in dealing with the economic turmoil fostered by the housing market,” said Phipps. “To combat this, we must assist those families threatened with the loss of their home by using all of the tools that we have at our disposal. Short sales offer families who cannot avoid losing their home a way to repay a portion of their debt obligation while maintaining a level of dignity during the process and somewhat salvaging their credit, enabling them to perhaps someday own a home again. NAR and its members stand ready to work with Congress and other industry partners to improve and implement all foreclosure mitigation efforts.”

Reel estate: Broker lures buyers with free fish

2008-09-01T08:12:00.000-04:00

Realtor Caroline Caira has often brought gifts - usually department store gift cards or restaurant certificates - for new homeowners. But her latest promotion takes the bait.

“I just brought haddock to a closing,” said Caira, who works out of the RE/MAX First Realty office in Watertown. “People like seafood.”

Caira’s fiance, Domenic Vincenzino, owns the Newton fish store Steamers, where she gets her fish. And her new deal offers anyone who buys or sells their house with her free fish for a year.

isn’t so much a reaction to the economy as a partnership to support local business, she said. Vincenzino talks up her real-estate business to customers and features her business cards at the counter advertising the fish promotion. Meanwhile, she talks tilapia to anyone who will listen.

“There’s no real gimmick,” she said, noting that the amount of free fish depends on the amount the house sells for. “If it’s a $500,000 house, we’ll give you $500 worth of fish.”

Caira, who has also served lobster rolls at broker open houses, is one of a select few who go beyond traditional promotions that typically feature free calendars. Another local broker, Naomi Zygiel-Almozlino from Coldwell Banker in Newton, recently sent out a food and wine pairing list to potential clients. Serve sharp cheese with a pinot noir or cabernet sauvignon, it suggests. But mild cheeses go better with sauvignon blanc.

No one may enjoy incentive marketing more than Ron Phipps of Phipps Realty. The Warwick, R.I.-based agent said he’s done plenty of unusual, even funny promotions during his 20-year career.

“Some things work. Some things don’t. It will cause them to smile, but it won’t make or break a sale,” he said.

Thoughtful gifts have included a Douglas fir to a family relocating from the West Coast and bougainvillea for a buyer from Atlanta. He tempted buyers of a waterfront property with a sailboat and offered a professional closet-planning service to a home ripe for a build-out. While jewelry and fur coats are not uncommon gifts in the South, Phipps said they would never work in New England.

Instead, he has plied open-house guests with the latest Harry Potter [website] title and pints of Ben & Jerry’s ice cream.

Phipps is careful not to offer anything that might draw attention to a weakness of a house and admitted that some perks turned out to be problems.

“Once I gave a gift certificate to go fishing,” he recalled. “The seas were rough and everyone got sick.”

These days, Phipps has scaled back, saying that buyers don’t want extras in a tight economy. They just want a well-priced house.

“It’s better to price the house where it’s going to be in 90 days, and sell it now,” he said. “We’ve reduced incentives and recommend all those resources go into the selling.”But in Newton, Caira enjoys the friendly conversation that her free-fish-for-a-year deal has prompted. Customers joke, “I’ll eat you out of business.”

“Well,” she said. “Restrictions do apply.”
By Jill Radsken

- jradsken@bostonherald.com

Home sales, prices mostly fall in Northeast

2008-09-01T07:53:00.001-04:00

Homes sales tumbled in most big Northeastern cities last month - with only Passaic, N.J., showing a healthy jump in activity - while sales of distressed properties dragged down median prices in the entire region, according to two reports released Monday.

Sales of existing homes in the Northeast declined nearly 12 percent in July from a year ago, the National Association of Realtors said. The median price in the Northeast was $278,700, down almost 5 percent from July 2007.

That reflected the national trend: sales dropped more than 13 percent year-over-year, while the median price decreased 7.1 percent to $212,000.

But the Associated Press-Re/Max Monthly Housing Report, also released Monday, showed July sales dropped by at least 20 percent in five of the nine Northeast cities tracked. The report analyzed home sales recorded by all real estate agents in those cities, regardless of company affiliation.

In the one bright spot, Passaic, sales jumped 38 percent over July last year. But the rapid sales pace could be stymied by glut of properties coming onto the market. The supply of unsold homes grew 32 percent to 10.6 months, and the median price slid 6 percent to $400,000.

In contrast, Pittsburgh posted the worst sales decline at 31 percent from July 2007. But prices offered a sliver of hope, dipping less than 1 percent to $132,000, the smallest drop in the region.

In Boston, the supply of homes for sale declined markedly, signaling a possible turnaround in the offing. Judy Moore, a local agent with Re/Max Landmark, said the condo market already is showing signs of life.

Overall, Boston home sales fell 12 percent in July and the median price decreased 8 percent to $355,000, according to the AP-Re/Max report. While Moore expects August sales and prices to decline year-over-year, she thinks the drop in both will be less severe than July's.

"It's been fits and starts, but there's always some activity going on," Moore said.

Philadelphia real estate agent Ellen Renish of Continental Realty said the sales pace has improved over the last several months there, though in July were still 20 percent below July last year.

"We're seeing sold signs instead of for-sale signs," Renish said. "We've even seen several properties in the past month that have had multiple offers." She's optimistic about August sales.

But inventory remains high here, up about 6 percent from last year, or a 10 month supply, including homes in or close to foreclosure.

Foreclosures are also leaving their mark in Providence, R.I. Nearly one of five sales in the area were distressed sales, said Ron Phipps of Phipps Realty in Warwick, R.I. The discounted properties are weighing down the market, where the median price fell by 13 percent last month to $234,900, the AP-Re/Max report showed. Sales there also slipped 9 percent in July.

"A lot of sellers are nostalgic for what was, so they're disengaging from the market," Phipps said. The supply of unsold homes shrank nearly 3 percent in July as a result.
Don Plourde, a real estate agent in Waterville, Maine, doesn't expect sales in the state capital of Augusta to turn around until at least next spring. Home sales fell almost 21 percent in July while the median home price lost 10 percent to $149,000.

Buyers are worrying about fuel oil, Plourde said, and out-of-state buyers are sparse this year, hurting sales of higher end homes.

"Maybe they're going to Florida for all the good buys down there," Plourde said with a chuckle.

Foreclosures and short sales - where the bank accepts less than the value of the mortgage - also are adding to inventory. Maine foreclosure filings more than doubled in July from the previous year.

Brenda Perry, 49, bought a one-story ranch home in a short sale at the end of July in a suburb of Augusta. Perry, a development officer at a nonprofit, wanted to move closer to her job. She declined to say how much she paid for it, but said she bought it for less than the $119,900 asking price.

"(Foreclosures) are coming onto the market faster than you could keep up with them," Perry said. "It's an excellent time to buy. There are plenty of houses on the market, plenty to choose from."

Helicopter Buyers

2008-08-01T09:08:00.000-04:00

You may recall all of the articles and stories several years ago about helicopter parents. These are parents that ‘hover’ over their children to organize, direct, supervise, encourage, engage, protect, and insulate their children’s lives. The concept is not complementary and child development experts argue that this behavior is very bad for the children. Children need to engage their own world. They need to develop problem solving skills, coping techniques, and a sense of self worth, of purpose. Helicopter parents may not live through their children, but they clearly interfere with the kids’ development.

In the real estate market of 2008, we have seen the advent of a new type of buyer: the helicopter buyer. He, she, or they are not like helicopter parents. The description is much more elementary. Helicopter buyers, are in the lingo of the industry, “ready, willing and able buyers.” who have identified the ‘right property’ for themselves, but do not buy. They hover around the property. They set up showings. They visit the house repeatedly. They come to open houses, over and over. They watch every marketing element of the property. They are not just professional students of the market; they are professional students of the property.

Each visit produces a new list of questions and queries. With the internet, most property information is easily available. Helicopter buyers want to know the ‘why of the data.’
Tax records, real estate transfer records, DEM environmental records, Google earth, etc are all libraries. It is in fact smart and appropriate to engage this research approach as part of due diligence for purchasing a property. Realtors encourage buyers to become knowledgeable and to do their own independent investigations. It is a major and important purchase that requires focus and action.

The challenge of this market is the lack of a final destination, a landing. A significant number of purchasers do exhaustive ‘due diligence.’ But never make an offer, or rather a formal one. They will ask what will the seller take, but not make the offer. The reasons for this are numerous, varied, and individual. Some buyers are simply trying to wait the seller out, expecting that they will become desperate and ‘give the house away.’ Some buyers are trying to time the market at the absolute bottom. Some buyers are waiting for rates to come down. Some buyers are waiting for ‘signs.’ Many buyers are waiting for their current residence to sell. Many buyers are looking for signs of encouragement. Most buyers are discouraged by the news about the market. Ironically, this is after they ‘know’ they have found and researched the right home for them.

The advent of the helicopter buyer is particularly frustrating for sellers. To have multiple interested parties visiting their home and no offer is most challenging. “There must be something wrong.’ Can’t you get any offer? Recently, we had a buyer view a house four times with private appointments and come back to four open houses. They have yet to make an offer on anything including this original house. They are well fueled ‘helicopter buyers.’ Oh and in case you are wondering, there are a lot of great choices, at great prices, in this market. If you find the right property, make the offer. You might be pleasantly surprised. At some point, you will need to land. Do it now, when the choices and values are great.

GPS for the Real Estate Market. Summer 2008

2008-07-30T09:07:00.000-04:00

You have heard the most important rule of real estate: Location, Location, Location. You probably have heard the new variations of the same concept: All real estate is local or each market is unique. All of these rules are common sense rules. Many things are portable, real estate, obviously is not. It is not just, what it is, it is where it is.

So real estate is understood and analyzed in terms of where it is. But to be really understood, real estate must be analyzed, also, in terms of WHEN it is. GPS is used as a navigational tool. When looking at real estate we need to add a feature to our electronic map, the ‘when feature.’ The when is now summer 2008?

In the largest sense, Rhode Island real estate has changed significantly. The number of sales has dropped significantly since 2006. The first half of 2008 showed another drop of 19% unit sales of single family homes since 2007. Average price of single family homes have also adjusted downward from approximately $280,000 to $250,000. This is a change of 6.9%. Condominiums have seen a similar trend: Sales unit volume dropped from 944, first half of 2007, to 647, first half of 2008. Condo prices have remained fairly constant changing from $215,500 to $215,000. Multi family sales are up significantly, while average price is down significantly.

These are the numbers, but the real challenge is what do they mean. First, we are still in a correcting mode. The number of active listing has gone down this year versus last year.
This bodes well for a stabilization of price. The number of pending sales has gone up for each of the last three months, communicating that nostalgic sellers with high priced houses are withdrawing their listings, and the prices of the remaining properties are low enough to generate sales. However, there is a fact in the price changes that is most telling: A large portion of the real estate market is bank owned. Almost one is five single family homes sold in the first half of 2008 was owned by a bank. Among multi family properties, more than half of the sales were bank owned. This is why prices have shown a significant downward adjustment. Some sellers, want us to ignore, these distressed properties when determining value. Unfortunately, when such a large portion of the market is banked owned, you cannot ignore the information. Moreover, these properties, although wrapped challenge, are priced so low they are compelling to many buyers.

Secondly, the Housing recovery act is in the process of becoming law. It is the single most important housing bill in at least a generation. It has many elements, over 600 pages long. Its primary features include 1. Shoring up Fannie Mae and Freddy Mac, the largest ‘buyers’ of mortgages; 2. Providing relief from foreclosure of many Americans; and 3. Stimulating housing sales. The last item is being done with several tools; the most effective is a tax credit of $7500 for first time home buyers. This should really help us in Rhode Island. The definition of a first time home buyer is someone who has not owned a house in the past three years. This bill will go a long way to shorten the real estate downturn.

Third, the demographics are strong locally. Very simply, we have enough ‘families’ to fill the housing we currently have available, in the broadest of terms. We do have an oversupply of expensive, urban condominiums, but when you look at the total number of families and the total number of residential units, there are enough families to fill them.
The issue is one of value and affordability. Many people cannot afford to purchase right now. Some very savvy investors are buying multi family properties a priced well below value. It is a smart move, as prices are low, demand for rentals high, and the properties will not only carry themselves, but can generate positive cash flow. We have returned to great fundamentals.

Fourth, the signs of stabilization are visible. In the industry we have been looking for the light at the end of the tunnel. (8000 people had licenses as of April 30, 2008. On May 1st after the renewals, that number dropped to 6000 people. A lower number of sales, at lower prices, translate to less brokerage fees for sales people. It has been, and continues to be very difficult for people in real estate.) The visible light is the number of pending sales and the passage of the housing bills. Both of these are good signs. It is a perception in the real estate community that we are on either side of the bottom. Also the number of bank owned properties are enabling a lot of sales. The investors are buying and buying well.

So where are we? Our time sensitive GPS suggests we are still in correcting mode. After the majority of bank owned properties are sold, price stability will be visible. Condo are doing the best is holding their value at the moment. We expect that trend to spill over to single family soon. So if you have been on the side lines, trying to time the market for the bottom, it is a really great time to look. We will not know where the bottom was until AFTER we have left it. It is only visible in the mirror. Check out the current options. There are some great buys out there now. One important recommendation: Get expert advise. Regardless of whether you are buying or selling, this market is difficult to analyze. Contact a Realtor, who ‘knows’ your market area, so you have some who can help you un-knot the dynamics of this market.

Businesses Feel Pinch

2008-07-21T09:11:00.001-04:00

With the credit crunch on Wall Street entering its second year, a widening array of businesses are finding it tough to get credit. And with mortgage giants Fannie Mae and Freddie Mac roiling credit markets, individuals could soon find it harder to get a loan as well.

One company feeling the strain is Chrysler Financial, the financing arm of the Big Three auto maker that was carved out of the former DaimlerChrysler AG last year. The Chrysler LLC unit has $30 billion of short-term debt due to mature in early August. And bankers, led by J.P. Morgan Chase & Co., are pushing hard to get that debt renewed.

While a deal is likely to get done, people involved in the transaction say the terms could be onerous for Chrysler Financial, pushing up borrowing costs for consumers and auto dealers that depend on it for loans. (Please see related article.)

Banks also are pulling back on the amount of rainy-day money they have been giving out to corporate clients in the form of loans called revolving-credit facilities. Retailers such as Sears Holdings Corp. and Talbots Inc. have struggled to renew revolving-credit facilities with their bankers in recent months. Other companies, including Wal-Mart Stores Inc., AT&T Inc. and American International Group Inc., have had to agree to tougher terms on such credit.

Overall, the value of credit held by banks in the second quarter shrank 1.5% from the first quarter, according to Federal Reserve data. That was the largest three-month contraction since 1948.

These tight credit conditions are particularly worrisome because the Federal Reserve has responded aggressively since the credit crunch emerged last July. The central bank has cut interest rates seven times by a total of 3.25 percentage points.

Despite those moves, "it's hard to make the case that financial conditions are especially stimulative right now," says UBS economist James O'Sullivan.

Credit-market woes have hammered the housing market and financial companies, but until recently they didn't appear to be hurting the rest of the economy so much. The latest data suggest that might be changing.

Credit is the lifeblood of economic activity. If it continues to be hard to get, despite the Fed's efforts to keep it flowing, that could spell trouble for an economy teetering on the edge of recession.

Investors had started to believe the Fed might be forced to raise interest rates later this year to fight inflation. But with credit tight, that looks less likely now.

The Fed's overnight target rate, at just 2%, is well below the rate of inflation. But that easy-money stance isn't translating into lower borrowing costs for companies and households. Many borrowers haven't seen a drop in the rates they get charged, despite the Fed rate cuts, which began last fall. Chrysler Financial, for instance, is likely to pay more to roll over its $30 billion debt than it did a year ago.

The bear market in stocks also means that companies can't easily tap the equity market for cash.

Much of the decline in outstanding credit has been due to banks sharply reducing the amount of bonds and other debt securities held on their books, but the slowdown is apparent across all forms of lending. The heavy losses banks have taken on mortgage-related securities are forcing them raise cash levels, leading to tighter lending. Because they can't know what other problems might be lurking on their balance sheets, they are being especially cautious.

Payroll-services company Paychex Inc. has been seeing fewer new businesses starting up, which it attributes to the tighter credit climate. On a recent call with investors, Chief Financial Officer John Morphy said that Paychex itself felt the effects of banks' reluctance to lend when it went to open a line of credit.

"We're working with our No. 1 provider lead bank for the last 20 years. You can't believe what we've had to go through to get this," Mr. Morphy said. "And we're in great shape. They want dividend restrictions; they want all kinds of stuff. Now, in the end, we're going to get what we want, but it was a battle."

Fruit-and-vegetable processor Del Monte Foods Co. bought back $50 million of its stock in the second half of last year at an average price of $9.31 a share. At $7.76 a share, the stock is cheaper now, but rather than buy back more of it, the company says it is shoring up its cash holdings instead in order to reassure bond investors of its credit-worthiness.

"The credit market today is very uncertain, to say the least, and the last thing we want to do is in any way affect our credit rating," Del Monte Chief Financial Officer Dave Meyers told investors earlier this month. If Del Monte's credit rating was dropped a single notch, he suggested, the company's borrowing costs could rise by millions.

In a survey of chief financial officers at 468 U.S. companies last month, John Graham, a finance professor at Duke University's Fuqua School of Business, found that companies with low credit ratings, in particular, were seeing significantly higher credit costs and were having a hard time obtaining or renewing bank credit lines. Many companies said they were cutting back or delaying new investment plans, paring hiring plans and initiating cost-cutting programs as a result of tough credit conditions.

"When credit gets tight, money becomes more precious than ever," says Mr. Graham. "If you have it, you're not going to spend it, and if you can't get it, it affects your operations."

That applies to individuals, too. Ron Phipps, who runs Phipps Realty in Warwick, R.I., says banks are making even the most credit-worthy borrowers jump through hoops, asking for reams of documentation before granting a mortgage.

"The approach now is so hyper-risk-sensitive and labor intensive, it's very emotionally taxing," he says. "Somewhere along the way common sense has been replaced by the check-off menu."
David Stevens, who runs the mortgage operation at Long & Foster Real Estate in Fairfax, Va., worked at Freddie Mac from 1999 to 2005. He says that during his time there, the mortgage lender was never as stringent about the quality of mortgages it would accept as it is now.

With banks and other lenders cutting back, Fannie and Freddie have been "the only game in town as far as credit creation is concerned," said Goldman Sachs economist Jan Hatzius. If the mortgage giants, in an effort to raise their cash holdings, curtailed activity in the same way they did in earlier this decade in response too accounting problems, credit conditions could get oppressively tight, Mr. Hatzius says.

By JUSTIN LAHART
July 21, 2008; Page A3

Draft a Winning Team to Sell Your House

2008-07-08T19:03:00.000-04:00

Sometimes in order to sell a house you have to act like you’re trying to win the Super Bowl: you have to have the right team.

To get the most for your biggest investment, you’ll want to draw buyers away from the new development down the street and that cute little fixer-upper around the corner. And that means you may need some special expertise.

“When the market is exuberant, you may be fortunate enough to do a good job selling your house without a team,” says Ron Phipps, a broker with Phipps Realty and Relocation Services n Warwick, Rhode Island. “In a normal market or a buyer’s market, a team isn’t a luxury—it’s a necessity.”

Unless you’re selling the house yourself, start by selecting an agent. The agent will essentially be your selling team’s quarterback and he or she can advise you on the pros you need, offer referrals and give you an estimate of just how much money you need to spend versus how much you’ll get back at the closing table.

The smart move? Audition at least three agents, from three different firms, says Phipps.

What you want to know is what they think your house is worth and how they plan to market it, he says.Hold off sharing personal information and financial details. You need to first understand how each agent would price the house (and why) and exactly what each would do to market it effectively.

Here are some other critical issues to consider before you hire an agent:

How creative is the agent with marketing?
Does the agent understand Internet marketing? (Eighty-five percent of buyers start there, says Phipps.)
How sharp are the person’s negotiating skills?
How will the agent position the property for maximum exposure?
How much has the agent sold this year? What is his or her performance record?
What price range does the agent normally represent?
How do the agent’s list prices compare to actual sales prices?
What you want is a successful agent who understands your neighborhood and has a good track record with homes of similar value to yours. You want an agent with whom you can build a relationship of trust, says Phipps, so go with your gut.

Your agent’s assessment and marketing plan will likely determine the other members of your team:

A home inspector: Get a prelisting inspection. The home inspector will give you a heads-up if there are any problems that need to be addressed. With this information in hand, you can decide whether to fix the problem or discount your home accordingly. Having a home inspection is a good preemptive move that can keep negotiations from falling apart after a serious offer. The price for an inspection generally runs between $300 and $500, although it could cost more if you have a large home.

You can get a referral from friends, neighbors or your agent, or use the professional who inspected your home before you bought it. Look for an inspector who is a member of the American Society of Home Inspectors (ASHI.org), a national organization that provides ongoing education and a code of ethics. (The site also includes a rundown of requirements for inspectors in each state and contact information for the state bodies that oversee inspectors.)

If your state licenses home inspectors, be sure to go online to the agency that regulates them to make sure the one you choose has a valid license to do business. Phipps adds that you should avoid inspectors who are also contractors.

A cleaning crew: This is a must if you’re a smoker or you have animals. And it’s not a bad idea if you have a busy family life, either.

Phipps says that one of his recent clients had a beautiful home that was also very messy. But the residents were so accustomed to it that they didn’t notice it anymore. So he hired a team of cleaning pros (for about $250), held an open house—and got an offer that day.

Want to take it a step further? You can hire a professional organizer to come in and declutter your home or a designer or stager to make it look more appealing to buyers. (A good real estate agent should be able to recommend pros in your area.)

A contractor or building professional: Depending on the home, you might also need a contractor to fix major or minor problems. Ask for referrals from your agent or from friends who’ve had recent work done. When you talk to the contractor, make sure he or she is licensed, bonded and insured. Get several references—and call all of them. (Basically, you want to verify that the work was first-rate and completed on time and on budget, and there weren’t any problems.)

“No team can make it to the Super Bowl without collaborating brilliantly,” says Phipps. “Effective home sales are very similar. If you want a great outcome, not an okay outcome, engage the support of a team.”

Discover EDGE contributor Dana Dratch is a freelance writer from Atlanta, GA.

5 Tips for Selling a House in a Slow Market As Posted on US News and World Report

2008-04-17T16:37:00.001-04:00

It's no secret that the days of houses selling like Beanie Babies are over. After real estate appreciated at jaw-dropping rates during the first half of the decade, home prices and sales tallies have dropped precipitously in recent months—tilting market dynamics to favor buyers over sellers. That doesn't mean your house won't sell, just that the playing field has changed. So here are five tips to help you get a timely sale at a fair price in today's reshuffled housing market.

1. Make those repairs. While in years past it may have been enough just to cut the grass and retouch the paint, anyone looking to sell in today's market will have to take care of those more onerous repair projects as well. "The buyer that might have bought a fixer-upper five years ago now has an opportunity to purchase a short sale or a foreclosure," says Ronald Phipps, president of Phipps Realty in Warwick, R.I. "So if you have a property that needs a lot of work, you are competing against real estate-owned [properties] that are compelling rather than interesting." So fix the leaky roof, call the plumber, and rebuild the staircase. "The modest repairs should be done," Phipps says. "Frankly, repairs period should be done."

2. Price to the market. Unfortunate though it may be for sellers, demand for real estate has softened significantly. That means, in many cases, sellers will have to bring down their asking price below what the house might have fetched just a couple of years back. "The best advice that real estate practitioners can give [home sellers] is, 'If you aren't prepared to sell at fair market value, then you probably ought to wait,' " Phipps says. "The properties that are selling are selling at or slightly less than fair market—it is very, very rare to have a premium house."
By setting an asking price above market value, homeowners risk driving potential buyers away. "People think, 'Well, I'll run it up the flag pole at [an above-market] price, and people will come along and make a [lower] offer. That is not really happening in this market," says Elizabeth Blakeslee of Coldwell Banker Residential Brokerage in Washington, D.C. "If people perceive your property is being overpriced, they will just move on to the next." Lowering the price may be difficult, but if you want to sell your home in today's market, grit your teeth and do it. "There is a buyer for every property if the pricing is right," says Lenn Harley, a broker at Homefinders.com.

3. Know your agent's stats: Finding an agent with experience selling homes in your market will help ensure correct pricing. When deciding on a real estate agent, find out how long it usually takes him or her to sell a house. It's best to choose an agent whose properties sell in an average of three or four months, a time frame that indicates the agent understands how to price the market, Harley says. "An agent whose average is six months is too long," Harley says. "Talk to an agent that has experience selling in your market."

4. Be flexible. Ensuring that your house is ready to show at all times will make it easier for prospective buyers to see it. So make your bed each morning and clean up the dishes before heading off to work, just in case someone may want to come by at the last minute. In addition, homeowners should be willing to disappear on Saturday and Sunday afternoons if potential buyers are free to see the property. "Access is very important," says Shari Kruse of Prudential Northwest Realty in Seattle. "Things like limiting the hours of showing or requiring an appointment because you have a pet are reasons for real estate agents to bypass your house when they go to show."

5. Bite your tongue: If a potential buyer comes in with an offer you consider too low, resist the urge to turn up your nose, Blakeslee says. After all, it takes a considerable amount of paperwork to make a formal offer, so even a low bid signals interest. "You need to respond—even though you are indignant and insulted," Blakeslee says. "Do a serious counteroffer. You have nothing to lose by countering, everything to lose by rejecting it out of hand."

8 ways to sweeten the deal on your home as Posted on MSN.com

2008-04-16T18:06:00.001-04:00

Offering freebies with your house is almost a requirement in today's market. But forget the Final Four tickets. Buyers want you to help reduce the initial hit to their wallet should they buy your house.

By Karen Aho
Your house has been on the market for months. The for-sale sign, spattered with mud, has tilted over in surrender. As you go to straighten it, you trip over the morning newspaper, and, presumably, your answer: Inside is a story about a home that sold quickly after owners tossed in Hannah Montana concert tickets.

So, do you race inside to see what snazzy perks you can get hold of? A friend with ballgame tickets? A relative with a time share? Your old Harley? Is the age-old marketing ploy -- the incentive – a home seller's sure-fire solution in this dismal buyer's market? The answer is yes … and no.

Incentives help. Some say they're even necessary these days. But not all incentives boost the prospects for a sale, and the options for which ones actually do have shrunk. The free balloon ride? That's probably out. Six months of heating oil and half the closing costs? Those are in.

To understand what works and why, first consider what's happening in the housing market now.

1. There are more homes for sale than there are people buying. Home sales declined 23.4% from January 2007 to January 2008, according to the National Association of Realtors. Sales slowed most in the Western region, with a decline of 28.5%.

The slide has continued month-over-month this year, even as prices continue to fall, and The National Association of Home Builders reports a 10-month supply of new homes on the market, compared with a 4.5 month supply in 2005. Turn on any news show and the pundits are summing it up: Home buyers remain wary.

2. Sellers are turning to incentives. In February, 55% of builders surveyed by the NAHB said they were adding optional items at no charge, compared with 37% in 2002. And 43% said in February that they were paying all or some of the buyers' closing costs.

Jessie Beaudoin, a mortgage broker with American Financial Network, says that he can't track incentives precisely but that in California he sees 60% to 70% of sellers now paying some of the buyer's costs. "The lenders and the real-estate community are encouraging this," he says. "Nobody right now expects to pay full price for any property."

Most bank foreclosure homes and corporate relocation houses are also offering financial incentives, says Ron Phipps, a Rhode Island broker.
3. Buyers need to put cash down. Lenders have reined in those fully financed loans that helped trigger the mortgage collapse. Banks now demand not only better evidence that buyers can make the monthly payments but also that they have a financial stake in the property from the outset through bigger down payments.

In 1989, the median down payment was 20%, says the NAR, and mortgage brokers have reported that institutions are inching back toward such heftier requirements.

Even buyers who qualify for a low 3% down payment with an FHA loan still need to come up with closing costs, which add another 3% to 6% of the home's price.

4. Many home buyers are first-time buyers. Without home equity to tap into, first-time buyers often have difficulty securing a large amount of cash. "First-time buyers can handle the monthly payments; it's coming up with the down payment and closing costs that's hard," says Walter Molony of the NAR.

First-time buyers comprise nearly 40% of the market, he says. Of those, 22% receive a gift from a friend or relative to cover some or all of those costs, and 7% use a personal loan.

Forget the gimmicks

Add these four factors, say the experts, and you get a strong case for offering prospective buyers financial incentives. But forget about the Final Four tickets. Instead, help soften the financial blow associated with a new home.

"That's the time when (buyers) have the least amount of money in their pockets," says Stephen Melman, director of the NAHB's economic services. "They're buying. They're going to closing. They might have moving costs. They're going to have to buy furniture. Anything that helps their cash flow is going to be great."

It's more true now than in recent years, say brokers.

Phipps, a broker with Phipps Realty in Rhode Island, has been offering creative incentives for years. Goods or services associated with the house – a trip to wine country to stock the new cellar, for instance – have always piqued interest. But today's buyers are savvy, he says. They're analyzing price data and aren't distracted "by things that seem like gimmicks."

"Awhile ago (the incentives) were fun, but the nature of the real estate market is more serious now," Phipps says. "Buyers react to those incentives or encouragements that impact their bottom line."
Here are some ways to offer financial incentives:

Pay closing costs

Closing costs include title, application and attorneys fees, and points paid toward the loan's interest rate. They typically range from 3% to 5% of a home's cost. The median price of a home sold in the United States in January was $201,100, according to the NAR. That means typical closing costs start at $6,000.

On a conforming loan, sellers can pay up to that 3%, and up to 6% if the buyer is using FHA financing, says Beaudoin. He says it is the most popular incentive today.

"There's definitely a trend for sellers to pay all or most of the closing costs for the buyers," he says. "It has a much bigger impact than dropping the price."Why? Because the home price will be spread out over the life of the loan. Closing costs are due now.

"It's much easier to pay $30 dollars a month than it is to save $6,000," he says. (If you save $30 a month it would take 16.6 years, excluding interest, to amass $6,000.)
Home builders rate closing-cost assistance as more effective than adding optional items or reducing the sales price, says the NAHB.

Buy down the mortgage interest rate

Instead of knocking down the price, a seller can give money to the lender to go toward the buyer's interest payments for a certain amount of time, usually one to three years.

Here is a rough example from one of Phipps' clients:

Rather than taking $5,000 off the price, the seller gave it to the buyer's bank, where the buyer had a $200,000 loan. The bank used the $5,000 to buy 2 percentage points of the interest payments for the first 12 months and 1 percentage point the second 12 months.

This reduced the buyer's monthly mortgage payments from about $1,400 to $1,100 the first year and to $1,300 the second year. Given that the buyer had been paying $1,200 in rent previously, it eased the transition into the higher mortgage payments.

"We are using the buy downs for the first-time homeowners more than anything," Phipps says.Pay toward the down payment

Lenders won't allow sellers to fund a down payment directly, but they do allow you to help via special down-payment assistance programs as long as those entities do not have a direct interest in the sale of the property. These include government programs, or nonprofit groups such as the Nehemiah Corporation of America, the Housing Action Resource Trust and Partners in Charity. (The U.S. Department of Housing and Urban Development maintains a list of down payment programs whose nonprofit status has been revoked.)

Nehemiah, the largest of the charitable groups, has provided down-payment assistance to more than 250,000 home buyers nationally in the past decade. This is how it works: Nehemiah contributes up to 6% of a home's price for a qualified buyer's down payment. The seller later reimburses Nehemiah to replenish its account for other buyers. The buyer can get help from Nehemiah only if the seller agrees to repay the program, so the seller wins, the buyer wins and Nehemiah gains funds to help future home buyers.

For FHA loans, which require only a 3% down payment, a seller could essentially offer 100% financing by working with a program such as Nehemiah, Beaudoin says.

Buy a warranty

This is a great incentive, say real-estate agents. It typically costs the seller just $400 to $500 and gives the buyer peace of mind that any mechanical or electrical repairs will be covered, minus a small deductible, in the first year. Sellers can add riders for other items, such as wells, spas or washer-dryers.

"Particularly for first-time home buyers, it really is a way for them to control or limit any unforeseen repairs," Phipps says.

Ask your real-estate agent what companies they like to work with. Also, the home warranties don't go into effect until after the sale, so you can prepare. A list of home-warranty companies by state is available here.

Prepay some first-year expenses

Buyers who might have exhausted their savings and entered into steep monthly payments may feel great relief knowing other costs have been prepaid for six months or a year. These could include:

Homeowners association dues
Taxes
Utility payments
Lawn maintenance costs
Housekeeping payments.
Offer owner financing

In this scenario, the seller essentially offers to act as a bank and can set the terms of payment. This is clearly for those sellers who don't need the cash immediately. It is risky, agents say. "The other incentives are one-time fees; this is a long-term relationship," Phipps says.
Sellers should not only check the buyer's credit risk, but also make sure the buyer is financially invested in the house from the outset, through a decent down payment.

"You want to make sure you have good professional advice from your Realtor and your lawyer as to what that means, and what the recourse is if the mortgage isn't paid," Phipps says. "And a pre-approval letter for financing doesn't necessarily mean that you don't want to do due diligence."

Reward your broker

If you're in a hurry, you can always offer perks to your sales broker. This can include a higher commission or a gift. Human nature being what it is, this may work get the agent to move more buyers through the house. (Read more about people who chose to pay their agents extra.)

Nonfinancial incentives

There's no cap to what you can offer. Just make sure you are upfront and disclose transactions to your lender. Incentives can work as a psychological draw, say experts. But keep them fun and related to the house, Phipps says. For instance, he knows a seller seeking a Smart Car, which is hard to find, to offer with a solar house.
Advertise that the incentive will be offered for a limited time, and if it doesn't work, try something else. Steer clear of politically incorrect items that might offend prospective buyers, such as fur coats or energy-hogging cars.

Be wary of paying for inspections or repairs

It's possible to pay for these if need be, but it's not necessarily a good idea.

A home inspector should represent the buyer. If a buyer pays for the inspection, there's less chance someone could cry foul later. You don't want to be accused of being in cahoots with the inspector simply because you signed the check for his work, Phipps says.

Also, if the seller offers to pay for repairs as a condition of sale, the buyer's lender could require that the work be completed prior to funding, potentially stalling the sale.

"It creates a hiccup in the transaction," Beaudoin says. "Instead, what lenders will suggest is that the seller apply that money toward the closing costs. You can proceed and no work needs to be completed before the close."

Stay aboveboard

No matter what kind of incentive you ultimately offer, keep in mind that you'll need to be upfront about the details with all interested parties.

"Any kind of credit that the seller agrees to is ultimately subject to approval, or is limited, by the buyer's lender," says Kenneth Russo, a real-estate lawyer with LaPlante Sowa Goldman, in Rhode Island. Both parties must disclose any transactions made as part of the process.

Real-estate transactions are governed under the federal Real Estate Settlement Procedures Act. Violators can be subject to charges of felony fraud, says Russo.

Also, check with the state's business regulatory office to ensure that incentives are legal in your area. Spell out their value clearly, and have a lawyer review the agreement.

With those caveats in mind, offer incentives. They can send a strong message to buyers that you are willing to negotiate, says Gary Painter, an associate professor at the University of Southern California and research director of the Lusk Center for Real Estate.

"In some cases, buyers prefer incentives over lower prices," Painter says. Just calculate the exact value, "and make it clear."

Seven Suburban Real Estate Myths and Legends

2008-04-08T07:38:00.002-04:00

At a time in human history when information and misinformation are often impossible to differentiate, it is important to admit that we make a lot of inaccurate assumptions. Every field has it myths. From the beginning of time, we are taught to have a critical mind and to challenge assumptions. That is our charge today: Obviously we need to start somewhere: So what are suburban legends or myths? According to Wikipedia,
An urban legend or an urban myth is a form of modern folklore consisting of stories thought to be factual by those circulating them. The term is often used to mean something akin to an "apocryphal story". Like all folklore, urban legends are not necessarily false, but they are often distorted, exaggerated, or sensationalized over time. A suburban myth or legend is just in a different locale, a suburb, like East Greenwich.  Remember these are not necessarily false, but they are exaggerations. Here are some good ones for suburban Rhode Island Real Estate:

1. New Yorkers or Bostonians will pay more than fair market value for MY house. When preparing to list a house, the best agents will evaluate ‘comparable sales’ as part of an analysis to help the seller determine the list price. Elements include, number of active, competing listings; pending sales; sold sales; mortgage interest rates, governmental regulations, absorption rates, (how many months will it take to sell of the existing inventory based on the current rate of sales.) etc. Often when a seller is disappointed with ‘fair market’ value, he or she insists the property be listed well above reasonable to sell to the one ‘uniformed, price unaware, New Yorkers. Now one might argue that there just might be basis for making that assumption; it is true that many are Yankee fans and some are Giants fans, but that nostalgic exuberance does not carry over to home prices, even when they are coming from ‘uber-wealthy’ Manhattan. In short, Boston and New York home buyers will not over pay for Rhode Island real estate, even your home.
2. If I wait long enough, I will get my price when the market catches up. This may have been true for a while in the early and mid parts of this decade. When the market is correcting, the gentler word for home prices dropping; you will need to wait a very long time. It may in fact be a very, very long time until we pass the water mark of real estate values two and a half years ago. Additionally, if your house is on the market for the four or five years, it is even more unlikely that you will sell if for more than fair value. The longer on the market, the less likely you will sell it at a premium price. Simply said price matters. A well price property will sell. One that is overprices is unlikely to find a new owner. This market is very impatient with sellers who are nostalgic with price, say 2005.
3. Buyers will look beyond repairs, decorating, or ‘deferred maintenance.’ It is amazing how many people say foolish things about buyers: The leaking roof does not matter; it is only a little leak. The toilet does not work, but the buyer will never notice. If you bake cookies or an apple pie, the buyer will never smell the septic system that is backing up. Truth be told, most buyers in 2008 have neither the patience nor the money to make a sellers repairs. There are plenty of houses on the market that are in great condition that will sell first.
4. Everybody will love my dog. There are over 75 million dogs in the United State in 45 million households. We are a nation of dog lovers. Well not necessarily. One of the most common complaints and objections of potential homebuyers is the evidence of animals, most often dogs. If you are not a dog owner, or rather a dog lover, having Bruno sticks his nose in the buyer’s butt or groin is not a good closing technique. Most buyers will not enjoy your dog. They either have their own or do not like them. It is not personal, it just is. I know Bruno does not bite, but the buyers’ fear is not perception. It is real. Yes I too have been bitten by a Newfoundland.
5. The agent who is not selected to list the house will sell it for the competing agent who obtains the listing.. Real Estate is intensely competitive. Many agents work on a contingent fee. If they sell the house they get paid. If they do not, they will not earn a fee. Sometimes when a seller says that they have selected another agent, they close by saying but you can always earn a fee by selling it for the competing agent. The operative word is ‘competing.” The non-selected agent is committed to selling his/her own listing, by contracted fiduciary. Only after they have tried unsuccessfully to close a potential buyer on one of their listings, will they move onto others, but not necessarily your, particularly if it is not priced right. There is a major oversupply. Multiple Listing is a great broker to broker network for cooperation and compensation, but it amplifies and highlights competition. Sold signs are one of the best ways to get future listings. The non-selected agent will want to sell his or her listing first so the sold sign is one on of his/her signs.
6. Which brings me to one of the biggest myths: a great real estate agent can ‘make a buyer’ purchase something they do not want. Great agents are masters at pricing, positioning, pursuing, and persuading potential purchasers. It is rare that a great agent can keep a transaction together through closing, if the buyer does not genuinely want the property. A great agent works tirelessly to identify and introduce a home to potential purchasers. For this to work effectively the buyer must be ready, willing and able. (ABLE has been the biggest challenge lately).
7. Houses sell themselves. This may have been true for a couple of months at the peak of the market, and maybe not. This market requires aggressive marketing, strategic pricing, web-centric marketing, and high energy commitment. If you look at what is selling right now, it is the result of a convergence of marketing talent, careful pricing, and unrelenting Realtor effort. While on one hand experience has major value in this market, it is also true that quick response is important. The National Association of Realtors completed a study that many elements are important for effective marketing, but among the most critical is response time. Often the person who makes the sale is not necessarily the agent with the most experience, best web presence, best logo, most awards, best looking, etc., rather it is the first responder. That needs to be repeated: The first responder most often makes the sale. It is important to have a responsive agent, who is available not merely to market the home, but to available to answer questions and to show the property. Even with digital presentation, the human touch of a Realtor is a very valuable element is selling a home.

We will share other myths and legends with you, but this gives you some good examples. If you want to share more with me, please share them here on my blog: www.phippsrealty.blogspot.com

Foreclosures, Short Sales, Walk A ways, and Opportunities.

2008-03-25T23:02:00.000-04:00

It would be almost impossible to be out of the reach of media in 2008, although it might actually be healthier. But via television, video, web, texting, tweetering, pda, cell, phone and what my grandmother used to call gossip, information and misinformation surrounds us like air. Sometimes the information is difficult to understand due to its volume and its inconsistency. The sub prime mortgage mess is a great example of this problem. What is true and what is real?

Approximately 46,000,000 people have mortgages in the United States. Incidentally, more than one third of Americans own their homes outright, that is without any mortgage. Sub prime mortgages typically are adjustable rate mortgages. Many people took out this type of mortgage to ‘get into’ a home without documenting any income. Most of the mortgages had a low ‘teaser’ initial rate and payment. Many of these loans will adjust after 2 years. The adjustment would increase the interest rate and the payment. A good number of these mortgage holders cannot afford the new payment. In each quarter of 2008, 450,000 mortgages are likely to ‘reset’ to a new rate and payment. Many buyers can not afford the pre-reset payments. Therefore, it is a major problem. The Federal Reserve and the Government are trying to help minimize the impact of ‘non performing’ mortgages by helping the borrowers, lenders, and investors. The economic stimulus package addresses some of the problem. Increases in conventional mortgage ceilings, from 417k to 475, and the increase in FHA mortgage ceilings from 316k to 475K will help. Even with all of these efforts, there are a significant number of foreclosures, short sales, and ‘walk a ways.’ Walk a ways are when the homeowner simply moves out and leaves. Short sales are a protracted process of selling the house for less than the mortgage value.

There are some great opportunities with foreclosures and short sales. The March 24th National Association of Realtors monthly numbers showed an increase in sales and a price reduction due in part to the impact of ‘REOs,’ Real Estate Owned, by the lender.
The real challenge in the market is that the lenders are not equipped to handle to volume of REOs. Any real estate broker dealing with REOs will tell you it is very difficult. It is not usual to wait 2 or 3 months for a response to an offer. It is obviously very difficult to keep a buyer interested. The result of that delay is a further deterioration of the value of the property and sometimes a deterioration of the condition of the property. Some foreclosed properties have suffered water damage, vandalism, etc. Foreclosed properties also hurt the value of the neighborhood. We must recognize that the lenders do not want instructions on how to run their businesses, but this is a perfect storm of hurricane proportions. The lenders would ‘recover’ more of the value of the property if they sold the properties more quickly. The non producing mortgage becomes recovered cash when the house is sold. This would be true even if the lender sold the property at a low price.
It should not take 3 months to get an answer after a house is in short sale mode or has been foreclosed.

As a potential buyer, there are great opportunities with short sales and foreclosures if you are patient and persistent. You must be prudent and you need to know what you are purchasing. Many of the properties have issues that nothing short of a comprehensive inspection would uncover. Some have been trashed. Sometimes the lenders are generous. Last summer there was supposed to be a sale on a property in the 470’s. The lender was owed almost 500k so they refused to close. That same house came on the market last week at 329k. At last count there were over 20 offers. Someone is going to do very well. Often short sale and foreclosed properties are sold between 10 and 20% below market value. It is important to have representation and inspection to ‘protect’ your position. But there are buyers out there and there are opportunities as well. If you have been trying to time the bottom, the clocks of some of the short sales and of foreclosures have struck midnight. It is a time of great opportunity.

New Rhode Island Conventional and FHA Mortgage Limits

2008-03-10T11:05:00.000-04:00

Real Estate News: Major Changes in Real Estate Financing;

The last few weeks have seen major changes in the mortgage market. The crisis in the sub-prime market has produced a major contraction in mortgage money. As with most things in life, every action tends to cause a predictable reaction. Pendulums swing both directions. The balance to the sub prime mess is difficulty for credit worthy people to obtain mortgages. It is true that mortgage money is in fact available for qualified homeowners.

The first part of March saw some major changes. One of the challenges has been
the rate difference between conventional rates and jumbo rates, mortgages above 417k.
The jumbo rates had grown to almost a full point, one percent above conventional rates. For example, if you were borrowing 415k your rate might be 5.5% in a 30 year mortgage. If however, you needed to borrow 430k, the fixed rate would be closer to 6.5%. The difference in mortgage rates, historically would have between .25% and .33% higher, not 1.0%. This impacts the month cost of a mortgage.
Conventional Mortgage limits are regulated by the GSEs, Freddie Mac and Fanny Mae.
As part of the economic stimulus package that Congress just approved, there was a provision to increase the GSE mortgage ceilings. Fortunately, all of Rhode Island was increased from $417,000 to $475,000. This means you can borrow up to 475k at the lower rates. This will help to stabilize prices. It will have significant impact in East Greenwich where the average sales price is just over 500K.

What was even more encouraging was the change in the FHA limits. FHA has historically been the source of funding for people with limited cash and who would not fit conforming underwriting criteria. FHA was super ceded by sub prime financing. Sub prime is essentially gone now. FHA will be the alternative. The limits for mortgage have been increased from 316k to 475k for single family, $608,100 for two families, $735,050 for three families, and $913,450. for a four family. The higher limits do come with a change in the amount down. Prior to 5 March 2008 you could finance a property with 3% down, now you will need 5% down. You may need more or may need to re negotiate the purchase price if the appraisal does not come in at the agreed upon price. Appraisals are critical now. The FHA program will have most value beyond East Greenwich. FHA is also a great tool for people who need to get out of sub prime mortgages and need a ‘flexible’ alternative.

If you are looking to finance a new purchase or re finance a house get some professional advice from someone who know the new financing choices. It is much better now than it was a week ago, but get expert advice, it will make a huge difference.

Realtors are really encouraged by these changes. It will help move us back into a normal market. A normal market can be either a buyers market or a sellers market. But is a normal market, credit worthy buyers can obtain fairly priced mortgage money. It is a good time to buy a house and obtain a mortgage. Just get professional advice: Call a Realtor!

TMI: To Much Information

2008-03-10T09:42:00.001-04:00

Rhode Island State Law requires that all real estate licensees take 18 hours of continuing education every two years. The current renewal period ends April 30, 2008. Anyone who does not have the continuing education hours will not be able to continue working in real estate. While the approved courses are required of all licensees, Realtors are required to take additional courses including Ethics. The best agents take more courses to be at the top of their game. The challenging market demands continuing training.
Some of the course help to teach the average Realtor, typically a 50 something female, how to work with x and y generation sellers and buyers. In one of the courses offered recently it was suggested that one of the things we should do is join one of the ‘social utilities:’ facebook or myspace. As a baby boomer, we tend to pride ourselves in our use of programs like: www.pandora.com. www.goodreads.com , and www.linkedin.com
Each of these communities engages a specific community. Furthermore, the amount of information exchanged tends to be professional in nature and is by choice and by situation limited. That is not the case with facebook. After joining several days ago, I have 12 friends. Several of them are my friends, but a good number are friends of my adult children. It is very kind of them to share their ‘faces’ with me, but there is by any definition a degree of awkwardness. The nature of social utilities is to be forth coming, but it makes me a bit uncomfortable to know all of the personal details about my friends much less my children. It is also very apparent that this is a great tool for background checks for employment. Yes, it is also true that you can place a privacy setting to limit the viewers of your face to just that your face and your name.
Maybe it is my age that is the problem, not the vehicle. How old is too old to be on facebook? Is the entry of baby boomers some form of generational voyeurism or is it some sort of generational envy? Truth be told, I am too much of a newbie to make any real conclusions, but the questions require response. What is really amazing is the breath of information on the site. Not merely friends, but pictures of friends of friends. Relationship status, orientation, religion, travel experience, steams of consciousness, video, thoughts, statements, gifts, pokes, et al. If you can dream, it can be experienced, at least vicariously through www.facebook.com.
One obviously conclusion, facebook has simply too much information. Not yet sure, how accurate all of it is, but one absolute truth is there is simply too much information TMI. If you are on facebook and find there are lots of new older Realtors joining it, do not be surprised. A lot of us took the same course. Not yet sure, how to ‘use’ this new social utility, but a least we are entering the area. If on the other hand you are a long time facebook devotee, and you want to have a laugh, check out some the new continuing education Realtors who are trying to engage a totally new curriculum. Lol.

Deal or No Deal? Rhode Island Monthly March 2008

2008-02-24T08:13:00.000-05:00

It’s a confusing, crazy real estate market out there. Whether you’re planning to buy a house, or itching to sell, here’s our expert advice on getting the most for your money. By By Mary Grady:

Watch your step,” Dave Larson calls to me from his back door as I make my way up his icy driveway on a snowy day last December. “I sold the snow blower in June.” He sold it because in the sunny days of summer, Larson and his wife, Sue, were optimistic that they would be moving long before winter set in. They were eager to start a new chapter in their lives in North Carolina, where they could escape the cold winters and find a smaller house close to their daughter and her three children. By December, that optimism had shriveled and blown away with the autumn leaves.

The Larsons have plenty of company. Homeowners across the state put their homes on the market for what seemed a reasonable price, only to find that buyers, if they bothered to show up at all, expected to spend much less. “We started out at $484,900 in October of 2006,” says Dave. It seemed fair enough for a three-bedroom home on an acre and a half in a quiet corner of Scituate. “We have an in-ground pool, a hot tub, two fireplaces, an in-law apartment above a heated two-car garage,” he says. “The woods out back go on for miles. In the morning we see flocks of wild turkeys in the yard; the other day we saw an eight-point buck.”

They found few who would even look, and those who did found fault. “One complained that there were no streetlights on the road. Another said the neighbors’ houses were too close,” says Sue. “It was unbelievable.” They gave up trying to sell on their own and found an agent, and then a second agent. By December, anxious to get moving, the Larsons had reduced the price to $349,900 and finally gotten a nibble. “Our agent said to us, ‘Take this offer and run!’” says Sue. “And that’s exactly what we intend to do.”

Not long ago, Rhode Island’s real estate market was the hottest in the nation. Between 1999 and 2004, the median price of single-family homes in the state just about doubled. Buyers were eager to catch the wave, driving the demand for risky products such as interest-only and adjustable-rate mortgages. Then the juggernaut faltered. Nationally, the economy cooled down, and prices leveled off. Last summer, the crashing subprime mortgage market reached national crisis proportions. Foreclosure rates rose as adjustable rates ratcheted upward and strapped-for-cash owners couldn’t meet payments.

In Rhode Island, as of late last year, about 1 percent of homeowners faced foreclosure, though up to 6 percent were considered to be on the brink. Those homes go back on the market, adding to the supply and driving prices down. By last October, the median price of a single-family house in Rhode Island was $236,000, about a 10-percent decline from a year earlier. It was the lowest price recorded in almost three years, according to The Warren Group, a Boston firm that tracks real estate data across New England. Last September, almost 7,000 houses were on the market, a ten-month supply, and buyers were scarce.

“Mortgages are harder to get right now,” says Richard Godfrey, executive director of Rhode Island Housing. “I think that’s a good thing. The mortgages being offered now are a little safer.” But it means there are fewer buyers to go around. Also, some buyers are waiting on the fence, hoping prices will drop even more. Other potential buyers who are already homeowners face the challenge of selling their own property if they want to trade up. And investors who were eager to flip properties in the ascending market are nowhere to be found when there’s a decline.

It all adds up to more sellers competing for fewer buyers, driving prices even lower. Forecasts by the Mortgage Bankers Association project a continuing decline in sales and prices nationwide through 2008 before the market starts to slowly recover in 2009. Last December, the New England Economic Partnership predicted the Rhode Island market would decline about 5 percent a year for two more years.

Paul Hogan, president of Hogan & Stone, says he expects a gradual recovery to start as soon as this summer. “There are positive signs that many of the expected foreclosures can be prevented by renegotiating the terms instead,” he says. “And the pipeline for new homes is shutting down.” As the housing supply falls back into balance with demand, he says, the market should respond as prices level off.

The Rhode Island market has another thing going for it—quality of life. “We’re spoiled,” says Ron Phipps of Phipps Realty in Warwick. The coastline, the restaurants, the access to Boston and New York—all of those values remain. And the cost per square foot for saltwater frontage is the lowest in the region, Phipps says. He expects that regional demand will grow faster than supply, and Rhode Island still has room for prices to go up in the future. Meanwhile, the statewide market reports mask local variations. Olneyville and Washington Park have been hit hard, while the East Side has held steady. Jamestown and Little Compton, where sales are scarce, have escaped the decline altogether. Last September, median sales prices in those towns grew 37 percent and 46 percent, respectively.

Condominium, waterfront and second-home properties all vary from the averages. Homes in the $3 million-plus range generally hold their value. It’s a volatile and complex market, but opportunity lurks. For those with the means to do so, Godfrey says, “Now is a great time to buy.”

As for the Larsons, in December, it is finally time to sell. Their front lawn in Scituate is covered in snow as their daughter calls from North Carolina and says it is seventy-five degrees and sunny outside. More important, her kids are asking when they will see their grandparents again. Like many families in the real estate market, the Larsons have accepted the fact that money isn’t everything. They will have to take less than they had hoped for, and the profit they expected has evaporated, but in the end, being close to family matters more to them. “We’re ready to go,” Sue says, smiling, and Dave nods in agreement.

Buy Low
Advice from the experts on getting the best deal.

[1] Find a good agent
Buyers might be tempted to think they can go it alone, with so many choices and online listings ready to browse. “But working with a great realtor can make such a difference,” says Bridgette Soby, a sales agent with Lila Delman, based in Newport. “A realtor knows the neighborhood, knows the market, knows the sellers and the history of the house, and has so much inside info to offer,” she says. She suggests buyers start their search for an agent at www.riliving.com. Realtor listings are searchable by town, with links to websites.

[2] …And get a good lawyer
Not everyone knows that state law presumes an agent represents the seller, not the buyer, though this law will change May 1. Since an agent’s commission is based on the price of the house, the higher the final sale price, the bigger that commission will be. You can save money by hiring a real estate lawyer, whose fee remains the same regardless of what the house goes for. Plan on spending several hundred dollars for your lawyer to review the documents.

[3] Don’t wait for prices to drop
Buyers need to look at the long term. Even if housing values continue to decline for a few years, that really doesn’t affect your bottom line unless you have to sell. There are more homes on the market now than we’ve seen in a decade, says Godfrey, so there are lots to choose from. If you can find a place that suits you at a price you can afford, why wait? Interest rates now are low, but if they rise over the next few years, that could wipe out any gains from waiting for a lower price. And if you plan to live in the house for at least seven to ten years, you will likely ride out most market fluctuations, Godfrey says.

[4] Don’t be shy
“Go ahead and make whatever offer would work for you,” suggests Soby. Buyers tend to think they shouldn’t go too far below the asking price, but you never know, especially if the house has been on the market for a while and the owners are anxious to move. “Just get things rolling,” she says, and don’t be surprised if you get a positive response. Keep in mind the Larsons, who eventually came down $135,000 from their original asking price.

[5] Be ready to bargain
“Everything is negotiable,” says Soby. So if you really wish the seller would throw in that dining room set or the living room curtains, go ahead and ask. You can also make an offer with the contingency that your own house must sell first. “When the market was hot, a lot of sellers wouldn’t take those kind of offers,” she says. Now that things are slow, any offer is worth a look. But if you can move right away, that is definitely to your advantage. “Some owners will make price concessions in return for a quick closing date,” she says.

[6] Consider a condo
Condominiums are still popular, especially among home owners looking to downsize, says Phipps. Overall, condos have been less affected by the sinking market; in the third quarter of last year, the average price for condos in Rhode Island actually rose nearly 5 percent from the year before, though units took longer to sell. That uptick, however, may simply reflect that more high-end units are on the market. Soby says there are plenty of condos in the $200,000 to $300,000 range, some within walking distance of downtown Newport and beaches. “There are some good deals out there,” she says. Hogan says condo prices in Narragan-sett are down about 15 to 18 percent from their peak. If you’re considering a condo in a larger development, ask how many units the developer still owns and how many are rentals. When do the leases expire? Once they go on the market, will those rentals be developed to the same standard as the ones being sold now? You don’t want to find yourself the only homeowner surrounded by transient tenants.

[7] Stay focused on the essentials
In a market where buyers are so scarce, some agents have tried offering incentives to attract their attention. Phipps has tossed in a sailboat or a lease on a luxury car to help properties stand out in a crowded field. Remember that what you really want is a good home at a good price, so don’t get distracted. Phipps says he’s found the incentives helpful, but the bottom line still comes out the same. “Right now, the only thing that’s moving properties is price,” he says.
[8] Forget about flipping
Bargains can be found among the foreclosure sales, but buyers need to shop carefully and be prepared to hold the property for the long term, says Karen Hurst, a broker associate with Storm Realty of Warwick. Most homes that have been foreclosed on are sold as-is. “It’s definitely a buyer-beware market,” she says. “This is not a time for flipping.” On the other hand, this may be a good time to invest. There are plenty of multifamily homes on the market, and the prices are low. “I’ve seen some good deals out there,” says Soby. A two-family house off Broadway in Newport, within walking distance of downtown, sold recently for $325,000, she says. “At that price, you can make a profit renting both units. Not long ago, you could make that work only if you lived in the house.” Rents are still very strong across the state, and Godfrey says he expects demand will keep them high for the foreseeable future. (See “Do you really want to be a landlord?,” page 47.)

Sell High
How to move the merchandise in a slow market.

[1] Call in the pros
For sellers, the challenge is to attract buyers and stand out from the crowd; the days of simply hosting an open house and choosing among offers are gone. The Larsons tried selling their house on their own but found in this market they needed an agent’s help.

There’s an industry saying that 20 percent of real estate agents do 80 percent of the business, so hire someone who has the best track record of selling houses in your market and who has a good website with detailed information about properties that are listed. An agent will be familiar with other comparable houses in your community, will know what buyers are looking for, and can help ensure that your house will be competitive. Consult friends and relatives for recommendations.

[2] Hire a professional stager
Most agents will advise sellers to take down family photos, remove clutter, add fresh paint in neutral colors, be sure the house is spit-polish clean and fresh, and all maintenance is up to date. If that’s not enough, you can enlist a professional stager. Stayci Fast, owner of New England Home Staging, says she can help owners see their home from a buyer’s perspective. She offers a two-hour consultation for $200. A more elaborate makeover focuses on the priority rooms—kitchen, family room and master bedroom—updating the focal points and furnishings with a fresh, designer look. Most homes can be staged effectively for $2,000 or less, Fast says. (See “Market Value,” page 65.)

[3] Set the right price
You may have a number in your head that you think your house is worth, but the real price of a house is determined by the market—it is only worth what someone will pay for it. If you want the house to move, be prepared to lower the price. Unless you bought in just the last few years, you can probably still turn a profit, even if it’s not as big as you might have hoped for.

[4] Add some frills
Consider what luxe conveniences would close the deal if you were buying. At upwards of $10,000, installing central air conditioning isn’t cheap, but it can be an irresistible selling point, especially when you’re showing the house in the dog days of summer. And who wants to schlep dirty laundry all the way down to the basement? This may be the time to install a washer and dryer in an upstairs room or closet.

[5] Keep your perspective
Remember that there’s more than money involved in your decision to move. Do you need more space for a growing family? Are you ready to get out of the city to a quieter place—or the reverse? Is it time to downsize, or retire? It might be worth it to cut the price, take the loss, and move on, or if you need more space, building an addition and staying put may be more feasible than pulling up stakes.

[6] Consider waiting
If you reach your rock-bottom price and no offers appear, there’s not much more you can do. “Waiting may be the best strategy,” Phipps says. He’s optimistic that the local market will rebound within two or three years. If state officials follow through on a plan to extend the Boston commuter rail to Green Airport and Wickford, it could provide an extra boost. “A house that sells for $270,000 in Rhode Island today would go for over $400,000 in a Boston suburb,” he says. “When the commuter rail was extended to the South Shore in Massachusetts, the market overall went up about 10 percent.” He expects at least that much of an impact here, and perhaps much more for waterfront property. Hurst agrees. “If you don’t have to sell now, don’t,” she says. “Wait a year or two. I suspect the mortgage situation will loosen up, and mortgages will become easier to get again.”Do you really want to be a landlord?
Sometimes renting out property can seem like the answer to a problem. Can’t sell that house? Rent it! Can’t afford a single-family, or hoping for a hedge against future market downturns, or just looking for bargains? A duplex or triple-decker can be tempting. With the current drop in prices, and mortgage rates still low, it might seem a wise investment. But keep in mind that being a landlord is a job, and you need to learn your legal responsibilities and fulfill them. For most houses built before 1978, lead paint may be an issue, and it’s up to the buyer to do due diligence and be sure the home is in compliance with the latest lead laws. Rules that took effect in 2005 require landlords to take a three-hour class about lead hazards. Information is available at www.hrc.ri.gov; the state’s lead hotline, 222-LEAD; or via email at leadinfo@admin.ri.gov.

You also will need to know the laws about discriminating against tenants, the legal procedures for handling evictions and more. Rhode Island Housing offers courses for new landlords; call 888-722-1461 for information.

And being a landlord is not for everybody. Here are some pros and cons:

Pros
If you have to move, can’t find a buyer and want to put the sale on hold for a year or two in hopes of a market turnaround, renting a vacant property can help reduce your losses.
If you have trusted friends or family members who want to rent from you, a duplex or triple-decker can work out for everyone.
Over the long term, rental income might help subsidize your retirement after the mortgage is paid off.
There are significant tax advantages to being a landlord that can beef up your bottom line.

Cons
Bad tenants can damage your property or fail to pay on time, and eviction, if it comes to that, is time-consuming and frustrating.
You’re on call 24/7 to deal with emergencies, from clogged toilets to icy driveways. Remember to consider what your time is worth when calculating the costs and benefits.
Even after the mortgage is paid, taxes and maintenance costs will eat into your rental income. Be sure you are realistic about expenses.
As an investment, there’s no guarantee that your rental property’s value won’t decline in the future

Home Improvements in a Correcting Market

2008-02-11T21:21:00.000-05:00

USA Today printed the following article today:

Fewer homeowners plan renovation projects:
By Noelle Knox, USA TODAY

As more people struggle to pay their mortgage and fewer take out home-equity loans, many homeowners have cut back their spending on remodeling kitchens, replacing windows and other improvement projects.
Two out of three homeowners who had planned an improvement project this year said they would wait until the market stabilizes, and about 11% said they were abandoning the idea of a project this year, according to an e-mail survey with 2,100 responses from homeowners in 11 metro areas.

The survey by the Zoomerang research firm, while not a random sample of homeowners, offers anecdotal evidence of the jitters about the housing recession. And it matches industry figures. The remodeling industry, with annual sales of about $280 billion, is expected to see a 2.6% annual rate of decline through autumn, the Joint Center for Housing Studies says. Freddie Mac says Americans pulled out only $38 billion in cash from their homes in the fourth quarter last year, about half the amount for that period in 2006.

As property values drop in many areas, some homeowners are finding it harder to refinance their mortgages and take out cash to finish the basement. Falling home prices can also reduce the money that a homeowner stands to recoup on a project.

"We are telling homeowners who want to sell in the next couple of years to do repairs or improvements to make the house look good, but not to spend a lot of money on a bathroom or kitchen," said Ron Phipps of Phipps Realty in Warwick, R.I.FIND MORE STORIES IN: Freddie Mac
A swimming pool can cost $50,000 to put in, for example, but it may add only $10,000 to the property's value even in a normal market, Phipps says.
Still, homeowners with access to cash have bargaining power. With construction plunging in many parts of the country, contractors are "hungry right now," Phipps says, and will do remodeling at cut-rate prices.
Lower interest rates are also easing the strain on homeowners who can afford a project, says Craig Smith of ServiceMagic.com, which screens remodeling contractors. He says traffic on the site was down in January, especially for big-ticket jobs, but rose about 10% after the Federal Reserve slashed interest rates.

Dean Herriges of Urban Herriges & Sons, a Milwaukee remodeling firm, says his business is "a little weaker" than last year "but healthy." He says he's still getting calls from baby boomers who have the money and the home equity for a new kitchen, although even they are asking more questions about prices.

One trend Herriges sees: "We are not finding as many younger people," who often don't have much home equity or savings.

In normal media fashion, the editor 'streamlined' my thoughts. Every suggestion needs to be to the individual situation. If one is going to sell soon, that is within two years, the improvements should be limited to repairs. Major improvements in a house that is about to go on the market, may not be the wisest strategy. If however, you plan to stay for a while and want to make a major improvement, it is a great time to do so. The builders and remodelers are in need of work and may be more willing to do the work for less money. Some improvements like swimming pools may not add any value to the home depending on geography. When the swimming season is 8 weeks, a $50,000 pool 'resort' will not have full re-embursement in the sales agreement. It is really prudent to get some market wisdom with a Realtor when making home improvements. The National Association publishes a list of expense and benefits of home improvements. Take the time to obtain that information from your Realtor.

Carpe Datum: SEIZE the DATA!

2008-02-07T22:54:00.000-05:00

The numbers, just the numbers! The real estate numbers for 2007 are now a matter of history: So how bad is bad? Even for the pessimists, it really is not all that bad. Statewide Single family homes sold at a lower annual rate and a slightly lower average price. In 2006, 8313 house were sold in MLS, while in 2007 7600 were sold. This is a drop of 8.6% of units sold. The median price went from $282500 in 2006 to $275000 in 2007.This is a reduction of 2.85%. This is for the entire State. If you read the headlines or listen to the lead in to any story on broadcast medium, you would think the market is
‘grim,’ but that is not the story the numbers tell. If you have been attempting to sell your house and it is taking longer, that is just a fact of the market.

The story in East Greenwich is more intriguing: Median price of single family homes dropped from $517,000 to $509,000, a drop of 1.5% percent. What is amazing is that 193 houses sold in 2007 versus 171 sales in 2006. Twenty two (22) more single family homes sold in 2007 and increase of 12.9%. In other words, the total dollar volume as reported in MLS went up from $88,407,000 to $98,237,000. Yet the headlines talk about huge drops. It is just not true in East Greenwich.

North Kingstown has not done as well: Average priced from $397,450 to $376,000. individual sales went from 282 to 237. Warwick fared better: the Change in price from $242500 to $230,000 and a Change from 1069 sales in 2006 to 913 in 2007.

So what does this mean? Is East Greenwich an oasis? Or is this the application of some of the oldest rules of real estate? Do you remember that rule: Location, Location, Location? There are several strands of information in the data: First the Correction in East Greenwich began early and appears to be more mild. Furthermore, the sellers as a group were somewhat more pro-active in East Greenwich. They tended to price to sell more quickly.

There are two much more important messages: First, for buyers, people are buying and it is ok to buy. One needs to research the market to make a prudent purchase. Expert advice will be a real help. If you need shelter, it is ok to buy. The second message is more important: Sellers need to price to sell. This is still a Correcting market. The prudent seller will price slightly BELOW the recent Comparable sales and the Competing properties on the market.

One additional footnote: part of the reason that East Greenwich did so well in 2007 is the limited number of foreclosures in town. An individual foreclosure can not necessarily will reduce the value of neighborhood homes. If there is more than one foreclosure, the reduction of value is rather likely. Part of the reason foreclosures are so difficult is the lenders inability to move the house quickly from vacant home to occupied. If a lender moves through that process fast, the negative impact on the neighborhood is negligible.
Seize the truth for these are intriguing times!

The Sub Prime Mess

2008-01-28T07:49:00.000-05:00

The only way you would not know about the sub prime mess is if you have been under a rock for the past year. If we do not learn from the mistakes of the past, then we are destined to repeat the mistake. First let’s talk in basic terms about the problem. Over the past several years, the hunger for homeownership on one side and the desire for high rates of investment return converged. Buyers of limited income, marginal credit histories, (with limited down payments), were able to buy homes. Because of any one of these reasons, they were unable to obtain regular, conventional financing. The ‘sub prime’ mortgages that they were able to obtain generally had very low, below market mortgage payments, initially. Often the first 24 months were at payments and/or at interest rates were ‘affordable.’ Then at the 25th month, the payments increase significantly. Most sub prime borrowers cannot afford the new payments. There are many contributing elements to the problem:
an expectation that the property will be worth more money, an expectation that the borrowers’ income will increase, or an expectation of a myriad of other great things. The challenge is that one of these things ‘had’ to happen for them to stay in the house. It is also true that the mortgage lenders made more money, initially placing these mortgages. Investors were promised high rates of return in “packaged mortgage investments.” Everyone would win if the borrows made more money or property values went up. Neither happened.
Now 450,000 sub prime mortgages are scheduled to ‘reset’ to a higher interest rate and payment, in each of the next 4 quarters. Most will not be able to afford their new payments. Fixed rate conventional (under 417k) mortgage rates are at record lows, 5.25-5.50% 30 year rates. But sub prime borrow generally will not qualify. This is further complicated by the fact that home values have gone down. In short, it is a nasty-perfect storm.
The government’s plan to help buyers really addresses a very small part of the problem. Moreover, a repossessed home often nets the investor only 30% of the original value of the property. Couple that with the fact that these displaced former owners will end up with lousy credit; it will be a very long time before they will be able to repair their credit to be able to borrow again. These people need to live somewhere, but without help; it will be a very long time before they will be able to buy a home again.
Ponder also the impact of the foreclosed property on the value of adjacent neighborhood properties. Ponder the impact on lost revenue for the city or town. Ponder finally the economic impact on the overall economy.
Congress and the White house are attempting to ‘stimulate’ the economy with a package. Among the inclusions is an increase in GSA, Fanny Mae and Freddy Mac, mortgage loan limits to 125% of median price. Some proposals include an increase to $625,000. This will help borrows by making lower ‘conventional’ rates available.
It will be helpful for homes priced into the 700k range. It is most necessary. But this does not address the sub prime borrowers’ plight. If the lender’s can keep the payments and the interest at a low rate, the homeowners will predominantly stay in the house, even if the house is worth less than the mortgage. at this moment. It is a way for lenders to avoid, short sales and foreclosures, and it helps the holders of the investments. Sometimes we make things more complicated than we should. This is one of those cases: It will be better to keep these families in their homes rather than forcing them out. Hopefully, common sense will prevail. Let’s hope so.
Please contact our Senators and Representatives to get their help:
Senator Jack Reed 401 943-3100
Senator Sheldon Whitehouse 401 453 52944014
Representative James Langevin 401 732-9400
Representative Patrick Kennedy 401 729-5600

8 tips for pricing your home

2008-01-20T08:49:00.000-05:00

Bankrate.com
8 tips for pricing your home
Saturday January 12, 6:00 am ET
Cheryl Allebrand

It's tough being the seller in a buyer's market. But you can improve your odds with the right research
In many cases, making a smart deal and getting the best price comes down to studying your market and being an educated seller.

"You've got to know more than you would have if you'd sold a year ago," says William Poorvu, professor emeritus at Harvard Business School and author of the upcoming book "Creating and Growing Real Estate Wealth." "If you want to protect yourself, you have to become knowledgeable."

8 factors to keep in mind as you prepare to sell:

1. Recognize that housing markets are local.
2. Analyze who is buying and selling in your market.
3. Ask the professionals.
4. Know what your house is worth.
5. Consider strategic pricing.
6. Rebate your "commission."
7. Evaluate whether you really have to sell now. 1. Recognize that housing markets are local.
Home prices are like the weather -- very different in different areas.

In many markets, home prices have actually gone up from last year, says Dick Gaylord, president of the National Association of Realtors.

In addition, demand will change depending on the price range and even the neighborhood. What you need to know: What's the demand for a house like yours in your area?

"You have to look at what's being sold and at what price," says Poorvu. "That's important."

Look at comparables for similar houses. Study prices and sales for one year ago, six months ago, three months ago and current numbers, says Gaylord.

What are the trends? Are prices going up or down -- and by how much? How many days are homes staying on the market? If they are on the market longer, how much of that could be seasonal? In many areas, spring and summer are the busy seasons.

Pay special attention to "the delta between the list price and the sales price," says Ron Phipps, broker with Phipps Realty in Warwick, R.I. That is, look for a meaningful relationship between list price and sales price. Perhaps most homes are selling for 5 percent less than the list price.

"An agent who works the market will be in the best position" to find "the tipping point between nice, attractive and interesting -- and being sold," Phipps says. You want to find the point between, "Hey, that's interesting," and "It's too good to pass up."
If you're not using a real estate agent, it's especially important to use the Internet, visit open houses in your area and study home sales in your Sunday paper, says Greg Healy, vice president of operations for ForSaleByOwner.com.

But you also need to realize that the paperwork alone only tells part of the story. While sales and prices are public, many times seller concessions are not.

2. Analyze who is buying and selling in your market.
What's your competition? Who are the buyers, and why are they shopping?

Do you live in an area like Phoenix, "a growing market with people coming in," says Poorvu. Or are you living in an area that doesn't attract a lot of new residents, where many shoppers are "bottom fishers" who don't have to buy but are "looking to pick up a bargain," he says.

Are you competing against a flood of new houses from builders eager to sell, or are you selling a newer home in an area where most of the housing stock is older?

3. Ask the professionals.
Don't ignore the elephant in the living room. When you interview real estate agents, ask about the market conditions for your area and price range.

Specifically, ask about the "absorption rate" says Phipps. What that means: In the current conditions with the current inventory, how long would it take the market to absorb or sell, all the houses on the market?

If the supply is much larger than the demand, ask potential agents how they would "price to offset that inventory," he says.

4. Know what your house is worth.
Talk to a handful of agents. Get an appraisal from a certified professional appraiser. Look at your comparables. Taken together, that information will give you a pretty good idea of what your home is currently worth.

5. Consider strategic pricing.
Here's how it works: If prices in your area are dropping 1 percent each month, and you want to sell within the next three months, you take 3 percent off your price right off the bat, says Phipps. So if you were going to put your home on the market for $400,000, you set the price at roughly $388,000.

The upside: You'll have the competitive edge over the guy who's dropping his price every month, without the air of desperation. Plus, in a market where prices are falling, you'll make more money if you sell quickly.

The downside: Predicting the market is a tough call, even for the pros. And it's really difficult to raise the price if your market starts to rebound, Phipps says.

6. Rebate your 'commission.'
If you're selling it yourself and need to move quickly, consider subtracting half of what would have been the commission from the sales price, says Healy. The standard commission is about 6 percent, so if you subtract 3 percent, your $300,000 house would go on the market for $291,000, he says.

Listing a home for "$9,000 to $10,000 under that value should create higher interest," especially if it's new to the market, says Healy.

The downside: If the house doesn't sell and you end up hiring an agent, you'll need to cover the commission, which may mean raising your sales price or taking a smaller profit.

7. Evaluate whether you really have to sell now.
If you want to get the best possible price for your home and the local market is tanking, "see if you can delay the sale," says Poorvu. Otherwise, in a lot of markets, sellers have "to be willing to accept a pretty good haircut over what they thought their home was worth last year," he says.

The downside of waiting: The market could decline or your circumstances could change to the point that you might need to sell quickly.

But for situations where the move is optional (or you might be able to rent the property until your local market improves), waiting is a solid option.

Just because you've already planted that "for sale" sign doesn't mean you can't change your mind if you're not seeing the interest you anticipated.

"If you know there are no sales or sales are decreasing, and you have the opportunity," taking it off the market is a decent solution, says Healy. "I think we're seeing a lot of that."

8. Assess the market where you plan to buy.
If you're selling one house and buying another, look at the market where you plan to move. Says Poorvu, "It might be that, with the housing there, it's a great time to buy."

8. Assess the market where you plan to buy.

New law puts agents in ‘neutral’ role

2008-01-19T13:58:00.000-05:00

By Christine Dunn

Journal Staff Writer:

A new state law that goes into effect May 1 will bring a fundamental change to the way real estate brokers and agents operate in Rhode Island. The law will eliminate the current legal presumption that all real estate licensees represent sellers. Brokers and agents will be considered neutral unless they have signed agreements with clients stating otherwise.

However, the law does not change the way agents are compensated. In practice, sellers, who usually foot the bill for commissions, will likely retain that privilege. But the new law will “level the playing field” for buyers, according to Bruce Allen, of Remax Professionals in Newport, who chaired a task force of the Rhode Island Association of Realtors that worked to change the law

“It’s crystal clear,” said Sharon Steele, owner of The Sharon Steele Group, in Providence’s East Side. Steele also served on the RIAR task force. “There are no more assumptions about what you get.… Everyone starts out in this neutral position.”

“You must be proactive as a consumer,” she added, “ … telling the agent what role you want the agent to play for you.”

The new agency law, as it is known, will also do away with “vicarious liability” — the listing agent’s and seller’s legal responsibility for any misrepresentations made by any agents working on their behalf as “subagents.”

Michael Jolin, deputy chief of legal services for the state Department of Business Regulation, said the change of Rhode Island’s “antiquated” law governing real estate licensees is progress, and will make it easier for the changing industry to offer different business models.

Although buyers’ agents are able to operate under current Rhode Island law, the state is the only one in the country that still has a law that expressly presumes that licensees represent sellers’ interests.

“This is a much better law,” said Allen. “It’s more in line with what other states are doing.”

The new law will require real estate agents and brokers to present a new disclosure form to all prospective clients at the first personal contact or before an offer to purchase real estate, whatever comes first. The disclosure requirements apply to both residential and commercial real estate transactions.

Consumers will have the choice to select agents to represent their interests as sellers’ or buyers’ agents. The law will also introduce a new category of real estate service. “Neutral transaction facilitators” will be allowed to provide basic services such as handling paperwork and showings, without representing either side in a sale.

“Our concerns were that people were informed, and that written consent was crucial,” Jolin said. “It requires [licensees] to disclose what the different options are … so that the consumer can make a more informed choice.”

The new agency law also regulates instances in which individual agents are involved with both the seller and the buyer in a single transaction.

Under the new law, an agent who represents the seller and then has contact with a potential buyer can no longer legally represent both sides.

“You can’t serve two masters; this was our main concern,” Jolin said. “… It’s like representing both sides of a divorce.”

But with permission from the parties involved, and under the supervision of a licensed broker, this agent can become a “neutral dual facilitator” in the transaction.

In this case, confidential information that the agent may have about the seller — why the seller is moving, the lowest price the seller is willing to accept — should not be disclosed to the buyer. Similarly, an agent in this situation should not reveal any confidential information about the buyer to the seller: for instance, when the buyer needs to be in a new residence, or how much the buyer is prepared to borrow or spend.

“Talk about the house, not about the people,” advised Kevin Dumont, of Dumont Realty in Pawtucket, when he was teaching a class on the new law for agents this month.

“Either you’re neutral, or you’re serving one side or the other,” Jolin said.

Instead of becoming a neutral dual facilitator, an agent in this circumstance could also have another agent from the same office represent one of the clients, again with permission of the client and under the supervision of a broker.

The new law makes the rules “a little clearer and somewhat easier to follow,” Steele said.

Consumers will be presented with new forms by May 1 and the state association is working to prepare agents and brokers for the change with classes on the new law.

“It is, frankly, good for licensees, brokers and agents, but I also really believe it is very pro-consumer,” said Ron Phipps, owner of Phipps Realty in Warwick, of the new law. He said the elimination of subagency and vicarious liability “is a very good thing, particularly for sellers.”

“If you were doing things properly before, it will be a fairly easy transition,” Steele said. “… If you were not, this has a big learning curve.”

“Transitions, by definition, are always hard,” Phipps said.

cdunn@projo.com

A Resurgence Begins in Mortgage Refinancing

2008-01-19T13:53:00.000-05:00

By Jeff D. Opdyke From The Wall Street Journal Online :

Another mortgage-refinancing boom is under way. But this time around, many homeowners will be watching from the sidelines.
For the first time since 2005, mortgage rates have slipped well below 6%, ending last week at about 5.87%, according to mortgage tracker HSH Associates. Some lenders are offering even lower deals. At these levels, about 37% of homeowners could refinance their mortgages and save money on their monthly payment, estimates investment bank Bear Stearns Cos. As rates drop further — and some expect that to happen if the economy continues to weaken — increasing numbers of consumers will find refinancing their existing mortgage worthwhile.
But here’s the catch, and it’s a big one: Many homeowners won’t benefit, either because their mortgage is too big or their credit score is too low. In other cases, falling home prices will make it tough for them to refinance.

As the subprime-lending crisis continues to roil the housing and financial markets, rates for so-called jumbo mortgages — those above $417,000 — are now uncharacteristically priced so far above conventional mortgages that refinancing generally makes no sense for homeowners who hold them. At the same time, conventional borrowers who have lower credit scores — or relatively little equity in their houses — are finding that they generally don’t qualify for the best rates, often negating any expected benefits to the pocketbook.
The result: The big winners will be conventional borrowers with so-called conforming loans — those eligible for purchase by Fannie Mae and Freddie Mac, the two government-sponsored entities that rule the mortgage market. In particular, borrowers with high credit scores or a large amount of equity already in their home, or some combination of both, stand to benefit, says Dale Westhoff, who heads Bear Stearns’s mortgage research. In the past, when rates have dived below 6%, "you’d normally see subprime and Alt-A and jumbo borrowers" in the market, Mr. Westhoff says. "But they’re really not going to be participants in this refi wave."
Fiona Furlong of South Glastonbury, Conn., is one borrower who has been able to refinance her home. She originally sought to refinance her conventional mortgage in December 2005, but missed the last of the sub-6% rates by a few weeks. She told her mortgage broker to keep her in mind if rates ever slipped below 6% again.
"When he called recently, I had sort of forgotten about this," Ms. Furlong says. "I was surprised to hear rates have dropped so significantly." She locked in a rate of 5.75%, reducing her current rate from above 6%, a move that will shrink her monthly payment by about $100. "My house just got reappraised and I’ll be paying more in taxes, so that savings will help," she says.
Ms. Furlong’s broker, Michael Menatian, president of Sanborn Mortgage Corp., in West Hartford, Conn., says his refinancing business is "surging" these days among those who qualify. "It’s going nuts, because we’ve had such a dramatic drop in rates in such a short time."
At Regions Financial Corp., a Birmingham, Ala., regional bank, refinancing business is up between 40% and 45% since October. "This market will be very different than previous markets, and that’s a function of the credit constraints and the jumbo-rate issues," says Todd Chamberlain, Regions’s head of mortgage banking.
Ron Hermance is more blunt. The chairman and CEO of New Jersey’s Hudson City Bancorp Inc. says many consumers "will be left out in the cold this time because underwriting is back in vogue," and many homeowners will find that during the previous housing boom "they originally got credit they weren’t entitled to." In the first two weeks of this year, refinancings accounted for 56% of Hudson City’s mortgage volume, compared with 42% for all of last year.
Overall, the Mortgage Bankers Association reports that for the week ended Jan. 11, weekly mortgage applications surged to a level not seen since spring 2004. Refinancings accounted for nearly two-thirds of the application volume, the group says. Still, those are just applications, and many are being rejected these days as lenders adopt tighter standards.
For jumbo borrowers, though, higher standards aren’t the biggest problem: Rates on those loans averaged 6.8% at the end of last week, according to HSH, meaning the spread between conventional and jumbo rates is nearly a full percentage point — four times the typical gap.
Jumbo rates, lenders say, aren’t coming down alongside conventional rates because buyers of those mortgages in the secondary market remain skittish. As such, today’s jumbo rates are well above the existing rates many homeowners currently have on their mortgage, meaning "there’s no reason to refinance," says Jay Steren, CEO at Mortgage Capital Associates, a Los Angeles mortgage banker.
In the conventional-mortgage market, Fannie Mae and Freddie Mac are moving to risk-based pricing, which has the effect of tightening lending standards across the country. The upshot: Homeowners with weak credit scores or little equity in their home will pay for the risk associated with underwriting their mortgage through higher interest rates and added fees — which has the effect of dimming, if not eliminating, the benefits of refinancing.
To get the best rates under the new risk-based guidelines, homeowners "need a credit score over 679, or equity of greater than 30%," says Sanborn Mortgages’ Mr. Menatian. But as home prices fall in many markets, homeowners’ equity sinks alongside it — making it tough to get more-attractive rates.
The risk-based guidelines impose so-called delivery fees that range between 0.75% and 2% of the mortgage value for consumers with credit scores below 680. The highest fees are charged to those with credit scores below 620.
Mr. Menatian says buyers with credit scores in the 620 to 639 range, and who have less than 30% equity, are getting mortgage rates these days of about 6.375%, while the best borrowers are getting 5.75%.
Holders of jumbo mortgages, meanwhile, are running into other problems. Rodney Rideout, of Darien, Conn., has an adjustable-rate mortgage of about $500,000 scheduled to reset in March, meaning his interest rate will rise to more than 6%. That will bump up his monthly payments by about $460. He wants to refinance, but because of the jumbo market, he’s unable to find an affordable fixed-rate mortgage.
"Everything is up near 7%, so it makes no sense," says Mr. Rideout. "I was thinking ‘jumbo’ meant something up near $1 million; I didn’t think it would apply to my loan."
Indeed, the definition of jumbo could actually be changing soon. For months, Congress has been debating the idea of raising the limit on jumbo mortgages, possibly to $600,000 or more. If so, that would allow a larger number of borrowers to refinance at lower rates. But just what will happen, and when, remains uncertain.
In the meantime, rates on jumbo mortgages can vary significantly. While the average jumbo rate is about 6.8%, Hudson City Bancorp — which operates in New Jersey, New York and Connecticut — is offering jumbo mortgages at 6.25%, for example.
"You need to do some legwork, scour the market, to find the best rates," says Keith Gumbinger, vice-president of HSH. He suggests starting with lenders who often keep on their books the mortgages they underwrite, such as local banks, thrifts and credit unions. "They can easily be a half-percent lower than the averages," he says.
All of this is affecting the home-buying market, particularly for expensive homes. Buyers are increasingly aware of the high jumbo-mortgage rates and the impact on their monthly payment. Thus, sellers these days are adjusting their sales price or offering other incentives in order to trim a buyer’s mortgage below the jumbo limit.
Neil Saunders, president of Greenwich Mortgage Corp. in Providence, R.I., is selling a 4,400-square-foot house in East Greenwich, R.I., priced at $998,000. To entice buyers, he’s willing to offer an interest-free loan for a year or two on the cash needed above the $417,000 cutoff. Mr. Saunders expects Congress will raise the ceiling on jumbo mortgages and the buyer will then be able to refinance into a lower-rate, conventional mortgage.
Other sellers, says Ron Phipps, president of Phipps Realty and Relocation in Warwick, R.I., are buying down the interest rate for buyers, often for just a year or two, to make it more comparable to a conventional rate.
"Everyone is very sensitive to this situation right now," Mr. Phipps says. "This is still a correcting market."
Refi Resurgence
• Mortgage rates have slipped below 6%, but not all homeowners will benefit.
• New risk-based pricing guidelines are making mortgages costlier for people with spotty credit and little equity in their home.
• Rates for jumbo mortgages are sharply higher than those for conventional mortgages.
• Congress may raise the limit on conforming mortgages to $600,000 or more, providing cheaper refinancing to more borrowers.
• Refinancing generally makes sense only if the money you save from the lower monthly payments offsets the cost of the new mortgage within a few years

Do I need an Agent? If so, who?

2008-01-07T22:19:00.000-05:00

There are many choices in the real estate market for both sellers and buyers. The internet has accelerated the changes and increased choice. It is in fact a consumer’s world. It is sometimes difficult to sift through all of those choices to make a wise and effective decision. How will I find or sell a home?
The buying side choices are clearer: Do I want representation from an agent? Can I go it alone for searching, financing, negotiation, inspection, appraisal, insurance, title and closing? Have I done it before? If I engage representation, will he or she be paid from the seller’s side? How much will it cost me? What forms must be signed? Is representation contractual? All of these are part of the conversation you want to have with a potential agent before you make a decision on how to buy your home? Professional agents, particularly Realtors, will welcome and appreciate the directness and the intent of the conversation. It is part of the process. Furthermore, the real value of an agent becomes more apparent through this discourse. What are the comparable sales? What do they mean? What is the market trend? What is the risk of buying a foreclosure or a short sale home?

While interviewing an agent, for representation on buying or selling side, make sure that he/she understands you and that you understand him/her. Does he/she take the time to explain things so that you are comfortable? Does he/she have the time to focus on you and your needs? Does he/she have experience in your market area? Does he/she work with a team? If so how many? If he/she is busy, who covers? What are his /her professional credentials? Does he or she have professional designations? Ask around about the persons professional reputation. Also, use the web to investigate your potential agent. What does Google report about them?

The selling side has more choice: You can forgo any assistance at all and sell the home on your own. You can decide to do most of the work yourself and hire a limited service company. Another choice is a full service company which will do almost all of the work. (You still have to make the house available for showing). Finally, you can engage a concierge company that will market, manage and maintain the property. This is the platinum level of service. It is interesting that over 80% of homeowners who try to sell their homes by themselves end up hiring a professional. When trying to make the best decision, invite several agents to your home to review the choices. Most will come with a market analysis to determine what price your home is likely to sell at. They should have some sort of marketing strategy to describe how they will sell your house. Know that over 80% of purchasers use the web to find the house they ultimately purchase. A web centric strategy is critical. Print media generates less than five percent of the buyers; its potential value is in open house announcements. By the way, signs still generate approximately 6 to 7 percent of potential buyers. MLS is a very powerful tool that shares your home with over 5000 potential Realtors in Rhode Island. It also provides web exposure through many websites including www.realtor.com and www.riliving.com, Through an MLS program called IDX, your listing agents company, can share your listing information on the individual company websites of other MLS members. In short, your house can be found on the competing broker’s company website.

Your conversation should include a discussion on showings and access. In this market, you want to make sure that your house is easily available for any potential buyer to see it. Some agents are not as available as you might prefer. It is a fair question. When looking at various marketing approaches you want to understand what the costs are.
How is the agent compensated? Is there an up front fee? Or is it a contingency fee? Is it an hourly fee or a fee for services? Remember that all fees are negotiated by each company individually and independently. If you are engaging MLS how are cooperating agents being compensated. In short, what are they being paid?

Other elements of the conversation should include: length of listing agreement, availability for rent of the house, any seller help with buyer’s mortgage, interval of agent seller reporting (how often will agent email or talk w homeowner), and staging assistance. The process is more complicated given the current market, but it is workable. On May 1st, Rhode Island changes its agency law that is going to change the way agents work with buyers and sellers, but let’s save that conversation for later.

The most important message here is to ask, and get answers to your questions. The best agent’s are Realtors, members of the National Association of Realtors, direct, forthright, and forthcoming. The transaction and the relationship should both be transparent.

Real Estate: Separations, Divorce and Death.

2007-12-11T00:50:00.000-05:00

Certain subjects, like separation, divorce and death, are never welcome or comfortable. But those conversations do in fact need to happen. Real estate can have huge impact, good and bad on each of these situations. This is true whether you own or you rent. So let’s have at it.

When you get married, you are hopefully very excited and full of optimism and of confidence. This is necessary and good as the odds are against you. The majority of marriages end in divorce. While I know of no study that suggests that married homeowners have a better chance of having a long term marriage versus tenants, the assumption is probably correct. If you have worked to keep the marriage together and it is simply not working, you need to figure out your shelter, whether you are separating or divorcing. Who is going to live where? Do not assume that the person seeking the separation or the divorce will be the one moving out. The best recommendation is to seek legal advice. This does not have to be adversarial or litigious. The advice is critical. An attorney who specializing in mediation, not necessarily litigation would be most helpful.

With that said make sure that the resolution of property division makes common sense.
Often the agreement ‘requires’ that the parties go back to court at additional cost. Sometimes we see agreements where the non resident party pays all of the expenses of ownership while the other party lives in the house. The resident party gets net proceeds when the house is sold. So the common sense question is why would the resident ever agree to sell the property if he or she is living there at no cost. This arrangement is in place until the party who is making the monthly payments has had enough and goes back to court for relief. The point is clear: it is really helpful to have mediation when separating or divorcing.

With the marketing of the property, obtain professional help. Have several Realtors give you market analyses and marketing strategies. Make sure that the agent’s fiduciary is to both parties, to the sale of the property. That should not be difficult. Have the agent provide email feedback and updates to both parties. Review results and price on a regular basis. Adjust price as necessary.

It may also be cynical, but anticipating a problem if often the best way to avoid catastrophe. Prenuptial agreements, while un-romantic, make lots of sense. Yes you plan to marry forever, but if it does not work out, a prenuptial makes the process of property distribution straight forward.

Death is more difficult with real estate. If the property is owned jointly with right of survivorship or in tenants in the entirety, the property ownership will pass to the surviving party. If, however, it is owned exclusively by the deceased, a will and probate will be necessary. The will can determine to whom the property or net proceeds are left.
Probate is the legal process, by which the Courts and the State, resolve the distribution of proceeds and properties, and insure that inheritance taxes are in fact paid.

Once again, preparation is the best course. Meet with an estate planer and review how you want you property dispersed. You need a notarized will. Make sure that you let your heirs and/or attorney know where the executed will is stored.. If you have an estate worth a lot of money, you should consider meeting with an attorney/accountant/financial planner, to set up a trust. This is a way to minimize the amount of taxes your estate will pay.

It is difficult at any time to discuss these issues, but the majority of people will divorce or separate and all of us will die. Plan accordingly.

Real Estate 101: Renting versus Owning

2007-11-27T08:24:00.000-05:00

There are some basic rules of Real Estate: Location, Location, Location. Buy the least expensive house in the neighborhood. Purchase what you can actually afford…etc. One rule has faced challenge, particularly from the Wall Street Equity ‘gurus’ like Jim Creamer: “It is better to own than to rent.” Some ‘experts’ suggest that it is better to rent now than to own, particularly with prices dropping. As with all rules, they need to be qualified and explained. It is, in fact, better to own rather than rent over the long term. . Lawrence Yun, the chief economist for National Association of Realtors reported the following data from the Federal Reserve: "The median wealth accumulation for renters from 1995 to 2004 was $4,000. The median wealth accumulation of a homeowner was $184,000." Obviously, owning, over the long term, is better than renting. The qualification is important. If you are going to move within 18 to 24 months, it may not make sense to own given the cost to acquire and the cost to sell. However, if you are going to be in a place for few years it is foolish not to own. There is an income tax deduction. Assuming you pay principle in your mortgage payment, you are increasing equity in your property. Both of these fact happen, even if the property does not appreciate, increase in market value, at all.
So in a correcting market what should you do? First, get some expert advice from a professional, ideally a Realtor. This person can help you find, negotiate, obtain financing and complete the acquisition of a home under preferred terms. You want to buy the best value, in the strongest location, with the least risk of detrimental conditions, at the best price. A Realtor can provide you with comparable sold information and price trends within neighborhood and towns. Make certain to study this information. Secondly, make certain that you can afford to own the house. Do not purchase more than you can afford. Pre-qualification with a mortgage originator is critical. Also, remember to look at the maintenance and repair costs of owner ship. Think about negotiating a home warranty like, AHS or HFS, into the purchase price of your new home. If you negotiate a buy down for the payments for the first couple of years, you need to make sure that you can afford the actual cost. We just negotiated at 2.1 buy down for a client. The monthly payment should have been $1400 per month, but with the buy down it is $1050 the first year and $1175 the second year. The seller pre-paid the difference for the buyer. It was great for the buyer, but the buyer was ABLE to pay the full amount. This is important that you be able to pay the ‘real cost’ of the monthly payment. Third, you must do a home inspection to make sure the property is in good condition. It will cost around $400. plus, but it is very important. A roof repair could cost thousands. You want to know what you are buying and what its condition is. Agents and most homeowners do not really know what the overall condition of property is. Bring in a pro! Finally, do not rush the process. Have a criterion for purchase. The most effective buyers have alternative properties. They avoid becoming emotionally committed to one possible choice. It will take time, so be patient and take the time necessary.
The market has great selection and prices have come down. In short, there are some great buys available right now. Take advantage of the market: it is better to own rather than rent.

Real Estate Progress Report: November 2007

2007-11-23T23:10:00.000-05:00

For some of us it may be a distant memory, for others it may be a regular occurrence: Do you remember your mid semester progress report? This is the real estate equivalent of that evaluation. We will have year end numbers in February, but the trend lines are rather clear. Let’s look at our review on three levels, national, state, and local:

National: Markets across the country are showing slow rates of sales, and lower prices. There are some hot markets although they are in the micro minority. The majority of metropolitan areas have more supply than demand. Jim Kramer and other Wall Street experts are suggesting the market is much worse than it is: Kramer: Over 1.25 trillion dollars of residential real estate are currently available in the United States. Perspective: Total value of residential real estate in the US is just over 20.1 Trillion dollars. So approximately 6% is currently on the market. Moreover, according to Fannie Mae, the total value of mortgages leveraged against that real estate is 11 Trillion dollars. Therefore, there is 9 Trillion dollars of net equity in US residential real Estate.
Finally, in 2007 approximately 5.7 million single family residences will be sold. This lines us with 2002 and would be the 5th highest level of sales since we began keeping records.

State: The end of the year will conclude with a reduction of sales of approximately 10% in single family sales, but an increase in condominium sales. In most statistical ways we are lining up with 2004. Average single family price in 2004 was $264700. It rose to a high of $282,900 in 2005. At the end of the 3rd quarter of 2007, median price was $279,900. Number of days on market is up to 84. The absorption rate, (that is the time it will take to sell all of the current listings, if no new listing come on, based on the current rate of sales-number of sales a month), is now at 11 months. A normal market in Rhode Island would have a 5 to 6 month supply. Additionally, there are a significant number of house that are coming off of the market because they have not sold in the past couple of years. The other fact is that the entry end and the upper ends of the market are healthy and active. The 500-800k range is more challenging. Economic indicators do offer some rays of encouragement over the long haul. The short course is steel and cold.

East Greenwich: This market is fascinating. First East Greenwich actually began to cool in early 2005 in terms of price and number of sales. Average price has dropped from $559500 to $522,500 as of 3rd quarter 2007. Time on market has increased from 67 days to 84 days (average). Yet sales increased from 48 in 2006 to 68 in 2007. Yes we have identified the price at which sales occur. There is a convergence of reasons for this activity: First people choose the best location and East Greenwich enjoys a strong location reputation. Secondly, East Greenwich is similar in terms of list price to alternative communities, so buyers are gravitating to stronger location at a similar price point. Third, East Greenwich enjoys strong relocation resale reputation. Transferees are being more prudent in their pursuit of shelter in Rhode Island. As the result more are buying in East Greenwich.

Conclusion: It is clearly a good time to buy a new home. Selection is generous, rates are historically low, and sellers are motivated. Please give us a call to help you find a great value! It is true that some sellers need to sell and will sell significantly below value.
It is, also true, that many sellers will sell at fair value, but will not give their homes away.
In short, the market and its value is stronger than the headlines would suggest. If you are a buyer who has been waiting on the fence, it is a great time to get off.

Ron Phipps, CRS, ePro, GRI
www.phippsrealty.com

Our National Association of Realtors Installation Toast

2007-11-19T05:46:00.000-05:00

Joel Singer, CEO of the California Association, and I delivered this Toast at the 2008 Officers Installation in Las Vegas:

The National Association of REALTORS is just like a great symphony. The music that we collectively create enjoys great volume, intricate rhythms, and breathtaking harmony. The balance between instrument and voice is inspiring and heartwarming. Although our volunteer leaders select the music and provide the brilliant sound, it is the orchestra, our professional staff, who bring it to life.

As we celebrate and salute our friend Dick Gaylord upon his installation as the 100th President of the National Association of REALTORS, we all recognize that great conductors inspire and liberate the best in all the people they touch. Through compassion, energy and enthusiasm they transform inspiration into excellence. Few individuals have inspire as many people as Dick Gaylord. He has and will continue to conduct our symphony and to perfect the relationship between volunteer leaders and dedicated staff. Let us raise our glasses to salute Dick and all of organized Real Estate's professional staff. Let us seal our commitment to an extraordinary pursuit of the perfect REALTOR sound.

Happens Chance: Random Lessons of Life

2007-11-19T05:39:00.000-05:00

There are many life lessons to learn: some more important than others. Among the most important is that relationships, friends, family, business, etc are among the most critical.
Sometimes when you are pretty confident and excited, the forces of life converge to remind you of your, minor place in the Universe. Humility is a great thing. No one has ever gotten anywhere without help from others. Sometimes funny things just happen.

The National Association of Realtors has approximately 1.4 million members in the Fifty States and 4 U.S. Territories. This past week over 30000 Realtors met in Las Vegas for their National Convention and to celebrate the beginning of the organization’s Centennial Year. Yes, the National Association of Realtors was formed 100 years ago in Chicago. Its purpose was to improve the professional and ethics of ‘brokers and agents.’
This year a good friend of mine, Richard Gaylord of Long Beach, California, (also a fellow 2003 Regional Vice President), was installed at the President. The position is a one year voluntary position. Over 2500 Realtors were on hand for his pledge.

When my wife and I arrived in Las Vegas there were some problems with our registrations. Our tickets to the Installation and International Night had been already picked up. There was actually no concern about it because NAR senior staff is always ‘taking care of logistics’ for volunteer leaders. Staff advised me that we were at table 11. You should also know that the other 2003 Regional Vice Presidents were going to be seated at tables 11 and 12. When we arrive, RVP Carole Horn said that she ‘needed’ to introduce me to someone. As I glanced, there no seats at the table for us, but I followed Carole’s lead: “Ron Phipps, I would like to introduce you to Ron Phipps and his wife Jenny”. Ok…I thought I misheard. Excuse me; you are Ron Phipps, too? Ronald J. Phipps is a Century 21 Agent in Las Vegas Nevada. Obviously, Rhode Island is my home State. The moment was awkward as we did not have enough seats. My namesake offered to move to another table, but convenience prevailed. Two of my RVP classmates moved to the next table and we made room for the 2 Ron Phipps families. The conversation that followed as really quite enjoyable. We compared family histories and shared contact information. Strangely enough, neither of us knew our family history with any real precision beyond three generations back.

The other Ron and his wife are moving back to her homeland in Singapore in two months. The odds that we will see each other again are in fact remote, but what we did was uncover a relationship that we did not know. We have exchanged emails and thanked each other for a delightful evening. It was in every sense of the word happens-chance, a chance meeting for both of us. But it cannot help but remind you that we are all related. Maybe it is 6 degrees in the rest of the world and less than 3 degrees in Rhode Island, but we are at the end of the day ‘connected.’

But there is in classic fashion was more. My fellow RVP’s wanted to remind me, that despite my advancement in NAR leadership, that my replaced was already in the wings.
Ronald L. Phipps.

Survival Skills for Home Sellers

2007-11-05T05:35:00.000-05:00

So you are attempting to sell your home and it just is not happening. What should you do? This market is about strategy and for some homeowners; it is about home ownership survival. The recommendations fall into three categories: the basics, the advantageous, and the critical.

The BASICS:

1. We have an over supply of residential properties and lower demand. While the demographics suggest that we have a balance between the number of households and the number of potential purchasers, the fact is that we have an eleven month supply housing. Specifically, if no new listings come onto the market, based the on the number of sales per month, it will take us eleven months to sell the current inventory of houses. A healthy market is a 5 or 6 month supply. In 2004, we had a 3 month supply. (Obviously, that was a seller’s market).
2. Price matters. You have heard the advice, but it is very simple: limited demand, high supply equals lower price. Many people are under the impression that the town or city assessment is ‘below’ the real value of their property. Unfortunately, that is just not true, particularly in East Greenwich which completed it last town wide revaluation at the height of the market. Additionally, those properties that are actually selling are priced slightly below fair market value. If you do not want to sell your house at a low price as compared to 2004, then do not put it on the market. Wait. They market will get better in time.
3. The buyers have the upper hand. It may seem obvious, but in a buyer market the buyers have the advantage. The goal is to sell the property, which means that you need to work with the buyer. While your predisposition may be to be adversarial, you do so at your own peril. You need to work to get the buyer, then get the proposal, and then get to closing. If you do in fact close, you have done well.
4. The agent and the marketing strategy matter: There are many good agents in the market. They have many business models. You need to evaluate their results, their approach, and their effectiveness for you. The best agents, and their teams, have many sales for a reason. Ask them for their results. Newspaper advertising, according to the National Association of Realtors, is not effective. Less than five percent of all sales are generated from Print media. Eighty-five percent is generated from the web. You need to have a strategy that is web based. Among the skills set required is a comprehensive understanding of both the market and of financing. Your agent should be able to talk about the competing properties and the recent sales in your neighborhood. More importantly, you need an agent who can close the buyer and negotiate effectively for you. This is not a luxury, it is a necessity. Finally, your agent needs to be persistent in the marketing process as well as the closing process. Realtors are the best agents. Work with the best Realtor, and/or agent you can find.

The Advantageous:

1. Price below ‘fair market value.’ In a market in which prices are continuing to go down, you need to price below what was fair value 90 days ago. While they are the comparables, they are old and misrepresentative of what is happening today. You need to price in anticipation of where the market is going. The good news is that they you may be getting less than you want for your home, but you should also be paying less for your new home.
2. Offer financing incentives. The vast majority of buyers will need a mortgage. As a seller you can significantly reduce their monthly payment buy paying some of the cost of the mortgage. One seller, with whom we are currently working, is offering the buyer either 3 months of mortgage payments or a 1% reduction in the mortgage rate for five years. Incentives matter for everyone involved in the transaction. Give the buyer a reason to give your property serious consideration.
3. Prepare the House for Maximum WOW impact. With almost 7000 single family homes on the market right now, the buyers will ignore those houses with problems as well as those houses that are tired. The fixer-up buyer can buy great at low price, why would they pay fair price for a project? They won’t! If your septic is failing, or the roof is leaking, fix it. There are dozens of competing houses in great shape without issues. “Tired houses” sell in a sellers market, but they are difficult in a buyers market. Get advise from your Realtor on how to stage and freshen up you property. Recently, we had an estate house on the Hill that needed repairs and updates. The family followed our recommendations, which included repainting interior and exterior, refinishing the floors, painting the kitchen cabinets, etc. We sold the property quickly and at a strong price. If they had not done the work, it is likely the property would still be on the market.
4. Availability to view. Your home should be available to be seen on the web as well as in person. There is much conversation in the real estate industry about the 360 degree tours and their value. One thing is certain, potential purchasers ‘view’ the properties with multiple photos. The importance of visual images in marketing real estate cannot be overstated. The same fact is true of brochures. Moreover, the brochure should re-enforce the value of the property, not detract from it. State law requires the buyers be given certain forms. They should be packaged in a professional an appealing format. Information about the state, city/town is helpful. One other inconvenience of a buyers market: When you receive a request to show your property, do not postpone it. With so many properties on the market, you give the buyer a reason to eliminate your home because it is not available to be seen. If you need to move the appointment an hour or two, no problem, but to another day may be enough to take you off of the agenda permanently. Incidentally, make sure that your agent is available and flexible for showings as well.

The Critical:

1. Respond to all offers: If you do the preceding steps well, you should receive an offer. It is really difficult not be offended, but do not be. A buyer needs to start somewhere and does not want to pay too much. By making an offer, they are telling you that they are really interested in your house. You should be encouraged by that fact alone. It does not matter where they start, but rather where they end up. The wisdom and advice of a strong agent is most critical in this element. Do your best not to take it personally.

2. If you cannot make your mortgage payments, get help and assistance early. Ideally, you should contact your lender, before you are late with a mortgage payment. It is important to try to avoid foreclosure. Beyond losing your house, you will seriously hurt your credit, and making getting back into the homeownership ranks very difficult. Most lenders will work with you. Some will work with you to do a ‘short sale.’ This is when the lender agrees to take less than you own on the mortgage in order to sell it. Some lenders will also provide’ forbearance.’ This is when the lender agrees to suspend mortgage payments. In both situations, it is the lenders decision whether to reduce the payoff or suspend payments. Our experience recently, is that they are willing to work with you. You need to call them before the situation is desperate. Also, let your agent know what is going on. They can help you with the lender, too.
3. It’s not over, until it is over. Many sellers expect that negotiations are over once the sales agreements are signed. In some instances and in the best case, that is true, but it is no longer common. Inspections are also a renegotiation of the agreement. Some transactions are negotiated all the way to and including closing. The media onslaught suggests that you should not buy. Buyers cannot ignore the repetitious and shortsighted advice. You need to live somewhere and it is a great time to buy. Prices are low and selection is great. The transaction is not complete until it is closed and you have received your proceeds.

You can prevail in your goal of selling your house. You need to be smart and strategic. With the best professional assistance, you can make it happen.

Ron Phipps, CRS, ePro, GRI
www.phippsrealty.com

Rhode Island Why's and Why Nots

2007-11-02T07:25:00.000-04:00

Familiarity breeds complacency. One of the advantages of being a Rhode Islander is having a critical eye and a loud voice, (albeit with an unusual accent). Every so often as you look around, it makes sense to ask why or rather “why not.”

My travels have produced some unrelated observations:

1. Why aren’t the traffic lights on Route 2 timed so that traffic flows freely? Have you noticed in Florida, or Kansas, or Indiana that the lights are timed to facilitate the flow traffic if you are traveling the speed limit?
2. Why do we clean the breakdown lanes in the latter part of the summer, rather than early? As a state with a significant number of cyclists, winter sand and glass is a real problem. Removing the sand early in the year translates to safer cycling.
3. Why do we have a shortage of RIPTA buses and service when we are trying to encourage the use of public transportation?
4. Why does the light on Main Avenue at the end of the Green Airport Runway cycle to red when no one is there?
5. Why don’t we use EZPass on the Newport Bridge?
6. Why are Rhode Islanders trained to make left hand turns in front of on-coming traffic?
7. Why are directional signals optional use equipment on Rhode Island cars?
8. Why aren’t the lines on the streets and curbs clearly marked for safe driving and to avoid parking tickets? How far from the corner in Providence do you need to park to avoid a ticket?
9. Upon the thirtieth anniversary of the Great Blizzard of 1978 do we still get bread and milk when snow is forecast?
10. Why do Rhode Islanders always include references to landmarks that are no longer there? “Turn left in front of where Jolly Johns used to be? It just past where the Warwick Tent used to be?
11. What happened to talking to your neighbor about a disagreement rather than calling an attorney?
12. How many former Rhode Island Governors are currently legal residents of Rhode Island?
13. Why does Rhode Island have 17000 state employees to serve 1000000 people, when Tennessee has the same number of employees to serve 5000000?
14. Why do we have 30 school districts rather than five?
15. With 1 in 150 elementary school kids being diagnosed with Autism, why aren’t we outraged and coming up with a Statewide response to providing and funding this ‘special need?
16. Why does it take so long to get approvals to build in Rhode Island?
17. Why are so many street signs missing?
18. Why can’t URI come up with a no water, slow growing green grass?
19. Why don’t we have more individual home wind mills to generate power?
20. Why do the delivery truck double park on Main Street East Greenwich across from Each other to create traffic? Where are the police then?

www.phippsrealty.com

Water and Real Estate

2007-10-31T09:07:00.000-04:00

You may think this is a story on waterfront properties or maybe even water in basements, but you would be mistaken. When one talks about basic human needs, generally it includes food, water and shelter. It is in many ways ironic that our government’s focus has been more sharply drawn to fossil fuels rather than water. Fossil fuels fired the industrial revolution of the past two hundred years, but there are alternatives to this ancient, soon to be exhausted fuel. Water, however, has been a pre-requisite of virtually all life, particularly human life. It is also incongruous that there is a water shortage particularly given the fact that the majority of the surface area of the planet is water.

There are some arid facts:
36 States will face severe water shortages over the next five years.
The U.S. used a total of 148 Trillion Gallons of Water in 2000 (last available statistics). That was for every purpose: commercial, manufacturing, residential, agricultural, etc.
That translates to 500,000 gallons per person in the US. (Brian Skoloff Associated Press)

California uses 23 Trillion Gallons of water a year. Much of that is from the Snow melt in the Serra Nevada Mountains. Global Warming will reduce that reservoir.

There are 1000 desalination plants in the United States. The larges in Tampa Florida produces 25 million gallons of water a day, only 10% of the area’s daily demand.

Climatologists predict the Southwest United States drought will last 90 YEARS.

The rest of the world is in a more serious situation. The Continent with the most people has the lowest supply of water. Asia. While the ‘water wars’ in the western United States are fought in court, that may not be the case in the rest of the world. Water is not a luxury. It is absolutely necessary.

While living in Rhode Island, the Ocean State, may ‘insulate’ one from
the most serious water shortage challenges, it does not allow us to ignore it.
Some self evident truths: We need water for life. Businesses, also, need water to provide jobs. We need a State-wide water policy, (not necessarily a single water provider). A pro-active water policy would promote conservation. We need to ‘reuse’ waste water for irrigation, and non human consumption needs. We need to encourage new technologies to save water. (The Chinese are now growing aerobic rice.). We also provide businesses with reliable, fair and consistent commitments for water. Maybe we should consider building a major desalination plant here. Good government is a steward of its resources. Great government anticipates. It prepares for crisis. But more importantly, great government looks at the future with plans in place. The Constitutional Convention was all about governance. A Rhode Island Water Summit to create the architecture and the opportunities for the future of Rhode Island is now appropriate. It is fitting that a potential model for 21st century water stewardship would emanate from Rhode Island. Slater Mill on the Blackstone River is where the Industrial Revolution began on this Continent. We have been given fair warning. It is time to respond. www.phippsrealty.com

Snowbirds, Splitters and Super-splitters

2007-10-25T10:01:00.000-04:00

About this time of year you hear, particularly at East Greenwich’s better watering holes, conversation includes the successes of the Patriots and the Red Sox. But there is another conversation underway: When are you going south? Are you spending Thanksgiving in Naples this year? Many people have delayed their departures this year due to the weather and the World Series, but the fact remains that many are on route. While no really precise numbers exist, it is accurate to suggest that the number is significant. One area condominium will see seventy percent of the members going south. Some of these people are true Snow-birds, people who travel to Florida, Georgia, the Caribbean, etc for the winter. Snow-birds lead the North and spend winter in the warmth. Snow-birds are an indigenous species here in Rhode Island. Every winter they migrate south.

There is another group called Splitters. WCI, the large Florida developer, coined the phrase: “people who own at least two homes and split their time between them for recreation, work-life balance, or to connect with family and friends.” Splitters are distinct from snowbirds as splitter travel back and forth between their homes four or five times, while snowbirds do so once maybe twice. Some splitters travel between their homes four and five times a month. Incidentally, super-splitters, Nicholas Cage, Oprah, Mel Gibson and the like, have multiple homes. Some of my recent clients fit into that category with a main residence in Florida, a home in Manhattan, a home in Stowe, Vermont and a getaway in Rhode Island.

Not sure how many snowbirds and splitters there are in Rhode Island, but there are many. The number is also increasing. How many former Governors are actually legal residents of Rhode Island?

Many of the migrant Rhode Islander rely on family to look after there homes while they are gone. Some people rely on electronic monitoring. Your security company can monitor unauthorized entry, low temperatures, water in the basement etc. Some ‘smart homes’ can be supervised remotely by sellers from any location on the globe. Obviously, leaving a home vacant increases the chances for more serious problems, but careful planning and preparation can minimize those risks.

Some people have opted to compliment their electronic monitoring with professional management services. These services actual go to the property on a scheduled basis to identify minor issues before they become major. The building is checked for security, maintenance, and necessary repairs. Typically they charge a monthly fee to monitor, and then a fee if they need to organize repairs and service people. When one looks at the cost of home and the potential risk, these services are inexpensive. There are a few companies in the area, including Phipps Real Estate Services that are engaged in the business.

So whether you want to hire professional help, or have family resources, make certain to have a plan to protect you home as you migrate to your winter nest.

Log into www.phippsrealty.com for more information

Real Estate Reflections Fall Harvest 2007

2007-10-18T01:12:00.000-04:00

Have you ever noticed that the only news that makes the headlines is bad news? Real Estate has had a lot of head lines lately. So is it as bad as the headlines suggest? The answer is not necessarily. So what is going on? The stats are conflicted. Real Estate across the country has seen a slow down and in some areas a reduction in median price.
That is also true in Rhode Island and in East Greenwich in particular. What is most interesting is that more single family, East Greenwich homes sold in the first nine months of 2007 versus the first nine months of 2006. Yes homes are in fact selling. More of the less expensive properties are selling, but they are selling. It is also true that average price of homes has come down over the past two years. So what explains the increase in sales? The market had suffered from a language barrier between sellers and buyers over the past two years. That barrier has begun to disappear. Sellers finally understand that the market is a buyers’ market. If they want to sell they need to be flexible, specifically with price. Those sellers who have not adjusted their price expectations have not sold. Those sellers, who have looked closely at the market value, reduced their price, have generated offers and sales. For many East Greenwich sellers the assessment at the peak of the market had given them a significantly inflated perception of value. The buyers, on the other hand, have been most effective in finding the best value. Buyers look at comparable sales and also analyze the motivation of the seller. A seller who needs to sell will be a better ‘target’ for the potential buyer. One of my clients recently focused on properties that had been on the market for more than six months. When we looked at properties, his approach included a comprehensive questioning of the sellers motivation. Do they really want to sell? He was very effective in purchasing a house twenty percent below original list and fifteen percent below assessment. In short, he got a great buy. The truth is that he is more representative of buyers. Price is the deciding factor.

There are some over arching demographics that we should acknowledge. Between 1980 and 2006, the number of households in the United States increased from 80 million to 115 million. Rhode Island has seen a more modest increase, but the housing supply as related to households is not in surplus. Very simply we have enough families to fill our housing stock. Value is ebbing now as credit has been more difficult and people are nervous. One of the curious outcomes of the difficulty in selling properties is that more properties have been rented. For some sellers this is a very workable alternative.

With every challenge there is opportunity. The correction in average value has made it possible for more people, based on their ‘real income’ to buy that first home. Affordability is always a major concern. The great news is that lower average price results in more people being able to buy. Additionally, many of the multi-families are now revenue positive. The rents will cover the cost of ownership. This is great for investors looking to purchase. There has been some comment in national media that foreign investors are going to use the strength of the Euro to buy American rental property as a long term investment. Clever.

At the end of the day residential real estate meets a basic need: shelter. The real estate professionals have refocused on that purpose. You need to be able to afford the financing before buying, but it is a time of great buys. So if you can buy, you ought.

Real estate: Seller’s are learning that it’s now a buyer’s market.

2007-09-28T22:19:00.000-04:00

As the summer draws to a close, the slowdown in the Rhode Island housing market has settled in, with a drop of about 3 percent in both the median house price and the number of houses sold in the first half of this year, according to statistics from the state Realtors’ association.

The condominium market has fared a little better, and a little worse: the median sales price dropped nearly 8 percent, but the number of sales increased 5 percent, in the first half of the year, the Rhode Island Association of Realtors reports.

The number of houses for sale in Rhode Island through the state Multiple Listing Service this month is 6,874, up from 6,473 at the same time last year, and 4,715 in September 2005. And the condominium inventory is 1,793, up from 1,771 last year and 1,028 in 2005.

According to Alan Pasnik, an analyst with The Warren Group in Boston, inventory is a key statistic to watch in tracking the real estate market. “As it goes up, you can be pretty sure that prices will go down,” he said.

Recent numbers from The Warren Group, which collects data on all real estate sales, not just those made through Realtors, indicate that July sales of single-family houses in Rhode Island dropped 4.4 percent, and year-to-date sales [January through July] fell 6.3 percent, from last year. The Warren Group said the median house price fell 4.1 percent in July, from $280,000 to $268,500; and the year-to-date median house price fell 2.8 percent, from $270,000 to $262,500.

The Warren Group also reported that condominium sales year-to-date were up 1.7 percent, though the median price dropped 4.3 percent, to $225,000. In July, condo sales were down 4.2 percent from a year before, with 207 condo sales this July compared to 216 in July 2006, and the median price dropped 2.5 percent, to $224,200.

Of course, statistics just give a general overview. Some properties sell relatively quickly, while others linger on the market for a year or more. Realtors say pricing a property correctly is the most important action for owners interested in a swift sale.

Housing economists often refer to real estate prices as “sticky,” because sellers are so averse to price cuts that it takes time for prices to respond to market conditions. And some sellers resist advice to cut their prices even as months go by without any interest in or offers for the property. Some sellers even blame their real estate agents, but “the Realtors don’t really control what’s happening out there,” said Cecile Cohen, president of the Rhode Island Association of Realtors. “It really is the buyer that controls the market — what they are willing to pay.”

Cohen said that although the five-year housing boom that nearly doubled the average real estate price in Rhode Island ended in 2005, many sellers still haven’t come to terms with the fact that it’s now a buyer’s market. “There are always sellers who aren’t willing to believe that the market isn’t booming,” Cohen added. “They are really in the position of being behind the market.”

“I think it’s going to be very tough sledding for the next couple of years,” said real estate attorney Robert Goldman, of the Providence firm LaPlante Sowa Goldman. Goldman is also a former general counsel for the state realtors’ group.

Goldman said the recovery of Rhode Island’s housing market could be hampered by rising foreclosures and the credit crunch caused by freefall in the subprime mortgage market.

“There’s no question that it’s affecting all the credit markets, not just the mortgage market,” Goldman said of the subprime crisis. “As a practicing conveying attorney in Rhode Island … title work and closings, across the board, there’s been a tremendous slowdown in the amount of work.” Goldman said he has seen a significant decline in just the past month.

“The entire subprime market is basically gone right now,” he added.

Goldman said Congress may act to increase the limits for government-backed loans to help sustain the jumbo loan market. Jumbo loans, which exceed the limits for government-insured loans, and generally come with higher interest rates as a result, have been harder to obtain in recent months, as lending guidelines have tightened, Goldman said.

Goldman said he believes there will be a “second wave of implosion” in the real estate markets that have seen price depreciation of 20 to 50 percent since the boom ended. In markets where prices have plummeted so far so fast, more people who have refinanced and borrowed against equity that is no longer there will be in trouble, he said.

“Foreclosures, the number of foreclosures are only going to escalate in 2008,” Goldman said. “There’s going to be a real problem.”

But Cohen and Ron Phipps, president of Phipps Realty Inc., of Warwick, said they’re seeing stabilization in sales and prices in Rhode Island after the correction of 2005.

“All real estate is local,” Cohen said. “What’s happening in California, Nevada, Michigan or Florida — it isn’t necessarily what’s happening in Rhode Island.” She said New England was one of the first regions to start seeing decreases in the market, and she expects it will be among the first to climb out of the slump.

Phipps admitted that the market correction “will be a little more arduous” because of the impact of rising foreclosures and the resulting credit constriction.

Nevertheless, Phipps said there are buyers in the market who are creditworthy, but they are “savvy” and will not pay more than what they think a property is worth. Often they encounter sellers who refuse to negotiate, he said. Phipps said he has been involved in situations as recently as this month in which sellers rejected offers from buyers outright, without making any counteroffer, because the prices were so far below their expectations.

“We still have sellers who are wrapped in nostalgia,” he said with a sigh. “If you really don’t want to sell … if you’re waiting for the exuberant buyer who will buy anything … it may make sense to step back and say, ‘I should wait a couple of years.’ ”
Joy Sawyer, an interior designer, has been playing the waiting game for more than 18 months. She bought a house in 2004, at the height of the boom, in North Kingstown’s coastal Poplar Point neighborhood. Last year, the house went on the market because her husband’s job took them to Albany, N.Y., where they have been renting a one-bedroom apartment. Their North Kingstown house remains unsold, so they plan to return to Rhode Island this month and live there until it does sell. “We got stuck in one of those places that you never want to be,” she said.

Sawyer’s husband, who works for an architectural engineering firm and travels quite a bit, can work from Rhode Island, but his company’s headquarters is in Albany. Sawyer said her husband’s employer has allowed this accommodation because of housing market conditions.

Sawyer’s house is now priced at $939,000, but was first listed at about $1.1 million. “They’re just aren’t that many people who are looking in our price range,” she said.

Having a house on the market for 18 months has been an emotionally draining experience, Sawyer said. “It’s like being pregnant,” she joked. “You talk about it all the time.”
Christine Dunn, Providence Journal September 16, 2007

Multi-Generational Housing

2007-09-24T19:55:00.000-04:00

As the real estate market has cooled, several historic trends are re-appearing. Most intriguing of these trends is the move back to multi-generational housing. Rhode Island is one of the best case studies for multi-generational housing in North American. From the Native Americans to the first Colonists and from the Irish, Italian to Guatemalan immigrants, the tradition has been a cornerstone of shelter. The concept of the suburbs has challenged the route, but even in the suburbs, multi-generational housing is becoming more common.

The triple decker houses in Providence are an ideal example of theory applied. The grandparent would be on one floor, the middle agent parents on another and the newly weds on yet another. Each had a degree of privacy with their own apartment, but they lived in a common building. This was true when the houses we first built in the early 1900’s and as true today. Three family, multi-generational, homes, are a great way for a family to pull financial resources together. As price increased, it had become almost the only way for families to get on the first rung of home ownership. Some of the additional benefits include at home childcare with ‘Papa and Avo,’

Recently, a widow invited me to review marketing her home in Cowesett. It had been a great, large ‘family home.’ that she and her husband had remodeled and enlarged. He had passed and it did not make sense for her to live alone in a 4,000 sq ft house. What strikes anyone walking through the home is the rich fabric of this family’s history in the house. From the ‘door jamb’ marking of each child’s height, to the oceans of photographs, one cannot help but feel the wealth of life. Yes, there is the ‘evidence’ of sadness and tragedy, yet they are a part of the whole, neither prominent nor dominant. They simply are. This is not a house, this is truly a home.

The owner discussed her plans with her children. She would move into a single family home of less than half the size, but it would absolutely include a garden so she could pursue one of her passions. It would need to be large enough for her to entertain the entire family.

When I called this week to set up an appointment to complete the paperwork to market the home, she was particularly excited. Now in this market, most sellers are not exuberant. Her excitement, however, is the result of a change in plans. Her son, his wife and their young children were going to move in with her. She would not have to give up the home she loved. Her son will put his house on the market.

It is my impression that this will become more, not less common as another trend in multi-generational housing. For real estate purposes it makes lots of sense. For environmental reasons it makes lots of sense. For family reasons, it makes the best sense of all.

Pricing in an Ebbing Market:

2007-09-24T19:51:00.000-04:00

The statistics reflect a radical change in the market: In 2005 we were at the summit of the value market, a seller’s market peak. Today we are in a valley of value, a buyer’s idea of perfect. While it is easier to appreciate how high or low the market is from an extreme position, hindsight is the best vantage point of all. Truth: the average sales price in Rhode Island has dropped from $282,500 to approximately $270,000 in the course of thirty months. East Greenwich has followed the same average adjustment. What makes East Greenwich most challenging is that the last revaluation was done in 2005. The new valuations were certified for the 2006 tax cycle. Buyers have reached an awareness that most of the homes in East Greenwich are selling at less than the assessed value. The problem is most sellers have not been advised of this information. One must remember that assessments are a tax valuation tool rather than a precise metric. The information is intended to be representative of value rather than a representation of absolute value and it is truly time sensitive. The value was set as of December 2005, the peak of the market.

One of the Moorehead houses we were marketing recently had an assessment in the mid 580s. It took almost nine months to sell. One of the challenges was pricing the property to sell in a market in which average sales price was going down. We reduced the list price from the low to 600’s to $565,000. We ultimately closed at $530,000. essentially at 90% of assessment. This is has become more common not less.

The reason this is so important is that historically assessments were significantly lower than fair market value. One would assume that their house was worth more than the tax assessor said it was. This is a new ‘reality.’

There is a more important message. Properties that are selling right now are either ‘wow properties or extremely well priced. “Wow” houses are those few properties that are so awesome that they evoke a ‘must have feeling.’ Wow houses generally represent 5% of the market. They sell quickly and often, even in this market, there are multiple offers.
We just had one in Cowesett that was a fabulous Nantucket Cape with an amazing kitchen. We had multiple bids and it sold quickly. The other groups of properties that are selling well are the ‘extremely well priced’ properties. The phrase sounds something like an oxymoron. Extremely well priced houses are those properties that are five to ten percent below fair price. There are in fact a significant number of those properties right now. They tend to sell quickly and fairly close to value. In short, they are ‘obviously’ a great value. Today that segment of the market is becoming larger due to the large number of REOs. REOs are real estate owned properties. They are owned by banks and financial institutions and are usually the result of foreclosure and short sales. Both of these categories have fluid definitions, so precise analysis of the numbers is difficult.
Right now, approximately 1 in ten properties fit the ‘extremely well priced’ definition.

So what about the remaining 85% of the market? Generally, the prices in the market are, in fact fair. Sellers must allow some room between list price and sales price to allow for negotiation. Of the houses that are selling the difference between final list price and actual sales price is between five and six percent. A house listed at $300,000 on average would sell at $282,000. and $285,000. We have so much inventory right now that it will take ten months to sell all of the single family houses if no new ones come onto the market. Sellers that are selling their properties are pricing just below what the recent sales suggest. This is an absolute acknowledgement that value is ebbing. The good news is that these properties are selling. Not necessarily quickly, but with patience and careful awareness of the details of the market, your house will sell. It is also a time when the assistance of a professional is the most critical. An experienced Realtor will be of great value in generating a sale in this market. So as value ebbs, be pro-active as a seller to reach the goal a sale

Prominent American family's summer estate for sale

2007-08-20T19:29:00.000-04:00

ecBy Richard C. Lewis

NEWPORT, Rhode Island (Reuters) - A mansion overlooking the Atlantic Ocean that was the summer home for the Astors, one of the most prominent families in America, is up for sale. And some think it could go to an overseas buyer.

Listed for $16 million, Beechwood is a 19,000-square-foot (1,765-sq-metre) residence set amid a row of opulent homes that staged the elaborate summer social circuit for New York society during the Gilded Age around the dawn of the 20th century.

One of the designers of the 39-room, Italianate-style home was Calvert Vaux, a principal architect of Central Park in New York City.

Real estate experts said the property is a signature symbol of Newport's heyday as the playground of the rich and famous and yet can be had for a fraction of the price of luxury residences in many parts of the world.

"In London, I've seen apartments on the market for 85 million pounds," said Ron Phipps, a broker who sells luxury properties in Rhode Island, the smallest state in the country.

"When you start talking about those numbers, $16 million is a lot but it's not obscene."
Realtors said the property could well be sold to a foreign buyer taking advantage of the weak dollar and recent slide in U.S. stock markets. Melanie Delman, Beechwood's listing agent, said she has had inquiries from overseas parties.

The home was bought in 1881 by William Backhouse Astor Jr., grandson of John Jacob Astor, the German immigrant who made a fortune in the fur trade and in Manhattan real estate.

Astor Jr.'s wife, Caroline Astor, hired an architect to add a waterfront ballroom with 800 glass panes, mirrored walls and French doors that established Beechwood as a highlighted stop of the summer social season.

Other famous family members include William Astor's son, John Jacob Astor IV, who died in the Titanic sinking, and Brooke Astor, a New York philanthropist and socialite who married into the family. She died on August 13 at the age of 105.

Composer Cole Porter is said to have written "Night and Day" during a visit and the mansion appeared in the movie "High Society" starring Fred Astaire and Grace Kelly, according to the listing firm.

"It's part of the old Newport that was the Vanderbilts, the Astors, the Carnegies," said Cecile Cohen, president of the Rhode Island Association of Realtors. "It's going back to when Newport was the place for that group of people."

The mansion now houses a living history museum and is rented out for weddings and corporate functions.

Rueter 2007

Elementary Real Estate Vocabulary: List Price, Sales Price, Appraised Value and Assessor's Value

2007-08-19T06:51:00.000-04:00

If you are doing any research on property values later you see a lot of conflicting information. To understand what real value is, one needs to understand the four different definitions of property value: List Price, Sales price, appraised value, and Assessors Value:

The list price is that price that a property owner sets as an asking price. Generally, this is done with awareness of the market and some experienced advice from a Realtor. In this market the list price is generally higher than the sales price, but not always.

The sales price is the negotiated price at which the buyer is willing to buy and the seller is willing to sell. In an arms length transaction, it is often referred to as market value.

The Appraised value is the price that a licensed appraiser determines ‘fair value’ to be.
In most sales situations, the appraiser has a copy of the purchase and sales agreement which shows the actual sales price. In this instance, the appraiser, with comparable sales, verifies the sales price. Appraised value is sometimes used for estate purposes, tax purposes and refinancing.

The most interesting value is the Tax Assessors value. By State Law, each town and City has an obligation to revalue all of the property in the city and town. Said revaluations typically happen between three and ten years. In East Greenwich the revaluations were based on 100% value of the property as of December 31, 2005. As the market has cooled, it is very common for the assessed value of an East Greenwich house to be 10 percent (10%) ABOVE the sales price. This should not be of major concern as the point of the assessor’s value is contextual: It should be fair value in relationship to all of the other properties in town. In the largest sense, it is.

If you valuation, however, is much higher than similar houses and the neighborhood, it may make sense to do some research. If assumption is correct and the value is higher, it will be of value for you to appeal your assessment. There is a process and documentation will be required.

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The Next Technology Revolution

2007-08-19T06:46:00.000-04:00

Link to the site below and view what maybe one of the single biggest leaps in technology is the past fifty years. Simply said: this is amazing.

http://www.ted.com/index.php/talks/view/id/129

FEET FIRST HOUSES

2007-07-23T17:03:00.000-04:00

There is a part of the market that is rarely discussed in print. Let’s call them Feet First Houses. Recently, while at the open house of an efficient, updated Cape, some great, long time friends stopped by. Frankly, it was great to see them, but I was surprised, because they live in a very special house. My first thought: maybe they are previewing for their children. After we caught up on family and with life, we discussed the reason for their visit. Although not old, they are looking a “feet first house.” A humorous, albeit bizarre, conversation ensued. They both wanted to have one final transition from their feet first house into the grave.

Several other experienced Realtors each smiled when asked about feet first houses. Most concurred that it had not been described that way, but they had seen an increase in the number of ‘mature’ seniors who wanted that last house. Many people will in fact end up in assisted living homes or nursing homes, but almost everyone prefers to be in their own home, be it a single family, multifamily, condominium, or mobile home. It is interesting and noteworthy, that as we age and as our needs become more basic, we place a higher value on our home. Home is more than shelter. Home is that place where some of the best of human experience occurs: love, family, friends, celebration, sorrow, happiness, connecting, contemplating (praying). laughing, and crying. It is a ‘place’ where the seasons of life are written, and sometimes noted by height marks on the door jam. It is the place, hopefully of safe harbour, from life’s storms. It is the place where one’s priorities are often most crisp.

While it may be callous to talk about feet first houses, they are a declaration of the importance that we each place on whatever it is that we call home, be it our first, our second, our largest, our best, or our ‘feet first’one.

If you want to find a first house, a feet first house or something in between, check out www.phippsrealty.com

Repurposed Real Estate

2007-07-12T09:12:00.000-04:00

Ingenuity and creativity are the higher cognitive powers of human beings. In other words:” thinking out of the box.” While one may want to discuss the wisdom of turning swords in to plowshares in the post cold war world, but that is not today’s topic.

When you look around at real estate it is impressive how creative people can be. On the corner of Division Road and Rector Streets in East Greenwich, an architect ‘repurposed a classic, steeple church into a great single family home:

In Rhode Island one of the most impressive cases of repurposing involves the conversion of Nineteenth Century mills into condominiums. Whether Hamilton Mills in North Kingstown, Royal Mills in West Warwick, it is a clever use of what would otherwise be obsolete. The space in mills is grand, with high ceilings. Complimented by stone walls and massive timbers, these residences have character and substance. Moreover, many are located on rivers and or the bay. It is noteworthy that our primal desire to be near water never leaves us. It has been the tradition in Rhode Island for centuries.

There are numerous other examples around the area of re-purposed properties:
the gas station that is now a coffee shop, the fire station that is now townhouses; and the mill pump house that is now offices. Recognizing the advantage of ‘saving’ obsolete properties and giving them purpose, some uses are simply not prudent. Some towns and cities have been very creative and far thinking in their approach to these properties. In a State with a long rich architectural heritage, it is encouraging to see repurposing, rather than flat-world big box store and big box houses. It is generally more expensive to re-purpose, restore property rather than level it and start from scratch. But the end product has more character and uniqueness than most new construction. It is possible that the swamp Yankee attitude that refuses to let anything go to waste is producing some great re-purposed properties.

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Patterns on the Horizon: Upcoming Trends in Housing

2007-07-12T07:54:00.000-04:00

Patterns on the Horizon:

Trends in housing are somewhat difficult to predict. Yes, the need for shelter is absolute. Everyone needs a place to stay which leads to universal demand. But what is adequate or desirable shelter? For example, when relocation buyers come to Rhode Island they were often told that a four bedroom, two and a half colonial is the most popular house in Rhode Island. It is size of and type of house that the average Rhode Islander would buy. The problem with that advice is that the average Rhode Islander cannot afford to buy it. Additionally, the probable buyer is more likely to be a relocation buyer rather than an average Rhode Islander. The advice is also self serving: the majority of houses in any given suburban community are colonials. No there is nothing wrong with four bedroom colonials. They are great function floor plans and they do in fact sell and re-sell well. They have served Rhode Island families for four centuries very well.

Patterns are influenced by choices. In Rhode Island, the range of choice is more limited than many other areas of the country. Hopefully, the ideas from other part of the country will cross pollinate here. The choices available influence the trends. Housing trends changes move slowly.

What trends might do we expect to see in the next ten years? Here are our Seven:

1. Quality over quantity.
2. Intuitive Smart Homes
3. Media Centric Homes
4. Function over formal
5. Carbon Neutral, “GREEN.” houses: Super Energy Efficient
6. Multi-generation/extended houses
7. High Personalized new construction

Quality over quantity:

There is an obvious difference between a Scion and a Ferrari. They are both cars. They are however compared on quality, not quantity. That has not been the case in real estate. Baby Boomers in particular were focused on the cost per square foot. It was a crude measuring stick that did not account for high end quality. A large box house tended to sell more quickly because of its perceived high value on a cost per square foot basis. That has changed and will change even more. People now want the best quality for the dollar, not the most square footage. Features and superior materials will be the most important element of value. Bigger is not necessarily better.

Intuitive Smart Homes:

One best change will be the move to smart houses. Digital management centers will become the norm. Imagine walking into your home at the end of the day and with voice commands adjusting the temperature, opening blinds, turning on the computer or entertainment center, or even drawing a bath. This technology will allow you to control the systems in your house remotely from a computer, pda, cell phone or smart phone.
Imagine being able to watch what your kids are doing when you are out to dinner. All of theses systems will be standard. What will be innovative will be ability for the house to ‘know’ that you have walked in. It will adjust the house to your personal preferences. What kind of music do you want to hear? What temperature to you like? What rooms are you likely to use? Imagine the home gym ‘knowing’ what work out you need to do today. Imagine having a digital conference family reunion from your home.

Media Centric Homes:

One thing the thirty some things and twenty some things have taught us: media should be experienced in the broad and grand sense. Home theatres will replace living and family rooms. The home theatre will be the keeping room of old. Family recollections will be of the DVD we saw and discussed. In some ways this room will become more important than the dining room, particularly for family interchange. Additionally, monitors will be located throughout the house. Security, communication and entertainment will be engaged from anywhere in the house and without manual equipment. Think it, say it, and it will be.

Function over Formal:

Among the more noticeable changes will be the move from ‘formal houses and formal rooms’ to functionalism. Every space in the house will have use. The duality of family space and formal space is ending. The space is simply too valuable to use for special holidays and guests. How many times were you in your parents’ formal living room?
Those days are now past and will be a distant memory in ten years. Given the cost to build, given the taxes, given the energy requirements, the shoe size of the house will fit the foot and the Velcro will be snugly fastened.

Carbon Neutral, “Green” Houses: Super Energy Efficient Houses

Each of us produces a carbon foot print. How much energy do we use? As Americans our energy foot prints are XX-Large. Over the next ten years, we will witness and participate in a major reduction in our energy shoe size. Many specific behaviors can produce major reductions in energy: energy saving light bulbs, high efficiency appliances; alternative fuel heating systems, tightly insulated houses, high efficiency windows, etc. Some things are fashionable for a year or two; this trend, however, will become ‘normal.’ Long term we will see smaller houses. Wind power and solar power houses will also become so common that they will not even illicit comment. Motivation will range from: environmental concerns, national security-patriotism, and family economics, to name a few.

Multi-generational and Extended Family Homes:

As the price of housing has increased and affordability has become more difficult, many families have purchased larger house together. We believe this trend will continue. The single biggest constraint tends to be city /town zoning rules. Multi-generational families will want to stay in their neighborhood. The cities and towns will change to allow for this trend.

Highly Personalized New Construction

Today, cars, clothes and computers are all customized, made to a buyer’s specific requirements. This expectation is going to migrate to housing. Houses will be constructed more quickly and buyers will be more involved in the build out from its inception. 3 dimensional soft ware, today, can give the buyer a ‘virtual look at their house.’ Tomorrow the buyer will make these choices directly. The day of the colonial as the ‘best’ urban option is waning. The re-construction of many existing homes will also be high personalized. It will be done ‘your way.’

Some of these trends may seem obvious; they are exciting and just around the corner.

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If preapproval crumbles, what can seller do?

2007-06-08T22:16:00.000-04:00

Your closing is just around the corner and you discover that your lender has gone bankrupt.
Or, maybe because of the chaos in the subprime market the lender has changed underwriting standards so you no longer qualify for the loan for which you had been preapproved.
What do you do now?
A lot of that will be determined by the wording in the contract. "It really depends on the circumstance," says Ron Phipps, broker with Phipps Realty in Warwick, R.I.
Every contract and set of state laws is slightly different, he says.
Crucial pointsTypically, there are a couple of crucial points in the process. After you've signed a contract but before you've gotten your mortgage acceptance letter, you can probably get your deposit back and walk away, if that's what you want. If you want the house but need more time, you can ask the seller to move back the mortgage contingency deadline or closing date.
"In this market, which is in most instances a buyer's market, sellers are willing to work with you," says Phipps.
One exception: If your contract has a clause specifying that time is of the essence, says Phipps. If so, the sellers may elect to go with another offer, if they have one.
If your financing falls through after you've received the mortgage commitment letter and your next stop is the closing table, you're in a more difficult situation. In some cases, the seller could keep the deposit and attempt to require you to buy the house.
Loan terms changeAnother bad situation: During that same period, your lender changes the terms of the loan and the rate is much higher than you'd anticipated.
Most standard buyer/seller contracts set a ceiling on a maximum rate. If it's above that threshold, you can be released from your contract. It's another good reason to read that buyer/seller agreement carefully and make sure that maximum is compatible with your budget.
Phipps' advice: If you hit a snag after you've already received your mortgage commitment letter, consult with a buyer's agent and a real estate attorney who specializes in conciliation (rather than litigation) and try to work out an arrangement with the seller.
You may simply need to negotiate for more time to get new financing at a decent rate. Or, if you've discovered that you probably can't get the financing, you might be able to get back all or part of the deposit.
Before you sign a contract, read through the terms so you know exactly what your obligations are, says Phipps. Pay special attention to the default clauses.
An additional safeguard: Scope out the lender thoroughly, says Phipps. Especially if you're marginal on the financing, he says, "Check the lender out and be sure of the money to make sure you don't get caught in a bind."
Dana Dratch. Bankrate.com 7 June 2007

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DRIVE HOME OPEN HOUSES

2007-06-03T10:33:00.000-04:00

Save Thursday night for that house hunt
01:00 AM EDT on Sunday, June 3, 2007
By Christine DunnJournal Staff Writer

Realtor Ron Phipps says the dynamics of open houses have changed in the past 20 years, because of the Internet and other factors, and Sunday, the traditional open-house day, doesn’t really work for today’s market. Phipps thinks the entire state will follow the lead of Thursday open houses.
The Kent Washington Association of Realtors hopes to start a warm-weather open-house tradition on June 7 when it begins a Drive Home Open House tour to be held every Thursday evening through the end of the summer.
Ron Phipps, president of Phipps Realty in Warwick, said the Thursday night tour may work better than the traditional Sunday afternoon open houses in today’s market. He said the board expects that at least 100 houses will be on the tour the first week.
“Regardless of one’s perspective or priority, whether it’s religious, or whatever, Sunday is supposed to be the family day,” said Phipps. And many families today have two working parents, children’s sports activities and other family and social commitments on the weekends.
And, Phipps said, as the price of gasoline continues to climb, the idea of a Sunday drive may become increasingly quaint.
The nature of open houses and the prospective buyers who attend them has changed since the arrival of the Internet and the ability of buyers to view multiple houses, each with its own portfolio of interior photos and, often, a virtual tour, online, Phipps said.
In the past, attending an open house might be the first step of a person who was just beginning the house-hunting process and wanted to get a feel for what was available on the market. For that reason, open houses were often viewed as an opportunity for agents to meet buyers and help guide them through the search process.
“The open house was part of the process of them stepping over the threshold,” Phipps said.
Today, the typical open house doesn’t attract many raw beginners. “A buyer who shows up at an open house in 2007 has probably seen pictures of the house online. There’s an efficiency that the technology has produced,” Phipps said.
The buyer may have six or eight houses they want to inspect personally, and then they may narrow down the search to two or three properties that will get a second look. “It’s a very efficient process,” he said. “Buyers are extremely knowledgeable.”
So, as buyers are increasingly able to search for real estate on their own, the role of the real estate agent has to become more analytical, helping buyers and sellers to make the best financial decisions, he said.
Last summer, weeknight open houses were tested in a number of Rhode Island communities. Jeanne Smith, of Remax Professionals, organized candlelight house tours in the West Bay communities of East Greenwich, West Greenwich and Cowesett. Gayle Flaherty, a Coleman Realtors agent, held weeknight open houses in East Bay.
Phipps said he thinks the Thursday-night open-house idea will be used statewide before long, but just in the summer, when it is warm and light in the early evenings. “It doesn’t make a lot of sense to do this in January,” he said.
“We’ve had a lot of conversations on the board level” about how Realtors should respond to market trends, Phipps said. “It’s necessary to be available” to clients, he said, but “we haven’t balanced the technology with our need to be totally consumer-centric, but also to be human.”
“Regardless of one’s perspective or priority, whether it’s religious,
or whatever, Sunday is supposed to be the family day.” Ron Phipps Warwick Realtor
cdunn@projo.com

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Water Water Everywhere: Salt Water front in Rhode Island

2007-05-28T21:44:00.000-04:00

As the threshold of the 2007 hurricane season is before us, the allure of waterfront property remains unchallenged. As with diamonds, automobiles, and art, waterfront real estate comes in a variety of size, quality, and features. In the Ocean State, salt water front is the finest, most valuable waterfront. What is most intriguing is the breath of value of salt waterfront. Moreover, the least expensive salt waterfront among the states from Maine to Virginia is here in Rhode Island. The stats are fascinating and also reflect the difference in value between ocean front and bay front.

We studied MLS closed sales of single family properties from January 1, 2006 until May 28; 2007.Waterfront varies direct with the ‘quality’ of the water:

Town/City: ........# Sales...........Range.............. Median Price......... Cost/Sq ft.

Warwick.................34.......... 159.9-1500.k .......488k....................... $290
East Providence ......14........... 247.-860.k.......... 433k.................... $306
Cranston.................. 4 ..........575-875 k.............. 702k................... $357
Warren.................... 5.......... 305-2,440.k.......... 1,123k................... $437
N. Kingstown......... 34........... 430-2,200.k ........1,037k ...................$442
Barrington............. 10 ..........330-2,700k...........1,189k ...................$449
Bristol .....................9..........275-3,275k.............1,051k ..................$470
Tiverton................ 11...........408-4,400k ............1,331k.................. $495
Portsmouth............21............280-5,800k........... 1,254k .................$533
Newport.................. 3...........1,295-17,150k........ 7,115k .................$540
Little Compton......... 1............. 2,800k..................2,800k................$636
South Kingstown.....12..............622-1,145k ..........1,734k.................$659
Narragansett ..........16 .............465-2,415k ..........1,117k..................$681
Jamestown............... 8...........1,460-2,975k.......... 2,182k.................$812
Charlestown............15............. 625-4,350k............1,952k...............$1016
Westerly ................10............ 600-6,800k............3,408k...............$1255

Information is from the STATEWIDE MLS and is deemed reliable but not guaranteed.

Numbers are numbers and statistics are statistics. The question is what do they tell us?

First waterfront is limited with a high demand.
Second, ocean front waterfront is more valuable than bay front.
Third the range of sales price is from $159,900 in Warwick to $17,500,000 in Newport.
What is fascinating is the range of value on a cost per square foot basis from $290 in Warwick to $1,255 in Westerly. The sample may in fact be somewhat small for absolute conclusions, but generally, Rhode Island is the best value for Salt Waterfront in the Northeast and Warwick is the best value in Rhode Island. So if you are looking for waterfront for less than a million dollars, Rhode Island is THE option. Sometimes the best opportunities are right in your own neighborhood. Celebrate the gift of waterfront in the State. And if so inclined, purchase waterfront.

If you do purchase waterfront, complete your due diligence. Obviously, with all real estate you need to have contingencies for building inspection, financing and clear title.
With waterfront you should also check on the availability/cost of insurance, particularly flood insurance, any building violations, particularly with the Coastal Resources Council, and waterfront features, particularly the seawall. If you are buying waterfront, make sure to look at comparable sales. While list prices are informative, closed sales are true comparables. Make certain to look at the closed sales and acknowledge the difference from one community to another. As with all real estate purchases, having representation is not a luxury, it is a necessity. If you are looking to sell, price reasonably. Price is the single most influential element in this market.

Celebrate the Ocean State and enjoy owning waterfront!

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Do sellers need to rein in expectations?

2007-05-06T23:18:00.000-04:00

Claudette Farrell, a visiting nurse who lives in Garden Hills in Cranston, has been a buyer and seller in Rhode Island’s real estate market in recent months. So far, neither experience has been a lot of fun — but buying has been easier than selling.
In November, Farrell bought a two-family house in Pawtuxet Village for $319,000. She plans to live in one unit, and her daughter, Kelly, an interior designer, will live in the other. But she won’t move in until her Cranston house, now on the market for $297,000, is sold. Farrell has been trying to sell on her own since November, and only now is considering hiring a real estate agent if she doesn’t have a purchase-and-sales agreement by July. She has tenants in the Pawtuxet house, so she isn’t financially pinched, but she’s starting to get “antsy” about the Cranston sale.
“You can’t just willy nilly set a price wherever you want,” Farrell said. “I feel like I’m in the ballpark. Although prices have come down a little bit, I think they’re leveling out.”
Farrell said she paid the asking price for the Pawtuxet two-family, but only after her first offer, for $305,000, was accepted in a verbal agreement. The seller, who was also working without an agent, delayed signing a purchase-and-sales agreement, and then, on the day an agreement was to be signed, told Farrell that she had a better offer — $311,000. After taking some time to think, Farrell and her daughter decided they liked the house enough to offer full price. “I was so upset. … It wasn’t right,” Farrell said. “[But] my daughter and I already had our heart set on this little house. … I was not happy, but I was OK.”
That kind of scenario was more common back in 2004 and 2005, at the height of the seller’s market and a five-year price boom. But last year brought a 14-percent decrease in the number of existing single-family house sales in Rhode Island, and a slight [0.14 percent] dip in the median sales price.
Today, the real estate market in Rhode Island is showing signs of stabilization: the first-quarter 2007 median sales price for existing single-family houses dropped 2.86 percent, but the number of sales, compared to last year, was up 1.25 percent.
Real estate agents report that most buyers in Rhode Island are educated about the market, and are quick to walk away from deals if sellers are not realistic about price and other terms.
“The Internet really plays a huge part in all this,” said Allen B. Gammons Jr., president of Prudential Gammons Realty Inc. in East Greenwich. Gammons said that more than 77 percent of people who make an appointment to see a house have already seen it online — along with many other houses in the same price range. This gives buyers a sense of the market, Gammons said, and they are not shy about communicating their opinions if they believe a property is overpriced.
And “there are still a lot of houses that are overpriced,” Gammons said. “Properties that are priced to the market are moving.”
Gammons said that ever since the market changed last year, “it’s really been a challenge” to “rein in” the price expectations of sellers. It doesn’t help the situation that “houses are overassessed across the board in several towns,” which supports sellers’ unrealistic expectations, he said.
Gammons said some fault also lies with “real estate professionals who are buying listings by telling people their houses are worth more than they are.”
Ron Phipps, president of Phipps Realty, of Warwick, said he continues to refuse listings if he believes the sellers are stubbornly refusing to acknowledge market realities. “I can’t tell you how many more listings I’ve said ‘No, thank you,’ to this first quarter,” he said.
Phipps said in these cases, when “the seller is inordinately exuberant about their price,” he’d rather let the seller list with another agent, learn through experience that their price is too high, and then get the relisting, “and be the one who sells the house.”
To the degree the market is recovering, Phipps said, it is because “finally, the sellers are acknowledging what the buyers know.”
“Throughout much of the winter, many sellers were still under the nostalgic impression that we were still in 2004 and 2005,” Phipps added. Not only were deals hard to put together — they were hard to keep together, Phipps said. Inspection issues often ended agreements, because both sides already believed they had yielded too much during the initial negotiations. Many buyers “just walked away” if sellers refused to deal with problems that surfaced during an inspection. In a cooled market, “buyer’s remorse tends to be a more virulent strain,” he said.
Christine Dunn, Providence Journal

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With hammers swinging, locals help Hurricane Katrina victims

2007-04-14T23:06:00.000-04:00

Matt Bower, Daily Times
04/14/2007
WARWICK - The cold weather yesterday wasn't enough to stop the hammers of Ron Phipps and a crew of more than 50 volunteers as they worked to complete a "house-in-a-box" to help survivors of Hurricane Katrina.
Once the house is complete, it will be shipped to the Gulf Coast for assembly. It is just one of 54 planned homes being built for survivors of the hurricane through a national campaign known as Operation Home Delivery, the brainchild of Phipps.Phipps, a Warwick resident, board member and past president of the Rhode Island Association of Realtors, said the plan came to him after speaking with a close friend of his, Marine J. Danny Cooper, an executive officer with the Alabama Association of Realtors."We were at a meeting in Washington, D.C., about six months after Katrina had hit and I said to him, 'So is everything back on track now,' and he said to me, 'Oh no Ron, disaster is starting to unfold now,'" Phipps said. After learning from Cooper that families in the Gulf Coast region were still struggling and dealing with the effects of Katrina, Phipps started to work with the National Association of Realtors (NAR) and Habitat for Humanity to come up with a way the agencies could help those families."We have a relationship with Habitat where we typically build one house per year with them, but for this cause we decided to do one per state," he said. Phipps said using the Operation Home Delivery program, the National Association of Realtors encouraged realtor associations throughout the country to sponsor and build a new home for victims of Katrina."It was really important last year when [Realtor associations] raised $70,000 in each state, especially for Rhode Island, because there are only 5,200 Realtors here, so that was a big deal," he said.Phipps said it costs $75,000 in materials alone to construct one "house-in-a-box," but he said realtor organizations across the country have raised more than $4.6 million with $270,000 coming from Habitat for Humanity. Every penny goes directly to the victims in need, he said.Phipps said there will be 54 houses in total; one from each state plus four more for four extra territories."I may have initiated this cause, but the Rhode Island Association of Realtors and NAR made this inspiring campaign possible," said Phipps, the New England-endorsed candidate for the president of the National Association of Realtors in 2011. "By combining our compassion, our vision and our sweat, I knew we could do something meaningful for Katrina victims."Phipps said not all of the houses will be built outside the area, as some Realtor associations, such as those in Massachusetts and Connecticut, have gone down to the region and helped build homes on site."Realtors have hearts of gold. We're in the shelter business, we're fixers and we're doers," he said.That good-will spirit was on display in New Orleans during a Realtor convention when thousands of Realtors donated their time to help the city, according to Ken Libby, owner of Stowe Realty in Vermont and vice president of the New England Region of Realtors."Twenty-eight thousand Realtors volunteered 8,600 hours of their time to help rebuild the city," said Libby.Phipps, who also visited New Orleans, said the level of devastation there was overwhelming. If one were to take all the houses in Vermont and shipped them down to the Gulf Coast, that number would be equal to the number of homes that were destroyed in the hurricane," Libby said."When you go block after block of empty, destroyed houses for miles, you can't help but have a great sense of loss. The thought of not doing anything about it doesn't even cross your mind," he said. "The lesson of this project is that we'll positively influence the lives of 54 families with the work we're doing."Phipps said he was there when a mother and her two daughters moved into the first completed home that was built in New Orleans last November."I felt like a proud parent to see the looks on their faces," he said. "People came together to do great things and everyone shared in the responsibility of making that happen."Phipps led volunteers from the Rhode Island Association of Realtors and from the Providence Chapter of Habitat for Humanity in a "wall-raising" ceremony yesterday morning to commemorate the program, which started in February 2006, he said."All houses will be built and delivered by the end of 2007," he said.
©Kent County Daily Times 2007

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