Real Estate: Separations, Divorce and Death.

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

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

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

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

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

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

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

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

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

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.

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

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:

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

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

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

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

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

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

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.

For additional information and links please log onto www.phippsrealty.com

If preapproval crumbles, what can seller do?

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

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

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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?

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

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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