Real Estate New York

Market Update June 2009

FHA Loans to use $8,000 Tax Credit for Closing Costs

FHA issues guidelines allowing consumers to use $8,000 tax credit toward downpayment

This week, the FHA finalized the rules that allow state housing finance agencies and some non-profits to monetize the credit, officially making the credit available to be used toward a downpayment. According to HUD, the new rules allow FHA-approved lenders to “monetize” the tax credit for use as part of a downpayment or for closing costs, which can help achieve a lower interest rate.

Borrowers can immediately apply the funds toward their down payments in excess of the required 3.5 percent. Previously, borrowers applying for an FHA-insured mortgage were required to make the minimum downpayment and lenders could not monetize the tax credit for use as an additional downpayment. “We believe this is a real win for everyone," said Donovan. "Today, the Obama Administration is taking another important step toward accelerating the recovery of the nation's housing market. Families will now be able to apply their anticipated tax credit toward their home purchase right away. At the same time we are putting safeguards in place to ensure that consumers will be protected from unscrupulous lenders.”

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Also see: $8,000 First Time Home Buyer Credit Basics below

Capital Region Home Sales UP 13% in April

Compared to March, sales in the region were up 13 percent in April and the median sale price was up 1.5 percent and median price fell 3 percent to $180,000.

However, compared with the same month a year earlier, sales of new and existing homes and condos fell 23 percent during the month and the median price fell 3 percent to $180,000, according to preliminary figures released by the Greater Capital Association of Realtors .

The biggest drop in closed sales happened in Saratoga County, which has the highest prices of the six counties where most of the activity occurs. Sales plummeted 30 percent compared to April 2008, down to 138 closings during the month.

Year-over-year sales in April fell 27 percent in Rensselaer County, 23 percent in Montgomery County, 17 percent in Albany County and 11 percent in Schenectady County. Sales increased 13 percent in Schoharie County.

Read more from the The Business Review (Albany)

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Architecture Coach: A Chip Off the Old Block

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Concrete block houses are nearly ubiquitous in the United States; yet they are often overlooked, even though they represent a special, but short, period of residential construction in American history.

The History Behind These Homes

Companies such as Sears Roebuck and Co. and Montgomery Ward sold special equipment to make ornamental concrete blocks during the early 20th century when many Americans depended on mail-order catalogs to deliver basic supplies.

Sears sold a cast-iron machine called the Wizard, which builders used to make their own hollow-core forms by pouring a liquid mixture into the mold, allowing it to dry, slipping them out, and making more.

Interchangeable molds allowed the builders to create different finishes: rough-cut stone, cobblestone, brick, diamond, and faux brick. What's more, in the late-Victorian era of excessive embellishment, home owners could create blocks with beveled edges and wreaths.

“It wasn't just blocks,” says Rebecca Hunter, author of Putting Sears Homes on the Map (Hunter, 2004). “There were porches, columns, and porch pillars.”

For a truly over-the-top façade, home owners could tint cornices or glaze their blocks with a glittery granite patina, which was highlighted during dusk and dawn.

“It was a creative medium with different styles and finishes,” Hunter says.

Initially, these blocks were used for building foundations. They were cheaper than stone and brick and could be made with local concrete and labor. It wasn't long before they were used for the entire house, although Hunter observed that only the first level of the houses she studied in Elgin, Ill., were fronted with concrete blocks.

“It may have had to do with how heavy they were and how hard they were to hoist up,” Hunter says.

Hunter says that interest in concrete block houses peaked in 1917, when Sears and Montgomery Ward published mailers filled exclusively with concrete block home designs. While the blocks were most widely used in Victorian-era homes, they also became the base for Arts and Crafts bungalows. Some overzealous owners would even add concrete-block porches onto existing Federal and Greek Revival homes, much to the chagrin of preservationists eager to restore the houses to their original appearance. When many home owners started owning cars in the 1920s, the blocks were used to construct garages, some of which still survive.

How to Identify One

To determine if your listing is a quaint block house gem, look for these one-of-a-kind features:

• Value in numbers. Where there's one, there's usually another next door. It was not uncommon for a local contractor to use a set of molds to crank out blocks by the hundreds for an entire neighborhood, church, movie theater, or gas station. Surviving examples include residences in the Hanger Hill Historic District in Little Rock, Ark., and the Edison Concept Homes in Gary, Ind.

• Matched sets. A concrete-block house often will have a matching garage. These early buildings can be identified by their narrow garage doors, originally built for Model T autos and a small storage space.

• Mapped clues. These homes were noted on old Sanborn Insurance Maps, drawings created for insurance company underwriters and used from the 1860s to the 1950s. Concrete structures usually got better insurance than their wood counterparts because they were fireproof. The maps also will show the structure's original staircases and porches.

• Railroad crossings. These distinctive homes often can be found near rail lines, even defunct ones, as supplies often were delivered by train.

• Decorative flair. Concrete block homes tend to be more decorative — blocks typically have three-dimensional adornments and patterns — than dwellings later built from plain cinder blocks.

Strang can discern concrete block homes by comparing the homes to designs in a reproduction catalog or examining the rafters for a stamp typical of many Sears homes. These residences, if the exterior remains untouched, never need to be painted, making them virtually maintenance-free. In fact, “they're more valuable when they're not painted,” Strang says.

Hunter has found that these houses also tend be well-insulated; consequently, home owners can save on heating and cooling bills. However, their history is the biggest part of the appeal.

“Everybody likes to know they have something unique,” Strang says. “It does capture the heart of the buyer if they know they have something special.”

Read more from Barbara Ballinger of the National Association of Realtors

How Much Do Foreclosures Affect Prices?

If all these homes weren't in foreclosure, where would property values be now?

A new research paper from the Federal Housing Finance Agency (FHFA) attempts to quantify the effect of distressed home sales on average home prices. It concludes that foreclosures have worsened price declines, but not dramatically.

FHFA calculated that sales of distressed properties magnified the price decline in California and other areas with high numbers of foreclosures by 5.4 percent since 2006. Taking that number into account, it figures that, on average, sale prices of homes in non-distressed areas have declined 36 percent since the market's peak.

Source: The Washington Post, Elizabeth Razzi (05/28/2009)

Offer Negotiation Tips - How to Negotiate an Offer

Offer Negotiation Tricks That Make Sellers Say "Yes"

The best way to get an offer accepted is to appeal to a seller's emotions. Why? Because residential real estate transactions are put together -- and sometimes blow up -- over emotional hotbeds of insanity, lunacy and what often seems to be bipolar mood swings. So it helps if you can give the seller a reason to care about you.

Put a Human Face to the Offer

This is a people business. Sellers have an unexplained desire, sometimes buried deep inside, to know that the house they are selling will fall into the hands of a worthy buyer. You scoff? You cynic, you. It's more than four walls, floors and a ceiling! A seller's house is a place where joy is shared, sorrows are expressed, hopes and dreams are crafted; it's a place of treasured memories.

• To make a seller receptive to your offer, make the seller feel a connection to you. Showcase your vulnerability and sincerity in a letter. Make the seller feel as though you are the perfect buyer.
  
  Include the following details:

1. The names, ages and relationships of all occupants.

2. A little history about your previous homes and how that relates to this home.

3. Your occupation, education and struggles to get to where you are in life.

4. List the specific reasons why you fell in love with this home.

5. Explain why you deserve to live in this home and how you will care for it.

Write a Clean and Positive Offer

This is more difficult than it sounds. Sometimes in the excitement of writing an offer, buyers don't read the offer for clarity. Ask your agent to double-check the offer as well.

Don't leave out an essential element or give the seller any reason to write a counter offer . If the agent prepares a counter to correct mistakes, it might make the agent consider changing terms of the offer as well. Make it a no-brainer for the seller to sign the offer the way you wrote it. Cross all your t's and dot all your i's.

• Verify the address is correct.

• Add up the earnest money deposit, loan amounts and balance of down payment to make sure the numbers equal the sales price.

• Check the closing date and possession terms.

• Discuss motivations for changing contract default periods.

• Review seller- and buyer-paid items and determine whether these items are "red flags" or likely to raise shackles.

• Generally, the party responsible for title and escrow fees selects the services -- has the seller selected the services and expects to pay for them, yet you want to choose? Don't let a small item become a big issue.

• How much time are you giving the seller to respond and who needs to receive the response, which will designate delivery acceptance?

Detail Selling Agent's Credentials

Just as the buyer tries to appeal to the seller, the selling agent should try to appeal to the listing agent as well. One of the biggest obstacles to a real estate transaction that listing agents face is incompetent selling agents. In the FAX or offer cover letter, a selling agent might want to:

• Share her experience and background

• State she is a full-time professional agent (to set her apart from some of the part-time rookies in the business)

• Indicate her willingness to cooperate

• Mention services she can provide that will help to expedite the transaction

• Express excitement over working with the listing agent

read more about Offer Negotiation by Elizabeth Weintraub

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