High Hopes for the Mystic Country Economy

A recent article in The Day News Paper quoted an economist as says, “Connecticut housing has become more affordable relative to residents' income, declining from a high of 5.4 times income to a current level of 4.2 times income - still about a point higher than the national average.”
This was a great article and I think that it deserves a look. Click here to view the article. We feel that the Mystic Country portion of CT is extremely unique and must be analyzed independently form the remainder of the state.

Homes selling at 4.2 times income levels are not necessarily a great thing. If we take a look at the Case-Schiller Index which states that equilibrium in a perfect world is 3 times household income then we still have a long way to go. Those figures become much less meaningful in towns where second homes are purchased and not just owner occupied primary residences are used for the calculation.

Many of the towns in the region appear to be close to equilibrium and a couple are actually below the magic number “3”...meaning that bargains exist.
Our next hurdle is the inventory. We must get rid of the inventory so that towns are absorbing the revenue streams from taxes. As soon as the towns are healthy then our budgeting gets cleaned up, schools are not shut down, roads get fixed, and town employees keep their jobs. Unemployment is another topic that warrants discussion.

People then become more confident in our economy and maybe by then the commercial loan debacle that is about to land on our laps is less disastrous. Baby steps are needed to turn things around. Activity breads results.

Tim Bray B.S. Real Estate & Urban Economics (UConn)
Sotheby's International Realty
860-912-7137
tbray@brayconsultants.com

We want to apologize to all the agents in Mystic Country

Entering the realm of Real Estate in South Eastern CT seemed like a natural progression when I moved here from Washington D.C. to be with my wife and her family. After all, growing up in a real estate family has made me passionate about the industry. As a child, I would listen to my father, Les, talk about real estate trends, valuation, spread sheets, and running a business in a moral and ethical way. Real estate was in my blood.

I knew when I entered the profession that it was going to be very difficult to gain traction and be successful over the long term in this industry. Statistics showed that 75% of all realtors leave the industry every 4 years. That was a huge failure rate and I did not want to be part of those statistics.

Early on, my father left his career as a very well known reputable Commercial and Residential Appraiser in Maine to join me in my quest for success. Together, we felt as though we were unstoppable. After all, he had been involved in over a Billion dollars in real estate transactions and I had a degree in real estate & urban economics from the University of CT. We had an edge over all the other agents in the region and we would use that edge to propel us into successful careers.

Looking back….it was scary. Most agents grew up in this region and had a sphere of influence to turn to for work and referrals. We had no one. The only edge we had was our knowledge of the industry, unique backgrounds, and our ability to represent clients to the best of our ability. We pushed our backgrounds to the news papers, bought radio ads, put up a website, and even placed signs on street corners. One of those signs we later learned was placed on the corner of another agent’s property. She was not impressed and rightfully so. We were exploiting our own attributes but at the expense of our reputations amongst peers in the industry. We were striving for a win-lose situation when negotiating with other agents. This was all in the name of giving our clients the best representation possible. Yes, we were gaining traction and quickly excelled to the top percentile in the industry, our clients loved us….but there was a cost. We lost the respect from some very well known and seasoned agents who deserve all the respect in the world. These agents were in the top 25% and had spent many years in the industry perfecting their craft. We want to sincerely apologize to these agents for our arrogance and disrespect.

Our business models are now parallel to Dale Carnegie’s teachings from the early 1900’s. We believe in a win-win philosophy where both parties leave the table feeling good about the transaction. We are here to guide our client’s and give them enough information to make the very best decisions possible. We are not here to exploit the short comings of our fellow agents but to help them become better through our own example.

Bright Spots Appear in a Gloomy Economy

While the economy in Mystic Country slowly recovers from this economic debacle, we look to each other for signs of improvement. We often ask our sphere of influence how business is going and believe that the answer will somehow act as a road sign for what is to come or a litmus test of our own present success level. For some reason there are always a few individuals in each trade who consistently remain busy and the work continues to flow to them like a river to the sea.

I pride myself in working with the best business people in our region. These individuals have not only mastered their craft but they uphold a moral code and desire to do what is right. Have you ever worked with someone who took pride and ownership in their trade? A sincere desire to do their best for others?

Rick Abdow, the founder of Shoreline Sentinel Home Watch,( http://www.shorelinesentinel.com/) is a great example of someone providing a unique, value added service to people who own vacation or summer homes on the Mystic Country Coastline. Many home owners enjoy the spring and summer months dining at our restaurants, shopping in our villages, and bouncing along the coastline in their boats but return to warmer climates during the fall and winter.

Rick provides peace of mind to these people by customizing a plan to make sure that their home remains safe and secure while they are away. Responding to alarms, watering plants, emptying dehumidifiers, assessing damage immediately after a storm and digitally documenting all concerns are just a few of his duties.

Occasionally owners will call Rick at the last minute to say they are coming into town with friends or family. Rick immediately races to the store with a short list including coffee, milk, eggs, flowers, beer and possibly steaks. The temperature of the home is adjusted, fridge is stocked, and boat is ready to go. Rick goes above and beyond to make sure that the owner’s stay is enjoyable.

If you know of a local, reputable, business person (painter, plumber, Dr., Dentist, etc) with traits similar to those of Rick, with an impeccable track record of satisfied clients…please send an email to tbray@brayconsultants.com as I would be happy to supply them with referrals.

Proposed Stimulus Package

The economy is without question still in a tumultuous state. The American population waits anxiously for the Government to fix the problems, extend incentive programs, and insulate us from the harshness of reality. It is time for each of us to get creative and try to solve some of the problems that exist in our local communities.

I propose that we STIMULATE our local waterfront communities by instituting nude beaches. Nude beaches would create a draw from outside the area, bring tourists, increase spending at our local restaurants, shops, and hotels. Maybe the swimsuit shops would feel a little pain but the rest of the economy would prosper.

I am not being serious….but I do think that we need to start to think outside the box and come up with some local solutions to a worldwide problem. I hope that I made you chuckle a little bit today. Life is short, live, laugh, and play hard.

Puzzle: Draw four straight lines (without lifting the pencil from the paper) which will cross through all 8 dots.

. . .

. . .

. . .

Tim Bray, B.S. Real Estate & Urban Economics (UConn)

Buy Now.....Sell Never

We all have stories of visiting amazing vacation properties that were purchased by a great grand father back in the hay day and passed down from generation to generation. Lakefront cabins, mountain retreats, or ocean side getaways where the family returns for gatherings, relaxation, and reflection.

As guests visiting these properties, I often wondered why my family did not have one of these properties. Had we missed an opportunity? Will that opportunity arrive again?
The time is now…After-all, the population continues to grow, great locations are limited, and deals are abundant. Create your own luck by flushing out these opportunities and helping families to achieve the American dream. Encourage families to hold onto these properties for generations and never plan to sell.

Paradigm shift in real estate

Relying solely upon customer service, work ethic, and organizational skills is long gone. Don’t get me wrong….it is easy to thrive in a normal market when mistakes are quickly erased by increasing property values. Simply matching buyers and sellers as a profession will not cut it in this market.

Today, we must gather “Insider Information” and help our clients make the best decisions possible. Utilization of strategies, economics, trending, and creativity are a necessity when buying and selling property in a turbulent market. The risks associated with real estate have never been greater in history, yet the advantages of making the right moves may reward you for the rest of your lives.

Join a long list of satisfied clients who utilize our creativity, straight forward approach, and uncanny ability to execute.

Foreclosures will spike in 2010

I do not want to focus on the negatives and pain that currently exists across the country. But I do have to acknowledge that it exists and look for possible solutions. Many families have simply thrown up their hands and have given in to what seems to be the inevitable loss of their home.

Short Sales and foreclosures do not ultimately have to be the outcome. 80 % of all loans written in the past decade contain RESPA violations. These violations do not make the loan contract void but allow a professional to use leverage with the lender when attempting a loan modification. The attorney attempting the loan modification on your behalf will first try to capitalize arrearages, reduce interest rates until a 31% debt to income ratio is reached (perhaps lower your rate down as far as 2%) extend your loan term, and lastly forebear principal.

There is a well know company out of Oregon that will not charge any fees until your loan is successfully modified. They have vowed to have an attorney in every state by March of this year. They have a reputation of being able to work with lenders up until two days prior to loss of the home. You do have time. (I do not have any affiliation with this company....just trying to help as many people as possible)

Warmest Regards,
Tim Bray B.S. Real Estate & Urban Economics (UConn)

Time for a loan modification?

The past few years have been extremely difficult for many people in the Mystic Country region of CT as well as the rest of the country. I am often asked about the opportunities presented by foreclosures, short sales, and REO properties. Don’t get me wrong, there are opportunities, for those people who have weathered the storm, but I want to focus on those people who have fallen into hard times and are looking for solutions.

After much thought, and countless hours of research, I must point you in the direction of a “Special Report” posted by the Real Estate Radio Guys entitled “What you must know before attempting a loan workout” This 18 page report is extremely informative and will guide you down the right path in making the best decisions possible before you contact your lender, attorney, or real estate professional. Please paste the following link into your browser to receive the report: or click here
http://web27.streamhoster.com/tbray777/Loan%20Workout/Loan%20Workout.pdf

To those people who inevitability must lose their properties, I offer you this advice. Meet with a knowledgeable real estate professional and get your property priced correctly and on the market. Let me offer you the following example:
Suppose that you owe $300,000 on your property but fair market value is $200,000. You are what we call “under water” You owe more on the property than it is worth. You place the property on the market and receive an offer for $195,000. You then take this offer to your lender and ask them to approve a short sale. Yes, you will have had to do everything outlined in the Real Estate Guys Special Report including the documentation of a hardship. The bank turns you down and you lose the buyer.

You may have just mitigated your losses. Let’s say that the market continues to decline and a year from now you get another offer…only this time it is for $150,000. The bank accepts….what are you liable for? You can argue that a year ago you had a ready, willing, and able buyer for$200,000….. $45,000 more than they just accepted. You may also want to point out that all the fees paid by the bank over the past year are solely the responsibility of the bank since your clock stopped the minute you brought the $200,000 offer to the table. Food for thought.

Psychology of the real estate transaction

As a real estate professional, I am forced to acknowledge the factors leading to the purchase of property on a daily basis. Most buyers and sellers have points of view driven by their own interest in a specific property.

Sellers typically believe that their property is worth more than other properties in the market place due to location, emotional attachment, personal improvements, or because their friends and family advised them. Selling a property below their own perceived value would be admitting that they may have made a mistake in the purchase, timing the sale, or over-improving the property.

Buyers, on the other hand, search for real estate to solve a problem currently existing in their lives. The most common utility achieved by the purchase of real estate is shelter. Affordability followed by lifestyle and ultimately leveraging funds in the form of a real estate investment lead the charge in the decision to buy property.

In today's market a buyer is quick to point out the negative attributes of a property in an attempt to justify and negotiate a lower offer. Often times the seller is offended by perceived low offers and a deal is ultimately not consummated due to emotional factors and/or financial loss.

As a listing agent my job is to keep as much money in my client's pocket as possible. I must provide care, obedience, accountability, loyalty and disclosure at all times. I am a successful real estate broker because of my integrity, work ethic and straight forward approach. My exceptional referral base is a direct result of proactive service and client appreciation.

Below, I have outlined my teams approach to selling properties at top market value and a brief analysis of your asset.

The First Step in Selling Property: Determine an accurate price range.

Trying to sell an over-priced property to an INFORMED buyer is virtually impossible in today's market. Buyers are knowledgeable and more educated today because of new technology and the internet. With a click of the button potential buyers are able to view all of the transactions in an area and quickly form an opinion about a property. Real estate agents are no longer in control of disseminating information. Their true value lies in market knowledge, interpretation and strategy.

Avoid Low-ball Offers: Third party appraisal will negate the buyer's ability to substantiate a low-ball offer.

Almost all of the offers I have received in the past few years contain specific language intended to protect both the buyers and the lending institutions. Specifically, "This offer is contingent upon the property appraising at or above the purchase price". By getting an opinion of value from a local, third party appraiser prior to marketing your property you will accomplish several things. First, your property will be priced realistically and will attract qualified buyers. Secondly, the appraisal will negate the buyer's ability to substantiate a low-ball offer. Third, an appraisal is an important component to help expedite the selling process. The goal in today's market place is to get recognized, get offers and sell. A long selling process, with multiple price reductions, hinders the ability to achieve a top market selling price.

Get Recognized and Not Passed Over: Being a real estate marketing professional means "professionally" marketing property so it looks great, creates interest and gets unparalleled market exposure. No excuses!

Hands down, my team markets property better than anyone in this region. We are the best because that is our standard. Marketing starts with having a thorough understanding of the market and being educated about the real estate industry. After compiling extensive market research, we incorporate professional photography, architectural drafted floor plans and aerial photos, along with other pertinent information to create graphically compelling marketing material.

Let's face it...if the property is overpriced then no one will ever see the marketing.
Tim Bray
B.S. Real Estate & Urban Economics - (UConn)

Are condos a risky investment in today's market?

I am often being asked if I feel that Condo’s are particularly risky in these trying times. Let me shed some light on the condo market and try to help you make the best decision possible. I will focus in on the primary resident condo market as opposed to investment properties in Aspen or on the ocean. Condos are built with a specific client in mind. Condo owners are typically first time homeowners who have good credit, previously were renters, who wish to enter the housing market. They often times use the condo as a stepping stone into the single family housing arena but can not afford to do so at this time. Or the condo owner enjoys the relatively maintenance free lifestyle that a condo offers.

The risk in ownership and potential depreciation in value lies in the age of the condo, management, Home Owner’s Association, availability of other condos in the complex as well as the town, taxes, and the barrier to entry for developers in the market place.
There are very few condo complexes in my region that I would recommend. The first thing that I look at would be the town in which the complex is located.

1. Has the town approved similar condo complexes that have yet to be built and would be in direct competition with the one in question?
2. More importantly, do the existing complexes or the one you are looking at have approvals in place for the developer to build more when the market shows signs of turning?
These two questions are critical in determining your risk and the probability of a further decline in value. Developers can typically be much more aggressive in their pricing of individual units and you will rarely win when trying to go head to head in competing for the attention of buyers.
3. Pay close attention to the spread between the cost to rent, own a condo, and a detached single family. The greater the gap in between these three factors will reduce your risk.
There are a couple of condo complexes in the Southeastern portion of CT that I would feel extremely comfortable in recommending to potential buyers. Unfortunately they comprise only a small fraction of the condos currently on the market and are losing value at a fast pace.

P.S. I do not have any affiliation, ties, or listings currently in the complexes being recommended.

Bright spot in the commercial sector

5 years ago most real estate markets were thriving....all except for one. The commercial multi family marketplace was taking a major hit. After all, anyone with a pulse could get a loan and purchase a single family home as opposed to renting. Vacancies were at an all time high and many commercial apartment brokers were forced out of the market.
The recent paradigm shift has created huge opportunities for those who stayed in this segment of the market. As a potential homeowner it is now very difficult to get a loan. People who previously possessed good credit and owned huge homes are now forced to rent due to the loss of an income,
Commercial lenders have closed their wallets, put their feet on their desks, and are playing the waiting game. The commercial sector, has been officially upended. If you question my claims then take a peek at the recent news articles on Inman News or CoStar Group.
Here comes the good news. Huge deals in the apartment arena are taking place every day. Loans are being made and money is flowing....but you still need to be smart. There is no more dumb-money in the market place. Study the demographics of the region in question to make sure that there is a wide spread between the cost to rent and the cost to own. The greater the gap, the lesser the risk.
Opportunities are there. Some need to be created...others are to be found. What opportunities do you see in this coming year?

Warmest wishes,
Tim Bray
B.S. Real Estate & Urban Economics (UConn)