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)