New Jersey Estates/Weichert Realtors/ NJ Luxury Real Estate/ New Homes: February 2009

It's amazing to watch the world through the eyes of a child. The exposure we gain is immeasurable. The evaluation skills we can take and the questioning of everything by the child gives pause to our often routine, busy lives.

Wesley, my son, does all that and more for me. He causes me to really evaluate and question the most important skills, abilities, attitudes, and actions that must be undertaken to create greater success.

Most of us look at success as a very complex combination of skills, abilities, attitudes, and actions joined together in a magical or secret formula to achieve grand results. Recently, in evaluating success, I realized that one thing reigns supreme. It struck me that if I could instill that one thing in Wesley in his lifetime, his success in anything was assured. That one thing is discipline.

Discipline is the fundamental building block that most people utilize to achieve greater success in life. Once you have acquired the skill of discipline, it doesn't matter what the economy is doing or what business you are in, your success is within reach at all times. You possess the most important tool to help you through the storms and changes of life.

Discipline is a crucial missing piece for many people. I believe that, because our country has become so prosperous, we take the need for discipline for granted. Older people in our society remember the sacrifices they had to make to achieve a greater measure of success.

People like myself, who were born in the 1960's and beyond, have grown up in a vacuum compared to older generations. We are far too removed from the World War I generation, Depression generation, World War II generation, and even the Korean War generation. Those generations needed discipline just to survive. In modern day America, you don't need discipline to survive. We have slowed the train down, so undisciplined people can stay on the train. Discipline is the "secret weapon" of successful people. It is the one big tool that separates them from all others.

If we can control and discipline three key areas of our life, we can control and discipline anything. These three areas are the toughest for most people to discipline themselves to take control of:

1. Our Finances:

I meet too many high production salespeople who can't control their money. Their hands are like a colander with lots of holes -- the money just runs right through, and it all runs out. In the end, it's not what you gross, it's what you net. It's not what you make, it's what you keep.

I always tell salespeople that I can easily teach them how to make another $100,000 in less than a year, but if they only net 20 cents on the dollar I haven't really helped them that much. We have to learn the skill of increase, coupled with the skill of discipline and control, to dramatically change our financial picture.

2. The Cleanliness of Our Home:

It takes discipline and hard work to maintain your home. For Joan and I, the battle increased exponentially with Wesley. Those of you with children know what a challenge this is daily. It's easy to let the laundry pile up, to not make the beds, to not control the kitchen. It's harder to have the discipline to keep the house in order.

3. Our Weight:

For many of us, controlling what we eat and how much we move daily is a tremendous battle. I made a decision in the fall of 2003 that I was too short for my weight. Given the low probability of an increase in height, I decided I needed to be more disciplined about my weight ... what I ate and how much I moved. Through regular exercise and better eating, I was able to shed twenty pounds in a few months. Now the discipline part really kicks in on keeping it off.

Anyone who desires success must have discipline. Success is attracted to you because of the person you become. It comes to you due to the plan you are working and the specific actions you take to implement the plan.

It takes discipline to plan; to set the necessary time aside to evaluate the conditions; to construct the plan that takes advantage of the current conditions and skills that you possess. You also must evaluate the weaknesses that must be addressed to increase the probability of your success.

It takes discipline to plan, and it also takes discipline to implement the plan. Most people quit before the plan can take full root and work. We live in a society where we all want instant success without significant effort. If we really knew the grand future that awaits us, if we could really see it, touch it, and feel it, we would be ready to implement disciplined activity to achieve it. In short, we would be willing to pay the price to get there.

An effective strategic plan should inject emotion and passion into you. You should be able to feel that emotion and passion. And that feeling, coupled with discipline, will move you to take action. Taking action is really the goal for a successful person.

Resolve today to decide on one disciplined action you should take, and do it. Don't wait until tomorrow; do it today. Don't wait until you feel like it, because you probably never will. Make the decision right now to do it!

Discipline is not magical; it's merely movement -- regularly, consistently, purposefully. Discipline is the link between your thoughts and your accomplishments - connect them today!


Written by Dirk Zeller
February 27, 2009 

"Every season I am miserable because of allergies and so is everyone else," says Paul Honnen, CEO of Screens, Inc. That caused Honnen to research and develop a partnership with a 150-year old specialty textile company in Europe that manufactures window screens that filter out the airborne pollens. His company is now the exclusive distributor for North America.

It all began on a beautiful sunny day in Arizona, while Honnen sat inside his home with the windows closed up and the air conditioner running to prevent the dreaded itchy eyes, runny nose and sneezing from the pollens and allergens. Honnen wanted to find a way to reduce his energy bill and be able to enjoy the fresh air.

According to the company, a recent report says that more than 50 million people in North America are affected by allergies and almost 55% of the population test positive for at least one or more airborne allergens. However, the only way to prevent allergy attacks in the home was to close up the windows and doors tightly, leaving the expensive cost of the air conditioner running to cool the home.

But the PollenTec Screens are helping to keep people feeling good in both their health and pocketbook. The screens eliminate up to 100 percent of pollen from entering into the home.

According to the company, extensive testing was conducted by the European Center for Allergy Research Foundation (ECARF) and verified that 100% of grass pollens, 99.71% of birch pollen, 93.1% of Stinging Nettle-pollen, 90.9% pollen and Ragweed were captured by the PollenTec screen. The complete results can be viewed here: pollentec.com/testdata.html.

Plus, Honnen says shutting off the air conditioner helps keep money in your pocket. "One month would more than pay for these screens. This is very much a green building product."

A 24 x 36 size window cost $75 to equip it with the special allergy-proof screens. The screens can be installed by homeowners, commercial and residential builders, and contractors. Screens, Inc. can even help customers find a screen repair company in their area to help them install the screening in windows and doors. Screens, Inc. can also provide a complete screen frame shipped directly to the consumer.

Honnen says his company is trying to get the screens approved for tax incentives from the government because of their ability to help reduce the energy footprint of a home. "What we're trying to do is get it so that if you buy the screen the government pays X amount of dollars. We're a little way away from that but we're working on that and we've already had some meetings with two governors who think it's a very good idea," says Honnen.

While the tax incentive is yet to be approved, Honnen says the benefit of being able to enjoy fresh air in highly pollinated seasons provides personal relief and may be an added selling point for your home.


Written by Phoebe Chongchua
February 27, 2009 

But why in the world should this surprise us? As long as we insist on being paid exclusively by commission, what we are asking the consumer to believe is that we can provide objective counsel that is in THEIR best interest when our compensation is wholly dependent on an outcome that we're advising them on!

If we can't recognize what a conflict of interest this presents in the mind of the consumer, then we need to ask ourselves how we would feel about a bank appraiser's report if they were only paid if they produced a "favorable" one. How much trust would you give a home inspector's analysis if they were paid only if the transaction was completed? And why should it surprise us that over the last few years, when it benefited mortgage lenders to sell more loans, that their advice was often not in the borrower's best interest?

Yet, we continue to ask the public to trust our profession to give objective counsel when our compensation is contingent on a favorable outcome. It makes absolutely no sense and no matter how it's presented or dressed up, there is an inherent conflict of interest when a real estate professional is expected to act as a fiduciary providing objective, unbiased counsel to clients while being paid exclusively by commission. In my book "Ripping the Roof off Real Estate", I call this conflict of interest the "elephant in the room". The real estate industry knows it's there because the consumer keeps pointing to it but no one wants to acknowledge it and certainly, no one wants to talk about it.

Please understand that I am in no way castigating the vast majority of real estate professionals. I believe that most real estate agents are hard working, honest, and ethical people who strive - sometimes at great financial sacrifice - to do right by their clients. When working with a seller, most agents will recommend a listing price that will get the seller the most money in a reasonable period of time, when by under pricing it, the home would sell faster and they could be assured of being paid. Most listing agents will truthfully counsel a seller on what the market is doing. They may even suggest a seller not sell their home when the market doesn't favor a profitable sale, even though they only get paid if the seller does. When a seller has outgrown their home, I have known many an agent who has counseled them to remodel rather than move, even though they have just talked themselves out of a job.

When working with home buyers, buyer agents (who have a contractual obligation to work in their buyer's best interest) do every day what makes absolutely no sense on paper: negotiate the lowest possible price for their buyer-clients even though they are paid as a percentage of that price.

That the vast majority of agents routinely put the needs and interests of their clients before their own is a testament to our industry, but the fact remains that agents are doing so in spite of the commission system, not because of it. And as long as we continue to insist that we can act as objective advisors while being paid contingent on an outcome, we will continue to be ranked at the bottom of the consumer trust list. The consumer just doesn't buy it!

The fact is that our industry is dealing with far more than a worsening market slump...we are dealing with an identity crisis because we agents are being asked to fill two roles that are in conflict, especially in the mind of the consumer.

Think about it: traditionally real estate has always been considered a sales profession, paid exclusively by commission, which means that as an independent contractor, we need to move the "inventory" as quickly as possible, and for as much money as possible, if we want to make a living in this business. And yet, if we are a REALTOR® we must follow a code of ethics which, among other things, requires us to put the needs and interests of our clients ahead of everyone else's, including and most especially, our own!

As Ron Stuart of HarbourSide Realty in Halifax, Nova Scotia recently said:

It occurs to me that many of the problems of current practice derive from moving away from sub-agency, but not all the way. In other words, while each side of the transaction became able to have its own representation, we collectively missed the opportunity to become the trusted advisors we should have been, and instead continued to behave as sales people.

 

As long as we continue to limit our compensation to a commission system which made sense when our only role was strictly that of a salesperson moving the product, then we shouldn't be surprised that the public sees our role as exactly that. And as long as we refuse to offer alternatives that are not contingent on an outcome and are devoid of selling anything, then we shouldn't be surprised that the public doesn't trust our advice and counsel.


Written by Mollie W. Wasserman
February 25, 2009 

Tops on the list: The massive stimulus bill signed into law by President Obama is certain to pull buyers into the market who otherwise would have stayed on the sidelines.

The new tax credit in the legislation goes up to $8,000 and is non-repayable -- unlike last year's ineffective credit program. It' s intended for "first time" purchasers, but under the program definition, you're a first timer as long as you haven't owned or co-owned a house during the previous three years.

You might have sold your long-time home in 2005 or early 2006, and haven't owned a house since, but you still qualify as a first timer for the $8,000 credit this year.

Most economists aren't sure just how many additional home sales the credit will stimulate, but even Mark Zandi of Moody's Economy.com says the "credit is a plus for the housing market." Brian Bethune, an economist with IHS Global Insight, says the $8,000 credit will not only push large numbers of consumers to buy homes, but will also "buffer the rate of decline in home prices" by creating more demand.

A second major government initiative announced last week should also be helpful: The Obama administration's massive $275 billion relief program to keep three to four million home owners out of foreclosure, and to refinance three to four million mortgages where owners can't otherwise qualify for a new loan because of property value declines.

The giant assistance program has its critics, who say it will reward people who bought pricier homes than they could really afford. But that's not the point here: The fact is that, costly though it may be, the program could prevent foreclosures and price declines in neighborhoods across the country.

Still another positive sign: Home buyers and owners are beating a wide path to their mortgage lenders not only to refinance but to take out new loans to buy houses. Total applications for new mortgages last week exploded -- up by an extraordinary 48 percent, according to the Mortgage Bankers Association. Applications for conventional loans to buy houses were up by 11 percent.

Part of the reason was that rates fell again -- this time to an average of just 4.99 percent for 30 year fixed rates and 4.7 percent for fixed rate 15 year loans.

The opportunities here are pretty tempting ... and it looks like buyers are getting the message.


Written by Kenneth R. Harney
February 24, 2009 

The first step is to educate homeowners in your area. Most homeowners think they have only two options - pay up or move out. The fact is that more than a dozen options are available. Although all of these options may not be realistic for every homeowner, most homeowners can realistically consider at least four or five of the options on this list:

Loan modification: Also called a mortgage modification, this enables the homeowner to negotiate a workout solution with the lender to catch up on late or missed payments and lower the monthly mortgage payment by adjusting the terms of the loan. This is currently one of the best, most available, and most popular options.

Forbearance: Forbearance provides the borrower with a payment plan for catching up on missed payments. The homeowner is typically allowed to pay a few hundred dollars extra each month over the course of 18-24 months to catch up.

Reinstatement: Homeowners may be able to borrow money from relatives who are in a position to do so, to pay any balance that is currently overdue and then pick up on monthly payments as though nothing ever happened. (This is a practical option only for those who have recovered from a temporary financial setback and can now afford the house payment along with any payments required to pay back their relatives.)

Refinancing: Given the fact that credit is still pretty tight right now, this option may not be available. If the homeowner can qualify for a fixed-rate, low-interest loan to pay off a higher interest loan and perhaps even consolidate their debts, refinancing could be one of the best options.

Short re-fi: With a short re-fi, the lender agrees to accept as payment in full less than is required to pay off the balance due on the mortgage, and the homeowner takes out a refinance loan to make that payment in full. The end result is that the homeowner has a new mortgage with a lower balance and lower monthly payments.

Government loan programs: The federal government, through FHA, offers down-payment assistance programs and is developing other programs to enable homeowners to keep their homes. Encourage homeowners to contact their local HUD office to find out what's currently available.

Bankruptcy: For homeowners who are buried in unsecured debt, including credit card debt, bankruptcy may be the best option. If you know some good bankruptcy attorneys in your area consider teaming up with them to offer your clients this option.

Selling the home: For homeowners who cannot or do not want to keep their homes, selling the home to "get out from under it" may be the best option. This is where you can really help - by listing the home and helping the homeowners find more affordable accommodations.

Short sale: For homeowners who face the prospect of selling the home at a loss, you may be able to negotiate a short sale with the lender on their behalf. With a short sale, the lender agrees to accept as full payment a partial payment of the loan. In most cases, a lender is more likely to go along with the idea if you already have an offer from an interested and qualified buyer.

Selling to an investor: If you know investors in your area who have the cash to purchase properties, you may be able to put the homeowner and investor in touch with one another to work out a win-win deal. Investors are often in a better position to move quickly on a deal, and when you are in a foreclosure situation, time is often of the essence. (Be careful not to get yourself into a conflict-of-interest scenario here.)

Deed in lieu of foreclosure: For homeowners who are unable to make payments (even significantly lower payments) and cannot sell the property and at least break even on the sale, the lender may accept the deed in lieu of foreclosure. The homeowner should hire an attorney, however, to make sure that the deal allows them to walk away totally debt free and prohibits the lender from seeking a deficiency judgment. In some cases, the lender may be willing to pay the homeowner a small amount in exchange for keys and leaving the property "broom clean," which the homeowner can use to move to more affordable housing.

Redemption: If you do business in a state that allows redemption, the homeowner has the right to buy back the property after the auction by paying the buyer the purchase price along with any qualifying expenses the buyer paid for. Check with a foreclosure attorney in your area or your county's register of deeds to determine the redemption rights in your state.

Abandoning the home: Walking away is an option, but it is not always the best option, because it can leave some legal strings untied. In some jurisdictions, for example, the lender can sell the house at auction and then pursue a deficiency judgment against the homeowner for the difference between what the house sold for and the balance of the mortgage.

Do nothing: One of the worst options (second only to being victimized by a foreclosure rescue scam) is to do nothing, in which case the homeowners lose their home along with any equity they may have had in it and have to go through the humiliation of being evicted.

Warning: Inform distressed homeowners of their options, but do not take on the role of attorney unless you are a licensed attorney. Letting homeowners know about the various alternatives to foreclosure is a valuable service in and of itself. Let them decide which options are worth exploring and which option is best for them. Don't try to steer them toward the option you think is best. If they choose to list and sell the home through you, bravo for you. If they don't, you still succeeded in making a good impression and doing your part to preserve the American Dream of Homeownership and stabilize the housing market in your area.


Written by Ralph Roberts
February 23, 2009 

Brighter Housing Outlook for 2009: Buyers Take Heed

"If you want to buy a house and are expecting to stay in the property for a long time -- it's not an investment property but a home -- then now is probably not a bad time to be buying," says Chen, co-author and Senior Director of Housing Economics, Moody's Economy.

According to the study, home prices in 381 US metropolitan areas have dropped on average 25 percent and will slip some more (another 11 percent) before stabilizing. The hardest hit markets include areas in California, Arizona, Nevada, Massachusetts, Florida, New York, DC, Virginia, Maryland, and West Virginia.

"Our finding is that we do expect on a national level that the housing correction will bottom by the end of this year. By bottoming we mean that home prices will have reached the lowest level and we expect that between the peak of the housing market in 2006 to the bottom that [housing prices nationally] will have lost 36 percent of their value," says Celia Chen, co-author of the report.

The bright side is that the "housing correction" is in sight, according to Chen; and may, in fact, close in faster with the help of the economic stimulus package.

"Our outlook depends heavily on policy measures that will help to shore up the economy and also to help mitigate foreclosures that are occurring right now," says Chen.

Chen says she believes that the stimulus package could help pull the economy out of a recession this year and "will help stabilize jobs which is a positive for the housing market."

She also expects that, "The Fed and the Treasury will work hard to keep mortgage rates low and, in fact, we do expect mortgage rates to fall to about 4.5 percent by mid-year. That will also help bolster demand for housing," says Chen.

"There is going to be some sort of foreclosure mitigation program put in place that will help forestall some of the foreclosures from happening. That's not to say that all of the foreclosures will end. I think that we'll still see quite a number this year but, at least, it will be better than if there is no policy at all," says Chen.

She says without this help from the government, prices could fall "even further than what we're expecting."

The $789 billion economic stimulus plan aims to save and create 3.5 million jobs, pumping up consumer activity through spending programs, and tax relief efforts including a credit for homebuyers. (At the time of this writing, details are still being worked out but it appears the tax credit for eligible homebuyers will be around $8,000).

The National Association of Realtors predicts that the tax credit will stimulate an additional 200,000 home sales, according to reports by the Associated Press.


Written by Phoebe Chongchua
February 20, 2009 

Real Estate Outlook: Bottom in Sight?

Signs of a cyclical turnaround for housing are on the upswing. Sales are up sharply in many of the hardest-hit markets, and prices are firming in many others.

And now, even some of the country's previously most-bearish economists and media outlets are seeing the light.

Last week, Dr. Mark Zandi, chief economist for Moody's Economy.com, surprised analysts by announcing that "the bottom of the housing downturn is in sight for the nation."

Just days later the Wall Street Journal -- which had been among the most pessimistic of major U.S. dailies -- ran a prominent article with this headline: "For some, it's finally time to dive into the housing market."

The article focused on purchasers in Phoenix, Seattle and Connecticut who recently found that lower prices and affordable mortgage rates made ownership possible for them. They got what appear to be great deals.

The Journal quoted one Phoenix buyer who had just picked up a bargain-priced first home as saying, "six months ago, I didn't think I would ever own a home. Now I do. It's so perfect."

It's obviously good news that doom and gloom economists like Zandi and the Wall Street Journal are picking up on what's happening in local real estate markets. More important for the larger market, though, is that they are in the position to spread the word to consumers that it's now not simply a "good time to buy," it's also a safe time to buy.

Mortgage rates continue to hover near historic lows. According to the Mortgage Bankers Association, thirty year fixed rates last week averaged 5.2 percent, down from 5.3 percent the week before. Fifteen year rates average a flat five percent.

But don't mistake the message here: The economy as a whole still is facing huge problems -- unemployment at 7.6 percent, banks taking billions from the government, a stock market that's still pumping out losses, household consumption down.

None of that is positive for real estate.

But here's what may be developing: Just as housing's troubles preceded the rest of the economy on the way down, there are increasing indications that housing could be out ahead on the national economic recovery.

Why? Because pent-up demand is strong, affordable financing is there for buyers with decent credit and a downpayment, and improved federal tax credit incentives make the equation even better.

Once more consumers grasp the fact that the worst is over for real estate, we just might see some very encouraging numbers in the months ahead.


Written by Kenneth R. Harney
February 17, 2009 

New Fannie Mae Owner-Occupancy Requirements Will Help to Boost Investor Sales

On December 16, 2008, Fannie Mae released announcement 08-34 to lenders around the country. This document contains good news for investors, agents of investors, and lenders who are trying to reduce their REO ("real estate owned") inventory. The good news consists of a loosening of Fannie Mae's owner-occupancy ratio requirements for loans made to investor purchasers of condominiums. Actually, the announcement characterizes itself as a "clarification" of the policy. Whatever.

As it stands, "Fannie Mae requires that established condominium projects consisting of attached units have an owner-occupancy ratio of at least 51 percent... if the mortgage loan being delivered is secured by an investment property." The owner-occupancy ratio is not at issue in cases of "established projects where borrowers will occupy the unit or use the unit as a second home..."

Suppose that a 100-unit condominium project has 45 units that are rentals. Its owner-occupancy ratio is 55 percent; thus an investor could obtain a purchase loan which might then be sold to Fannie Mae.

But suppose, now, that, of the 55 owner-occupied units, eight are lost to foreclosure. (This would not be an unheard of percentage - of the total 100 units - in many parts of the country today.) These eight become REO inventory and are listed for sale. What is the owner-occupancy ratio now? Most of us, I think, would say that the REO properties are not owner-occupied; hence the ratio of owner-occupied units would be reduced to 47 percent. Apparently, many lenders around the country have thought the same way. Based on that understanding, the project would not be eligible for investor financing acceptable to Fannie Mae. In general, that would simply be another way of saying that no investor financing would be available.

As many have noted, a turn of events such as this can easily become the beginning of a downward spiral for the condominium project. For, while it is true that the ratio only applies in the case of investor buyers, there simply are not that many potential owner-occupants who are both motivated and qualified. Even with dramatic price drops, most of the potential buyers are investors. But, giving the understanding about the ratio, they are not eligible for financing. Hence, many of the units are left vacant, and the HOA (condominium association) may find itself short of dues income. (Yes, the foreclosing lender is responsible for paying dues in a timely manner; but they are not always forthcoming.) As more "for sale" signs sprout, the lower unit values drop.

Fannie Mae's December 16th change - "clarification" - is "to include REO units that are for sale (not rented) as owner-occupied units in the owner-occupancy ratio." This means that there will be more sales of these units; and that will be good for everybody.

During the past couple of years, more than a few would-be investor buyers have been unable to purchase condominium units because of the owner-occupancy ratio requirement. Agents who worked with those people should give them a call. There are more opportunities today than there were a few weeks ago.


Written by Bob Hunt
February 5, 2009