IS REAL ESTATE A SMART INVESTMENT TODAY?

Is Real estate a smart investment today?

Many people are wondering how today's real estate market compares to markets of the past, and what direction it is heading. There is more and more research coming to light that purchasing a home today makes financial sense. Whether it be income to price ratios, renting versus buying, or mortgage payments and qualifications, purchasing a home right now is a bargain compared to historic norms.

Think about it like this- when is it better to go shopping for holiday presents? "Black Friday" or the day before Christmas Eve? When are the sales? When is there more inventory on the shelves? "Black Friday of course. In the same respect, Real Estate right now is ON SALE! And there is an abbundance of inventory. In the Spring prices increase, the cost of a loan will increase due to rising interest rates, and the demand is higher because there are more buyers looking in the Spring and Summer than in the Fall or Winter. It doesn't make sense to wait!

According to the most recent S&P Case Shiller price index, residential real estate values have returned to the levels of the first quarter of 2003. However, in 2003, 30 year mortgage rates were at 5.88%. Today they are at 4%. How does that impact the COST of a home? On a home purchased for $250,000, here is the difference:

In 2003 a loan of $250,000 at 5.88% interest would equal a monthly payment of $1,478.84

Today a loan of $250,000 at 4% equals a monthly payment of $1,193.54

A difference of $285.30 per month, or $3,423.60 per year and $102,708 over the life of a 30 year mortgage!!

So TODAY you can buy a home for the same PRICE as in 2003, but the COST is over $100,000 less!! And rates are only going to continue to climb over the next 6-9 months as housing prices begin to stabilize.

This is why so many financial advisors are saying that this may be one of the best times in history to purchase a home.

REALTORS Against Hunger

Last week I started collecting donations of non-perishable food items for LIBOR's 4th annual REALTORS gainst Hunger Campaign. I started by handing out flyers in the "Democrat Hill" section of Patchogue (My Neighborhood). I have to say that I am extremely pleased with the results. With less than 2 day's notice, homeowners up and down each block rallied to to donate over 75lbs of food!!



Long Island REALTORS will be collecting donations of non perishable food items from September 1st- December 31st at various real estate offices throughout Nassau, Suffolk and Queens, in an effort to provide food to hundreds of local food pantries, soup kitchens, shelters and other programs that feed the hungry. Additionally, all REALTOR Service Centers will be serving as collection points for memebers to make donations during this time.

Kudos! to a few Patchogue businesses that are allowing me to set up a collection box at their location as well. Thank you to Gallo Restaurant at 3 E. Main St., Main St. Cafe Il Gusto Bistro at 30 E. Main St., and J&R Steakhouse of Patchogue.



I will be collecting donations every Thursday through Christmas. This week, donation bags were placed on doorsteps of all the home on Bayview Ave in Blue Point. I hope the response is just as good as the "Democrat Hill" turnout!

For more information, please visit LIRealtorsagainsthunger.comTo make a donation at anytime, feel free to call my cell phone at 631-831-0912 or drop me an email at

KKellyNY@gmail.com

"We're more than REALTORS..."

The Pitfalls of FSBO

The Pitfalls of For Sale By Owner
Let’s be honest here… with the exception of the homeowner who is simply transferring ownership to a relative or friend, or the investors and experienced home sellers, most everyone who is opting to sell their home For Sale By Owner (FSBO) is doing it to avoid paying the commission to a Realtor.

Let’s explore the pitfalls of this attempt.

First and foremost, who is buying a FSBO?
A recent survey conducted by the National Association of Realtors (NAR) revealed that 86% of buyers in the market today prefer to use a licensed real estate professional to aid in the purchase of a home. So you are left with 14% of the entire buyer market as your potential pool.

96% of the buyers who do purchase FSBO’s are professional investors. These investors choose to work with FSBO’s because they love to prey on the inexperience of the home seller. Furthermore, investors are looking for a “sweet deal”. So unless you are offering your home at a significantly discounted rate from fair market value, these sharks aren’t even swimming in your waters.

So, if you’re not marketing your heavily discounted property to a professional investor, you are left with a little more than ½ a percent of the entire buyer market as your potential customer. For arguments sake, let’s say your area has a high rate of buyers- approximately 300 buyers in the market today. 86%, or 258 of those buyers are using a Realtor. That leaves 42 Buyers in your market that would purchase a FSBO. 96% or 40 of them are investors looking for a great deal or a weak negotiator to prey upon. What’s left? 2 buyers! That’s right- 2 buyers out of the 300 (a high figure to begin with) that you are possibly marketing your house to. How many homes are for sale in your area? What are the chances your house is the perfect match for one of these two buyers? I’ll let you figure out that math.

Oh let’s not forget. Why are those two buyers looking to purchase a FSBO rather than work with a Realtor? Well, they have the same mindset- to save money (commission). When a buyer sees that a house is for sale by owner, do you know what immediately crosses their mind? It’s something like this…”hmmm, well this seller is already saving money by not paying a commission, so I can offer him less than he is asking”. Both parties can’t save on commission.

This Time We Are Sounding the Alarms

This Time We Are Sounding the Alarms

FSBO a No Go!!

This blog prides itself on the quality of real estate information we deliver each and every day. We try to gather empirical evidence to validate the positions we take. We do not use just an anecdotal story to make a point. We also do not get caught up in the sensationalism of the moment. However, today will be different.
We can’t resist commenting on the story which recently appeared in the Wall Street Journal regarding Colby Sambrotto, the founder and former CEO of forsalebyowner.com. It seems the founding father and livelong evangelist of the concept of selling your home without a real estate agent was forced to hire a broker to sell his home after failing at what he preaches others should do.
After failing to sell his NYC apartment on his own as a For Sale By Owner (FSBO), Sambrotto hired a broker and paid a 6% commission in order to get the job done. His personal experience helps refute some of the myths Sombrotto has been espousing for over a decade. Let’s look at two of those myths:
Myth #1 – You Will Pocket More Money Selling on Your Own
Most FSBO sites say you can save the commission by selling on your own. What happened in Sambrotto’s sale?
From the WSJ article:
“The broker, Jesse Buckler, said he told Mr. Sambrotto the apartment in the Lion’s Head building on West 19th Street near Sixth Avenue was priced too low and wasn’t drawing the right buyers.
By May, it went into contract, he said, after attracting multiple offers. It closed in the last few days for $150,000 more than the original asking price.”
Myth #2 – The Internet Alone Can Sell Your Home
Many have said that, with the introduction of home search on the internet, hiring an agent is no longer a necessity. What happened to the FSBO guru when he attempted to only depend on the internet?
From the WSJ article:
“Looking to move his family to the suburbs, [Mr. Sambrotto] said he carefully staged his apartment for sale himself, and put it on the market. But after using a mix of websites to publicize his apartment, he said he had only ‘middling success’ and switched to a broker because many buyers were so reliant on brokers.”
Bottom Line
There is a reason the real estate industry has been around for centuries: it performs a valuable service.

5 Great Reasons to Sell Your House Today#more-8929

5 Great Reasons to Sell Your House Today#more-8929

Why They Are Saying to Buy A Home NOW

Despite what appears to be a non-stop wave of tough news regarding real estate, four major media players have come out this month with the same advice: It Is Time to Buy a Home! Here are the four articles and a breakdown as to why the advice makes sense.

The Wall Street Journal: Why It’s Time to Buy

CBS Money Watch: Why the Time to Buy is Now

Forbes Magazine: 9 Reasons to Buy a House Now

National Public Radio: For Many, It’s Still a Good Time to Buy a Home

With prices continuing to depreciate in most regions of the country, some may wonder why these four entities are suggesting to their readership that now is the time to buy. Each organization realizes that PRICE is not as important as COST. The cost of a home can go up even if prices continue to fall. Unless you are an all cash buyer, you must take into consideration the expense of mortgaging when calculating the full cost of a home. Here is some information to consider.

Interest Rates
Currently, interest rates sit at historic lows. However, Fannie Mae, Freddie Mac, PMI and the National Association of Realtors are all projecting approximately a 1% increase in mortgage rates over the next year. A one percent increase in rate negates a ten percent fall in prices.

Lending Standards
The government has proposed a tightening of lending standards called Quality Residential Mortgage (QRM). If accepted as proposed two things will happen:

The qualification process for loans will become more difficult
The cost of a loan will increase
Bottom Line
There is a reason more and more financial organizations are suggesting to their followers that now is the time to buy a home: because the cost of purchasing a home is about to increase (even if prices continue to fall).