Sunday, September 30, 2018

BALANCING ACT: HIGHER HOME PRICES AND HIGHER MORTGAGE RATES



With high home prices and increasing home mortgage rates, is it better to wait to buy and hope that home prices will fall, or buy now because mortgage rates are still low and but are predicted to go up.  There are some unknowns – will prices continue to go up because of low inventory and high demand or have prices peaked and will they begin to soften over the winter and into 2019 when the new tax changes hit middle and upper income New Yorkers’ pockets.

Depending on which scenario you buy into, it appears that buying now may be a better strategy than waiting, because the mortgage rate increase over time would amount to paying higher dollars overall in interest than you would save even if there was a decline in prices.  

An example with a set of assumptions makes it easier to see.  For the statisticians among my readers, I’m keeping this simple.
           
           Assumption: Purchase a home for $500,000 with a $400,000 30-year fixed rate mortgage at 4.5% today(current rates) versus purchasing a home next year with a 5% price increase and a 5% mortgage interest rate (predicted rate increase.)
               
           The monthly payment is $2,027 at 4.5% on $500,000 purchase with 20% down, versus $2,255 at 5% on $525,000 or $228 more each month.  The total interest you would pay for the 4.5% loan is $329,600 and for the 5% loan $391,680  -  $62,080 more interest over the 30-years, plus $25,000 more in purchase price.  If prices drop 5%, the interest paid would still be $25,000 more over the life of the loan.

Without a crystal ball, we don’t know exactly what rates will be next year, but they certainly will not be lower.  We don’t know what prices will be next year, they may continue to rise, a likely scenario, but perhaps modestly.  One thing is clear - rising interest rates will impact your overall cost the longer you wait to buy.

If you’re planning to buy a home on the North Fork, don’t bet on prices falling, because they would have to fall significantly to offset predicted increases in interest rates.  Act on what you know now, take advantage of the low mortgage rates today and lock in a fixed rate.  The North Fork is a good investment and a great place to live.

Whether you are buying or selling the team at Beninati Associates has the experience and expertise to help you. Call us at 631  765 5333 or visit our office at the corner of Horton’s Lane and Main Road in Southold. 

Sunday, September 23, 2018

AN OFFER YOU CAN REFUSE...BUT WAIT!


            Your realtor calls to say there is an offer on your home and you are thrilled. Then when the Realtor describes the offer, your excitement deflates into disappointment, you may even be insulted by the offer - it's not enough!  Or perhaps the buyer’s terms are challenging:  he also want to postpone the closing for four months, he wants all your furniture, or your boat at the dock!   Your immediate response is no - you can’t see how it will work.
            The key is to remain calm, and have an open  discussion with your realtor as to whether a counter-offer should be made. Sometimes the offer is so low  and unless there are material defects that have come to light, a counter-offer is truly not appropriate.  But in most cases, a counter keeps the conversation going and often with good will on both sides, a deal can be made. It’s important to remember that a buyer generally presents terms most favorable to her, with the expectation of a counter-offer from the seller.  
            A skilled real estate agent will help you craft a good counter.  Your counter-offer should give the purchaser a sense of what is important to you and what is not. Although the price is probably the most important part of the offer, it’s also necessary to look beyond the price and consider conditions that will impact  the net return to the seller. For example, a delayed closing will require the seller to carry expenses of the house longer, a lower cash offer, may be a better bet than a higher offer with questionable contingencies.  If the buyer’s financial qualifications are shaky or the offer has any questionable terms or conditions, you and your Realtor should sort out the risk you can live with and shape a counter‑offer that delivers something that works for you and the buyer.  Finding that middle ground is the “art” in the deal.  You may have to go back and forth more than once, and there will probably be compromises on both sides, but with a lot of patience and skill, you and your agent can create a scenario that will work for you and the buyer.
            When choosing a Realtor to represent you, consider the experience and entire skill set of the agent.  This is where the rubber meets the road – your agent is the deal-maker, and all the glossy brochures and pretty pictures and the size of the firm, will make no difference if the deal cannot be brought to fruition.  We are skilled negotiators at Beninati Associates, we have lots of experience and we drive your deal home!!!  For professional advice on all aspects of buying or selling real estate, call us at 631-765-5333, email broker@beninatiassociates.com or visit our headquarters at the corner of Horton’s Lane and Main Road in Southold.

Wednesday, September 19, 2018

ON LINE HOME ESTIMATES CAN SKEW-UP YOUR HOME’S REAL VALUE


Many home buyers are familiar with home value estimates from real estate web portals such as realtor.com, Zillow and Trulia (same company), and others.  However, when it comes to online home value estimates, the No. 1 caveat for home buyers is that these estimates are not a substitute for formal appraisals, comparative market analyses and the in-depth expertise of real estate professionals. Solely or too heavily relying on just one price estimate will likely skew the views of a particular property’s true market value.  And if you rely on these estimates to make an offer on a property, it will likely cause you to lose the deal.
Online home value estimates are based on information on the internet. In real estate, access to property details and values is easier due partly to low-cost immense computing power. The most popular sources of home value estimates online are those that use automated valuation models (AVMs). These estimates have varying levels of accuracies because they depend on the data available to them.
For example, Zillow’s “zestimates” for North Fork properties often reflect inaccurate values of homes, both on and off the market.  The reason is due to the fact that our market has a wide range of prices and types of homes but not a large number of homes and transactions. A statistically valid model is difficult if not impossible to create without additional input. 
               Over the past several years, I have seen homes have 30% to over 100% variances with the true value and the “zestimate” and in most cases the “zestimate” is below market value. Most recently an impeccable home marketed at close to a million dollars, had a “zestimate” of $732,000. When I researched the 7 homes used to calculate the “zestimate” included was a home sold at $329,000 which was a small home in disrepair.  When this home was removed from the array used by Zillow, the new “zestimate” increased over 20% to $889,000. When another home valued at $450,000 was also removed, the “zestimate increased to $992,000 – virtually, the asking price.
When you are looking at these online valuations, it’s important to know that these estimates have varying levels of accuracies and should not take the place of appraisals and realtor comparative analyses based on the local market.  
We are happy to prepare a current, detailed comparative market analysis for any home you wish to buy or sell in our marketplace. Call us at 631 765 5333 or visit us at our office on the corner of Horton’s Lane and Main Road in Southold.

Sources consulted: RISMedia.com and the Center for REALTOR® Development (CRD).

Sunday, September 9, 2018

Remembering 9/11...



Tuesday is the 17th anniversary of the World Trade Center tragedy. It’s hard to believe that so many years have passed since the attack on American soil.  Our lives have been changed forever by the attacks on the Twin Towers, the Pentagon and the attempted attacks on the White House and the Capitol. 

Let’s take time to remember the innocent victims, the heroes that lost their lives working to save others, the brave passengers on Flight 93 who fought the hijackers and crashed into a field in Pennsylvania, and all the family members left behind. Let’s remember the surviving heroes that risked their lives to save or recover victims in the aftermath and those lost from illnesses due to exposure from the aftermath of the attacks.

The United States of America is truly a great country.  We are blessed with a heritage of Freedom. Even when times are tough and even with all our challenges, even when we disagree, we stick together to protect each other and what we hold sacred.  In spite of what divides us, we should be mindful of our American spirit and the goodness that comes from within that unites us.

May God Blessed America and Guide us through difficult times strengthening us with resolve to always do what’s right, and to protect and preserve freedom throughout the world.

Sunday, September 2, 2018

HOW TO BEAT THE HOMEBUYER’S JITTERS


     The market is tight and you know that if you see something you like, you will have to make an offer quickly, because it’s likely to be gone if you hesitate. Your realtor presents your offer to the sellers and after one round of counters, they accept!  You’re happy and excited - until you wake up the next morning with the jitters even before you have your morning cup of joe! You’re second guessing yourself, wondering if you acted too hastily and paid too much for the house?  Or perhaps wondering if there’s another home coming on the market, that you may like better?  Or maybe your dog won’t like the neighborhood!
      With the short supply of home on the market, and the need to act quickly,  that morning after “buyer’s remorse”  is not uncommon. But before you do anything you may regret, take a moment to reflect on the situation and understand that this is a very normal reaction to making a very large lifestyle and financial commitment.  Almost everyone who buys a house experiences this feeling, with varying degrees of intensity. But if you have a bad case of homebuyer’s jitters, take time to considered things carefully and rationally.  Be sure that your financial  planning is solid – it’s one of the reasons we recommend a bank mortgage preapproval. And remind yourself of all the family and lifestyle reasons you came to the North Fork in the first place – a less hectic pace, the beautiful beaches, numerous creeks for boating and kayaking, farms and vineyards and bucolic scenery that enhances each day you spend here. Talk to your realtor, share your concern.  It should all fall in place. Then take a deep breath and go for it!  I don’t know anyone who has purchased a home on the North Fork, who regrets it.  In fact, everyone I know is thrilled to be in this special part of the world!