By BOB TEDESCHI, New York Times Published February 9, 2010
Few mortgage borrowers have had the fortitude for a thorough reading of all their loan paperwork, often feeling intimidated or overwhelmed by the legalese and numerical complexities in the disclosures. But some mortgage brokers say that such passivity is declining.
A month after new loan disclosure procedures were put in place, some brokers say that borrowers are asking more questions, and are very likely becoming better informed as a result, if a bit frustrated at times. Others report a mere shift in the nature of borrower confusion.
"Consumers are much more involved in the process than in the past," said Richard Martin, a senior vice president with DE Capital Mortgage in New York, adding that not all of his clients may want to be as engaged. "But if you want to be protected, you've got to be involved."
Starting Jan. 1, lenders and brokers were required to provide borrowers with new Good Faith Estimate forms, which were simplified from years past, to show the final closing costs, and the maximum rate a borrower might pay on variable loans, among other things. Borrowers are asked to sign the document and return it to lenders and brokers before the underwriting process can begin.
"That's brought about an increase of 50 percent in the number of inquiries we're getting on these documents," Mr. Martin said.
Research shows that, in the past at least, the dialogue between lenders and borrowers was often sparse. According to a survey of loan officers fielded late last year and released last month by Wolters Kluwer Financial Services of Minneapolis, 36 percent of borrowers asked five questions or fewer during the loan process.
The borrowers may have been so well informed that they did not need to ask questions, but many mortgage brokers and industry executives suspect the opposite.
"Consumers don't understand this stuff," said Brian Benjamin, the president of Two River Mortgage and Investment in Red Bank, N.J. "People will say, 'Just do what you think is right,' but 10 percent of all the people in the industry" are not to be trusted, in his estimation.
Still, Mr. Benjamin says the new disclosure forms have not necessarily helped make borrowers more active participants in the loan process. In fact, he believes the new system has replaced confusion of one kind with confusion of another. Clients have been asking roughly the same number of questions as in the past, but now they ask more questions pertaining to closing costs not itemized in the new disclosure form, he said.
Mr. Benjamin suggested that borrowers also request to see the loan costs broken down on an old version of the Good Faith Estimate, for a more detailed accounting of the loan's costs.
The new Good Faith Estimate has also increased the amount of time it takes to close a loan, some industry executives say.
Mr. Martin of DE Capital says the new disclosure form has added five days to the time it takes to process a typical loan. That is because lenders must seek fee quotations from third parties like title companies and lawyers before sending the form to the borrower.
Guaranteed quotations are important for brokers and lenders, because closing costs must remain posted until the final estimate, which is given three days before the settlement date. If, during the processing of the loan, the costs change the effective rate of interest by one-eighth of a percentage point, a new set of disclosure documents must be issued, and the loan cannot close for at least another three days after that point.
After issuing the first Good Faith Estimate, lenders must wait for borrowers to sign and return the document before ordering an appraisal. That extra time pushes the loan approval process to at least 45 days, up from the typical 40, forcing some borrowers to pay extra fees to guarantee an interest rate, Mr. Martin said.
And these extra fees, he added, can easily add a quarter of a percentage point to the interest rate.
Wednesday, February 17, 2010
Tuesday, February 9, 2010
The State of the Market
One of the constants about the Manhattan residential market is it's seasonality. Certain types of apartments sell better as the weather warms than they do in the middle of the winter. Studio and one bedroom activity increases, particularly downtown, as students graduate from college and need to get established for their new jobs. Outer lying areas (i.e. 1st Avenue) can benefit from better weather because they seem more accessible to buyers.
The chart below is a snap shot of all Coops and Condos available in Manhattan as of February 10, 2010.
The overall numbers here have been consistent for the past month with new apartments on the market somewhat being balanced by signed contracts. We continue to carefully monitor the status of signed contracts as an indication of the degree of difficulty in getting residential mortgages. The past 12 months have shown this to be by far the single biggest challenge facing sellers today. The discrepancy between the number of studios and one bedrooms available can be partially explained by 1st time buyer activity. The price decreases in this area have made this part of the market affordable for buyers who have been priced out for the past several years. Another important factor is that new Condo construction usually consists of one bedrooms and larger sized apartments and rarely includes studios.
We've included the 2 charts below to show that the number of apartments built before World War II continues to lag behind modern construction.
The chart below is a snap shot of all Coops and Condos available in Manhattan as of February 10, 2010.
The overall numbers here have been consistent for the past month with new apartments on the market somewhat being balanced by signed contracts. We continue to carefully monitor the status of signed contracts as an indication of the degree of difficulty in getting residential mortgages. The past 12 months have shown this to be by far the single biggest challenge facing sellers today. The discrepancy between the number of studios and one bedrooms available can be partially explained by 1st time buyer activity. The price decreases in this area have made this part of the market affordable for buyers who have been priced out for the past several years. Another important factor is that new Condo construction usually consists of one bedrooms and larger sized apartments and rarely includes studios.
We've included the 2 charts below to show that the number of apartments built before World War II continues to lag behind modern construction.
Wednesday, February 3, 2010
Advertising Review
In this column we show some of the more interesting aspects of ads. What does and does not work and why? Consider this photo from a recent walk up listing in Greenwich Village:
What thoughts come to your mind when looking at this picture? Perhaps the single most important aspect that stands out here is how much sun is coming in through the windows. Third floor walk up apartments in the Village are not known for being bright so this is a rare quality that needs to be showcased.
What about the photo below?
What thoughts come to mind here? Which positive features are being highlighted? This is a photo from a recently posted ad by an owner selling his own apartment in Manhattan. Buyers and agents look at pictures like this and see weakness than can be exploited in negotiations. They are correct to assume that this picture does nothing to educate or motivate the audience to visit or bid on this apartment. As a result the closing price will probably be much less than market value.
Wednesday, December 2, 2009
Advertising Review - 2 Bedrooms Compared
Consider:
Kids room:
Master bedroom:
Which image is more appealing and why? A picture can be thought of as the sum of it's parts. What is the single best thing about each?
Kids room:
Master bedroom:
Which image is more appealing and why? A picture can be thought of as the sum of it's parts. What is the single best thing about each?
Inside The Buyers Mind
1) "...This is an apartment I could be interested in, let's see the floor plan. Oh well, there is none. What do they not want me to know? Maybe the rooms are very small? I don't have time for this, next apartment...".
It's very important to have a floor plan for every apartment advertised. Many buyers will simply skip an ad because they can't get the information they need. Omitting a floor plan is a mistake new agents and for sale by owners make.
This can be hand drawn if necessary but critical that it has reasonably accurate dimensions so a buyer can begin to understand what the space is like. Effective ads have a balance between a level of accuracy and appeal.
2) "...This is such a high asking price. There's no way the owner will negotiate to a level I can agree to...".
Over pricing an apartment can be counter productive for sellers. The listing will be out of the price range a buyer is searching for (i.e. not too many people are looking for $2,000,000 alcove studios). Even if a buyer finds the ad he/she may be intimidated by the asking price.
3) "...This can not be a real one bedroom. The price is so low that it's either a mistake or this apartment is really a converted studio....".
Under pricing an apartment can also be counter productive, i.e. no one is searching for $300,000 two bedrooms. Either buyers won't find the listing in their search or won't follow up because they suspect something is seriously wrong with the property.
In most cases the balance between the appeal and accuracy of a Real Estate ad will determine whether this is the start of a viable relationship between the buyer and seller or the conclusion. Inaccurate or missing information can lead many buyers to distrust the seller.
Savy buyers often pay significantly less because they prey on weaknesses in the sellers position.
It's very important to have a floor plan for every apartment advertised. Many buyers will simply skip an ad because they can't get the information they need. Omitting a floor plan is a mistake new agents and for sale by owners make.
This can be hand drawn if necessary but critical that it has reasonably accurate dimensions so a buyer can begin to understand what the space is like. Effective ads have a balance between a level of accuracy and appeal.
2) "...This is such a high asking price. There's no way the owner will negotiate to a level I can agree to...".
Over pricing an apartment can be counter productive for sellers. The listing will be out of the price range a buyer is searching for (i.e. not too many people are looking for $2,000,000 alcove studios). Even if a buyer finds the ad he/she may be intimidated by the asking price.
3) "...This can not be a real one bedroom. The price is so low that it's either a mistake or this apartment is really a converted studio....".
Under pricing an apartment can also be counter productive, i.e. no one is searching for $300,000 two bedrooms. Either buyers won't find the listing in their search or won't follow up because they suspect something is seriously wrong with the property.
In most cases the balance between the appeal and accuracy of a Real Estate ad will determine whether this is the start of a viable relationship between the buyer and seller or the conclusion. Inaccurate or missing information can lead many buyers to distrust the seller.
Savy buyers often pay significantly less because they prey on weaknesses in the sellers position.
Thursday, November 5, 2009
Stager's Corner
With the advent of tv shows Open House LXTV, Designed to Sell, The Stagers, we present a viewpoint from a Manahattan based Real Estate Stager, Debbie Oulvey, to address sellers' queries and questions for today and the future.
Debbie Oulvey, creator of Amazing Space NYC LLC, brings an Interior Design and a business background to her Real Estate Staging business. A member of ASID (American Society of Interior Designers), CSP (Certified Staging Professionals) and RESA (Real Estate Stager Association), Debbie has the ability to successfully accentuate the attributes of a room or create a focal point using color or accent pieces. Whether vacant, furnished or owner occupied, Debbie can transform a space into a picture-perfect, buyer-friendly property that offers a significant increase in marketability. Her ability to design eye-catching model apartments that cater to the lifestyle of a development’s target buying audience has earned her the respect (and repeat business) of well known real estate developers and business development brokers.
Debbie Oulvey – ASID, CSP, RESA
Amazing Space NYC LLC
www.amazingspacenyc.com
917.428.3965
STATISTICS:
· U.S. Housing and Urban Development reported that a Staged home will sell, on average, 17% higher than an un-staged home.
· Only 10% of the Buyers can visualize the real potential of a property (Home Staging Resource 2005-2009)
· Leaving a property in “as is” condition will actually help sell the competition (Home Staging Resource 2005-2009)
· According to a May 2008 RESA study: Vacant, unstaged homes remain on the market 120 days versus 26 days for similar properties that were Staged.
· According to a May 2008 RESA study: Furnished, unstaged homes were on the market for 102 days versus 45 days for similar properties that were Staged.
· 84% of buyers use websites to research properties before even contacting a broker or agent.
· According to RIS Media, 91% of the people surveyed believe Staging makes a difference when selling a home.
· In a national survey, 63% of buyers said they would pay MORE for a home that was in move-in condition.
SIMPLE STAGING TIPS from Amazing Space NYC LLC:
1. Show each room with ONE purpose. A dining-home office area translates to “not enough space” to a buyer.
2. Eliminate pet and cooking odors.
3. Pack up unnecessary items and furniture before you show the property. Stagers recommend packing and removing at least 50 per cent of the items in closets and on shelves.
4. Storage space sells; eliminate excess clutter and organize the storage areas.
5. You only get one chance to make a first impression: Make sure Buyers are greeted by an entrance you want them to remember.
What is the biggest misconception about Real Estate Staging? It is considered an expense rather than an investment and part of the overall marketing effort. A certified, Real Estate Staging professional will highlight the property’s attributes, neutralize its décor and strategically place color or accents that will draw the Buyer into the space and throughout the property. A Staged property is a powerful presentation in web pictures, brochures and in person. By investing in professional Staging, a property’s value increases as Buyers are able to see what they are really buying, understand how to use the space and ultimately move right in.
Whether a detailed assessment or a full Staging, Amazing Space NYC will design and execute a plan based on the property’s target audience, the price point, and the lifestyles of the potential buyers. The end result is a picture-perfect, buyer-ready marketable product.
Subscribe to:
Posts (Atom)
Posts
