Latest Entries »

The short answer is: “You Don’t Know What You Don’t Know”

For the purposes of this discussion, when I refer to a REALTOR®, I am referring to a full-time, experienced REALTOR®, who averages at least 11 closings per year. For what it is worth, over 70% of RI REALTORS® do less than 5 transactions per year, which is why you should seek out an experienced full-time, REALTOR® to handle, what for most of us, is the largest financial transaction of our lives.

In essence, sellers are potentially exposing themselves to liabilities that may be unnecessary.  Either as it relates to disclosure of information, utilizing correct forms to expedite the transaction, and the general practice know-how that protects buyers and sellers from liability. Experienced full-time REALTORS® guide and control their client’s transaction so purchases and sales happen on schedule, and the buyer and seller can easily transition to the next stage of their life.  Additionally, REALTORS® know the market; we know houses, and we know sellers and buyers.  It’s our job.  Those of us that take our job seriously are continually learning, studying, reading and taking classes, so that we are aware of new regulations, financial instruments, and mortgage programs that best serve our clients.

As a full time REALTOR®, I make it my job to be aware of the latest financial incentives from housing authorities, tax incentive programs, mortgage programs from various lenders, and the latest guidelines from the government backed loan products (FHA and VA.) Being current on these programs gives me the tools to work with a full spectrum of clients, being able to assess their needs and help them best maximize goals.

REALTOR® Associations frequently change forms to accommodate the needs of members and consumers, so it is also part of my job to be aware of these changes and use the latest forms.  These forms frequently have time triggers with deadlines which, if missed, could cost the buyer or seller A LOT of money.  I take classes, attend webinars, and go to conferences to remain sharp and have the best skills, training, and tools for the benefit of my clients. I’m proud of this because it makes me extremely qualified to assist them with what I’ll mention again is likely the biggest financial investment of their lives.  This requires a large time-commitment and a significant amount of mental “focus.”  Most, if not all, of my top-producing colleagues approach their job in the same professional manner.

If a part-time REALTOR® has a “real” or “full-time” job, where would he/she find the time to do this?   I say this not to throw anyone under the bus.  I am not disparaging any REALTOR®; I am simply asking the aforementioned question.

These are just some things to think about as you consider hiring /working with a REALTORS®. I hope this post has giving you some food for thought, and I would love to discuss any of this with you and how it relates to your personal real estate needs and objectives. I look forward to hearing from you!

Hopefully everyone will have a healthy and prosperous 2018.  It certainly seems to be shaping up that way so far.  The Dow, has broke 26,000, dropped below 25,000 and closed up over 300 points today.  We have experienced well in excess of $1 trillion of new wealth in the stock market in the past twelve months.  That is a good thing.  It is not just the wealthy, the stockbrokers, and other “big shots” that realize this increase in wealth from the stock market.  It is the little guy too.  The laborer/teacher/police officer/fireman who has paid into to a union pension reaps these benefits too.  The pensions invest in the stock market, bonds, real estate and other assets.  As do many mutual funds, some directly and some indirectly.  The word “Wealth” has, in many sectors of society, been erroneously associated with “evil”, “greed”, and other nefarious behavioral traits.  Increasing your wealth is not a bad thing for you, your family and your heirs.  Pretty much everyone wants to make it “easier” for our children to have a better life than we do.  Which brings us to the whole “transfer of wealth” issue.  Full disclosure, I was raised in a family that owned a small business.  My parents, aunts, and uncles all worked hard to assure that their families could be supported by the business.  Was it easy? I don’t think so; trying to sell musical instruments when interest rates were 18% must have been a challenge.  But they did it, they worked hard to increase the value of the business every year.  When the time comes that they pass on they will have the value of their business as a part of their estate. An estate that is composed of assets (typically cash, stocks, bonds, real estate) that are taxed annually.  Why does it make sense that upon their death, the estate should have to pay a tax on these assets yet again? This the government acting like a silent partner, reaping the rewards of decades of hard work without ever participating in the “work” aspect of the business.  So the “wealth” of a small family-owned business will be transferred to the heirs, after the proverbial “pound of flesh” is taken by the government.  We are not talking Kennedy/Rockefeller/Getty wealth, but small time family business “wealth”.  This scenario is repeated millions of times across the country with immigrant families, first and second generation American families, who work hard to build something of value that could be decimated by estate taxes.  This confiscation of wealth is not a good thing. It discourages hard work for the delayed gratification of leaving children and grandchildren in a better financial position than their predecessors. Is that good for America?

Communication is important – it is how we convey information to each other. To communicate effectively, and be successful in conveying the information accurately, we need to do a few things well:

  • Word Choice, use language your audience can understand. If I am trying to explain something to an audience (even if it’s one person,) I should be less concerned with trying to impress them with my knowledge and more concerned with them understanding and comprehending my message.  If I use “$2 Words”, and no one else knows what they mean, what did I accomplish other than wasting everyone’s time?
  • Spelling, homonyms can be tricky for many.  Are you drinking “Sweat Tea” or “Sweet Tea”? Both are spelled correctly but mean something totally different. Allowed and aloud are others that have different meanings but sound the same. Then there are the plain-old typos and misspellings. Some of my favorites are: “Peeface from the Editor”, “Panty stuffers”, and “School of Pubic Affairs”;
  • Punctuation, “Did the Bear eat John?” or “Did the bear eat, John?” and everyone has seen “Let’s eat Grandma!” instead of “Let’s eat, Grandma” …a comma CAN save a life.

Perhaps errors like these should be expected from grammar school students, but what drives me bonkers is when the NY Times, the Providence Journal, and GolocalProv make these errors. Spellcheck is not adequate, and is for lazy writers.  Why don’t these writers check their own work with their own eyeballs? After-all, it has THEIR name on it. I submit to you that it is due to a lack of self-pride.  They are not proud of themselves, and they are not proud of their own work which represents them.  What do you think?

 

BUT WILL IT LAST?

According to the CNBC All-America Economic Survey, for the first time in at least 11 years, more than half of all survey respondents rated the economy as Good or Excellent.  Forty-one percent believe the economy will improve in 2018, and forty-two percent approve of President Trump’s job performance.  This poll was conducted by a Democratic firm and pollster, Hart Research – so this is not a firm with an agenda to make the economy and the president look “good”.

What is also interesting is that this poll was conducted December 10-13, during the tug-of-war debate about tax reform; so there is a certain amount of “uncertainty” that may have suppressed these numbers.  It is also worth noting that there has been a significant “talk” on the business-news channels that there are going to be two or three Fed rate-hikes in 2018.  This, one would think, should provide reason to be doubtful about the prospects of a strong economy.  However, the respondents to this poll by a Democratic pollster have feelings that are contrary to that presumption.  Why is that? What does it mean? (If anything.)

Our economy is good, or bad, because we believe it is.  So, what are some things that would contribute to our believing the economy is good/going to improve if:

  • There are multiple negative-news headlines,
  • Alleged lack of certainty in our economic prospects,
  • There aren’t enough positive-news headlines reported by the “Main Stream Media” (if you believe Fox News.)

Well, I submit to you that perhaps, people are making more money, becoming more gainfully employed, and more people are making more money.  According to the Bureau of Labor Statistics, civilian worker compensation was up 2.5%, year over year, in the third quarter of 2017.  In the nonfarm business sector Output was up 4.1%, and hourly compensation was up 2.7%, in the third quarter of 2017. Nonfarm payroll employment was up 228,000 in November 2017. The unemployment rate has been trending downward and is at the lowest rate in 17 years – even in the wake of several hurricanes.   This has probably contributed to the fact that the Average FICO score is up to 700 from a recent low of 688 in 2005.  As consumers earn more money they pay more bills in a timely manner.

This economic data can be viewed against positive birth-rate trends.  The age range that has the largest number of home buyers is 30 to 34 years old.  If we look at the birth rates from 30 years ago we can see that the trend increased for several years. From 3.82 million in 1987 to 3.91 million, to 4.02 million, to 4.17 million before starting a downward trend.  This would indicate that there will be an increasing number of home-buyers in that demographic for several more years before leveling off and then declining.

A statistic that could be viewed as a negative is the fact that housing inventory is very tight across the country.  So in the absence of new construction (still at a 50 year low) we will continue to have a limited supply of product to sell.

So what does all of the above have to do with real estate and housing?  It bodes well for the housing industry and positively for property values.  In the coming years we are going to experience increasing demand, a sense of economic-optimism, increasing wages, an improved consumer-credit profile, and presumably higher employment.  So to extrapolate; there will be more buyers, with a better credit profile, earning more money from more jobs, chasing a limited supply of product (housing inventory).  Economics 101 taught me that a greater demand with a limited supply will drive prices up; and this is supported by empirical data.  THAT is good news for consumers looking to buy, those looking to sell, and the REALTORS® that consumers will work with to receive maximum value from the largest financial transaction of their life.

Secret Santa has brought your gift early this year.  A holiday recipe for finding the best deal on your home purchase this year: sauté •strong demand with •less competition from other listings marinate in •low interest rates and add a dash of •Holiday Season. The result?  The perfect blend for an Artisan deal.

The Holiday Season is upon us, and everyone’s mind is occupied with shopping, parties, sending out cards and wrapping gifts. But, all holiday shopping isn’t done on line, or at the mall, or at that swanky boutique…

In fact, there is a significant amount of home-buying that happens during the “holiday shopping season”.  Last year there were almost 1,000 Rhode Island houses that went Pending between November 15, 2016 and January 15, 2017!  This “shopping List” was valued at OVER $317 million …THAT is a lot of shopping!

Why is it good to go House Shopping during the Holiday Season???  Well to start, there is less competition from other buyers, so it is less likely that that there will be a “Bidding War” for your dream house – as has happened throughout the year with some houses in high demand areas.  The same holds true for putting your house on the market during the Holiday Season.  There are fewer active listings as the temperature drops; but according to the National Association of REALTORS, demand for houses remains strong through the Holiday Season.  Additionally, interest rates are still below 4% for a 30-year fixed rate mortgage.  This is half of the historical average of 8% for a 30-year fixed rate mortgage.

Strong demand, less competition from other listings, and low interest rates.  That is a holiday recipe for getting an excellent value on a home purchase.

While the average buyer has pushed the average price for a single-family home in Rhode Island almost to the $270,000 marker, there are houses that sell for a multiple of that as well.  In fact, Little Rhody, The Biggest Little State In The Union, has had its fair share of “celebrity” buyers too.  The most recent was the announced purchase of The Seafair by Jay Leno and his wife Mavis for $13.5 million.  This year it is the highest so far, and the highest since The Fairholme Estate in Newport sold for $16.1 million in 2016.  And get this, for $13.5 million, he didn’t even get the whole house! (He bought 4 condo units.)  So technically, since it was bought in parcels totaling $13,500,000, this year’s record stands at $11,650,000 for a single-family sale in Newport.

For the entire state of Rhode Island, Single Family sales greater than $1 million increased to 232 houses from 183 houses last year.  As for Condo sales over $1 million this year there were 16 in 2017, up from 10 last year.

There were five single-family sales greater than $5 million through November 30 of this year; which is the same as 2016.

If you have any questions about the real estate market in your area, the value of your house or any real estate questions whatsoever, call a REALTOR.  If you are going to engage in the largest financial transaction of your life you deserve the guidance of an experienced, ethical, real estate professional.

As of the publication of this Premier Issue of Real Estate Today, there are 80 properties priced over $1 million listed on RILiving.com – a really good place to do your Holiday Shopping.

Kudos to the Journal’s editorial board for highlighting the importance of staving off the elimination of state and local tax deductions in the pending tax-reform debate. As the Nov. 2 editorial (“State and local deductions at risk”) pointed out, many residents in high-tax states like Rhode Island would likely see an increase in taxes, not savings. Beyond that, however, there are other compelling reasons to maintain these deductions for citizens in all states, particularly those deductions that relate to real estate.

Sustainable home ownership is and always has been a way to achieve the American dream. According to a Federal Reserve survey of consumer finances, a typical homeowner’s net worth in 2013 was $195,400 while a renter’s was $5,400. Furthermore, with every home sale, money flows back into the local economy with the purchase of home-related goods and services, creating and sustaining jobs in the process. Make no mistake, housing is a huge economic driver.

With homeownership at an all-time low, not due to choice but due to barriers to entry, is it wise to take away incentives to home ownership? Not in the least.

The latest reports on tax reform indicate that the deductions for mortgage interest and real estate taxes, which were headed for the chopping block, could be saved after all. We should all ensure that outcome by doing our part in making sure our congressional delegation understands that a blow to homeownership is a blow to our residents and our economy.

Joseph Luca

The writer is president of the Rhode Island Association of Realtors.

If you are thinking about buying an older house that needs “some work” or “TLC”, you need to have an honest conversation with yourself and any partners who may be involved. You do not want to get involved in a project that is beyond the scope of your abilities, your budget, or your tolerance for surprises…because all of these will probably be tested during the process of going from “old” to “new” and while the shows on cable seem to be fairly realistic to the average consumer, the average consumer does not have the purse strings of a TV network to catch any cost over-runs. In real life you cannot “edit out” all of the stressful scenes; you take that stress home to friends and family. This is a quick read and is worth the time. JoeLucaRealEstate.com Tel: 401-580-9797

Visit houselogic.com for more articles like this.

Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

Five Crucial Home Selling Decisions if You Want to Sell in 2015

If you’re planning on selling your home in 2015 there are five crucial decisions that can help you maximize your sale price, get your home sold quickly and do it all without the mountain of stress that often comes with the sale of your home.

Decision #1 – Decide to prepare sooner than later. Home sellers who wait until spring to get their home “ready” are already behind the curve. The real estate year is in full swing by March 1st and homes that sell quickly and for top dollar during the “selling season” are the homes where the owner had a plan, got their home ready, staged, and listed early in the year.

Decision #2 – Decide to prepare yourself emotionally. Selling your home can be very emotional. When you receive an offer for less than you think your home is worth, it generates a whole host of negative emotions. You can feel angry, frustrated, and think everyone is trying to steal your home from you.

Well, they’re not. Buyers just want to know they’re getting the best price. We all feel similar when we make a big purchase. So be careful to manage your emotions. And if you get a “low-ball” offer rely on the help of a trusted professional. A good agent can often gently negotiate the price into a range where everyone wins. The key is to keep your emotional swings in check.

Decision #3 – Be realistic and price your home accordingly. One of the big keys to getting your home sold quickly, for the most money, is pricing it correctly. If you price your home too high, thinking you’ll “test the market,” it can be costly. Your home can sit on the market too long and get labeled as a “no-need-to-show” because you’re viewed as being unrealistic.

You see it all the time. Sellers think they are going to “hold out” and get a better price. Well, you need to consider how soon you want to sell? The reality is you can get just about any price you want if you’re willing to wait long enough. If you wait 5-7 years your home will very likely sell for a more than it will today. But if you want to sell in 90-120 days for top dollar, pricing is a crucial issue that you should discuss at length with a trusted real estate professional.

Decision #4 – Reconcile reality quickly. This is somewhat similar to decision #2, but it’s actually more practical and actionable. Emotions can be hard to define and control, like in point #2. But what is fairly easy to judge is your market’s numbers, and the realities of value.

Agents always hear things like, “But my home has this, this and this. Therefor it should be worth a lot more.” In theory that’s somewhat true. However, the reality you have to be prepared to reconcile is, if people won’t pay more for those things, it doesn’t make your home worth more.

Now don’t get me wrong. I’m not trying to soften you up so you give your home away. The goal is to help you get the highest possible price, in the shortest time, with the fewest hassles. But something that’s very important to deal with is reality, not wishful thinking. Wishful thinking backs tens of thousands of home sellers into very difficult positions every year.

Having a clear objective view of reality, as well as a trusted professional to help guide you through the emotional ups and downs, can help you avoid a massive mountain of emotional stress, while your home just sits on the market.

My encouragement is, prepare yourself for the true realities, while maintaining high standards throughout the process. It’s a balancing act that with the help of a trusted professional can be far easier to navigate.

Decision #5 – Trust your gut. When interviewing agents there are few things more important than a deep level of trust between you and the agent you choose to represent you. And trust comes in two crucial parts. The first is professional competency.

To trust someone with what is likely the single biggest financial transaction of your life, you need to have confidence that the agent you choose has the skills, technology and ability to fight hard and win what’s in your best interests. That’s why choosing someone just because they’re a “friend of the family” isn’t always the best choice.

The second layer of trust is personal. When you work with someone on something as important as the sale of your home, you need to know you can trust that person personally.

You need to feel a deep sense of confidence that your agent puts your needs in front of their own. It’s not about flash and glitter, or how many homes that agent sold. What’s important is, “Can I trust this person with my financial future?”

That’s where “listen to your gut” comes in. most of us can sense authenticity and integrity. It comes out in many ways and generally when you’re in the presence of it you know in your gut. Sometimes the person might be a little quirky, other times they’re not, but again it’s not about flash and charisma.

The bottom line, choose someone you trust on both a professional and personal level and “go with your gut.”

I hope you found these suggestions helpful. Selling your home is a life altering series of decisions. The better prepared you are to make those decisions effectively, the better the end result.

And as always, if there is anything at all I can do to help you, please feel free to call me at 1-401-580-9797. The conversation is always free and you’re under no obligation of any kind. My entire objective in our conversation is always to help you in any way that I can.

Also, if you would like to know approximately what your home is worth before meeting with an agent, feel free to check out my offer below. It’s a free over-the-phone market evaluation. Just call anytime 24 hours a day and if I don’t pick up leave a message with your email address and I’ll get that evaluation out to you ASAP!

Generally speaking, the consensus seems is that the residential real estate market in most parts of the country is on the upswing in the aggregate.  As a licensed Realtor, I will run with that consensus as much as I can because so much of our economic health is psychological and relies on consumer perception.  Anecdotal evidence indicates that there is an impressive correlation between the tone of the national headlines about the economy and the psyche of the average consumer.  If the news anchors say the sky is falling everyone will soon be running for shelter, even if there is no empirical evidence to support the claim.  Similarly, if national headlines are droning on about the lousy economy, high unemployment, and soon-to-be-rising interest rates, home-buying will grind to a virtual stand-still.  What both of these occurrences have in common is that they frequently rely on inconclusive, or superficial, data that do not adequately represent the economic “status-quo”.  For example, below is a graphical representation of actual data from Core Logic, an aggregator of real estate data (among other things).

Equity-InfoGraphic

The old saying goes: “The only difference between a recession and a depression is that in a recession your neighbor is out of work, in a depression YOU are out of work”  So what does this mean?  Selfishly speaking, I don’t know and as long as houses are selling in RI and MA (which they are) I am not sure if I should be concerned.   However, when I read economic data that do not support the economic outlook; in the back of my mind I can hear the voice of one of my college economics professors emphatically stating that the real numbers do not lie…but those numbers can be manipulated by others for political gain. Case in point: http://tiny.cc/ifnutx an article in the NYT trumpeting the great employment outlook, and this sobering report by the CEO of Gallup http://tiny.cc/oknutx.   What do you think???

This past week I came across two separate indications about what may happen to the residential real estate market in southern New England, and elsewhere, in 2015.  The first was actual data that demonstrated that while sales were down in 2014 compared to 2013, the prices had risen close to 5%…and this is in Rhode Island, traditionally one of the “lagging indicators” of all states and historically one of the last to exit from economic downturns.  See the below:Median House Prices and Sales 2013-14

Rhode Island has been hit especially hard since the last downturn because the unemployment rate has been one  of the highest in the nation, and it has been ranked last by CNBC on several occasions for business attractiveness.  Next I read the predictions for interest rates from several different sources and they all indicated that rates are going up from .3% to 1.2% by the 2015 4Q.

Mortgage Rate Predictions 2015

So to extrapolate: In a “worst case scenario”, if the price of a house increases from $200,000 to $210,000 AND interest rates increase 1.2% (NAR) the monthly payment excluding taxes and insurance would increase from $948/mo today to $1,143/mo at the end of 2015.  That is an extra $2,340/year, $35,100 over 15 years, and a whopping, uncompounded,  $70,200 over 30 years.  Wouldn’t it be better to have that money in your retirement account, or use it for a vacation home?  Since we have been at historic lows for a few years, and prior to the downturn the “Fantastic Rates” were well over 5%, this is not that outlandish.  It is also not outlandish to think that we will not be returning to rates this low for generations since prior to 2010 we had never had rates in the 4% range (BankRate.com.)  So what do you think is now a good time to buy or sell a home???  If you have questions about buying or selling a home, email Joe@JoeLucaRealEstate.com or voice/text at 401-580-9797.

Architecture Here and There

Style Wars: classicism vs. modernism