Why Permits are Required

June 27, 2007

Municipalities require that homeowners obtain permits for major improvements, like electrical work, structural changes and plumbing.  The main reason is to make sure that your contractor (or you) did the work properly, and by code.  It’s not because, as some Libertarians feel, government is too big.  It is to enforce safety.

Many times a homeowner will make improvements, then shortly after will place their home on the market, forgetting about the need for the permit. This serious issue can become a real problem, especially if the improvements were not disclosed, and a future problem occurred, like an electrical fire, or a collapsing deck or balcony. Chances are these things won’t happen.  But  if they do, you may encounter tremendous liability.

What will happen, however, is this – your settlement with your buyer can be seriously delayed. This of course can cause problems for you and your buyer. You municipality will need to have the permit pulled by you, then the work inspected, and if there are any problems, they must be corrected as per building code. Is this a pain in the backside?  Yes. But all for good reason.

If you are a homebuyer, inquire about recent improvements. Make sure your attorney discovers if there were permits needed for any past work.  Some attorneys also now include a clause which states, “Seller has obtained all necessary permits for any improvements during their ownership.”

Like any thing else, make sure it’s done right the first time. 


Mortgage Rates Climbing

June 25, 2007

With rates reaching 6 ¾ % last week, ($6.49 per thousand mortgaged for 30 years) buyers must be wondering if they need to wait for prices to come down more, or if they should buy now due to rising rates.  The chart below demonstrates the differences between purchasing now, comparing the costs of  a 6%  or 8%  rate, for a 30 year mortgage.  This chart includes principal and interest only.


Mortgage Amount                    6%                   7%                   8%


$100,000                                 $600                $665                $734

$200,000                                 $1200              $1330              $1468

$300,000                                 $1800              $1995              $2202

$400,000                                 $2400              $2660              $2936


It is important to note that while you may be waiting for homes to drop another $10,000, climbing rates will offset any savings you may be able to take advantage of. If you locked in a 30 year mortgage today at 6.75% , your payment would be $1,947.  If rates, however, were to climb to 7.75%, your monthly payment would increase by $201. If you were to stay in that home for 7 years and did not refinance, your  payments would cost you an extra $16,884, based on a 1% mortgage rate increase.  If rates increase 2%, you just spent an extra $33,768.

 Buy now!

Real Estate Vocabulary

June 21, 2007


 Acre – A parcel of land equal to 43,560 square feet

Many home sellers tell me they have about a half-acre. Most have much less. If an acre is approximately 200×215, then a half-acre would be about 100×215. Interestingly enough, many of today’s buyers do not wish to have a lot that large, as less leisure time is available for lawn maintenance.

Being Great at 1 Thing

June 19, 2007

Every once in a while, I consider the idea of selling commercial real estate. Why not? Making a sale or 2 a year could help send the kids to college. After selling residential real estate for so long, maybe I need to spice it up as bit. A change of pace would be exciting. Then reality sets in. I could hurt somebody!  I mean, their transaction, that is.  So, as I stick with my niche, I began to think of how some agents become a jack-of-all trades, master of none, and plaster all those designations on their cards.

1. New homes specialists. Pretty specialized, for sure. You are more than likely an employee of the builder.

2. Relocation specialists. Some of these agents wait, wait wait, and expect leads from their broker. Kind of like the characters in Glengarry Glen Ross.  Yuck.

3. Commerical and Industrial Real Estate. Some of these agents wait years to see a paycheck. Maybe I will do this when I don’t need to make a living.

4. Geographic Speciality. I once had an agent who told clients she served “Cape May to High Point”. My guess is that was when gas prices were $1.10 a gallon. Serving too far and wide an area limits your understanding of the communities, and can get an agent in hot water for non-discloure of issues which a local agent might have been aware of.

5. Senior Specialists. With the aging of our population, I think this is a way for agents to give credibility to their monthly mailer to the 55+ communities, asking for business.

6. Rentals. I know agents who do only rentals. God bless their patience. Lots of time, little pay.

7. Condo Specilaists. I guess this is ok if you live in a city, where you have alot of condos to sell. Years ago, I looked at real estate in Boston, and I walked with an agent  from condo to condo. Cool!  Really. 

8. High End $pecilaists.  My Dad worked for 36 years at General Motors in Ewing. He was a tool and die maker. In other words, we did not reside in Princeton or Beverly Hills. And that’s quite allright with me. I guess it’s never too late to expand my network.

9. First Time Buyers.  While this can be very rewarding, I know it can be torturous as well. Buyers who communicate well are always appreciated.

10. Residential Resale. This is what I do. It’s all I do. and even though this post strayed from it’s original point, it is important that we pick a niche which has enough opportunity, but beware of choosing too many areas where you are an “expert”, for you surely which be the master of none.

What is your niche? 

Real Estate Services Directory: I Need Your Help

June 18, 2007

I am in the process of putting together a list of vendors for customers and clients who live in Central and South Jersey.  These vendors should be home-related, for example, contractors, plumbers, electricians, carpet installation, painters, etc.  If their service is home-related, send me their info.

If you have had a positive experience with a local vendor, please email their contact info, and when the directory is complete, you will be the first to receive a copy.  I have a good head start on this list, but need more names.

The Balance of Price and Marketing, Part 3

June 18, 2007

Think back to when the market was climbing, climbing, climbing. Every time a house in your neighborhood sold between 1997 and 2005, your internal cash register rang.  “My house is now worth $220,000”.  “My house is now worth $250,000.”  Then higher, higher and higher. Your mind adjusted every single time a home like yours sold.  One day a neighbor came by to let you know the home around the corner,  not nearly as nice as yours, just sold for $300,000.  Wow!  Eventually, your home value reached about $360,000, by your estimation.  Things were great. It was never going to stop.

Then something strange happened. People became overextended. They had to sell. They had no choice. Inventories of homes grew. The buyer pool yawned. Homes in your area began to sell for $350,000. Then $340,000. Then $330,000. But your cash regsiter in your head didn’t allow for this kind of thinking. It was still stuck at the old number.  You began to say things like:

“That house does not have a pool”.

“Their carpet is not as nice as ours.”

“We have more landscaping than they do.”

So you’re stuck at $360,000. You are asking how this can happen to you, when you are finally ready to sell? It’s not fair. You’re not giving your house away. You will just wait it out. You don’t have to move, like those other people.

What is happening is the market is going through a healthy cleansing cycle. It is doing what it needs to do to be healthy for the long term. Prices, rates, and fear are bouncing off the real estate walls.

Hang in there. Be logical.  Your house is your home, but it is a commodity. It is worth (right now) less than your asking price, and exactly what your best offer becomes. 

Does Your Agent “Double Dip” ?

June 17, 2007


One of the great things about this country is that I have the freedom to choose. I can choose to charge less, more, or different. Anti-trust laws allow me to do this. With technology changing how we do business, I can provide all of the same services, and many more, in most cases, for far less than other competitors. And because my company is smaller, I can do it faster.   Of course, commissions are negotiable and not set by law, and there is always someone out there who will charge less.  Less is not always best, sometimes it is less. Some agents are charging less while not providing many services at all, or bad service at that. Crummy property flyers, no virtual tours, limited office hours, you name it.

But that is not the point of this post. For years, when a real estate company charged a percentage commission, the fee was not a “variable” fee, meaning, it was a big percentage commission regardless of who sold the home, including your listing agent.  So if your listing agent sold the home themselves, they made double, or what some agents call a “double bubble” or “double dip”.

At my company, my set fee is my fee, regardless. If a stranger, my best friend, my Mom or anyone bought your listing, my fee is set. I don’t charge double. Why should I?   There is no extra work.  I would rather work directly with the buyer than another agent. It just makes life easier. It’s a direct contact, simplifying the communication process, simplifying the entire transaction.

Part of the problem with the traditional real estate environment is that the calls or inquiries that come into an office usually go to the person “on duty” and not the listing agent directly. Hence the extra fee. 

What an absolutely archaic way of doing business.