Thursday, February 19, 2009


About forty years ago my grammar school aged brother owed 11 cents on an over due library book that he found under his bed. When he asked that my Father “give him the money”, my little brother received his first lesson in financing. With his shoeshine kit under his arm, he set out for the barber shop to earn the money he owed his “lender”.
It is family folklore today that my brother has been debt free since his shoe shining days, but he is one of the rare folks who can make that claim.
Last night the housing package to the Stimulus Plan was unveiled to the country and the mixed reviews will be debated for a very long time. While the economic experts, industry leaders and elected officials have been meeting and holding court with each other over the housing debacle for a period of time, Realtors have been meeting with and holding clients’ hands for a far longer period of time. We know first hand in our own homes and in our clients’ homes that something HAD to be done…even if the plan to help homeowners who can not pay their bills is unfair on its face to those homeowners who have paid their bills….and it is.
In short, 9 million homeowners are going to get a break with their mortgage debt and many more millions of homeowners will not.
“But, Daddy, Bobby’s parents didn’t make him work for the library fine.”
Putting all debates aside, the cold hard facts are that our country’s lenders loaned money to anyone with a pulse for several years. Those folks were all on borrowed time because they could never pay back the loans and tidal waves of foreclosures have been hitting the beaches and driving down the values of all homes everywhere. IT MUST STOP.
In my days as a nursing student, I remember being completely disgusted one day in class when we were taught that live leeches were actually placed on infected wounds because they ate up the dead tissue and promoted healing.
Sometimes it takes a jar of live leeches to clean up a festering wound and save the patient.
The inventory of properties MUST be moved. Increasing the inventory with more foreclosures MUST NOT be allowed. The way to move this inventory and unclog the plug that has “stopped up” the whole world is to make it possible for homeowners to STAY IN THEIR HOMES, for buyers to BUY HOMES, for lenders to LEND RESPONSIBLY.
Two hundred billion dollars will be given to Fannie Mae and Freddie Mac for such purposes as refinancing mortgages and lowering rates. Seventy five billion will be used to modify mortgages into smaller payments so that 9 million homeowners can STAY IN THEIR HOMES. Even without equity in the home, there will be refinancing possible now.
Some specifics include incentives for both the lender and the homeowner to come to the table and rewrite a deal with which both can live. There are additional incentives for the lender and homeowner to enter into a better deal BEFORE the homeowner is late on payments.
Our Constitution remains the greatest experiment in the history of the world and no matter what fix we get ourselves into, we will have the shiniest shoes on the block as we get ourselves out.


The market and the economic stats that affect it have many folks wringing hands, scratching heads and afloat in a sea of uncertainty. We may all be in many different boats, but Captains attempting to navigate through choppy waters without a trustworthy Pilot and an accurate chart is a frightening and foolhardy endeavor.
To avoid ending up in the fog and on the rocks, you must be as well informed as possible.
Real Trends is a publication that tracks valuable stats for both Real Estate professionals and consumers. Steve Murray is the publisher of that well respected resource and the most successful real estate giants of the industry rely on his findings. I recently attended a summit for all New England RE/MAX owners where Steve Murray was guest speaker and the data he shared is invaluable to all Realtors and real estate consumers.
What can we expect for home values in 2009? The best we can expect is that the home values stay the same as they were in 2008, that is, no appreciation and no depreciation. (Buyers, buy that home you’ve been dreaming of NOW). The height of the sellers’ market wherein home values soared during the sub prime debacle was in 2005. Home values have depreciated steadily since that time and we will not see those values again until the year 2020.
When we apply that data to individual consumer circumstances, the Captain now has a Pilot to navigate through the choppy waters. Here are examples of real estate circumstances and the strategies best applied by a trusted Pilot.
1. FACTS:“Russ” owns a beautiful home in a lovely area in town. He wants to sell his home, but he would like to wait until “the prices come back”. He thought that he might rent the home until “the price comes back” to what his neighbor got in 2005. He owns another beautiful vacation home that he loves and he has given thought to purchasing a smaller property in a nearby town rather than own two large homes.
STRATEGY: If Russ waits till the price of 2005 “comes back”, his home will be another decade older and if he rents it during the “waiting period”, it will have the additional wear and tear that comes with rental territory. He will also have the additional carrying costs of repairs, maintenance, taxes, and all that is attendant to being a landlord for many years while he “waits”. It is likely that the large home he considers renting will depreciate further. If he sells it now at market value, he can purchase the smaller property at market value and the real estate transaction can be a “wash”. That which you sell “low” is offset by that which you buy “low”.
2. FACTS: “John and Penny” had their home on the market last year for $525,000. They have homes in two other states and their intent was to sell their large Massachusetts home and purchase a smaller one to maintain a presence near their grandchildren. Two offers came in at about 480,000. (The buyers would likely have come up to $495,000). The sellers were insulted. They had spent a great deal of money adding improvements to the property and despite the downward trend of the market, they would not reduce their price and they came off the market.
STRATEGY: The property is now worth about $450,000 and “John and Penny” have joined the ranks of homeowners who want OUT NOW. Anyone can put a property on the Multiple Listing Service. The key is to get you OFF the Multiple Listing Service for the MOST amount of money in the SHORTEST period of time. With very few exceptions, the stumbling block is the PRICE. The home must be priced just a bit UNDER fair market value because it’s not enough to be a “good” deal. With high inventory, you are in the best position to sell when you are the “best” deal in town. Fair Market Value is determined by comparing a property today with properties that have sold months ago. In a declining market, the savvy Captain and Pilot price the home conservatively and capture the most amount of equity as quickly as possible by doing so. (Multiple offers are born of correct pricing.)

This Pilot advises all Captains that no matter how choppy the water, we can avoid ending up in the fog and on the rocks by charting an aggressive and intelligent course that is based on accurate information. Pilots do not operate from fear of the unknown. We operate from understanding the facts, knowing what we can and can not change, and applying that wisdom to protect our passengers and crew. This Pilot wishes all of you Smooth Sailing.

Tuesday, February 3, 2009


My client, a young man who was just buying his first home, arrived on time for his home inspection. He was beaming as he approached his home inspector and his pure happiness reminded me of the time when I bought my own first home. The young man had worked as hard as any young man I've ever known and the reward for all of his very hard work now had an address and was nestled on a beautiful lot in his favorite town.

As the young man and his inspector walked around the exterior of the home together, I entered what I thought would be an unoccupied home. (Sellers are usually not home during home inspections and the seller's agent was not able to attend the inspection.) When I opened the side door, an elderly woman stood several feet away from me in her kitchen. She introduced herself to me as the seller and she asked if it were "ok to stay" if she kept "out of the way". I reminded her that we were guests in her home and I asked if it were "ok" for us to be in her way for a short time.

The elderly woman forced a smile that failed to mask her sadness and she began to tell me her story. Her husband of sixty years had died only months before and it became financially impossible for her to keep the home that knew a lifetime of happiness within its walls. While she tearfully showed me her husband's military medals, excellent workmanship around their old home and photos that captured their past, I could see my young client in the back yard smiling with his inspector as he was learning more about his new home and plans for a bright future.

As the elderly woman pointed to a family portrait, I saw a large group of children gathered around the holiday decorations that must have filled the room with joy for years. The home would have new decorations and a new family portrait would be hanging someday with more children in it. It's called "life".

The cycle that affects all of us is palpable in the Real Estate industry. We see and address life's changes that bring tears or cheers every day behind the closed doors of the homes we share with our clients for the moments and times in their lives. The documents, deeds, records, reports, contracts, inspections, rules and regulations, are mere stepping stones that lead us from one home to another as we move through life's changes. The Real Estate business is far more about understanding and developing relationships than it is about "transactions".

Sometimes clients share things with Realtors that they do not share with their family members or close friends for a number of reasons, the most common of which appears to be because they "do not want to be a bother." No one wants to leave a home they love even if they appear "unmoved". The simple act of walking through the home and looking through photo albums with them or helping them pack may help them through the process of saying "good bye". Many of these homeowners are one as they go through the process of selling their homes and they could really use a visit or more frequent visits from family or friends during these difficult times.

The elderly woman signed the papers that made her home my young client's. After the closing, I accompanied my young new "homeowner" to his new home. When we entered the property, he bounced from room to room... his rooms. He ran down to his basement. He came upstairs beaming again and as he turned to leave his kitchen, he saw a note addressed to him on the counter. I watched him as he opened the note. I saw his eyes move through the handwritten lines before his face flushed. He folded the note slowly and he put it in his shirt pocket. He said "She is a very nice lady... a very special lady... a very special lady."