As I was out and about the other day, looking at properties on the market, it suddenly occurred to me that many of the properties I was seeing could be purchased at prices I would have expected to see in the late 1990s. These “flashback deals” may not be prevalent everywhere, but a smart investor who knows what to look for can find rental properties that would have listed for $150k in 2006 for almost half that price today! I realized that in spite of the trepidation investors may be feeling because of the “burst of the housing bubble,” if you know what you’re doing, now is the perfect time to buy.

Any quick search of real estate news will tell you just how low housing prices are. This article in the New York Daily News states that “home values [in the New York metro area] fell 1.6% between January and March to $346,600, hitting their lowest level in more than seven years,” and that  “across the country, home values posted their biggest quarterly drop since 2008, falling 3% in the first three months of this year.” According to ABC News “Home value declines are currently equal to those we experienced during the darkest days of the housing recession.”

This is good news for investors, who may wait decades for a buyer’s market as steadfast as the one we’re currently experiencing; but further research reveals that investors looking to take advantage of the low property prices should be prepared to make it a long-term investment.  Although there are a few opportunities for house flipping for a quick profit, most experts agree that it may be a few years more until the housing market fully rebounds and home values see a consistent upward trend.

So when can investors expect to see home values increase?  Most sources say not until 2012 at the earliest.  According to CNBC “Home value declines are currently equal to those we experienced during the darkest days of the housing recession. With accelerating declines during the first quarter, it is unreasonable to expect home values to return to stability by the end of 2011.” The Wall Street Journal puts it another way, saying “if we consider that the housing bubble inflated from roughly 1999 to 2006, that made seven fat years. An ancient authority would suggest that seven lean years should follow. That would mean two more lean years to go.”

But when economists predict two more years of declining real estate prices, they don’t necessarily mean that prices will suddenly return to “normal” in one or two years, only that this is when we might expect a break in the downward momentum.  The Wall Street Journal explains it this way “As the debt hangover works its way through the system, the outlook is for housing to continue along an extended rocky and bumpy bottom, generally moving sideways in nominal terms. Since we will have an overall inflationary regime, real house prices will be falling. After working through the concluding lean years, housing prices can reasonably be expected to regain their long-term trend of increasing a little over 3% per year in nominal terms. . . This would take them back to their highs in 10 years or so.”

What this means for investors is that there may never be a better time to buy than right now… but only if you have the wherewithal to hold on to your investment as long as it takes to see the kind of return you hope for. If you have questions about the current real estate market, or whether now is the right time for YOU to buy, contact my office today.

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While the current housing crisis has some homeowners and sellers worried that the sky is falling, savvy investors recognize that if you are in the market to purchase or resell a property there are some great opportunities out there.

Buying a home in foreclosure can often mean amazing deals, sometimes as much as 25% below market prices or more.  However, as a real estate investor myself, I know the ins and outs of dealing with foreclosure sales, and there are some pitfalls to watch out for.

Unlike a regular sale, where you are dealing with an individual homeowner, when buying a distressed property you may end up dealing with several different lenders and investors, each with their own agenda and procedures to follow.  This can often drag the process on for many months.  The bank that services the loan may not even own the loan, in which case they will need to confirm what investors who do own the loan are willing to accept.

A great example of an eventually successful but drawn out short-sale property in Long Island was described in a recent article in CNN Money.  Shopping for a new home on Long Island after the birth of their daughter, Chris and Diane Moore fell in love with a 1920s Mediterranean-style home with a storied history.  According to the article, the home was sold as a short sale, in which a lender must agree to accept less than what’s owed on a property.  And as often happens with such deals, the buying process soon turned into a horror show.  The property was one of a kind, and the couple eventually secured the property at a 26% discount, but it took 10 months of negotiating.

Some short sales may qualify for the Federal HAFA program (Home Affordable Foreclosure Alternatives); and if it is a bank approved short sale or HAFA qualified short sale, this can speed up the process considerably.

Investors may wonder if it is safe to purchase a foreclosed property.  With recent news of the ‘robo-signing’ scandal, many illegally or improperly filed foreclosures and properties being returned to the original home owners, I understand your concerns.   Rest assured, as long as the new lender and buyer have title insurance, the former owner cannot seize the property.  Lenders always require a lenders title policy.  Owner’s policies are optional, but highly recommended for foreclosure properties.

If you are in the market for a home, it is especially important in this volatile and sometimes confusing real estate market to work with a real estate team that you can trust.  As a real estate investor myself as well as a real estate attorney, I can help you navigate these troubled waters to secure the amazing properties you are looking for.  Please feel free to call me with any questions or concerns.

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Conflicting reports in the media may have some homeowners at a loss as to what is really happening in these troubling financial times.  Reports of a steep decline in foreclosure filings had many hopeful that the housing crisis may be heading towards recovery, but experts warn that the underlying conditions in the housing market have not yet improved.

With a 15% decline in February for New York foreclosures, and 27% nationwide, the country experienced a 3-year low compared to 2010.  In February, default notices, auctions and seizures all fell, according to a report by RealtyTrac.

Some experts are attributing the decline in February to the backlog of filings due to the ‘robosigning’ controversy in the industry.  Investigations into the foreclosure process resulted in a big drop in activity as banks and servicers work through the mess they got themselves into due to poor procedures.  Lenders are now working to re-file paperwork that was initially improperly done.

Dr. Barbara van Kerkhove, Research and Policy Analyst at the Empire Justice Center recently published an exhaustive report on New York’s foreclosure crisis. The report indicates that the state is nowhere near the end of the foreclosure crisis, which now includes those homeowners with good credit and prime loans.

A recent article in The Daily Record quoted Van Kerkhove as saying the number of loans 90-plus days past due exceeds the number of pending foreclosures in every county of New York state, meaning a flood of new filings is forthcoming.

According to an article in the Business Review, Nearly 69,000 home loans in New York are at imminent risk of foreclosure, a situation that an advocacy group said today could lead to a “tsunami” of foreclosures over the next year or two.

Rueters recently reported on the decline as well, quoting Rick Sharga, senior vice president at RealtyTrac; “The drop-off was too severe to be organic.  There’s nothing in the underlying conditions that are causing foreclosures to suggest they should be going down yet.”

And so it seems we aren’t out of the woods just yet, despite the recent decline in filings.

I will continue to follow and report on the current housing crisis, foreclosure trends and legislation.  If you or somebody you know is at risk of foreclosure, I can help—please contact me.

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Many seniors have considered a reverse mortgage to help support them in their golden years, but are not aware of the pitfalls associated with this type of loan.  You may even be surprised to learn that the rules have changed, leaving some elderly homeowners at risk of losing their homes.

Reverse mortgages are supposed to protect seniors from economic hardship, paying older homeowners a regular sum against their property’s equity.  Now, due to a 2008 rule change by the Department of Housing and Urban Development, surviving spouses can be excluded, leaving them at risk of being displaced due to foreclosure upon the death of their spouse.  AARP, the seniors’ organization, recently filed suit against HUD, asserting that recent policy changes are pushing older unsuspecting homeowners into foreclosure.

Reverse mortgages were intended to be non-recourse loans.  This means that the most a borrower can lose is the house itself, even if the value of the property goes down.   In this market, nearly 25% of all homes with mortgages are worth less than they owe, making them nearly impossible to sell.

Lenders sometimes encourage only the elder member of a couple to put his or her name on the mortgage because then the payout is greater.  What they fail to disclose to the couple is that when the older spouse passes, the loan becomes due and payable in full.

In one such case, reported in the New York Times, the Robert and Ophelia Bennett secured a reverse mortgage.  The new mortgage, intended to secure this couple’s future, instead helped destroy it.  They paid $20,000 in fees but received only $1,800 in cash.

Mr. Bennett said he did not realize that his new mortgage had taken his name off the title of the home, which the couple had owned together since 1981.

Mrs. Bennett, who was a decade senior to her husband, died shortly after the new mortgage went into effect. The payments immediately stopped and the mortgage became due and payable.

The lender began foreclosure proceedings and scheduled a sale of the property last month.

If HUD had not changed the rules, the suit says, Mr. Bennett would have been allowed to live in the house until his death.

I can’t stress enough how important it is to work with a team you can trust to avoid such tragedies to your family.   If you have ever considered a reverse mortgage or have questions about any real estate topics, please feel free to contact me.

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Purchasing Real Estate is a major life event, right up there with marriage and career.  It is one of the most important investments you will make and can carry with it much excitement and anticipation—as well as significant stress.  I cannot express how important it is to make sure you have a real estate team that you can trust to make sure your investment is a sound one.

A recent lawsuit has many asking the question, how do you determine the square footage of a property?  Is it calculated by the livable area?  Does it include closets or even the insides of the walls?  Incredibly, in New York, where every inch of space is precious, there is no hard and fast rule; and lawyer Rishi Bhandari recently discovered that some developers and sellers will even ‘estimate’ square footage to their advantage, in some cases over stating the square footage by several hundred square feet.  Many buyers take the information that a developer or real estate broker advertises at face value.

The New York Times recently reported on an ongoing lawsuit over a Brooklyn condo, noting that the state attorney general’s office, which oversees the sale of new condominiums, does not tell developers how to tabulate space, but requires them to disclose to buyers how they do it and to abide by their stated guideline. (In co-op conversions, square footage is not required to be reported.)

Homebuyer Mr. Bhandari, said he was also pursuing a principle: if he walked away, developers would continue to sell properties with inflated floor plans.

The standard of measurement can get confusing for buyer: exactly how is square footage defined?  Is the square footage advertised based on gross square footage or net square footage?  Appraisers and architects generally measure from inside wall to inside wall including the closets.  Gross living area as defined by Fannie Mae and the Appraisal Institute’s Dictionary of Real Estate: “Gross Living Area (GLA) – The total area of finished, above-grade residential space excluding unheated areas such as porches and balconies; the standard measure for determining the amount of space in residential properties.” In a perfect world, this information would be accurately disclosed to potential buyers and overstating square footage would be an illegal practice; unfortunately, we do not live in a perfect world.

The good news is that this is just one of the many details that your real estate team can assist you with to make a well informed decision when purchasing real estate. You may want your real estate team to include: a real estate agent, title company, inspection team, insurance agent, and of course—a knowledgeable real estate attorney.

I know exactly how important it is to have a team you trust; not only because of my years of experience with real estate law, but also because of my own experience with buying and selling property as a real estate investor myself.  If you have any questions, or need help in putting together the best real estate team for your needs, do not hesitate to contact me.

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