House Call

HOUSE CALL
FOUR TOP REAL ESTATE EXPERTS DISCUSS TO
THE REAL DEAL ON TODAY'S HOUSING MARKET

Every day there's another conflicting report on the news or in the
papers about the state of the housing market: it's down double digits;
it's back on track; it's a good time to buy; it's a terrible time to buy. The media-fueled hyperbolic roller coaster of housing whoas and woo-hoos
is enough to make you lock your doors, draw down the shades and hide under your covers until the wild ride is over.

When it comes to the biggest purchase you'll ever make, there are lot of questions and concerns. We've called in four top regional real estate experts for a little housing market MD. Here, they give us the inside scoop on who to talk to, what to buy, where to look, when to sell, how to up value and why believing all the hype will just give you a headache.

SAN FRANCISCO, CALIFORNIA
Annie Williams is a Top Ten Producer for Hill & Co Real Estate in San Francisco, CA. Here, Williams weighs in on the thriving Bay Area market, what you need to know about tax deductions, how not to get caught up in a buying frenzy and more.

1. What's the trend in your area? What do families want?
San Francisco tends to have microclimates, different trends by neighborhood; however, most of the neighborhoods where families want to live (and there are single family houses) have seen an incredible shortage of supply in the past few years. We have been defying national trends and continue to have bidding wars and ales consistently over the asking price. If something is on the market, priced right and without an obvious defect it will normally go into contract within two weeks of initial listing with a 21 to 30-day escrow as the normal closing period. We're not sure yet what, if any, the recent mortgage crunch will have on our market—there are a lot of cash buyers here.

Families are probably looking for the same thing here as other places—a safe neighborhood with other kids, proximity to parks, outdoor space in the form of a yard or a deck, at least three bedrooms and two bathrooms. Unlike the suburbs, where you live has no effect on which public school you qualify for because San Francisco has a school lottery. As such, being in a specific school district has no effect on people’s choices. Also, many people in the city work in a suburb, so they choose which side of town to live on to make their commute easier.

2. What's your advice for a first time buyer?
When you work with a real estate agent, he or she can help you with everything you need to purchase a home. The first thing I do is meet with a knowledgeable lender and get a buyer pre-approved for a loan. I also make sure they understand what the monthly payments on different types of loan programs are and what other expenses are involved, such as property taxes, insurance and annual maintenance. I also find out from an accountant or online source about the tax breaks a buyer can get for owning the specific property. For example, property tax, insurance and mortgage interest up to $1 million are deductible and will radically change the withholdings on your W2.

If buyer tells a quality lender what they are currently paying in rent, assuming it is a comfortable level for them, and how much they have saved for a down payment, the lender should be able to work backwards with them to know how much of a loan they can afford. This is a very important first step because it stops people from becoming attached to a price level that is not attainable; they start looking at the right level right away.

Second, I tell them to go to a knowledgeable local agent (you may want to meet a few to see who you feel most comfortable with) so they can educate you on the different neighborhoods, recent trends, other houses on the market in your price range and understand your priorities (what is a flexible demand verses a must).

Third, I advise buyers to see a lot of properties, so they can further refine what is important to them as well as get a good sense of local value and price. I would also suggest waiting until you have saved 20 percent as the loan rates are much better.

3. What's your advice for a family that is looking to trade up, but needs to sell their house first?
That question is very market specific. In San Francisco, for the past several years, it has been easier to sell than to buy, so I have counseled people to check with their lender about a bridge loan, to get their house in good shape (pest and contractor inspections, do the suggested repairs), keep the garden attractive, keep the paint maintained, make sure the deck is in good repair, etc. It's not until they are finally in contract on the new house, that I put their current one on the market—fast!— so that the period of holding the bridge loan is reduced. I have had clients looking for that trade up house for three years, and they would have been in a tough position if they had sold first then had nothing on the market to buy. Unless, of course, they were happy renting somewhere for a while, but most families don’t want to move twice and once they have owned a home, they feel that renting is a waste of money.

4. When you do think the market will turn around?
Again, San Francisco has been an island in this regard. The market has been very hot for the past four years, save about four months in the fall of 2006 which were a bit slower. We are wondering now what this fall will hold; however, there is a lot of pent up, financially-qualified demand here, so unless the market is flooded with inventory next month, it will likely stay competitive.

5. What about investment properties? Is this a good time to buy a second or rental home?
Investment really depends on how many assets one has. People buy investment property in San Francisco for the long-term equity appreciation, not the monthly cash flow since the prices paid here are high relative to the rent generated. However, for tax deductions, long-term equity growth and even ego, there are always many rental or investment properties that are bought and sold.

Regarding a second home, I have a lot of clients who want or have a pied-à-terre in San Francisco. For almost all of them, it is a lifestyle verses a financial decision.

6. What do you need to know before you purchase a second or rental home?
Make sure you can afford it and are factoring in the cost of maintenance. The loan and insurance programs are less advantageous for a second home since it's not one's primary residence. Think about who is going to fix things when they break and you are far away.

7. What are the top five things everyone needs to know about buying a house?
    1. Know what you can comfortably afford and don’t exceed it.
    2. Do your homework on neighborhoods, look at enough houses to both be comfortable with values and your priorities.
    3. Make sure you have a good real estate team, realtor, lender and attorney in place— people you trust and are comfortable with.
    4. It’s both fun and stressful.
    5. Trust your intuition—you will know the right house when you find it. For most people, choosing their home is an emotional rather than
        a rational decision.

8. What are some red flags to look out for when buying a house?
One with a lot of deferred maintenance, such as wood rot, pest infestation, peeling paint, substandard foundation, and an old roof—those could be costly expenses down the road. Pay attention to neighborhood noise and crime rate. Go to the house at different times of the day and night if you are serious about getting a feel for the whole picture. Be wary of getting caught up in a frenzy and overpaying for something substandard just because you are sick of looking.

9. What can/should a family do to improve the value of their house?
Regular maintenance is key: clean your gutters every fall so they don’t leak, have regular pest inspections and repair small things so they don’t become large. A little wood rot may not sound like much, but rotten wood attracts termites and that's a big, expensive deal. Make sure your house is up to current safety and energy efficiency codes. Reroof and repaint when necessary. This maintenance protects the house as well as puts a smile on your face when you come home every day. Invest in landscaping, it will pay off.

10. What should a family avoid doing that would hinder the growth of their house?
Don’t neglect to maintain your home. Also, don’t over improve it for the neighborhood or street if you plan on selling in the near horizon. I you are the only house on a block of apartment buildings, don’t spend a fortune remodeling it; however, if you are the smallest house on a nice block, you will more than be rewarded for your remodels.

11. What do you tell your clients about finding the perfect house?
While it will feel perfect to you when you find it, just know that there is no perfect house—just like there is no perfect spouse or partner. However, when you find that house, the total package exceeds any shortcomings or things that are missing on your must have list. When a buyer has gone wild for a house, I very often find myself in the position of saying things like: “But, it does not have a big flat yard like you said you had to have, it is not walking distance to your son’s school, which had been a prerequisite.” Once they've found the one they love, they don’t care. The total package is there and it’s actually a very emotional, as opposed to logical, decision for most people. Some houses just make you feel good for reasons you may not even understand—layout is the same as the apartment you are currently renting and love, it reminds you of grandma’s house, etc. I tell everyone there is no perfect house and that they are going to have to make compromises—everyone does—even at the $6 million level, compromises are okay when you find the total, right package.

For more information, go to www.anniewilliamshome.com. Contact Annie at 415.819.2663 or awilliams@hill-co.com.

RED BANK, NEW JERSEY
Joyce Tabachnick is a GRI and CRS-certified realtor specializing in residential and investment real estate. Here, Tabachnick discusses the importance of teamwork, why a stitch in time saves nine and dispels the myth behind finding the perfect house.

1. What's the trend in your area? What do families want?
The trend in our area depends on the town that you live in. Growing families, of which there are many in my area, are very interested in having enough open living space. Gourmet kitchens over-looking the family room offer a nice way for everyone to spend time together and most of my family clients seek out this amenity.

2. What's your advice for a first time buyer?
First time home buyers should find a realtor with whom they feel comfortable—one who will explain every part of the process. Buyers should also know that a good realtor will have a reliable team of professionals with whom they work, such as attorneys, home inspectors and mortgage reps, etc.

3. What's your advice for a family that is looking to trade up, but needs to sell their house first?
It's not so easy to predict when a house will sell—or for what price, these days. In most markets, it is advisable to list your house with a realtor who can present you with an aggressive program to get your house sold before you buy a new one. In my area, it is easy to find a house to buy, but not so easy to sell one quickly. As soon as your house is under contract, then you should look to buy.

4. When you do think the market will turn around?
If I had a crystal ball, then I could tell you when the market will turn around. Some say as late as 2009, while most suggest probably right before the November 2008 elections.

5. What about investment properties? Is this a good time to buy a second or rental home?
It's always a good time to buy second home, if you have the resources to do so. With the stock market so volatile, people can feel comfortable that real estate is a good place to their invest money. But, I cannot stress enough that you have to be honest about your ability to service the house on a monthly basis. When figuring out if you can afford a second home, be sure to include not only the monthly costs of mortgage, insurance and taxes, but the estimated costs of electricity, heating, water and repairs.

It's also always a good time to purchase a rental home, if you have the resources to do so. You must think of a rental home as a long-term investment, not a source of immediate extra income. In fact, you should bank on having tenants only nine to ten months out of the year in an effort to make sure you can afford carrying the cost of rental home if it's empty. I don't advise people to buy a rental home unless they have enough extra money in the bank to cover the mortgage, taxes and insurance for several months along with a nice cushion of funds to cover necessary repairs.

6. What do you need to know before you purchase a second or rental home?
In my area, since home prices have been in a downward correction for the past year-and-a-half, it is a good time to purchase a rental home. Here's a simple rule of thumb: If the NOI (net operating income) is more than the net operating expenses, then you have found a good investment. Most importantly, you must do your homework. What new developments are being built? What are rents going for in the neighborhood? What are the local (town) rules and regulations for renters and tenants?

7. What are the top five things everyone needs to know about buying a house?
    1. Is the house structurally sound?
    2. Does it need a new roof?
    3. How old is the hot water heater?
    4. Has the electric been upgraded to code?
    5. Is there an oil tank on the property?

8. What are some red flags to look out for when buying a house?
Is there or was there an oil tank? If there was one, was it removed and sealed off properly? Is there water in the basement? Are there cracks in the foundation? Are the floors pitched? Is there an appearance of mold in the bathrooms or basement?

9. What can/should a family do to improve the value of their house?
To improve the value of your house always make sure that you fix even small things that go wrong, so as to ensure that they do not become big things. Keep the driveway neat and usable, keep the exterior of the house clean and make sure that the property is neatly manicured.

10. What should a family avoid doing that would hinder the growth of their house?
Do not over-improve your house—you never want to be the best house on the block.

11. What do you tell your clients about finding the perfect house?
I tell my clients to make a wish list, in order of priority, of the things that they would like to have in their new house. Order of priority is important because people rarely find a house that has everything on their wish list. The only way to have the perfect house, according to your likes, is to build it from scratch.

For more information, go to www.newjersey4homes.com. Contact Joyce at 732.547.1477 or joyce@joycetabachnick.com

welcome man

DALLAS, TEXAS
Fred Lanham is an ABR, CRS, GRI and RECS-certified agent for Keller Williams Realty. Here, Lanham talks trends, traffic patterns, trust and more in Dallas, Texas.

1. What's the trend in your area?
The trend is perceived as a “buyer's” market, but good homes priced at fair market value are selling very fast. Builder's homes are somewhat overbuilt and flexible in pricing and/or promotions.

2. What's your advice for a first time buyer?
Do your online research with the assistance of a trusted realtor that is knowledgeable in the specific area where you wish to purchase.

3. What's your advice for a family that is looking to trade up, but needs to sell their house first?
If they have a lot of equity in their present home, then I tell them to look into a home equity loan (low closing cost and competitive interest) prior to looking at bridge loans. The last choice is to write a contingency offer because sellers view it as a very weak offer and will accept it only when they are desperate or if it appeals to their greed.

4. When you do think the market will turn around?
The Dallas area market has not suffered very much and is already showing signs of improving. There are now fewer home for sale and they spend less time on the market.

5. What about investment properties? Is this a good time to buy a second or rental home?
I feel that it is a good time to buy a rental property. Look for value and growth potential over the long-term rather than buying to flip. I feel that second homes should be purchased very carefully. If you use finance and tax leverage, remember that rental deductions will probably conflict with your personal use and maintenance will probably be a chore.

6. What do you need to know before you purchase a second or rental home?
Buyers need to know that second homes and rental homes are two very separate categories of purchases and both should be approached with caution. You should take a very realistic appraisal of your personality concerning renting and dealing with tenants.

7. What are the top five things everyone needs to know about buying a house?
    1. Location.
    2. Condition.
    3. Does the home fit the size of the neighborhood (larger or smaller)?
    4. How many investment properties exist in the neighborhood?
    5. School quality—even if you do not have children.

8. What are some red flags to look out for when buying a house?
    1. Home does not fit the rest of the neighborhood—consumers like homogeneity.
    2. Home has been completely redone and you nor your inspector cannot determine what is hidden behind walls and/or modifications.
    3. Roof and/or foundation movements.

9. What can/should a family do to improve the standing of their house?
I strongly recommend pre-inspection of homes and owners correcting the major and minor items found in the inspection. I feel that drive-up appeal created by landscaping and cleanliness (not just done one week before putting the home on the market) pays dividends.

10. What should a family avoid doing that would hinder the growth of their house?
Don't be too trendy with decorator colors in basic portion of the home. A few uniquely colored bedrooms dedicated to children are okay, but many other trendy approaches deter the appeal of the home. The market place calls for homogeneity.

11. What do you tell your clients about finding the perfect house?
Look at a lot of homes, study floor plans and traffic patterns near the homes. Think about how long you are going to live in the house. We have found that most families' needs change basically every seven to 10 years, so anticipate these changes.

For more information, go to www.dallasresidential.com. Contact Fred at 972.386.7454 or fred@dallasresidential.com.

ARLINGTON HEIGHTS, ILLINOIS
Sue Ducheck is a licensed agent and broker for Picket Fence Realty. Here. This Arlington Heights native talks preparation, expanding your portfolio, bright pink wallpaper and more.

1. What's the trend in your area? What are families looking for?
Trends in my area are hard to sum up. But what families are looking for and my area's trends seem to mirror each other. The demand for schools, park districts and close proximity to community downtowns is at an all time high. Arlington Heights offers all of the above and has been enjoying a strong demand due to these factors.

2. What's your advice for a first time buyer?
My best advice is to really sit down and look at what your goals. Ask yourself: how long do I want to commute?; what are my interests?; how far is the home from my extended family? The next issue is being realistic on what you want/can spend on your home. What you qualify for (mortgage-wise) and what you want to spend can be vastly different. Make a wish list—break it down into a must-have list and a would-be-nice list. Get a realtor who has an inside track to your market segment. Being on the front end of the information train can prove invaluable.

3. What's your advice for a family that is looking to trade up, but needs to sell their house first?
Start early. Having your home prepared for selling and hitting the market at the most optimal time can be huge. Understanding timing strategies and being honest and objective with yourself about your property is key. A buyer who has no home sale contingency is a powerful one. The other factor is to be willing to think about alternative housing should your home sell very fast and you have not found your next dream home. Contingency plans and being flexible about timing offer challenges are, in the long run, worth considering.

4. When you do think the market will turn around?
This is always a hard question and one that I am asked all the time. Real estate is very cyclical and what we are experiencing is not new. Although it is the first time I (and a lot of other realtors) have experienced this type of market, market correction is a normal phenomena. If I were to make a prediction based on what I am seeing and feeling in my market, we have a while to go. I think we will be well into 2008 before we see much shifting.

5. What about investment properties? Is this a good time to buy a second or rental home?
Due to the high level of inventories available, picking up properties at market value is alive and well. Realtors can help an investor find a properties that meets an his profile for his portfolio. Second homes fall into this same classification—there are some great buys available.

6. What do you need to know before you purchase a second or rental home?
Identify your goals: long-term holding for investment, short-term fix and flip or eventual retirement house. Understanding which market you are seeking for an income property is very important. Are you looking for a residential rental? If so, look at the school system and consider things like a clean, three bedroom property that is, of course, priced right. If you are looking for commercial property, make sure you look at all external issues, including industry shifts, vacancies, and CAM (common area maintenance) costs.

7. What are the top five things everyone needs to know about buying a house?
    1. What are you comfortable spending? Make sure that the mortgage payment make sense for you.
    2. Do your homework as to the location. School district, demographics and growth trends are all available online.
    3. Have all of your ducks in a row—get pre-approved, not just pre-qualified for a mortgage. Talk to a reputable lender who will run your
        credit and verify all of your information to give you a solid pre–approval. Having the go-ahead to purchase a home without any delay
        can be the difference between securing your dream house or losing it to someone who was more prepared.
    4. Find a realtor who knows your area. While there are many online search sites, they can be very frustrating. Many times the sites have
        dated information. Often times people fall in love with a home they find online, but when they call to get more information on it, they
        find that it's already sold. Having a professional notifying you of all the properties that are currently available and having, by proxy,
        access to all their tools will allow you to know immediately when new properties become available—this is vital. A professional who
        does considerable work in an area is going to have an inside track to information before it becomes public.
    5. Trust your instinct. I often think a buyer knows it the right house within the first five minutes he or she visits the property. Your gut
        will tell you if you have found it. That's not to say that you should just buy with your heart. You must do your due diligence: get the
        home inspection, check out what closed comparable homes sold for and then put the ball in play.

8. What are some red flags to look out for when buying a house?
Beware of a home that has been on the market for an excessive length of time without any price adjustments. Also, make sure that the answers you get from questions add up. Use all of your senses when examining the house. Look for major structural issues. And, again, use a professional home inspector to ensure that your interests are protected.

9. What can/should a family do to improve the value of their house?
Be objective. From the front door (Is it clean and fresh? Does the door bell work?) to the bright pink floral wallpaper that you put up 20 years ago, you must be leave your emotions at the curb and look at the home from a buyer's perspective.

Don’t put off minor improvements. Keep your eye on the kitchen, bathrooms and systems (heating/AC/roof)—keep them fresh.

10. What should a family avoid doing that would hinder the growth of their house?
Do not go too far outside of the norm in your area. You don't want to over-improve your home to the point that you can't re-coop your investment. Certain investments, such as finished basements or swimming pools, in a region like the Midwest where seasons are short, can be a hindrance. Finished basements can become hard to get a dollar for dollar return because they can be a personal preference. Going over the top in below-grade finishes can also be a trap.

11. What do you tell your clients about finding the perfect house?
Breathe. With a solid game plan, realistic expectations and focus, finding the perfect house can be an amazing adventure—one that can sculpt their future. I love working with buyers because I can quickly learn what their likes and dislikes are and when we find the right house, it's very satisfying. It is a process that should be enjoyed by all.

For more information, go to www.picketfencerealty.com. Contact Sue at 847.394.5804 or sue@picketfencerealty.com.