Five Minutes For Memorial Day

 Posted by at 9:09 am
May 262010
 

When I drove out of town the other day I got to wave to a couple of friends who were installing our flags on the the electric poles along Main Street. The day the flags go up is a special day for me and I love coming home later in the day to see those flags flying. So thanks to Jeff and Gary for the work–and to the many others who made the flags possible with donations and support.

I have occasionally speculated that Memorial Day could just be considered a day of thanks. But I’m not going to lobby for that because I do think it should be about remembering–it’s the remembering that makes us thankful. Watching Jeff and Gary reminded me of “helping” my Dad get ready for the day many years ago. There were trips to the cemetery to plant flowers and place flags… a special day then, too. I guess the rituals were enough for a five year old to understand something special because I don’t remember many words. The speeches after the parades are long gone. But I do remember a crisp uniform and a somewhat strange combination of pride, sadness, and happiness as we went about the day. 

I’m glad I still experience that combination of feelings every year. Many things have changed but some have not. If you need some words to help with the memories, pride, and appreciation spend five minutes watching this video.

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I Almost Saw It…

 Posted by at 4:04 am
May 252010
 

Imagine my surprise when I saw this in a recent e-newsletter from the Greater Bangor Board of Realtors:

FEATURED COMMENT:  Open the Spring 2010 Broker Agent Professional magazine to page 27 and see a featured comment from our own Walter Boomsma of Maine Choice Realty!

I had to do some research to determine what I’d said and why! Turns out there had been an article “Why Realtors Cry” on the Broker Agent website dealing with the trying times many are experiencing given the current market. Here’s part of what I said:

When I teach pre-license courses I’m fond of pointing out the new agent’s biggest mistake: being desperate for income. It may not be a sin to be poor, but most decisions made from the perspective of poverty end up being bad decisions… Another way of looking at this is that while it may not be a fiduciary duty as such, we do have a duty to our clients to run a profitable business and deal with our own cash flow challenges without making those challenges our client’s problem.

There is a certain irony that this crossed my desk while I was working on a letter to my clients and friends: if we don’t create change, change creates us.

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I Saw It On TV!

 Posted by at 10:37 am
May 172010
 

I’ve been reading a book based on a TV series about real estate. It’s actually fairly well written and in many cases downright funny.  But there are also a number of places where it is just plain wrong. That’s one of the joys of receiving advice (whether it’s from a book, TV show, or the agent you are working with). Sometimes it’s just plain wrong.

I chuckled a bit when a potential buyer called me recently to announce that she was ready to buy a house because she’d been watching all the real estate programs on TV and knew “how it worked.” I envied her because I’ve been at this for a while and I still don’t know how it works. Not every time anyway.

Students in my real estate classes learn to remember that we have two hands and that should remind us to consider both sides of a question when giving clients advice. When a buyer asks, “Should I make a really low offer?” we do well when we consider both possible answers. “Yes, because the seller might accept it. But on the other hand… there are some risks associated with really low offers…”

In other words, you should be getting all the information necessary to make a decision that is ultimately yours. If I could give a buyer only one “tip” it would be just that. Get all the information—the pros and cons—before making an informed decision. In simplest form the tip is “be a smart buyer” and that includes surrounding yourself with professionals willing to educate you.

In addition to being a smart buyer, here are some other recommendations—many of which will apply to sellers as well.

  • Read every piece of paper and take everything seriously. This is especially important regarding the offer you sign. Don’t be intimidated into just signing and don’t be too proud to ask questions about any points you don’t understand.
  • Keep legible copies of all paperwork in an organized file. Remember that a real estate transaction is complex. Be prepared to consult professionals: lenders, home inspectors, attorneys, accountants.
  • Don’t just look for a house; look for a community or neighborhood. Unless you are a hermit, what’s around you will have importance. You can add a family room. Changing a community isn’t quite so easy.
  • Be prepared to act quickly and be available to do what needs to be done. Taking a few days off to go to the islands might sound good, but remember your priorities. It’s actually a good idea to set a timetable. I once worked with a buyer who had been looking for seven years. (Not with me!)
  • It will sound self-serving, but have some loyalty to the agent you choose.
  • In Maine, you should be given a one page “Real Estate Relationships Form” that describes various types of relationships the law permits and requirements for them. Selecting the agent and type of relationship is an important decision that should be made early in the process.
  • Understand that there is an emotional and financial component to selecting a home to purchase. In the ideal world, these will be in balance. In the real world they’ll require some juggling. The home you fall in love with may not make the best economic sense. That doesn’t mean you should reject it. (Think, “On the one hand—on the other hand.”)

Ultimately this really is about making an informed decision—your informed decision. Don’t let somebody else tell you the right answer. Oh… and don’t believe everything you see on TV!

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May 082010
 

The opportunity may be gone to collect a tax credit for buying a home, but that doesn’t mean there aren’t other opportunities for buyers. Just consider this: there were some reports of sellers “hardballing” buyers in the last few weeks of tax credit eligibility. Sellers knew that buyers were working against a deadline and they took advantage of it. They knew getting under contract meant up to $8,000 in tax credit for the buyer and they decided to “force” the seller to share the wealth by increasing the offered price. “If I accept your offer you stand to receive an $8,000 benefit. My counter offer involves you sharing that… I want $4,000 more than you offered.” We might say that a buyer’s opportunity became a seller’s opportunity as the deadline approached.

This reminds me of the oft-stated truth, “There’s nothing like a fast approaching deadline to keep you focused.” In a perhaps not intended way, the tax credit deadline created some “undue influence” on buyers who waited until the last minute to find their home and get the deal done. We can argue whether or not the sellers in these instances were being fair, but the buyers ultimately put themselves in this position.

A lot of buyers are repeating the mistake and again putting themselves in a less than ideal position. Without getting all “economic” we can say with some confidence that interest rates are already off their lows. I’m not confident about how quickly they will climb, but I’m sure they will. The only question that’s worth talking about is how long it takes for sellers to realize climbing interest rates are creating another deadline for buyers.

It’s basic math. As interest rates climb, payments and costs go up. Each “click” up potentially reduces the amount of house a buyer can afford. (The money that would have gone into purchasing the house goes into paying to borrow the money.) So, let’s say for example, as a buyer you postpone your buying decision hoping prices will come down. If you’re looking at homes requiring a $100,000 mortgage and interest rates climb just one half percent that delay cost you $5500 in increased interest cost over the life of the mortgage. Your monthly payment will also increase 3%.

If interest rates begin to climb quickly, sellers may gain the edge in negotiating. The house the buyer could afford today will become unaffordable at some point in the near future.

So, while I don’t subscribe to the “it’s a great time to buy!” theory as a general guideline, I do think it’s a great time to sit down and do some thinking and analysis and make some decisions. If you are in the market to buy, how long are you going to wait before you “get serious” and make a decision? Does waiting cost you money or make you money?

Let’s not forget the principle of “target fixation.” The term stems from a phenomena discovered in World War II where pilots became so fixated on targets they would tend to collide with them during strafing runs. The brain gets so focused on the target that awareness of obstacles and hazards decreases. (If I represent you in a transaction, one of my tasks is to help keep you focused without allowing you to become fixated.)

Your stimulus package is no longer about a tax credit. In reality, that was only one piece of the buying decision. I’ve used interest rates as an example, but that’s just another component. Yes, prices of homes (in general) are down. That’s just another component. Your personal stimulus package needs to include all the positives and negatives at your disposal–you might be surprised at how many there are!

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