Hoboken Mom Condo Living
Planning the long-term & juggling the everyday

A couple of local realtors have contacted me to offer discounted real estate commissions to blog readers. I discussed a 4.5% commission and a flat $2k commission if you sell on your own.

The realtors are:

Kyle  Cook
Garden State Realty Group
50 Harrison Street #206, Hoboken, NJ 07030
(908) 627-1190 Phone
Kyle@GSRG.com

Marie Gomer
Liberty Realty
201-926-5040 Cell
mariegomer@gmail.com

The other route you may want to take is to list your unit using a flat fee MLS service (I highly recommend housepad.com) and offer a 3% commission. That is more than agents usually earn, plus you get to try to sell on your own.

The NYTimes recently reported that real estate buyers and sellers are having a very hard time committing to real estate purchases. Both buyers and sellers have been getting cold feet, backing out of transactions at the last minute. The plethora of inventory is contributing to the climate of indecision; studies have shown that people make better decisions when they have fewer choices.

The current state of affairs reminds me very much of dating. You always wonder, is there somebody better out there? I guess that explains why I have always been very decisive about real estate purchases; I got married when I was 25, easily 5-10 years before any of my friends got married. I am subject to misgivings like everyone else, but I know when I see something truly good, and I don’t let it get away. I thoroughly research my options, make a decision, and then don’t look back.

I think that most people, me included, fall into what I call the “upgrade trap.” Basically, you take what you have and think, wouldn’t it be great if I could have exactly this setup, only with upgrades? In the case of my husband, I would love to for him to have great table manners and to excel at small talk at cocktail parties. But it’s not like I can go out to the husband mart and select the same guy, with those upgrades. He is what he is, and if I chose to go find someone else, I might very well find someone with great table manners and conversation skills, only to discover that person is lacking in an area where my hubby is very capable.

There is no such thing as the 100% perfect situation. For the overwhelming majority of the population, the name of the game is compromise. You have to pick your poison rather than waste your time searching for that impossibly perfect solution.

I have heard so many people extoll the virtues of the suburbs as life’s panacea. Listening to them, it sounds like if I moved to Bergen County, I would have a perfect life with plenty of space, no neighbor hassles or noise issues, no worries about property taxes or schools. But life isn’t that simple. Houses are not soundproof. That means that you can hear your kids stampeding overhead when they are supposed to be asleep, and you can hear garbage trucks in the middle of the night, the roar of gas-powered leaf blowers, and the neighbors fighting. Property line disputes, yardwork, soaring property taxes that in many cases are double the level of Hoboken taxes, and bullied kids smoking pot in the high school parking lot. Not to mention long commutes, a car-based culture, and intense racial segregation.

My life in SW Hoboken isn’t perfect, but it is more or less what I expected when I bought my four-bedroom. I already knew the neighborhood since I lived here for five years before then, and we fulfilled my primary criteria (as much indoor space as possible in a healthy building very near a train station). I am worried like everyone else about the school and city budgets, as well as the unfathomable and incredibly corrupt political scene. But I believe Hoboken is headed in the right direction and that we have everything here that we need to take care of our family in the long-term. The worst case scenario is that we have to spend money on private school, and that can happen anywhere. I recently met a family in Church Square Park that lives in Montclair and has their kids commute to the Hudson School in Hoboken. That struck me as ironic in the extreme since so many Hoboken families move out to Montclair for the school system there and pay exorbitant property taxes for it. I cannot imagine for one instant that family planned for things to work out that way.

When I was dating, I countered my misgivings with the dealbreaker approach. Basically, if I was dating someone really special, did that person have characteristics that were absolute dealbreakers? It could be religious beliefs, personality traits, or spending habits, but every guy I dated before I met my husband had identifiable dealbreakers. And even my husband had some traits that almost made me term them dealbreakers, and vice versa (I am certainly not perfect).

But at the end of the day, I chose to be with my husband because I knew I could be happy and fulfilled with him long-term, and that I could deal with his shortcomings. The same applies to my real estate purchases. At a certain point, you can either make a decision, or you can wait things out only to discover life has passed you by. Fencing has taught me never to hesitate, because once an opportunity has passed, you can never recapture it. I believe in getting in early, while you have the pick of the market, rather than waiting until the market is picked over. Sure, you can get a bargain that way, but the selection isn’t that great and you might not wind up saving much more than with an early-bird discount.

Whenever I catch myself saying, “That could never happen to me,” I do a doubletake and force myself to examine the matter more carefully. One example is strategic default on a mortgage.

According to the WSJ, homeowners are more likely to walk away from their properties when they are more than 20% underwater on their mortgages. We have seen a drop of about 6% from the peak of the Hoboken market. Foreclosures are rare although there are a ton of short sales, especially in investor-heavy buildings like the Sky Club.

The NYTimes recently reported on a Boston non-profit that specializes in buying homes in foreclosure and reselling them to the defaulted homeowner at the current market price. It’s an interesting concept, but how do we know when it should kick in? 10% underwater? 15%? And how do you evaluate hardship? One person might have to move for a job, another might have used home equity to finance vacations and new cars. How do you draw the line between bad luck and poor judgment?

When my husband and I bought all our apartments, we put down a minimum of 20%.  We could easily have put more down when we bought our two-bedroom condo in southwest Hoboken but opted to keep our cash free for investments. However, our strategy differed radically when we bought our four-bedroom. We scraped up as much cash as possible to put down 30%. Why? Because we have no intention of moving anytime soon, and we knew there was no way we were ever going to be able to better the 4.5% interest rate we are currently paying on our mortgage.

The plan was to put down as much as possible to keep the monthly payments low, and then not to prepay the principal, thus giving us the opportunity to rebuild our savings. So far that plan is working out as anticipated. However, what if my husband experiences prolonged unemployment or Hoboken property values plunge? It would be very hard to remain sanguine if we lost our entire down payment.

First of all, you have to live somewhere. Our four-bedroom was the best of the available options last year when we needed more space for our family. I can’t constantly reevaluate the decision as if we were going to move today. If and when a life change is imminent that forces us to reevaluate our real estate situation, then I will worry about how much of a loss, if any, we would take on the sale of our condo.

As long as my husband remains employed in his industry, we should not have any problems making mortgage payments, nor will we have to move unexpectedly. And the odds are low of our condo devaluing significantly since four-bedroom properties constitute only 1% of the Hoboken market.

Do I think there are some funky, oddly-shaped walkup units far from the PATH that won’t sell and are going to wind up in the hands of the bank? Yes, I do. However, barring some sort of natural catastrophe like Hurricane Katrina, I think the odds are low of strategic defaults becoming the norm in Hoboken. We may not experience huge appreciation like the heady days of a couple of years ago, but chances are we also won’t see drastic price drops either. Whatever happens, we will be able to see it coming from far away.

First of all, take a deep breath. You are embarking on a road that takes great mental strength and endurance. Second, get your facts straight.

The standard NJ realtor commission is 6%, split between the buyer and seller agents. The listing agreement you sign as a seller delineates the commission split, but it is usually 50/50. When there is a referring agent, that person receives 1% and the remainder is split between the buying and selling agents.

You can negotiate the commission down to 5% with most agents. 4.5% is the lowest most of them will go. I had a 4% commission on the listing agreement for the sale of my Hoboken 2BR and paid 3% on my 4BR purchase. Negotiating those terms with the realtors caused about 45% of the stress from my sale-contingent purchase (another 45% came from the mortgage process and the remaining 10% went to the usual paperwork/juggling act hassle).

Here’s the secret; you and your buyer can negotiate a reduced commission with your agents. Basically, both brokers have to sign off on accepting a lower commission from the one on the listing agreement, but it can be done. In my case, the deal would not have happened without the lower commission because the seller and I had both given up more than we wanted. He went down below his lowest #, I went above mine, and we were still about $10k apart.

There were three critical factors to negotiating the reduced commisson:

1. The unit I purchased had been listed for quite a while, with several price drops, and the listing agreement was about to expire. Expired listing = $0 for the seller’s agent.
2. My purchase and sale were tied together. 4% of my 2BR sale + 3% on my 4BR purchase made it worthwhile for the listing agent (same one on both deals) to take the commission hit (I listed my 2BR after I went into contract to buy my 4BR).
3. The buyer and seller on my 4BR were in frequent, close contact. This is the reason why most commissions don’t get negotiated down. Your agent is your ally, yes, but don’t forget he or she is also making money off of you. I estimate my buyer’s agent got compensated at about $1k/hour. She sent me a bunch of listing emails and took me and my family (toting two toddlers through ice and snow; fun!) to one day of showings (we saw five properties). I believe in compensating people fairly for work done, but I can’t think of any industries that warrant pay on that level; maybe astronaut?

If you have a reputable agent (I was working with the biggest agency in Hudson County) then you will not see any difference in performance on your sale due to the lower commission. I had over 50 showings in a two-week period in December 2008, the slowest real estate month in a down year for real estate. It can’t hurt to ask for a reduced commission; the worst thing that happens is your agent says no.

Realtor.com: All New Jersey MLS listings here (direct feed from realtor-only databases). I start with this site to get the most accurate sense of asking prices for a unit (ie. search in Hoboken, NJ for 3BR+, 2BA+ units between $600k and $800k). I look at the square footage, finishes, location and unit sizes to get a decent sense of where a property should be priced.

Trulia.com: MLS listings only, the listings get uploaded a bit later than Realtor.com b/c they don’t have the direct feed. I really like this site because it shows all sorts of useful local data on its home page, like recent price change %, # of listings, sales and foreclosures, and you can ask realtors questions. Shows listing address when available, a nice bonus.

Zillow
Oh, Zillow. How I love Zillow. This is hands down my favorite real estate website. Very comprehensive database of Hoboken properties (features both MLS and FSBO listings), showing walkability, street view, property taxes, square footage, ownership and estimated value (pretty accurate for 2BRs, skewed a bit high for smaller units and low for larger ones.) My favorite feature is when you search for an individual property, it pops up on a map with “Similar Sales” in the bottom righthand corner of the popup window. If you click that link, a whole list pops up of recent sales. I have noticed a lag of about two months in sales data (ie the actual sale took place in March but the Zillow sale date is May) but otherwise incredibly useful for comparables to determine how much a property is worth.

hobokenrealestatenews.com
This site provides a rare glimpse into the world of MLS listings that NJ realtors guard under lock and key (most buyers buy through a realtor, making FSBO really difficult) through weekly postings of the total # of properties for sale, under contract, and sold. I use this site for the latest comparables and to get a forecast of rules changes that could change the New Jersey real estate environment. If you sign up for the Weekly Wednesday update you can get the latest sales figures. I find the posts about realtor etiquette barely comprehensible. I am sure the split in commission is fascinating for realtors since it is all about their paycheck, but for buyers and sellers, who cares as long as we get access to the properties? The comments on this site are interesting but can also be extreme and barely comprehensible.

Streeteasy
I have actually never used this site but know a lot of people who swear by it, especially in NYC. I ran a quick comparison search using the same parameters as Realtor.com (my favorite, 3BR+, 2BA+ units between $600k and $800k) and came up with only 7 listings compared to the 18 on Realtor.com. Don’t know what the story is there. This site is definitely MLS listings only (no FSBO) but for some reason they don’t have 100% of them.

Housepad.com
Flat fee MLS listing service. Starting at $299, you can pay a NJ realtor to list your property for sale at the MLS, cutting the amount of commission you have to pay by half (your typical commission is split between the buyer’s and seller’s agents. By using Housepad you take out the seller’s agent commission). I used this service to list my 2BR; the listing showed up very quickly on Realtor.com with Realmart Realty as the listing agent. The problem is that local realtors know Realmart is a flat fee listing service and conveniently “forget” to tell their clients about Realmart listings. The only showings I got were from buyers who searched on Realtor.com and brought my listing to a realtor (usually the realtor is the one sourcing listings). Downside: you cannot link to an external website b/c of strict MLS guidelines. Upside: you have total control over the listing information and can send changes to your Realmart contact which are implemented very quickly. I recommend the $399 package because it allows you to post 8 pictures instead of one, very important for first impressions.
Note: If you are selling FSBO then you need to develop a relationship with a real estate attorney before you find a buyer. Since most sales are MLS, which comes with a standard contract, FSBO sales are much more complicated and attorneys justifiably charge more since they have to do a lot more work. The seller’s attorney writes the contract, so s/he is someone you should have on speed dial as soon as you find a buyer.

Postlets
An excellent way to format your real estate advertisement and disseminate it online. Ads are syndicated to a number of free classified sites, and HTML code is provided to copy and paste onto Craigslist for the prettiest (and easiest) ads you have ever seen.

New Jersey Online Tax Records database
This site is a giant PITA to use but worth the hassle because it shows you ownership and sale price information on every property in New Jersey. I usually have to search several different ways before I find a property or owner I know exists.

PropertyShark.com
Similar to the NJ tax records database since it provides ownership and sale price info. You are limited to four free reports per day. I used to use this site all the time before I discovered the NJ records database, according to an online review it provides additional services like foreclosure info and mailing lists, but I was not able to access this information. I think that similar to Streeteasy, this is more of a NYC site than a NJ one.

Conventional wisdom agrees that the real estate market has bottomed out and returned to reality. Properties are starting to sell quickly, in some instances for pretty high prices. There are some multiple bids out there, always a promising sign. So what differentiates the properties that sell and those that sit on the market for six months or more (aside from pricing)?

There seem to be two recent trends with units that sell quickly; they are beautifully staged and in pristine condition. But the condition is the tip of the iceberg; the properties that sell have wonderful floorplans and finishes. Buyers these days have so many options that they can be very selective. They want to buy homes that are move-in ready; they do not want to use their imagination to look past a bad floorplan or outdated kitchen.

In many cases, sellers are finding that they are able to more than recoup renovation costs; one seller garnered an extra $375k for $147k renovation. If you have the time and cash, it might be worthwhile refinishing the floor or upgrading your kitchen; if buyers keep asking about california closets or a backsplash, it could be the difference between selling and not selling your unit. And chances are, the increased purchase price will more than justify the expense and hassle.

Almost everything connected with real estate is a volume game. Lenders, mortgage bankers, attorneys, realtors, house cleaners, they all want to work with someone who is going to send them lots of business. That leaves the typical home buyer (ie. me) at a distinct disadvantage. After all, how many real estate transactions am I going to be involved with over my lifetime? I doubt I would buy or sell more than once every five years, plus those transactions are not exactly major conversation pieces for me (shocker, right? I save it all for the lucky people who read this blog).

What that means is that people who make their living off of real estate transactions have no incentive to provide good customer service. Once you hire them, they are going to get paid whether they do a good job or not (anyone want to start a realtor ratings website?).  So here is my macro approach to assessing which realtor is right for listing your property.

—————

Hi Katherine,

Could you tell me what agent you use and your experience with your broker, overall positive? any negatives? anything i should look out for if i decide to use one?

Thanks so much, and love your honesty and advice on brokers!

M.

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Hi, M,

We used Patrick Southern from Liberty Realty to list our 2BR. We wound up selling FSBO, but over the two weeks Patrick had our listing (we sold in 3 weeks) he had a whole bunch of buyers lined up to see our unit, as well as a photographer and video tour scheduled (never got them shot since we sold too quickly).

Liberty is a huge outfit so there was very much of a machine feel (ie. our sale was a # being run through their system). Great for efficiency, not so great for the personal touch. What was especially frustrating was that about half of the showings no-showed (it took us 2 hours to get ready, and we had to juggle naptimes and feedings for our two toddlers, NOT fun), another 25% were hours late, and the feedback from all the showings was very negative (they hated the location -so why waste their time and ours by bringing them over?) Also, after my initial visit with Patrick, almost all of my contact was with the receptionist. And I had virtually no input into the wording used in the MLS listing, even though I had very strong opinions about that based off of feedback from my neighbors and FSBO buyers (I wanted to highlight the huge outdoor space, Patrick advised that buyers would think there was something wrong with the interior if we did that).

You can decide whether to go with a small realtor, like Hoboken City Real Estate (Clara Sciancalepore is very nice) that maybe doesn’t have the same network and resources to get your unit seen, or else a large outfit like Liberty that has more of a cookie cutter approach to sales. I was very impressed by the websites of realtors like Soha Fontaine. The other way to go is with an outfit that will discount their fees and allow you to sell on your own, like Garden State Realty Group (my contact there is Kyle Cook).

I have had limited experience with all the realtors except for Liberty, but I would love to hear your feedback if you list your unit with one of them. The one thing I would definitely do before signing with a particular agent is to check them out on Trulia. If you can track down one of their listings (ie. find one on Google then do a search on Trulia by Hoboken, NJ, size and price) then you can click on the agent’s name and see all their other listings. That way you can get a sense of their area of expertise (ie JC, Hoboken) and the types of units they usually sell (small 2BR, walk-ups, luxury buildings). I have noticed that realtors tend to be better at helping to buy/sell different niches, but it’s hard to get them to tell you what their specialty is. This way, you can judge for yourself.

Hope this helps!

Kathy

Much has been made recently of the Case Schiller data showing the real estate market is stabilizing, including the recent gain of 0.3% in New York. You can track the Hoboken MLS market every Wednesday, breaking down the #s into different size categories. There has been recent controversy about shadow inventory (ie. owners who want to sell but haven’t listed their units). Forget about hypothetical #s: what about the owners who are actively trying to sell on their own, or my FSBO compatriots?

Over the last six months, I have setup websites for four Hoboken moms selling their 2BR units, as well as helping a local developer market a 4BR. I am pleased to report that the 4BR is in contract for close to the asking price (about 4% under asking), scheduled to close at the start of the new year, and one of the 2BRs sold at the asking price after the owner listed it with a realtor. However, the news is dire for the other three 2BR units. One owner gave up on trying to sell and rented out her 2BR, and the other two are sitting on the market (one studio and one 2BR). There have been a few serious nibbles, with one potential offer but long dry spells in between spurts of activity.

I reached out to the owner of the recently sold 2BR and asked for her feedback on the sale process. She wrote:

We did sell our apartment. We ended up going through a realtor and sure enough she got it sold for asking price. We still lost money because we did sell for only slightly less than we bought it and then minus the 5% commission but all in all we are glad that that part is over. It worked out well because the woman who bought our place bought it as an investment to rent. We immediately started renting from her so our money is out and we can look for a house without the stress of having to coordinate closings etc.  We got the offer the end of August. We put an offer in on a house out in Millington in Long Hill Township it got accepted. We are set to close on Nov. 20 but the inspection turned up a few issues so it may be pushed back.  Thanks for checking in and I hope all is well with you.

D.

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From: Katherine Zucker
Sent: Tuesday, October 27, 2009 12:37 AM
To: D

Hmm, that kind of sucks. But at least you sold. Makes me wonder if my other friends w/2BRs should do a flat-fee MLS listing so they can save on the commission. Their craigslist ads have been getting flagged and removed every week, we think by a broker who wants their listings.

Thanks for sending me the update, do you mind if I post your email? I am planning to write a blog post about the status of the moms I have been helping (you are the only one who sold, groan). The developer’s 4BR near my building did sell, so not sure if that means the 2BR market sucks (which it does, but that might not be the only reason why these units aren’t selling -I think location and not being on the MLS play a big part).

Congrats on the upcoming purchase, and fingers crossed that all goes smoothly on that front! I am sorry to see you leave Hoboken but know staying isn’t an option for everyone. Stay well.

Kathy

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From: D
Sent: Tuesday, October 27, 2009 1:45 PM
To: Katherine Zucker

I don’t mind if you post my email.  I think purchasing an mls listing would really help. I also think many buyers especially first time buyers feel safer when a place is listed with a realtor. There is no real reason for it but I think they are scared and don’t know the process and tend to go with realtor listings that was just the feedback we got.

Thanks again for all the help you provided for us.

D.

Because I blog about Hoboken real estate, I have been approached by a local realtor who has agreed to give moms who come through me a reduced commission (we discussed 4.5%) and a non-exclusive listing allowing the owners to still market the property on their own with a predetermined commission (I had $2k written into my listing agreement). I don’t personally benefit from these referrals but thought it was worth passing along to my readers because hey, who doesn’t want to save money?

I have not worked with him personally so don’t know how good a realtor he is, but he seems to be personable and motivated. And being able to sell on your own while listing on the MLS is really the best of both worlds, so if anyone wants his contact info, shoot me an email at zhobokenmom@gmail.com. I would love to hear feedback so I know whether to continue to recommend him.

Kathy Zucker

When you read real estate articles and blogs, it is very easy to think you have a solid handle on the real estate market. Every single person I have met in connection with real estate has been cocky at the outset. Buyers, sellers, renters, developers, their position relative to the market made no difference. They were all convinced they were a great position to buy/sell/rent. I have patiently waited for them to physically get into the market and watched their illusions slowly fall away.

Assumption #1 was that I was going to find a fantastic, huge apartment to rent for a song. That illusion was the first to go. Yes, there are a ton of apartments available for rent. But most of them were too small for my family (a 1,400 SF 3BR is not going to cut it long-term for us) and they weren’t all that cheap. I also didn’t like the layouts or finishes, which were pretty crappy. And I REALLY hated the renter mentality of the buildings I looked at; everyone kept to themselves, the other tenants were rowdy and inconsiderate, and I felt like an ATM being wrung by the management company, with high stated fees for every possible repair/service.

Assumption #2 was that there would be a huge selection of apartments for us to buy, and we would be able to bargain sellers down an enormous amount. Um, no. There were a total of 10 apartments available in our location (Hoboken), price range ($600k-$800k) and size (3BR+, 2BA+). That’s not a whole lot of options. And when we went to look at properties, our options got a lot more limited because we hated about 80% of the properties we saw. We now know we will never live on Willow Terrace. And when we found the perfect home, we wound up spending about $100k more than we planned because that’s where the market was.  It’s very rare to find a seller who is going to sell for a lot less than recent sales, and short sales have their own set of headaches.

Assumption #3 was that we would be able to clear at least $100k on the sale of our 2BR. Every realtor I spoke with assured me my apartment would sell somewhere in the $500k range. It appraised for $585k in 2005, so $500k+ was a reasonable assumption, right? I’ll never know now if we could have gotten that much if we had waited longer (our second offer was above $500k but the buyer needed more time than our sale-contingent purchase allowed), but our unit plus two others sold in the mid $400s this spring. Either we dragged down the values in our building with our sale, or we were prescient. I really hope it was the latter.

Theory is great, but until you actually get out there and actively try to buy or sell a property, you don’t know what you are truly dealing with. The best thing to do is to establish a range of expectations (ie. absolute minimum sale price for your 2BR, up to what you expect to get) and then throw your hat in the ring and see where the chips fall.