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

Most buyers are looking to close immediately. They are often near the end of their rental lease or else have decided they need to move. The whole sale process lends itself to immediacy since mortgage rate locks expire after 30 days, and it is very expensive these days to float your rate. It is also fairly risky to wait to lock since nobody knows where interest rates will be in six months and it is very hard to plan if you don’t know how much your monthly mortgage payment will be.

Big lenders are backlogged right now with refinancing application (Wells Fargo, 90 days, WTF?) so it is taking 30-60 days for most purchases to close. The problem is, where do you go? I have noticed that my clients all initally plan to rent, but once the actual prospect of selling their 2BR becomes immediate, they all start looking to buy. A rental lease locks you in for 12 months, and that is too restrictive if you know you want to buy.

Once you make up your mind to sell your 2BR, you should start looking seriously at areas to buy. Even if you don’t want to go into contract, it helps to identify the properties you would want to live in. And maybe the stars will align and one of them will be available after you go into contract to sell your 2BR. It can’t hurt to look, and you will have a firm sense of how much you can pay once you know the net proceeds from your 2BR.

There are a number of ways you can advertise your sale. I recommend starting with the free options and then escalating to the paid ones. As always, you should point all your ads to one stable location -the last thing you want to do is make an interested buyer search hard to find information about your unit. Try to choose a domain name that is short and easy to remember.

Free

• Postlets.com (I highly recommend the $5 lifetime multi-page ad)
• Craigslist (using your Postlet script to make a very pretty ad! Make sure you post every Wednesday since buyers start looking for weekend showings on Thursdays. You can also post more frequently to make your ad go to the top of the list.)
• Kannekt.com (same Wednesday deadline)
• Zillow.com (look up your address and then claim your unit; you can set a “Make Me Move” price if you are not actively looking to sell)
• NY Real Estate Trends
• Hoboken411
• NJVille

Fee

• NYTimes online classified ad $130 (print option is $280)
• MLS $299 (need to specify buyer’s agent commission of 2%-3%)
• Trulia.com (must have an MLS listing for this site)

The nice thing about all these ads is you have complete control over them. If you want to adjust your sale price, tweak a bullet or pull your ad, all it takes is a login or email.

If you google “showing your home” you can get whiplash from the torrent of information out there. Stage your home, declutter, show your home empty. remove all photos, have fresh flowers, the list goes on and on.

When we were selling our 2BR, I felt like we had two choices; 1) move out and stage our apartment to show, or 2) rent a storage unit and get rid of about two-thirds of our possessions. Neither approach appealed to me since the first was too risky and the second would have made it very difficult for us to live and take care of our two young children. That is why I set up my website; I was able to show buyers what the unit could look like so they were more tolerant when they saw it in person (I took absolutely everything out of the kitchen for the photo, but for showings hid the cookware and baby stuff in convenient storage boxes.)

I rented a small storage unit and put our sports equipment, books and extra baby gear there, but that was it for the decluttering. And unsurprisingly, the feedback from our realtor showings was really bad. Too much clutter, buyers couldn’t get past the interior, et cetera. Our FSBO showings had much better feedback because those buyers had already seen our website and photos (the MLS does not allow links to non-realtor controlled websites).

The one piece of showing advice that I did take was to remove all personal photos. You want buyers to picture themselves living there, and your family photos make that very difficult. I went a step further and removed all religious items (didn’t want to alienate buyers of different religions) and political swag (that Obama bumper sticker could have instantly driven away a Republican buyer).

I have been working with a few other Hoboken moms to help them market their units, and the need to be politically and religiously neutral came home to me when one of them wanted to highlight the fact that her condo is very close to the synagogue. I know that was a huge bonus for her, but what about someone who isn’t Jewish? There’s no point in limiting your pool of buyers to just the ones with Jewish affiliations.  You should definitely include stuff like the synagogue proximity in your marketing materials, but it should be subtle (ie. at the end of the property description, and the photo should not be the most prominent one on the site). After all, non-Jewish and non-democratic buyers’ money spends just as well, so why risk alienating them?

This NYTimes article highlights the difficulties you can run into with an appraisal. We received low valuations on our appraisals both for the sale of our 2BR and the purchase of our 4BR. This did not turn out to be a problem with either transaction because both sets of buyers put down enough down payment to offset the lowball appraisals, but it also didn’t make much sense.

Our 2BR appraised at $490k, and a virtually identical 2BR down the hall appraised at $525k two weeks earlier. The difference? The way our enormous outdoor spaces were valued. Our appraiser gave us a $2k credit for our 800sf outdoor space, and the unit down the hall received a $20k credit. When I discussed the matter with our appraiser, he gave me some convoluted explanation about outdoor space being worth less in Hoboken (apparently parking is worth about $20k, also a lowball credit since I typically hear #s like $30k-$35k).

I don’t know how to get around the appraisal issue since the banks choose the appraiser. All I can suggest is that someone start an online database listing their names so buyers and sellers can provide feedback as to their experiences. Since I paid the appraiser for my 4BR purchase, it would be nice if I had some degree of choice as to the appraiser (ie. I would like someone experienced in Hoboken appraisals vs. someone from South Jersey, which is what I got). Lowball appraisals don’t help anyone in this market.

Real estate transactions can throw the unexpected at you even at the best of times (an unexpected lien that doesn’t appear on anyone’s radar until closing day, a HELOC application that the seller’s attorney didn’t know about, all this stuff can lead to closing delays), but we are in a brave new world right now. One of the things I learned during the sale of my 2BR and purchase of my 4BR was that anyone who told me they knew exactly what to expect was someone I should ignore. Government regulations and lender standards are changing practically on a daily basis, so in the 30-60 days it takes to close these days, a lot can change. All I can say is to expect the unexpected.

In our case, we received our lender commitment letter stating only two conditions (a HUD statement demonstrating we closed on the sale of the 2BR and had net proceeds equaling the down payment on the 4BR, and proof of the building’s flood insurance). Legally, I could have gone after the lender (thank you, Countrywide) for requiring additional documentation (they asked for an HOA questionnaire from the condo association, $10k in supplemental flood insurance, and a $50k fidelity bond guaranteeing against theft by the association officers and management company). I decided it wasn’t worth jeopardizing the deal for an extra $550, but I was not happy about the additional expense.

The real estate market and lending environment has been changing so dramatically that any data prior to October 2008 is useless, and you have to keep abreast of standards on practically a daily basis just to keep up. Most buyers are failing to get mortgages because they fall at one of the many unexpected hurdles they run into from lenders. 25% minimum down payment, delays in closing because lenders are swamped with refi applications, a low appraisal, any one of these new issues could give a buyer a way out of a contract.  And if you are applying for a loan exceeding $417k, the hurdles are exponentially higher because all the old and new Fannie Mae guidelines are now being enforced. No exceptions for anyone, baby.

Basically, you should not sell or buy right now unless you really want to and are prepared for a lot of kinks in the road. Eventually the system will stabilize and buyers will know more or less what to expect, but right now the banks are in such turmoil that anything can and will happen.

I’ve always thought brokers have a conflict of interest when it comes to buyers. The way broker fees work is that the buyer and seller brokers split the commission (usually 5%-6%). So when a buyer comes to an agent, it’s in the agent’s best interests to steer that client toward in-house listings since that essentially doubles their commission. Who wouldn’t want to do the same work and get paid twice as much?

Buyers Seek Brokers of Their Own

Right now, conventional wisdom is saying that sellers are being unrealistic in their asking prices and that is why units aren’t selling. I disagree. Here are my reasons:

1. A buyer has to want a property before he or she will purchase it. You could offer me a Hoboken studio right now for $50k and I wouldn’t buy it because I don’t want a studio.
2. Classic supply and demand. If the unit I want to buy has some attribute that is extremely rare, like, say, a fourth bedroom, then I have a lot less wiggle room on the price because it’s not like I can walk away and buy one of the 50 other 4BRs on the market. When we purchased our 4BR, there were only 10 total units on the market in our price range, and most of them were townhouses (no central air and too many stairs=dealbreaker).

A real estate sale is about matching the perfect buyer with the perfect seller. In a seller’s market, all you have to do is list your unit, sit back and wait for the check to appear. In the current buyer’s market, there is so much inventory out there that you have to market your unit so it immediately stands out to a buyer looking for exactly those attributes. Buyers don’t want to waste their time any more than you want to waste yours selling, so marketing your unit well is key to targeting the correct buyer audience.

To market your unit, sit down and make a list of all the positive attributes that are obvious to you. Are you in a great location? Is your unit nicely renovated or new luxury construction? Here are some taglines I recently wrote for units I am helping to sell:

2BR/1BA steps away from parks, fine dining and the best of Washington St

Luxury 2BR/2BA w/incredible outdoor space

650sf full-service one-bedroom w/balcony, easy access to Manhattan

Those taglines will help select out buyers for those types of units, who will then click down through the websites to learn more about each one. The goal is to maximize each buyer exposure so you capture  the truly serious buyers while weeding out the ones who are looking for something quite different. You should have a floorplan, photos and detailed information available on your sale website so buyers can really get a sense of your property before coming to see it.

There most likely will be some price adjustment on both sides, but a real estate transaction is an emotional one. Encourage your buyer to make an offer and promise not to be insulted by it. The offer is just a way of starting the conversation, and as you feel each other out, you will arrive at a number that works for both of you.

When I first started thinking about listing my 2BR, I talked to several people who recently tried to sell Hoboken units, and they all advised me to hold open houses and try to show to as many buyers as possible. I never did get to host an open house since we went into contract within three weeks of listing our unit.

I think that when it was a seller’s market, buyers had so few options that they were willing to purchase units that weren’t exactly perfect for them. Now that there is a lot of inventory on the market and the economy is crappy, buyers can be a lot more picky. With two little babies in the house, I was not willing to endure an endless marathon of showings to buyers who might or might not be interested in my unit. I wanted to weed out all but the truly serious buyers, and I accomplished that via my website.

My 2BR’s main selling point was the giant outdoor space. The biggest negative was the location. My website accomplished the dual goals of making buyers aware of both. After viewing my website, the only buyers who requested showings were ones who either really liked the outdoor space or were not bothered by the location. My odds of getting an offer from those showings were much higher than the ones through my realtor because the only criterion for those buyers was that they were looking for a 2BR in Hoboken.

It all comes down to how badly you need to sell. If you need to sell right now, then more showings can’t hurt. But if you are trying to juggle showings with nap schedules (that was fun. Not) then optimizing your showings minimizes the inconvenience.  For me, that alone made selling FSBO worth it.

I recently had a conversation with a prominent local realtor who told me that studies have shown that FSBO sellers sell for 6% less than sales through a realtor. He also told me something I have heard from every realtor I spoke with, that FSBO buyers are looking for deals.

It’s a bit scary to keep getting the same message from so many realtors (from 5-10) until I started wondering why I was getting exactly the same message, with virtually the same wording. I spoke to another friend who is a realtor, and found out that realtors get trained to discourage FSBO buyers because it costs them money. That is why I keep hearing the same message -it’s taken verbatim from their training sessions!

I don’t doubt that there have been times in the past when realtor-represented sales have garnered a higher purchase price than FSBO. The thing is, sales are few and far between right now. If you have to pay a 6% commission, that might be the difference between selling and not selling. Buyers have so much data at their fingertips that they know exactly how much properties are selling for from week to week. Thanks to craigslist, realtors and FSBO are reaching basically the same audience, so I really don’t think sellers have much to lose by listing FSBO or signing a realtor contract that allows them to sell directly.

Read about our 2BR sale and 4BR purchase