Archive for the ‘Gini Denninger’ Category

Foreclosures – Build Your Team First!

Wednesday, September 19th, 2012

By Gini Denninger

As an agent, I occasionally have buyers who say they want to buy a bank foreclosure, thinking it will be cheaper, since there are so many foreclosures! But as in all things, there is more than meets the eye with foreclosures! Actually, in Rochester there is not a lot to choose from, the foreclosure market is relatively small compared to other parts of the country. A search of the local multiple listing service of REO, or bank owned , HUD or government owned listings over three counties yielded a mere 64 properties ranging from $499,000 for a 54 multi-use unit to 20 thousand for a two family. There was exactly 1 HUD offering! Some were beautiful homes in pricey suburbs, regular family homes, or investment properties. in either move-in or rehab condition. Are they really bargains? That is up to potential buyers to determine, but how to do that?
In other parts of the country, corporate investors armed with cash and the ability to move quickly, buy up large numbers of homes daily. The average buyer has to compete with them, at a disadvantage. The investors looking to buy very cheaply and often; have buying power and large sums of cash allowing them to deal directly with banks. They are looking for homes to hold as rentals for eventual resale when prices climb again. Rochester does not support these buyers since foreclosures here are relatively rare and are generally offered for sale with little discount. Lenders know our market does not have a glut of homes with depressed prices, and as a result, chose to list their foreclosures with agents, in order to maximize their return.
While tax auctions can offer relative bargains, this avenue is best left to seasoned investors who can afford to take large financial losses, should a property prove to be in far worse condition than initially estimated, potentially turning “a steal” into a money-pit. Novice investors or home buyers should not be comfortable with the large margins of risk involved here. When sold in a tax auction, all debt/liens on the house are usually discharged (not always so in bank auctions). Due diligence is crucial before bidding, not after! Working with an agent to identify foreclosures is a better choice for the average home buyer or novice investor. Buying listed foreclosure properties offers buyers opportunity to do their due diligence for repairs and title issues.
To be prepared buyers should assemble a team as follows: A savvy Realtor familiar with the process, a lender, who has pre-approved their mortgage amount, a reliable contractor available to price out repairs –if the buyer does not know how, an attorney, who must be familiar with pitfalls in foreclosure sales (hint: ask your agent for names) And last, a quality home inspector should be included on the team. Smart buyers work with experts to avoid being stung buying homes that prove to be financial disasters! This is not a time to be penny wise and pound foolish!
Finding the right agent is paramount. Working with an agent costs buyers nothing! Sellers pay the listing agent, who in turn pays the buyer’s agent. There is no advantage to not having representation. The right agents understand the ins and outs of buying foreclosures. Full time agents work every day in the market place and are aware of neighborhood trends. If not, they have knowledge of and, accurate tools to see what the trends are. Agents prepare offers, properly structuring them for the buyer’s advantage and protection.
A smart agent will insist the buyer line up a mortgage company or provide proof of funds-if a cash buyer; to make sure the client is financeable or has the money to buy.  There is nothing more stupid than an agent who takes clients to see properties, not knowing if they can actually buy! The mortgage officer should be familiar financing foreclosures and be able to offer options and suggestions to structure the loan. Sometimes a foreclosure doesn’t qualify for conventional, FHA or VA financing, due to property condition. 203K or “HomePath” loans, allowing buyers to roll rehab costs into the mortgage may be offered. These loans are not simple and require a qualified mortgage officer to explain them to their client, as well as process them to the closing table. Not all mortgage officers think outside the box, with foreclosures they need to. Buyers must be honest with their mortgage officer about whether they plan to live in the property or want to flip it. There are restrictions with some of the loans in regards to flipping, with serious penalties. A quality loan officer can make the difference between a deal coming together or not.
Never buy foreclosures sight unseen! It’s crucial to calculate costs to make the home habitable. It may have been completely trashed or stripped out, missing cabinetry, copper plumbing, furnaces, air conditioners, even lighting or moldings. If not destroyed, they might have been removed for resale! Repair costs must be decided before writing the offer. The actual cost of the home is what you pay AND cost of repairs. Remember the property might be bought for $80,000, repairs totaling $20,000 but actual value is only $100,000 even after repairs. This is not a bargain! Financially this home does not work, if the plan is to resell it! In Rochester, this is a common scenario, making flipping of properties pretty hard to do.
Once a potential buy has been gone through and identified as a “buy”, quality agents’ supply needed information, including a comparative market analysis. Buyers and agents should research the neighborhood. Is it stable or in a down-ward trend? If it passes muster, the agent helps with pricing. Offering random numbers like half of the asking price, is a waste of time for everyone. Banks are not desperate; it’s a rare situation where a bank accepts such a low offer. A more realistic offer is come to by estimating the worth of the house in good condition. Subtract the cost of repairs; do not exaggerate. Possibly repair costs were figured into the banks asking price, if so, no deduction. An agent can figure if a discount was included. Banks may partially discount, if so, the rest of repair costs should be factored before determining a bid. After subtracting repair costs, 80% of the resulting sum is an offer that usually is seriously considered. For example; if buying a home that should sell for $100,000 in good condition, needing $30,000 in repairs, determine what 80% of $70,000 is-that’s your offer. Buyers should  be firm with the maximum amount they are willing to spend. Going off track creates problems!
When writing the offer, agents should include several clauses. 1) The right of inspection which is a buyer’s protection , not to ask for repairs, but to uncover major issues that might make buying too costly. If too costly, the clause should give the right to withdraw from the deal without penalty. 2) Utilities be on for inspection, to facilitate evaluation of the furnace, H20 tank and electric system. 3) an exit clause, the offer dies if the appraisal comes in for significantly less than estimated value, especially if paying cash! Attorneys can make additional suggestions regarding protective clauses. It’s crucial to have a real estate attorney on the deal, not just the family lawyer. Foreclosure buys require professionals who are very familiar with foreclosure deals, to catch irregularities and to help protect buyers’ interests.  One legal area often over looked, is title insurance. Its recommended foreclosure buyers have their own title insurance policy. Banks always have a policy included in mortgage costs, but this doesn’t protect the buyer! There are two types, one for bank protection, the other for buyer protection. Attorneys should discuss the ins and outs of this topic thoroughly with their client, but will usually do so only when asked.
Lastly, a NYS licensed inspector should inspect the property. Agents should suggest several inspectors to choose from. They are a crucial member of the team in determining without bias, repair issues with a property. Additionally inspectors can help prevent further damage to a property, which could be acerbated by not being tended to immediately after buying. For example, broken pipes could lead to serious water damage!
A well-chosen team can make a good experience. It’s crucial to stress foreclosures, if not researched and handled properly, can cost time and money. Buyers must be educated and work with their team of experts to find the right property! Buyers should never “go it alone” unless very experienced with this market. Following the rules equals winning the foreclosure game!

Rochester’s Quiet Jewel – The Maplewood Neighborhood

Wednesday, August 8th, 2012

By Gini Denninger

Thinking about popular neighborhoods in Rochester; Park Ave, Upper Monroe, Corn Hill and the South Wedge come to mind. They are trendy, have lots of stores and restaurants, strong neighborhood associations, and offer a vast variety of home styles. But, did you know there is one neighborhood that offers all of that and more? Located in the North-West side of the city is The Maplewood Neighborhood. This area has been horribly overlooked and additionally, the shrinking of Kodak has not helped. Yet, a revival seems on the horizon for this part of Rochester. People are beginning to remember or uncover the neighborhood for the jewel of the city that it is. More homes are being restored and new businesses are becoming established.

Bounded by the Genesee River as a natural boundary on the east side, Driving Park is the southern boundary, Mt. Read Boulevard on the west and the Riverside and Holy Sepulchre cemeteries’ on the north. In this area you will find some of the most interesting architecture in the city, from small, simple homes to grand mansions, this neighborhood offers huge variety. There are three full size grocery stores within a two mile radius and many small “mom & pop” stores and national chain convenience stores, some with gas stations. Varied restaurants are pocketed throughout the neighborhood. Besides city schools, Nazareth Academy and Aquinas Institute are also found here. There are numerous beautiful churches and Rochester’s only cathedral, the magnificent Sacred Heart Cathedral. A newly refurbished YMCA serves the community and there are even three large parks!

With all this one would think Maplewood would be the premier area to live. Unfortunately negative publicity began to overshadow the positive points of the area. There are down-trodden pockets, some of which are sadly associated with violence, noise and crime. Sadly, this negative image is what sticks in many peoples minds when thinking about the North-West side of Rochester, including the Maplewood area. What people do not know is that most of the streets here are actually quiet neighborhoods!

At this point, I must make a disclosure. I have lived in the Maplewood neighborhood for the past eight years. As a displaced east-sider, I shared many of these misconceptions. I came here because I bought an incredible bargain, a shell of an elegant Queen Anne Victorian. It had good bones and I thought I would restore and flip it. Yet I am still here, because I discovered what a gem of a neighborhood I live in! My greatly restored home is beautiful, roomy and relatively inexpensive! Add into the equation, where else can I find this quality home for the price? I stayed put, and am continually discovering more reasons the Maplewood Neighborhood is the quiet jewel of Rochester. I no longer wonder why the area has such loyal residents, some even are starting to move back in, after leaving for various reasons.

Why love living here? First, and foremost, housing prices immediately come to mind. In this area you get more for your money! Most of the old homes were built on a larger scale. While many have been converted to multi-families, there are still large numbers of single family homes that are unscathed by the frenzy to chop grand old homes up into apartments; so, so many years ago. These homes, invested with quality materials, were a cut above in quality to many other homes in the Rochester area. Lots are generally large and often planted with ornamental trees and shrubs. Inside, find chestnut instead of gumwood for trim, doors, and moldings. Leaded and stained (often quite intricate) glass windows are commonly found. Homes range in design from Victorians, Italianate, Colonial Revival, Craftsman, Prairie, Mission, and many other styles. Rare is the street with cookie cutter homes in Maplewood.

Single family home prices are ranging from $24,000 to $119,000. The average family home sold in the last year is 2500 sq.ft and cost $60-65,000. 2-4 family homes currently on the market range from $40,000 through $120,000. Two real estate firms operate in Maplewood. They are Platinum Properties and Goodman Realty. Vince Nebbia, a Realtor with 25 years experience opened Platinum Properties at the corner of Flower City Park and Lake over seven years ago, growing it to a full service Realty which also offers property management services. Vince chose to live and work in the Maplewood area because it “is a beautiful part of the city and offers so many unique and beautiful homes”. He saw opportunity in a neighborhood with potential to rebound. Another thriving Maplewood Realtor is Sam Morreale, who had the most real estate deals in the area in the last year. Besides working here, he lives here. Sales in the area have been steady. Ask any Realtor that knows the area and they are all likely to agree that single family home prices are currently the lowest they have been in a year, combine this with low interest rates, this is the time to buy into the Maplewood Neighborhood!!!

When people ask what brings a neighborhood back, I tell them several factors come into play. Some of the biggies are properties with unique features making them interesting. A perception of having lots of value for the dollar, even when factoring in property improvements. There must be business infrastructure in place servicing those in the area and providing space for new businesses to come in. The neighborhood has to be easily reached by expressways and major arteries of the city. And preferably there should be unique neighborhood features not found in other parts of the city. Lastly, there should be a strong neighborhood association like the Maplewood Neighborhood Association. The Maplewood area boasts all of the above.

In addition, there are special features many are blissfully unaware of. Did you know that the Maplewood Area is listed on the National Register of Historic Places, as of 1997? Or, that there is a world-famous Rose Garden on the corner of Lake and Driving Park, with thousands of rose bushes lovingly tended by the garden staff. You can attend the

yearly Maplewood Rose Festival in June, when the roses are at their peak. This two day festival has vendors, workshops on growing roses and lots more! Holding weddings here has become very popular! The gardens are next to the Genesee River Gorge, where a trail runs alongside ending at Lake Ontario. It’s very scenic and equivalent to Letchworth Gorge in many ways. Yet most Rochestarians have no idea that they live, play or work near this natural wonder. Stand on the Driving park bridge and enjoy awe-inspiring views. On one side you can see the depth and length of the gorge, on the other side; the falls. The “upper” and “lower” falls are visible from the bridge. Walk down the path by the newly refurbished YMCA and you can stand right next to the “lower falls”, feel the ground rumbling from tons of water rushing by and get wet from its spay. After that, meander a path under the Driving Park Bridge to the Maplewood Park and back to the Rose Garden or continue on the trail to Lake Ontario. The Maplewood Park was famously designed by Olmstead. It is one of the most serene parks in the city.

Love looking at houses? Take a walk to see the many styles. By Nazareth Academy is 1017 Lake Ave, one of the earliest surviving homes in the Maplewood historic district. Further north enjoy the Vanderbeck House at 1295 Lake Avenue. This home is featured on this years Maplewood House and Garden Tour. Its owner John Acker, bought the property after it suffered extensive damage due to a lightning strike. He had always loved the house and when the opportunity came to put it back to it’s former glory, he jumped at the opportunity. His firm “Cam Real Estate Development“, has beautifully restored the house to it’s former glory, housing John’s office and four apartments. If you love Queen Anne homes, stroll down Lakeview Park. There are many examples of this style here, some rival the painted ladies of San Francisco. Seneca Parkway is known for the many Tudor Revival style homes gracing that street. If you like Bauhaus inspired buildings, check out the apartments at 1043-1059 Lake Avenue. Further north are the famous Thistle Apartments at Lake and Seneca Parkway. This building is a rare example of a Tudor Revival apartment building. These mentioned homes and buildings are just a small sample of what the Maplewood neighborhood has to offer. Its time you get acquainted with Rochester’s Quiet Jewel! Who knows, you might just find your own private jewel, like I found mine!

Short Sales: A Sign of the Times

Tuesday, July 10th, 2012

By Gini Denninger

The term “Short Sale” was relatively unknown before the financial melt down changed the real estate world. Always around, short sales were much less visible years ago. Over the past five years, extreme economic factors converged, bringing short sales into the limelight. Sellers learned short sales are valuable tools when they need to sell their homes but are unable to get as much or more, than what they owe on the property. Buyers are aware of and interested in finding short sale deals. More agents are short sale experienced. And lenders now opt to work with short sales rather than resorting to foreclosure. The increased use of short sale options has been noticed. It seems everyone is talking about short sales and the opportunity for buyers and, yes, sellers!

We hear of short sales and foreclosures all over the country, but what about here in the Rochester area? Are we affected too? It turns out we are, but not to the degree that other areas are. There are reasons for this. In real estate, the story is always local. Despite the fact that large cornerstone businesses like Kodak,  Xerox and Bausch & Lomb downsized, our real estate market stayed relatively stable, except in some areas and for some types of properties like investment properties in the City of Rochester.

Investment properties are one area of real estate especially hard hit with short sales.  2-20 unit investment properties are the most commonly sold as short sales. A combination of unsound leveraging schemes, poor property management and City of Rochester code enforcement issues, creates the perfect storm involving investors. They begin divesting their properties leading to more investment properties available than buyers. Too many properties on the market combined with deferred maintenance on many of these properties, pushes property prices down further. When this happens, the only options can be short sale or foreclosure, depending on the condition and value of the property.

Our suburban areas also offer short sale properties in all price ranges. One of my clients, Robin, bought a Perinton property in the Blackcross neighborhood for $60,000 less than what other properties in the neighborhood were selling at. The owners had fallen on hard times due to divorce and job loss. They no longer were able to maintain the property, letting repairs pile up. Sales appeal was lost in comparison to what was available in the area, forcing the property to be priced ever lower, in an effort to find a buyer willing to put money into the property to bring it back up to neighborhood standards. Robin has greatly improved the property and if she needed to sell, would have no trouble doing so. These buys are out there, but be warned, difficult to find.

Bob Hibbard, a short sale specialist real estate salesperson in the Rochester area points out short sales have to be priced right to sell. If too high, no offers come in. If too low, the bank might not approve the deal. Some people think “short sale” means fire sale. Not so fast! Hibbard says the average discount for a short sale is between 20-30%. This is proven, by the price paid by my client Robin. She should be able to sell between $170-180,000. Short sales might be priced slightly under current market value, which makes them hard to spot. The owners try to get as much as they can to the property to ensure bank approval of the short sale.

Just because someone is willing to make an offer, there is no guarantee the bank will approve the price for a short sale, for various reasons. An appraisal might show more value to the property in question, despite the fact that it has been on the market for an extended period of time and had multiple price drops before the offer came in. The bank may be willing to wait for a better offer to come along, which does happen, depending on the property and its desirability. Desirable neighborhoods, especially higher end suburban areas usually have smaller discount margins than less appealing neighborhoods.

Short sales are a long process. Buyers have to be willing to wait out the process. Robin put her offer in and had to wait for bank approval. Fortunately for her, a previous buyer had begun the process, but was unable to complete their deal. Robins accepted offer was able to be inserted into that buyers place, shortening the wait time by three months. The average short sale takes between 4-6 months from start to finish. But be warned some take longer, even over a year! If the price is right and a buyer is able to wait they will get a great value for the price.

Why would a bank even agree to a short sale? Mike Smith, a Nothnagle Realtor specializing in short sales explains that in NY State, the foreclosure process is very difficult and drawn out. The time it takes to foreclose is double that what it was a few years ago! Before accepting a short sale offer, the  bank will calculate what it will cost to complete the foreclosure and what the property could sell for if foreclosed on, in addition to fees for the sale and maintenance of the property. If the sum is more profitable to hold they will hold, foreclose and sell the property themselves. If they calculate they will benefit more by selling as short sale, they will usually opt for the short sale.

Sellers chose to do short sales once they recognize this is a way out of  a property they cannot hold on to any longer. Sadly, many who are upside-down with their mortgages do not realize selling their home as a short sale could be an option to them. They think their only option is foreclosure. Hopefully they learn that short sales are an option before losing their homes.  Short sales are far less injurious to a persons credit history than foreclosure. Foreclosures take 200 points off credit scores, while short sales only 50. Also, foreclosure must be admitted by a former owner every time they apply for credit or mortgage. Hibbard,  points out that short sale sellers can even buy another home in two years while those who opted for foreclosure, wait five years or more.

Short sales arise from sellers need as well as the buyers and lenders recognition of benefits to themselves when party to such sales. Short sales are not without pitfalls, but as long as they continue to benefit all parties involved, they will become more accepted as part of the real estate landscape. The term “Short Sale” will no longer have strong negative connotations and will become just another tool in the selling of property. Selling as a short sale helps those who are genuinely in financial distress, benefits the banks in that they have less foreclosures and is a boon to buyers like my client Robin, who was able to afford a home in Perinton, that she might normally not have considered. Short sales, while difficult and uncertain are a great way to buy a property in our area as well as nationally.