FSBO: For Sale But Overpriced

Obviously, I’m not breaking any ground on this one. Because of our current economic and housing conditions this occurrence is more prevalent than ever. I’m sure everyone hear is familiar with the dreaded for sale by owner call. If sellers only knew that we hate making this call more than they dislike receiving it. They swear up and down that they don’t need us, they can sell the house themselves, we’re con artists, blah, blah, blah. What’s ironic is these for sale by owners actually need us more than some of the sellers that waste no time in contacting a listing agent. So why do we continue to subject ourselves to this abuse? Because we know the statistics. Every 9 out of 10 for sale by owners will eventually list with an agent. My good friend Ed Norton might say, “and maybe more than that”. Hopefully some of you are as big of a “The Honeymooners” fan as I am. If not, then you clearly didn’t get that great one liner I just stole!

Anyway, at one point this summer I began to make a game out of predicting what the seller’s response was going to be. I must say, I was pretty good at it. There was this one FSBO in Peekskill that I called. These people bought the house in 2004 for $225,000 and think that somehow their home defied the odds and appreciated $50,000! Of course I offered my services but they said if they can’t sell it themselves they would just rent it out. That, by the way, is a classic response of a soon to be short sale candidate. I had another of those in Cortlandt Manor. Both soon changed their for sale signs to for rent signs….lol.

My next adventure was in Fishkill. I was showing my buyers a house and the one right across the street was a FSBO. My buyers were very interested so I called. Before I called I said to my buyers, “Watch this. They’re going to be about $50,000 overpriced because of all the money they want back from the stonework in the back yard.” Sure enough, I call and the woman says, “I’m sorry, I know I’m over priced but we put so much money into our back yard. I can’t afford to drop my price.” SHE EVEN TOLD ME HERSELF SHE WAS OVER PRICED!!!

My favorite was this guy in Yorktown. This poor guy doesn’t have a clue! My buyers found this FSBO listing. They are great clients. The wife said if they don’t like it maybe I’d at least get a listing out of it. They are as loyal as loyal can be! Well, we got half way through the house and I already decided there’s no way I want this listing. The house was a DISGUSTING DISASTER!!! It would take me a week to type all the things that are wrong with this house. The seller was walking us through the home making it sound like the Taj Mahal. He then had the nerve to say, “All it needs is some paint here and there.” I really thought my buyer was going to say all it needs is a bulldozer here and there. Needless to say, he was about $75,000 over priced.

There were a couple more but you get the point. Here’s why these people need an agent…. So someone can explain the influence of an appraisal! I even explained to all of these sellers what will happen even if someone offered them their overly ambitious asking price. Buyers would not be able to obtain financing. Unfortunately, they’re all in denial and need a strong, competent agent to lead the way.

Is that my commission in your pocket or are you just happy to see me?

I’ve wanted to post this blog for some time now. After reading a blog posted by a young, new agent the other day I figured now is as good a time as any. She was basically saying how much she hated the business and was looking for opinions on whether or not she should continue in this line of work. The distaste was not in fact from the “real estate” part of the business but from the disgusting lack of dignity, loyalty and respect from the general public.

Don’t get me wrong. I have made plenty of friends within the field and have built many lasting relationships with my clients. I love the business! However, when I was a rookie a few short years ago reality does hit you pretty hard. There are plenty of people that just don’t care that this is what we do to earn a living. This is hard to believe considering we are the experts that will control negotiations on the biggest investment of their lives!

As with every other agent out there, I’ve had my share of buyers and sellers trying to reach into my pockets. Not that I have never given back to any of them, but there are appropriate circumstances for that. I can’t fault people for asking for discounts. In fact, I respect the fact that they have the guts to ask. The problem I have is with the way in which some people ask and their demeanor after my response. I think it’s only a matter of time before I say something like, “Mr. seller, if your boss came up to you tomorrow morning and said, ‘excuse me, we are going through some tough economic times right now. If you don’t mind, we would like to cut your salary this year by 20%’ what would you say?” They would probably flip out.

Here’s my latest encounter. I met with this nice young couple. They wanted to list their half million-dollar home and purchase a home in the million-dollar range. I should throw in that they are referrals as well. So there’s 30% right off the top. Not that I’m complaining by any means, but it is relevant. I met with them at their home, took the tour and introduced the company and myself. Everything went very well. I was there for a couple hours and I can tell they were comfortable with me. I educated them on the process and let them know I’m here to help and I’m the least pressure type of guy there is. I didn’t even bring listing papers with me! Later that evening they decided they wanted to view a few homes for sale. We went out the following weekend and everything was still smooth. Until….. the proposition. I received a phone call a week later and the wife tells me she has a proposition for me. She says they are ready to put their house on the market and continue the search for a new home. But, here’s how this is going to work. She said they would choose to work with me if I worked for only 1% commission. Meaning that if the commission is, let’s say 2.5% on the buyer’s side, I will take 1% and rebate the remaining 1.5% to them at closing. In turn, she would find the homes and schedule the appointments herself. You know, do all the “work”. When they found the house they wanted they would contact me to negotiate the deal and handle the transaction from there. She also told me that her friends purchased homes this way and other agents went for it. Let’s just say I said no. I explained that this is probably illegal and CERTAINLY unethical. Any agent that would go for this should lose their license. Why would you want an agent that is that desperate for business to represent you anyway!

Don’t these people realize they should be looking for the best realtor, not the cheapest! I have yet to hear back from this couple. By the way, you have to love how some people view showing houses as our most valuable service. So much for negotiating the sale, marketing their home and making sure they are protected throughout two transactions!

The city slickers move to the burbs

I'll give you a brief description before getting into my two stories of city buyers moving to the suburbs. I am originally from Yonkers, NY. My immediate family eventually moved up to Putnam Valley, NY. With much of my family remaining in Yonkers, I grew up with the benefits of learning the ropes in both a city and suburban setting. However, it is rather annoying when everyone South of Yonkers refers to our location as "upstate".

I guess I take my knowledge of how things work "in the country" for granted. When I first got into this business I assumed that everyone knew the basic information that I'm going to mention in a minute. I guess this is why I find these two stories so amusing. I've had my share of buyers that wanted no part of houses with oil, wells or septic systems. They also had to have natural gas. I'm pretty much able to calm down most buyers and educate them about the area. Once they realize that those amenities aren't available outside the city (and Urban areas) they accept the alternatives. Here are two of my funnier stories:

1. I was showing around a young couple from Yonkers. They wanted to buy a home in Upper Westchester/Lower Putnam to get into what they felt were better school systems. This was one of those cases in which I had to explain how the well and septic systems work. The husband had a very concerned look on his face. I laughed and asked what was the matter. He then started with his question; "You guys have a lot of deer and animals that run through your yards, right?" I laughed and answered yes. He then asked, "Well, don't they go to the bathroom on the ground?" At that point I was hysterical and cut him off because I knew exactly where he was going. I explained to him that the wells are over 200 feet under the ground and are safe from deer urine.....LOL. You better believe I teased him about that one for the duration of our home search!

2. Another couple that I just represented invited Marcie and me over for dinner to celebrate the new house. They are an awesome couple and we had a blast. The real fun began when we moved to the living room. They started to tell us about their adjustment to the rural life. After talking for a while the husband told us that they had a great mail day earlier in the afternoon. I wasn't exactly sure what he was talking about so of course, I asked. I was anticipating some deliveries of large packages or furniture. This was the answer; "We haven't checked the mailbox since we moved in (just shy of two weeks). I looked inside today for the heck of it and it was full of mail. There must have been the whole two weeks worth of it. Our stupid mailman never put the flag up!" Well, Marcie almost choked and nearly spit her food all over their couch. The both of us were laughing so hard that we started to tear up. He was quite embarrassed for complaining about the mailman, especially when he realized his mailbox theory was incorrect. It's easy to forget that if you lived in the city your entire life, you probably never used a mailbox. By the way, you put the flag up when you have a piece of outgoing mail. The flag lets the mailman know there is mail waiting to be picked up.

To Key or Not To Key - That is the frustration

This isn’t an issue that comes up too often, but when it does it drives me crazy! Some of you who read this may have done this. Hopefully, I don’t offend you. If you have, please comment and tell me why this makes sense to you because…. I DON’T UNDERSTAND THIS! Ok, let me get to the point here. I was scheduling appointments for a buyer of mine yesterday for single-family homes. As usual, I was scheduling about four appointments back to back. When getting the showing instructions from the third listing office I became quite agitated. The woman said, “You’re set to show and you have to come pick up the key.” I’ve come across this a few times showing co-ops in Long Island. I work mostly in Westchester and Putnam Counties in New York. It’s only happened a couple times here with co-ops but never with a single-family house. Who has time to stop at an office to pick up a key and then return it when you’re showing multiple listings spanning several hours? There is another catch. This particular office closes at 5 PM and I wasn’t scheduled to show the house until 6:00. So, I go back to my original question. Why isn’t there a lockbox at this property!!! I was trying to think of a reason. There’s no way a seller requested that a lockbox not be present. It doesn’t make anything easier for the agent. It better not be to save the $20 on a lockbox. Most importantly, it could cost you showings!

The end result was a disaster. I called the office to let them know I was going to get there at 5:15. The secretary panicked and said that she couldn’t stay because she had a doctor appointment. She then checked the logbook to confirm my appointment and said that I wasn’t in the book. She finally found me as someone jotted me down in the wrong spot. Because of this another agent showing the house in the morning took they key. It’s a good thing I didn’t rush to get there before five! She gave me his number and told me to give him a call. Turned out he was showing houses as well and asked me to meet him at his location. The heck with that, I was already out with my buyers. We drove by the scheduled house to look around outside. From that, they concluded we’d just scratch that one off the list. Now, for all we know the house could have been a masterpiece. Too many sellers and their agents have the attitude of, “well, they’ll just come back another time”. Here’s a reality check… no they don’t! Besides, why would you take that chance? Maybe I’m wrong but to me this was just stupid!

What would your buyers do?...

As you can see, I’ve been lacking on posts lately. After the conversation I had today with one of my buyers I figured I should write about this one. It’s a terrible sign that I’m surprised by someone sticking to principles and putting morals and values before money. Unfortunately, we live in a society that has become “all about me” and getting greedier every minute… or so I thought. I’m in the middle of a deal on a single-family house in Yonkers, NY. The listing agent is representing a couple going through a bitter divorce. At one point my buyer said to me out of frustration, ”I understand this process is tough for the sellers but why is it that I feel like I’m the one going through a divorce”. I couldn’t help myself, I thought that line was hysterical and burst out laughing. The negotiations weren’t too bad until our appraisal came back $10,000 under the negotiated price. At that point the solution should have been simple; the sellers drop the price to match the appraisal and we wait for a closing. NOPE, why should anything in this business ever go as planned? The husband insisted the house is worth more and he’s not budging on the price. His own real estate agent and lawyer are trying to convince him that he has to drop the price or the deal is off. We have been stuck at this point for two weeks now. Earlier today the mortgage agent, the listing agent and myself suggested to do what we hate most. Yup, we were going to each throw in $1,250 along with the wife (out of her half of the proceeds) to come up with the $5,000 he is required to give up. If you’re paying attention, I did say the appraisal was off by $10,000 but that’s $5,000 from each of the husband’s and wife’s half of the proceeds. I don’t want to get off topic but it’s a joke that a seller would blow a deal over $5,000! Anyway, I presented this solution to my buyer. Now remember, he’s a tax credit buyer. He stands to lose his $8,000 tax credit if we don’t get this straightened out in the next week or so. His response was, absolutely not!!! He said there is no way he is going to allow myself or his mortgage agent to give up any of our hard earned money to bail out this owner. I explained that my commission is secondary and that closing this deal and getting him the tax credit is my primary concern. He then said that he was glad to hear me say that his results were more important than mine but he has to move forward keeping his principles in order. He also stated that if he misses the tax credit then so be it but it wouldn’t be the right move to pay someone else’s way. His comment was, “if every transaction you had to give up that much money, why get into the business in the first place?” I was taken back by the sincerity of my client. The whole conversation was just something I’ve yet to encounter in this business. I’m used to people who are quick to ask us to reduce our fees or give them bonuses. Of course they’re the same people that if you asked them to take a pay cut in their profession because of budget restraints would tell you to go take a walk…. In not so nice words too! Especially in today’s times, it’s not to often you will come across a young couple that will jeopardize their new home along with $8,000 to make sure you don’t have to unjustly give up $1,250 of your hard earned money. So again I ask, what would your buyers do?

Who’s The Boss?

No, this blog is not about the hysterical sitcom featuring Tony Danza as Tony Micelli. That was a great show! Anyway, I’m going to touch on the frustrations many realtors go through with seller today. Please keep in mind that I’m not lashing out to all sellers out there. Hopefully you will see things from our perspective and learn how this real estate stuff is supposed to work. When it comes to selling a property there is often conflict between a seller and his/her agent and question concerning authority arises. As I mentioned in my last post, here comes my sports connection. One of my favorite quotes is from the great Bill Parcells, hall of fame NFL coach. When coming to the Jets, Coach Parcells was asked about his authority with the team and his ability to pick players from the college draft. Parcells answer was reasonable, “When you’re asked to cook the meal, you want to be involved in buying the groceries.” OK, so this quote doesn’t translate as well in the world of real estate but it sends the same message. The Jets hired Bill Parcells to do a job. Now, get out of his way and let him do it! Sellers, us agents are only asking for the same respect. We cannot do our job while “wearing handcuffs”. I say this with the greatest amount of respect… if you don’t trust us, don’t hire us. This is why it’s extremely important to make sure you interview several agents and choose the one you feel most comfortable with. Trust me when I tell you, you will only hurt yourself in the end if you fight with every decision we make. I know it hurts but when we say you have to drop the price, let us do it. When we say how much to drop it, drop it that amount. One of my favorite shows on TV is Real Estate Intervention. It involves a real estate professional who helps sellers determine if they are priced right or not. His advice is as follows, “it’s always better to set the market than to chase it”. He’s absolutely right. If you’re going to put your house on the market please keep this, and us, in mind.

A Deal Gone Awry! - Yankees lose with Winn

You might be wondering why I’m blogging about Johnny Damon and the New York Yankees. Hopefully you’re a sports fan because I can, and will, relate any sports topic to a real estate matter. As a New York Mets fan I couldn’t care less who plays left field for the Yankees, however, as a real estate agent I must draw attention to the parallels of this failed free agency transaction to today’s real estate market. For those of you who aren’t up to speed with Major League Baseball, let me fill you in. Johnny Damon’s four-year contract just came to an end with the Yankees. He was a perfect fit, as he NEEDS to play for the Yankees AND the Yankees NEED Johnny Damon. The Yankees offered Damon a two-year contract at $7 million per year. Damon’s agent (the infamous Scott Boras) refused and the Yankees signed Randy Winn. This was an atrocious job by Scott Boras. On an interview with WFAN radio Damon explained his situation by stating nobody would want to take a 40% pay cut after coming off the year he had. His previous contract was signed in 2006 for $12 million per year. Let me explain how this deal hits to close to home as a real estate agent in today’s market….

   1. There are several reasons to hire an agent. Besides the obvious, one of them includes keeping emotions out of the deal. This should be very simple for most agents. However, this is never the case with Boras. Why is that? Ego! If you have an ego it’s extremely difficult to be a good agent in any field of business. When you put the facts aside and are only concerned about who’s right and wrong and who’s going to win or lose… BOTH SIDES LOSE! There have been numerous deals where my clients got so angry they were ready to walk away simply out of spite. That is an unacceptable reason for a deal to fail. It is the agent’s responsibility to keep the clients focused on the big picture knowing that once the deal closes the relationship with the other party concludes. Nothing is worse than working with a party that has an ego.

   2. Understanding the market. Johnny Damon’s last contract was 2006, which was during a stronger economic period. Much like sellers that have to realize they aren’t getting what they did four years ago, so does Damon. It’s almost a slap in the face to complain about a pay cut when you’re still earning $7 million. Hey Johnny, how about the millions of people that are currently taking a 100% pay cut! This is very similar to sellers we are faced with today. They are upset with the fact that now they will only make $200,000 profit when they sell their house instead of the $350,000 they thought they should make. It’s easy for me to say but they should thank God that they are making something and not facing foreclosure or in a short sale situation like many other Americans. Not to beat a dead horse but Damon also has to understand that at his age his value is depreciating… not appreciating. This point leads me to my final point….

   3. Understanding the situation. The bottom line is this… Damon is only worth $7 million dollars per year. How do we know this? Because it’s the only offer he got! This is the same realization sellers are faced with. Sellers always think they are being low-balled until finally they realize they’re not getting any other offers. Your house is worth what buyers say it’s worth and this has nothing to do with how much of a profit you would like to clear. The solution to any negotiation is very simple, however, if you involve ego or greed it’s virtually impossible. In this case, Damon wants to be a Yankee and at the same time make as much money as possible. It’s blatantly obvious that he cannot play left field in any other ballpark and he fits the Yankees lineup like a glove. Not to mention, he won’t win anywhere else. The Yankees want Damon because he popular with the fans and he’s the best #2 hitter possible for their lineup. Again, he fits their stadium perfectly. If both sides were to put egos and greed aside, they could have easily put a deal together for lets say $8.5 million and would be on their way to back to back World Series’. But no, welcome Randy Winn. For the record Randy Winn is an over the hill, washed up substitute….lol.

I guess the moral of this story is to put all emotion and opinions aside and put a deal together that works for both sides. They key to a successful negotiation is when both sides walk away feeling like they won.

Never Assume – Well Maybe Sometimes…

If you read through any of my websites or blogs you probably know that I currently own three multi-family investment properties. Through the years I have racked up many memorable moments to blog about. This post, however, concerns the buyer I’m dealing with. I have two of my houses under contract and with a little luck will be closing in a month or so.

I’m sure you’ve all heard the infamous cliché on assuming, “You should never assume because you’ll just make an @ss of u and me”. This is true for about 99% of the time. The other 1% is when buying a home.

Being a young real estate agent, I’ve been going out of my way to help my buyer purchase my properties. He is in his mid 20’s and these will be his first investment purchases. I was 26 when I bought them and wish I had someone like myself to help me through the process. At the time, I neither had my real estate license nor much experience under my belt. I gave him advice throughout the entire process and was very lenient with credits and wording in the contract. My goal was to sell my houses, not take advantage of a young aspiring investor. We have been in agreement throughout the process except for one issue. My loans are assumable. This is very rare in today’s mortgage industry, except for FHA loans. I advised him to assume my loans. This would save time, bypass the approval process with another lender and save him thousands of dollars. Unfortunately, like many buyers he was stuck on one thing – the interest rate. Focusing only on the interest rate is a mistake made by many buyers in today’s market. Interest rate is a crucial part of the purchasing process, however, it is only one piece of the entire purchasing puzzle. He has decided to get his own mortgage because he will save a couple points on the interest rate, as my rate is slightly higher than today’s going rate. His argument is that he will save money monthly over time and that will equate to a larger sum than the money he would save upfront. My answer… STUPID!!! Ok, that’s not so nice but it really is silly. The cost of assuming my loan according to my lender is $500 per loan for a total of $1,000. The closing costs combined on the other two properties will be at least $8,000. It is ALWAYS better to keep that amount of money in your pocket then try to accumulate it over a long period of time. Not to mention there is a nice positive cash flow, which is covering all expenses anyway. Take a slightly lower positive cash flow and keep $7,000 in my bank account… Sounds like a pretty easy decision to me.

Box Office Blunder!

This isn’t real estate but it’s quite a funny story. I’m sure all the men that read this will get a little chuckle while many of the women think, “Oh, brother!” For Christmas I figured I could surprise my better half (Marcie) with dinner for two and two tickets to see a performance of Beauty and The Beast. I made up a nice mock ticket on the computer, put it in a box and wrapped it. As you can imagine, she was excited as Beauty and The Beast is her favorite story. We also saw it on Broadway during its final showing at the Lunt-Fontanne Theatre.

So Marcie gives me a call on Monday evening (Jan. 4) to see what’s up. She was away for a few days in NJ. I was telling her how excited I was over this miracle of the Jets making the playoffs. Yes, I know these last two wins were gifts! I told her they play Saturday so don’t schedule ANYTHING from the late afternoon on. She then asked what time they played. The game starts at 4:30. She informed me that I was in fact not going to watch the game because we have somewhere to be. Well, I almost had a heart attack! I had NO IDEA what she was talking about! When she told me we had reservations for Beauty and The Beast my immediate reaction was, “Oh no, I did it to myself!” That’s what I get for being nice…LOL.

On Tuesday, I told the story to the women in my office. I’ve been working with them for a few years now and refer to them as moms #2,3 and 4. They of course were hysterical because it was of my own doing. After the laughter subsided, one of the women took charge, called the box office and requested they change my tickets to the Friday showing (tonight). They all have sons around my age as well so are accustomed to getting us young stupid men out of trouble.

Now for the question everyone’s waiting for…. What was Marcie’s reaction to the whole situation? Well, she just happened to call after everything went down. She thought the whole thing was hilarious. Marcie knows the wonderful ladies I work with and pictured what must have happened. They all agreed that Marcie must be great to not care that the date was moved.

Yes, she is! Tonight we will get a nice dinner and enjoy a wonderful production of Beauty and The Beast. As for tomorrow, J-E-T-S JETS, JETS, JETS!!!!!!!!!!!

Introduction to Real Estate With Tom Ricapito

Thanks for visiting my blog. My name is Tom Ricapito and I am a licensed real estate agent in NY. I specialize in the Westchester/Putnam/Dutchess area. I will be talking about everything that has to do with real estate including FAQ's, hot new listings, foreclosure and anything else you can think of. I would like to keep an active blog as it would benefit both my readers and myself. It may be difficult to come up with a real estate topic everyday so I'm sure I will have various topics of discussion. My goal is to keep it fun and interesting. We also have various promotions to both buyers and sellers! If you have any questions please email, IM or call my cell at 914-804-3048.

On this blog I will be posting advice, new listings, foreclosures and all other properties I feel are good deals. I strongly recommend that you subscribe to my blog so that these updates are emailed to you automatically. All you have to do is fill in your email address and click subscribe. You will receive nothing except my blog updates. I will also be posting podcasts which will include audio descriptions of my listings, advice and more. You can also subscribe to my podcasts through iTunes. By doing so, all of my future podcasts will be automatically selected and inserted into your iTunes program.