Hi, my name is Jim, I Live in Park Slope, and I Own a Car

Three years ago, when my wife and I began dating, she would slog her brother’s pickup from Red Hook, where she lived, to Park Slope, where I lived, because her 100 pound Shepherd/Rotti mix was not permitted on the B61. Then, only two months into the relationship, long before I ever said, “I love you,” and while she was still a relatively poor law student, she bought the 1994 Honda Civic that we still have today. The car cost $2500. How she knew that I, at that stage of our relationship, a 43 year old confirmed bachelor, warranted such expenditure, is a testament to just how fantastic she is, how fortunate I am, and a post for another day. For today, the point is I own a car and I live in Park Slope.

(For those who don’t know, let me premise the following by saying that Park Slope and cars — or more specifically Park Slope and parking — go together as well as Rosie and The Donald. The neighborhood is nicknamed No-Park Slope. Google, Parking “Park Slope” and you’ll get no less than 284,000 hits.)

I use the car almost exclusively for work these days. My job entails a lot of driving and a lot of parking: metered parking, alternate side of the street parking, running into the office to get a set of apartment keys double parking, waiting in front of a fire hydrant to pick up the photographer parking, not knowing you left the car in front of a church or private school parking, coming back to your spot, finding your car missing, thinking it was stolen and finding out it was f$%#ing towed parking, amongst other categories of parking. Since the acquisition of the Honda, I have contributed inordinately to the city’s coffers – over $3,000 inordinately that is. And it is this fact that uniquely qualifies me to present you with the following revelations:

(Sadly, as I scribe this using Cafe Sutra‘s free WiFi, I have to run out to feed the meter…I’m back)

Parking Mantra: Be pessimistic.

Stop believing that life is fair, stop wishing things will work out, and stop hoping that maybe this time you won’t get a parking ticket. Face it – the city is on their game (I’m not happy about it, just stating the facts). Park illegally, give them the opportunity, and they will write you a ticket. My advice: prepare for the worst and have a plan. Read on.

The Tao of Parking: Take your time.

Relax, slow down and park the way God intended us to … legally. Give yourself a little extra time and you’ll be able to avoid parking where the city says you can’t. To demonstrate my point, the statisticians at From The Stoop, have carefully recorded empirical data over the last three years and have calculated the following:

  • You have a 31% chance of getting a ticket within 10 minutes of an expired meter.
  • The odds go up significantly after the 10 minute mark.
  • You will receive a ticket more often for not moving your car during alternate side of the street parking then any other violation. (Think of it this way, if the DOT hired you to catch fish (i.e. parking violators), and you knew that in a specific cove (i.e. block), of a specific lake (i.e. neighborhood), at 11:01 AM every Tuesday, you could catch no less than 11 lunkers, wouldn’t you fish there every Tuesday at 11:01 AM and take the rest of the day off?)
  • 23% of people will actually claim to observe the ticket being written and placed on their windshield.
  • 43% of the 23% mentioned above will claim to have told off the ticket writer.

Point is, relax, drive safely, drive slowly, and park legally.

Parking tip #1: Save your quarters.

‘Nough said.

Parking tip #2: Employ the Double Time rule.

Sub-tip 1: Fill the meter for twice the amount of time you expect to be there. It’s a lot cheaper then the ticket. (25 cents per one-half hour as of this writing.)

Sub-tip 2: Always double the estimated time it takes to get to your car. Car parked 5 minutes away? Give yourself 10.

Parking Commandment: Thou Shalt Not Forget…

Again, from empirically gathered data, I know that the number one cause of expired meter and alternate side of the street parking tickets is a lost track of time. Solution: set an alarm. If you’re high-tech, set a reminder in your Palm or Blackberry. Want to go low-tech,? Get an egg timer. And, just as importantly, don’t wait to set it or put it off because…you’ll forget! Don’t make, or return, or answer a phone call. Don’t run into the office to get out of the rain. Don’t reach into your ashtray for a quarter. Don’t do any of these things before you set the alarm – because if you do, (remember empirical data) you won’t set it. Always set the alarm first and then do the other things.

There’s more I could write (including how to fight your tickets online), but this is already a long post. Please forward your own parking tips my way. I still need all the help I can get. Thanks for reading, Jim.

Pre-Qualify Yourself

By far the most effective strategy for moving a sale from accepted offer to contract is to be prepared – a.k.a do your homework, a.k.a have all your ducks in a row – or as we are calling it here: pre-qualify yourself.

What does it take? Being pre-qualified means that you have an understanding of your financial affairs, your papers are organized in such a way that you could sign a contract within a week (if you had to), and you have identified your real estate team. Specifically,

  • and most importantly, hire a lawyer. If you are a buyer you need to do this before you begin shopping for a home. If you are the seller you need to do this before you put your property on the market. For more on this see What Happens Now?
  • You have made, or accepted, the offer in writing. This is not a binding contract; this is just the offer, in writing, to cut down on the ambiguity. Why in writing? Here are some things that I have actually heard people say – “that’s not what I offered;” “I only said 10% down;” and “no, I meant $559K, not $595K.” If you are the seller, you should have a pre-printed Offer to Purchase Form ready to be filled out. If you are the buyer, you should have your own Offer to Purchase Form, in case the seller doesn’t have one. At a minimum you should fax or e-mail the other party the following information: your contact information; the offer amount; the amount of down payment; where the down payment is coming from? (i.e. is it coming from the buyers’ savings or are they borrowing it); and any contingencies (i.e. the buyers need to sell their own property/home in order to purchase the one at issue).
  • If you are a buyer, you have obtained a pre-qualify letter from a bank or mortgage broker. If you are the seller, you will ask the buyer for this – if he or she doesn’t have it, then the sale is a no go (unless of course the buyer is paying all cash, in which case you just won the lottery!). Besides having a letter to present to the seller, this process will inform you about how much of a house you can afford.
  • If, you wish to inspect the property before going into contract then you have hired an engineer. This means that you have spoken to them and they are aware that you may be scheduling an appointment soon.
  • You have sat down and gone over your finances – for example, if you plan on liquidating assets to put toward the down payment, you know what is involved and how long the lead time is.
  • You have located the documents you will need to give the mortgage lender, such as pay stubs and bank statements.

There is a lot more that can be said on this topic, so feel free to leave your own tips/suggestions as a comment at the bottom of this post. Thanks for reading, Jim.

The Accepted Offer

After Last weeks post, “What Happens Now?” I received a lot of questions about what exactly an accepted offer is. Here goes:

An accepted offer is defined as a verbal agreement between a buyer and a seller whereby a property owned by the seller will be purchased by the buyer for the agreed on price and terms.

Admittedly, Atticus Finch I’m not; but you do get the general idea: two people are agreeing to go forward with a transaction. It’s very important to note that this is almost always a handshake agreement. Further, it’s an agreement that either party can walk away from -anytime, for any reason. Buyer’s walk away when they get buyer’s remorse (and Oh Boy, do I need to write a post about that), find another property they like better, get divorced, lose their job, etc. Sellers walk away too -often because they have received a better offer. Point is, that no one is legally bound to sell or buy a property until both parties sign a written contract (and usually after a little bit of good-faith moolah, is handed over by the buyer). This is because, in New York State, there is a law called the Statute of Frauds and it essentially states that certain contracts (i.e. agreements) must be in writing in order for them to be enforced. In New York State, a Real Estate Contract of Sale, also know as a Purchase Agreement, happens to fall under the Statute of Frauds.

(Please Note: I’m not suggesting that you behave like a real estate monster. It is impolite to willy-nilly present or accept offers just because you can. Let me stress, beg, plead, implore, and appeal to your sense of decency by asking you not to verbally commit to a transaction unless you mean it. Besides the business reasons, you shouldn’t do it because it’s downright dishonest. )

Next week, I’ll write about how best to get yourself from Accepted Offer to Contract. Thanks for reading, Jim.

Make an Offer

Probably the question I field most frequently is, “How flexible is the owner?” in other words… “Is there some wiggle room in their price?” in other words… “How much do you think they’ll come down.”

My answer is always the same:  Make an offer. You’ll find out very quickly how flexible the owner is.

As a matter of fact, you should be making lots of offers on lots of places. It’s the only way to make things happen. It’s the only way to get the negotiation process started. It’s the only way you are going to find a bargain.

Here’s how I see it.  If you really like a place, then you should always make an offer as long as you can meet the following criteria: a) you are sincere (it’s not nice to mess with people); b) you are making an offer for no more than the property is worth to you (this is not necessarily the market value); and c) you are making an offer for what you can currently afford.

Finally, try to remember that you will always catch more flies with honey than vinegar. Be respectful and polite when presenting an offer – especially if you are speaking directly to the owner. You want them to want to work with you (return your phone calls, take you seriously, etc.). Here’s an example of how I’ve always presented offers in the past: “I think this is a great house (or apartment, or brownstone, etc.). I really love it. I know that the offer I’m making is below asking, but I want you to know that it is a serious offer. I have been pre-qualified for a mortgage and have retained a lawyer and so am prepared to go forward immediately. That all being said, I’d like to offer $XXX,XXX for your house.”

So make an offer!  You’ll be surprised at the results. Thanks for reading, Jim.

The 650 Rule

At least once a week I’m asked by a prospective buyer to estimate the monthly mortgage expense for a specific property. Usually, I look up at my forehead, pause a second, and produce a fairly accurate figure. Sometimes, during a slow open house, I show off by computing the calculation for a number of down payments.

I’m neither a math genius nor a savant. What’s my secret? It’s the 650 Rule and you can use it to do the same calculations in your head. Simply stated, for every $100,000 you borrow, you can estimate a monthly mortgage payment (a.k.a. Principal and Interest) of $650. Borrow $200,000 and your payment is $1300. Borrow $500,000 and you’ll have to cough up $3250 a month. Want to verify it? Just go to any standard mortgage calculator , enter $100,000 for the Loan Amount, 6.75% for the Interest Rate, and 30 years (or 360 months) for the Term. What do you get? OK, admittedly, not $650 spot on, but would you read a post called The 648.60 rule? One other thing, 6.75% is a little higher than today’s average interest rates, but we’re erring on the side of caution.

Remember this estimate is just for the money you’re borrowing not the entire purchase price. For example, you are purchasing a two bedroom Condo in Crown Heights for $500,000 and are putting 20% down. What is your monthly mortgage payment? Answer: $2600. How did I calculate it?

Down Payment = $500,000 X 20% = $100,000
Amount Borrowed = $500,000 – $100,000 = $400,000
Monthly Payment (applying the 650 rule) = 4 X $650 = $2600

There are other monthly expenses (fodder for another post), but the 650 Rule calculates the bulk of your expenses and is a damn good estimate in a pinch. Thanks for reading, Jim.

The Elusive Perfectly Priced Brownstone

Let’s talk about the Elusive Perfectly Priced Brownstone: a rarely seen, near extinct animal that any respectable house hunter would love to bag. Why so hard to find? There are at least two answers to this question. As an agent, I have first hand experience about one of them. That is, once a property hits my desk, it gets advertised at the market price or I’m not doing my job. That’s right, my job! We, the licensed, are all contractually obligated to the seller and committed to selling his or her property for the most money. This is what we do. As a result, we are always inadvertently driving prices higher. Have I ever seen an Elusive Perfectly Priced Brownstone? Sure have. Chances are I’ve seen a lot more of them then you have. That’s because I counsel the owners to sell it for the market price (because that’s my job…). Now that being said, it’s not all my doing. Another factor driving prices up is the Internet. The existence of readily available and frequently updated sales information makes it so that even the casual surfer can accurately value their own home. Bottom line – the vast majority of properties sell for what they are worth.

But not all of them. With a bit of elbow grease, you can find a property below market value. Stir in a little luck, and maybe, just maybe, you can actually find the Elusive Perfectly Priced Brownstone. I bought the limestone my wife and I own for much less than market. It took over a year and I treated the search like a second job. In the end it was worth it. I purchased a great house at a great price. I also learned a hell of a lot. All of which I’d like to pass on to you. Here’s my list of suggestions.

  1. Get pre-qualified by a bank or mortgage broker. Don’t worry, this won’t commit you to anything, but what it will do, is give you a damn good idea of what you can afford. This will save you mucho time by focusing your search only on those properties that are feasible for your budget. It will also allow you to act more quickly if you do find a property you want to buy (remember you are not the only house hunter out there).
  2. Start looking at listings. The best and most efficient way to do this is via the internet. There are a lot of sites out there, but if you only use the following three, you should be able to cover 90% of the market. They are: The New York Times, Craigs List, and Trulia. (If you find something else cool out there, please pass it on. I’m always looking for new sites). If you are just starting out (and can stand it), do this for 5 to 7 days without answering any of the ads. Just look for a while. This will give you time to soak it all in and get a feel for the market.
  3. Go to open houses. The more you do this, the more educated you’ll become and the quicker you’ll be able to recognize a bargain. A cool thing is that some open houses are poorly attended and so the agent hosting the open house has time to answer your questions. Take advantage of this. Brokers and agents are around real estate all the time and are a wealth of information. If the open house is being hosted by an owner, it still may be an opportunity to ask questions, but you should be polite. After all, it’s their home.
  4. Find some agents you like and keep in touch with them. At least five, but as many as you can handle. Don’t be disappointed if most of them don’t return your phone calls. They may not be overly enthusiastic about working with you because they won’t have what you are looking for (re-read the opening paragraphJ). Just keep calling them. If they have what you want, they’ll call you back. The smaller firms often have the bargains, so don’t just call the big firms. Another reason for working with many agents is that no brokerage in Brooklyn has access to every listing. Brooklyn doesn’t work this way. Fact is most Brooklyn realty firms don’t share their listings or belong to a Multiple Listing Service. Also, and just as important, no agent can say that they are your agent and that they can show you everything. If they do, they are flat out ly– let’s just say they are being a bit disingenuous, and you should feel free to call them on it. We (brokers/agents) are all contractually obligated to, and working for, the seller. Incidentally, the seller is also the person paying a commission to the agent who has claimed to be your agent. If you are a buyer, you technically have no agent and no agent is representing you — not even your agent (your lawyer is your representative, but that is a discussion for another post).
  5. Make offers. When you see something you want make an offer. Make an offer for what you think the property is worth and what you can afford. The only way to really find out if an owner is willing to negotiate is to make an offer below asking price. Don’t worry about offending anyone. If the offer is made to an agent, than that is his or her problem. If the offer is made directly to an owner and they become offended, then they should have hired an agent. I’ve made lots of offers on lots of places and believe me it’s a great habit to get into and the only way you are going to make something happen.
  6. Repeat Steps 1 through 5 frequently (at least once a week).

Here are two more caveats I learned the hard way.

  • Look for problems because problems can be fixed. When I bought our limestone, it had an illegal apartment in the cellar, the cellar had extensive flood damage, and the garden apartment was occupied by a section-8 tenant. These things scared a lot of people away, but it gave me an opportunity to purchase the property for a good price.
  • Hire an attorney before you start looking. I’ve seen more than a few deals fall apart because prospective buyers needed extra time to find a lawyer. By the time they had hired someone the seller went ahead and found another buyer. Better to be prepared before hand.

That’s it for now. Please feel free to email your questions or even your own favorite tip. Thanks for reading, Jim.