Baby Boomers ‘Under Water’

Article below provided by NY Times

A RECENT report suggests that the housing-market slump is hitting baby boomers particularly hard: many middle-aged homeowners had been so seduced by the rising prices of years past that they failed to save for retirement and may now owe more than their homes are worth. if these people were forced to sell their homes now, they would have to bring cash to the closing.


The center’s report also found that baby boomers in the 45-to-54 group saw their overall net worth plummet by about 45 percent over the last five years, to a median level of $94,200 from $172,400. Another factor that has led to a decline in personal wealth is what the report calls “the near zero level of savings nationally.





Those homeowners around age 60 whose mortgages are under water, and who might now be considering selling, should carefully weigh their options. If these homeowners expected real estate prices to decline for years, and if they wanted to retire someplace other than their current home, selling now could shield them from deeper losses in the future.






Even baby boomers who aren’t under water could have a more difficult time affording retirement.

Rever Mortgage Not Equal To Giving Up Your House

Looking for a way around the continuing credit crunch, more older people are exploring reverse mortgages, which allow homeowners 62 or older to borrow against their equity.

With reverse mortgages, lenders and brokers generally don’t consider credit history. Instead, they look at the applicant’s age, any existing mortgage and the home’s value.
“Many seniors have been able to use reverse mortgages to avoid delinquency or foreclosure, and to help fund their retirement.

Part of the reason that reverse mortgages have gained in allure, brokers say, is that it has become more difficult to sell a home and move to a less expensive one. Also, some elderly homeowners have been unable to refinance their mortgage or qualify for a traditional home-equity loan because they cannot meet tighter credit standards.

But reverse mortgages have their drawbacks. For one thing, they can be expensive, even with the recent caps on fees, which is why they make sense only for those planning to stay put for a while.

Total costs run from around $7,000 to $20,000. In addition to the regular mortgage closing costs, there is an origination fee (capped at $6,000). There is also an upfront insurance premium equal to 2 percent of the home’s appraised value or lending limit (up to $625,500), which protects borrowers if anything happens to the lender and guarantees that the total debt owed will never exceed the home’s value.

There were misconceptions about reverse mortgages — a lot of people thought they were giving up their houses, which is simply not true.

Article above provided by NY Times

What Contract? Backing Out Of a Deal?

This article below is provided by NY Times

COULD the days of the iron-clad contract be numbered?

It used to be that once a buyer went to contract on an apartment, the terms of the deal were all but set in stone. Sales prices never budged, and if the buyer balked, the down payment went bye-bye.

But double-digit price declines and the lending drought have started to threaten this once near-inviolable pillar of New York real estate. Buyers are demanding concessions from developers on apartments that they say have lost up to 30 percent in value. Others are hoping to back out of their contracts entirely, while keeping their down payments in the process.

The sudden demand has sent lawyers scurrying to uncover avant-garde legal tactics for ducking out of a deal. Downtown conversions like 75 Wall Street and new developments like One Hunters Point in Long Island City are facing suits from buyers seeking to break contracts on the basis of a once-obscure consumer protection law.

The number of New Yorkers filing claims with the attorney general’s office to claw back their down payments has more than tripled in the last two years, although most disputes don’t reach this step. In 2007, 57 claims were filed; in 2008, 168. By Feb. 20 of this year, the office had already recorded 74 claims.

The ultra high end is not immune. At the Brompton, a heavily marketed Upper East Side condominium designed by the architect Robert A. M. Stern, lawyers say some buyers are calling on the project’s developer to pay closing costs, cover taxes and relocation expenses, and, yes, even retroactively drop the price of apartments.

It remains unclear whether these efforts will be convincing, whether at the negotiating table or in a court of law. On the developer’s side is the legal strength of a signed contract and the financial leverage of a buyer’s deposit.

But the incentives have realigned in a market where many apartments are now worth less than their purchase prices. It may make financial sense for buyers to cut their losses and leave their deposit on the table rather than move into a money pit. And while developers would pocket the down payment, they might be stuck with a unit that eventually sells for much less — or even worse, just sits. This new math may put some developers in a negotiating mood.

“Behind this, the big elephant in the room is the price,” said Adam Leitman Bailey, a real estate lawyer who says he is representing unhappy buyers from nearly 50 buildings.

The traditional method for a buyer to break a contract is to prove that some element of the completed unit differs from the developer’s offering plan. This is why lawyers have been known to use lasers to measure square footage to within a millimeter and to debate descriptions of views and amenities.

But if the issue is more financial than material, buyers may be forced to “in essence, throw themselves at the mercy of the developer,” said Peter Graubard, a real estate lawyer.
“They are saying, ‘Hey, listen, I’m in a financial hardship and the loss of this 10 or 15 percent deposit is going to be devastating to me right now,’ ” said Mr. Graubard, explaining that every one of his clients who went to contract before October 2008 — about 30 in all — is trying to renegotiate or abandon a deal.

Officials at the attorney general’s office said they were seeing more appeals based on such emotional pleas.

But these arguments may not fly. Unless a contract includes a mortgage contingency, nothing in the law allows for a change in financial circumstances or the lending market to constitute a “right of rescission.”

Sometimes, though, a bit of saber-rattling can shake loose concessions.
“Threatening not to close, threatening legal action, maybe the threat of an attorney general’s action, all can bring a developer to negotiate,” Mr. Graubard said.
Some lawyers are looking beyond the traditional methods of arguing breach of contract.

A Web site called No-Condo.com opened in December and immediately received nearly 100 queries from New York residents who want their deposits back. It is the brainchild of Lawrence Weiner, a lawyer at Wilentz, Goldman & Spitzer in Woodbridge, N.J., whose arsenal includes the Interstate Land Sales Full Disclosure Act, a 41-year-old consumer protection law rarely applied in the city.

Of course, not everyone in the industry has sympathy for the buyer who wants concessions or money back.
“I think it is the height of audacity,” said Stuart Saft, a partner in the real estate division of Dewey & Leboeuf, which represents several large developers in contract disputes. “The buyer calls and says, ‘The apartment is not worth as much as when we signed for it.’ My response for that is, if the market went up 20 percent, would you have given us 20 percent more because the market improved?”

And for his part, Mr. Graubard, primarily a buyers’ lawyer, is skeptical of efforts to undo purchase agreements. “You really can’t get that creative; there’s only so far you can go,” he said. “Without the enforceability of a signed contract — well, really, what do we have?”

Mis-Representation of MLS Data

What a horrible day today?

A professional and respectable client back out of a lease by blaming my professionalism! How convenient!

The detail of the story...

I represent my client as a buying/leasing agent at a condo unit downtown. It is a very decent unit in an upsacle building on Bloor.

Last Thursday we visited the unit twice and signed the offer to lease on the same day. I fax-ed the offer to the listing brokerage, the offer is accepted and fax-ed back to us on Saturday. Everything was fine!

I let my client know that the offer is accepted and require to deliver a certified cheque within 24-48 hours by email.

*Now, I know!! She might not have enough money for the certified cheque. That might be why she is backing out of the deal!* Anyways, that is my guess. or she found other place.

But, anyways, she emailed me this morning (Monday) and backed out of the deal and blamed on me that I mis-present the informationon MLS data sheet. That is not a JOKE!

First of all, NONE of the agent would warrant or verify the detail measurement of any room. Unless the measurement is ridiculously wrong. Should an agent bring the measuring tape to the site now? What else should we verify beside measurement? Good question eh? We revisited the same suite twice before she made up her mind to lease. By the way, her decision was not made under force. The size of the room has NOT changed before or after the lease being signed. Interesting that she is not illiterate either. She has the exact same knowledge presented in front of her as much as it was in front of me.

I, on the phone, suggested her that we cannot simply drop the lease. There is a LEGAL contract right there. We have to look for a mutual release if necessary!! She said she is not going to take the lease and she would complain to RECO about my professionalism.

Are you looking for the "Best Buy Ever" or "Best Deal Ever"?

If your answer is the Best Buy Ever, now is the perfect time to shop for the most ideal home. But if your answer is Best Deal Ever, you still got time!! I will keep sedning you the weekly Fantastic Deal.

The market has certainly changed. Let's see why Today is the "Best Buy Ever"! Did you realize that we have already shifted away from the balance market to the buyers’ market just in the last couple of months. Toronto Real Estate Board (TREB) statistic suggests there are more listings than sales consistently for the past couple of months.

History does repeat itself! Take advantage this economy downturn. If you miss this opportunity, you will have to wait for the next economic cycle, could be 10 years from now.
Back in the early 90s, there are 1) Reverse Offer 2) Reverse Offer Presentation and 3) Mortgage Rate Reduction. These are the vehicle towards the "Best Buy Ever".

Q: What is a Reverse Offer?
A: Sellers present offers to interested Buyers. Seller usually gives better than listed price and adds/removes conditions which are in favor to the Buyers.

Q: What is a Reverse Offer Presentation?
A: A Buyer brings 5 offers of 5 different properties to the Seller. The Seller has to decide to accept/reject or counter offer to the Buyer's offer given the knowledge that Buyer can move on to purchase the next property.

Q: Is this ethical?
A: YES! Absolutely! It is no different than 1 Seller chooses from 5 Buyers’ offers in the Sellers’ Market. Don’t forget we are in the Buyers’ Market now.

Q: How low can our Mortgage Rate be?
A: On March 3rd, 2009, Bank of Canada further reduced the target for overnight rate to 0.5%. We expect Canadian major banks will pass along the rate reduction to mortgagee.

If you have considered purchasing a home in the Sellers market, why not take advantage of this Buyers market?

Don't just sit and wait for your "Best Buy Ever" passes by!

Post-Lehman Syndrome

Responsible spending, comfort and, most especially, value

FOR better and worse, the mentality that helped propel the city’s real estate prices into lunar altitudes is gone. Not only are there fewer buyers today, but they are also more apt to have a yard-sale attitude, demanding sharp discounts on top of reduced prices

Racing to keep up with a down-market mindset, many real estate brokers say they have been experimenting with a new paradigm in advertising, spinning their ads like roulette wheels in the hope of landing in the sweet spot of the parsimonious post-Lehman buyer.

The model is shaping up like this: The new propriety frowns at luxury, lifestyle and the fetishistic focus on designer brands and architects. Instead, brokers say they are trying to recast their listings in terms of responsible spending, comfort and, most especially, value.

An attractive price is the most direct way to convey value, preferably set off by some variation of the formerly taboo “reduced. We never used to say ‘reduced’ in a very strong market because we felt people would think of it as tainted goods. But now if you don’t, people don’t think the seller is serious, especially if it’s been on the market any length of time. And people today feel cheated if they don’t get a deal.

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