Cold snap fuels hot real estate market

Staff Writer

 Real estate professionals in central New Jersey say the sparse inventory of homes on the market this winter has resulted in a greater demand for those that are for sale. Buyers, meanwhile, are taking advantage of interest rates as low as 4.5 percent.  STAFF PHOTOGRAPHER ERIC SUCAR Real estate professionals in central New Jersey say the sparse inventory of homes on the market this winter has resulted in a greater demand for those that are for sale. Buyers, meanwhile, are taking advantage of interest rates as low as 4.5 percent. STAFF PHOTOGRAPHER ERIC SUCAR A lthough the winter and its numerous storms have been tough to weather for many in the region, the conditions carry at least one positive outcome — helping to create the perfect storm for buyers and sellers in the real estate market.

“The American dream is back; it really is,” said Andrew Zastko of North Brunswick-based Gloria Zastko Realtors. “I would call it a win-win market for both buyer and seller. It’s a really well-balanced marketplace.”

While it’s typical to have a winter lull, during which sellers hold off on marketing their homes with the thought that they don’t show as well during the snow and drear, the inundation of inches dumped on the area contributed to a particular lack of inventory on the real estate front, Zastko said.

“We are inventory shy,” said Joan Lorwey, a member of the Monmouth County Association of Realtors’ board of directors, and a 28-year veteran of the field.

New listings in the state were down 23.6 percent in January compared with last year, according to the New Jersey Association of Realtors (NJAR).

“Part of the statistics is driven by the fact that we’ve had a month of snow,” Lorwey said.

Sparse inventory translates well for sellers. “When you have motivated buyers chasing a more limited inventory, you have increased prices,” said Lorwey, a realtor with Morganville-based Keller Williams.

For those who have been tossing around the idea of placing their homes on the market but have hesitated, now is a good time to make a move, according to Lorwey.

“Have an agent come in and give you a current comparative market analysis,” she said.

Zastko agreed, saying the limited inventory is creating more demand, and therefore, more bids on homes. This results in sellers garnering numbers in the vicinity of their asking price.

“The seller that’s ready and listening to the market at this point is doing very well today and coming out on top,” he said.

Both realtors pointed out that homes must be lacking in fatal flaws to take advantage of this boon. However, Zastko said sellers do not need to drop tons of money on granite countertops in kitchens and sunken tubs in bathrooms to make a sale. A good cleaning and a coat of new paint can be all it takes to do the trick, he said.

Zastko offered a caveat for sellers, saying all bets are off if a home is overpriced.

“They need the advice of a very honest, knowledgeable professional in their area … that is an expert in that community,” he said, adding that such advice will help to determine proper pricing. “That’s the win-win factor.”

But all this winning for sellers does not equate to a losing proposition for buyers, the experts said.

According to NJAR, it’s a great time for prospective buyers to take advantage of attractive interest rates, which may begin to inch upward as the year goes on.

“The rates are still fantastic,” Zastko said, explaining that a well-qualified buyer going in for a 30-year fixedrate mortgage can expect to see about a 4.5 percent interest rate.

The rate looks even better when positioned in a historical slant. When Zastko entered the real estate field in 1987, rates were around 11 percent, he said.

The millennial generation — those born after 1980 — compose a large part of the emerging population of purchasers, according to Zastko. This is a group that has perhaps paid down a good portion of college debt, and has had a chance to save for a home while living with their parents.

It’s possible that this group is at least in part responsible for the upswing in the market overall.

The NJAR documented a 23.3 percent increase in sales of single-family homes over the past 12 months in Middlesex County, with a 13.1 percent increase in Monmouth County, and a 29.5 percent rise in such sales in Ocean County.

Middlesex saw a 13.6 percent increase in closed sales on condominiums and townhouses over the past year, according to NJAR data. In Monmouth and Ocean counties, increases in condo and townhouse sales were more impressive, at 19.7 percent and 20.2 percent, respectively.

Sales of homes in adult communities underwent the largest spike in Middlesex County over the past year, at 36.1 percent. In Monmouth County, sales increased by 17.9 percent, and in Ocean County, by 7 percent.

New construction, which had slowed to a halt in recent years, is another area seeing increased sales, according to Zastko.

“The builders were just hunkering down,” he said. “People love new.”

No matter what a buyer’s vision of the perfect home encompasses, the key to making that vision a reality comes down to dollars and cents.

“It’s in the interest of every buyer to be prequalified [before shopping for homes],” Lorwey said, adding that not doing so can be a recipe for heartbreak.

And potential buyers must figure in more than just the down payment when budgeting.

“Be prepared to come to the table with the additional costs of the home of your dreams,” she advised.

In general, well-qualified buyers making a down payment of 20 percent on a home can expect to pay about $2,800 in closing costs per $100,000 of mortgage, according to Zastko.

The figure increases for those making smaller down payments, including those getting loans through the Federal Housing Administration.

Although most costs involved in buying a home only apply if the deal goes through, the home inspection fee — usually about $400 to $450 — is one that a potential buyer must pony up in either case.

“I’ve had people walk away after the home inspection,” Lorwey said. “Be prepared to walk away if there are any major structural issues.”

Issues with plumbing, heating, electrical, siding, roofing and foundation should raise red flags for buyers. Unless problems are easily repaired or the seller agrees to fix them before the sale, a buyer should not get roped into the sale, Lorwey added.

At the same time, she said, it is important to keep a somewhat open mind.

“Be realistic with your expectations,” she said.

For example, being turned off by minor things like the stove or kitchen cabinets should not be a deal breaker, Lorwey said.

“Accept the guidance of your experienced licensed agent,” she said. “Get yourself an attorney that specializes in real estate transactions.”

Along with the confidence afforded by dealing with experts, those shopping for homes are finding further assurance by arming themselves with the wealth of knowledge at their fingertips on the Internet.

“We have a much more savvy class of buyers coming into the marketplace,” Lorwey said.

While much of the preliminary footwork is now done online, the localized human touch of the agent makes for a successful sale, according to both Lorwey and Zastko.

“I love the buyers who need me,” Lorwey said. “Because when you’re sitting at the closing table and they tell you that, ‘Without you, we couldn’t have done this, and because of you, we’ve gotten our dream,’ that’s kept me going for 28 years.”

The cost of buying a house

Escrow to the lender: (usually 3 months)
 Homeowner’s insurance
 Prepaid taxes

Monthly payment:
 Interest
 Principal
 Escrow

Qualifying for a mortgage:
 28% maximum amount of buyer’s monthly pre-tax
gross income allowed for monthly housing expenses
(includes principal, interest and homeowner’s

 36% is the maximum amount allowed for monthly
and all recurring debt (credit cards and other loans).

Additional charges for the buyer before closing:

 Inspection fees Home inspection — $300-$ 650 Radon testing — $60-$ 300 Wood- destroying insect inspection/ — $60-$ certificate 300 If applicable: Septic inspection — $450-$ 750 Well testing — $400-$ 600 Oil tank inspection — $250-$  Application 350 fees — $300-$ 700 can include credit report and  Appraisal appraisal — $300-$ 500 for single- depends family on type home of loan  Homeowners insurance (one- year premium) $400-$ 900  Flood insurance (one- year premium) $750-$ 2,000

Fees at closing:

$800-$ 1500  Attorney fee — Survey — $450-$ 800 300 Recording fee with mortgage and deed — $200-$  Title search and title policy endorsements payment on type  Title Insurance (one- time depending $300,000 loan of loan and cost of home) — $1,290 on a Points paid to lender in exchange for a lower interest rate 1% of loan one point on $100,000 loan = $1,000 or amount insurance (one- year premium)  PMI — Private mortgage price, if down payment is less than 20 percent of purchase as required by lender PMI for $300,000 loan = $3,800 Conventional interest Interest — 0 to 30 days of depending on day of the  month of the closing of loan  Transfer tax rate per $500 if more than $1M, mansion tax applies — 1% of loan. of $200,000 to $550,000) (i. e., $4.25 per $500 for loan  Property taxes for quarter

Simple tips for getting your house ready for sale:

 Get rid of clutter and organize
Pack up collectibles and family photos, put away toys,
clean out closets and drawers
 Rent a storage unit for excess furniture, clothes and
 Get rid of odors
 Get rid of wallpaper It is too personalized
 Add a fresh coat of paint to walls and/or trim
in neutral or soft colors
 Buff or refinish hardwood floors
 Steam clean dirty carpets or replace worn carpets
 Thorough cleaning Wash windows and light fixtures,
dust ceiling fans
 Make minor repairs Fix leaky faucets, running toilets,
loose doorknobs; fix or replace any missing hardware
on cabinets, burned-out lightbulbs
 Update original lighting fixtures, window treatments
(get rid of the vertical blinds)
 Update original appliances If they were there when
the house was built, it’s time to replace them
 Bathroom should be spotless and odorless;
clean any mold or mildew
 Outside curb appeal Keep lawn mowed; trim or
prune bushes, trees; add mulch; plant yellow flowers;
get rid of clutter