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Buyer be ready: 6 tips for house-hunting in Long Island NewsdayDecember 7, 2007 By Ronald E. Roel About a year ago, Tom Cavanagh decided to buy his first house. "A lot of my friends thought I was crazy," says Cavanagh, 36, a private music teacher who also plays guitar in a touring band. Why would he buy on Long Island, they asked, where home prices and taxes were so high? "I was thinking about moving out of New York," says Cavanagh, a Levittown native. "But I have a strong student base here. My parents are still here. I've seen what it's like everywhere else traveling with the band. There's a lot you miss not living here." When Cavanagh began house- hunting, "the prices people were asking seemed ridiculous," he says. But in the last six months, he noticed that sellers were beginning to drop prices. Finally, Cavanagh saw the house he wanted: a 1950s-era brick ranch in South Huntington with three bedrooms, a finished basement, a remodeled bathroom and enough space to build a home-recording studio. The house originally had gone on the market in the spring for $419,000, but by August the price had dropped to $409,000. Cavanagh offered $375,000, and the owners, who were moving to Las Vegas, accepted. Taking the plunge Cavanagh is part of a new world of home buyers who are forging through an unsettled market. While many experts predict that overall prices may continue slumping through next year, they also note that mortgage rates have remained low - and with inventories at record highs, there have never been so many homes for the picking. "Now that the prices have flattened, it's a great time to buy," says Dottie Herman, president and and chief executive of Prudential Douglas Elliman Real Estate. A few years ago, "there were auctions for houses," adds Dean Hartman, chief planning officer at Continental Home Loans in Melville. "Now, the auctions are for buyers. The buyer is the prized possession." Still, consumers seem in no hurry to ink a deal. "Buyers are scared," says broker Bethany Marten, owner of Home Buyer's Resource Center in Baldwin. They're still worried about prices, she says. Then there are the ominous reports of soaring foreclosures, coupled with an equivocal economy that seems strong one week and on the verge of recession the next. But while advising caution, many real estate experts say the time may finally be right for buyers who have been waiting to jump into the market. "In my 25 years in the business, this is by far the best buyers' market I've seen," says Steve Harney, a former owner of a large Long Island real estate firm who now specializes in negotiation and sales training. The key, real estate experts say, is for buyers to be ready as well as wary. Here is a quick guide for navigating today's market. "There may be more shrinkage in prices, but the buyer who waits for the absolute bottom may also miss it," he says. 1. Have a well-laid plan "Always have a plan," says Marilyn Urso, co-owner of Long Island Village Realty in Syosset. "Think about the ultimate picture, your goal: 'Am I buying for five years or the rest of my life?'" If you're selling and buying, you should sell your home first, then look for a house to buy, adds Barbara Bucovetsky, a broker with Shawn Elliott Luxury Homes & Estates in Woodbury. "Nobody wants to accept an offer if you haven't sold your home first," she says. Be ready with everything you need - a mortgage preapproval, a real estate attorney, home inspector - all on standby, says Emmett Laffey, principal of Century 21 Laffey Associates, based in Greenvale. "A house can be sitting for nine months, and then all of a sudden three people are fighting over it," he says. When you make an offer, "the single most important thing you can do is to show them [the sellers] a proposal in writing - and sign it," Laffey says. "Sellers what to know: Is this an absolute, definite offer? You'll see more flexibility from the seller if they see it's a bona fide offer." Don't be deterred by the winter months or even the holidays, says Kathleen Myers of Century 21 Laffey Associates' Westbury office. If sellers are showing their homes in winter, Myers says, you'll know they're serious about selling, and they'll know you're serious about buying. 2. Buy when price is right Price trends are all over the map - literally, depending on the area. A report released last month by Manhattan-based appraisal firm Miller Samuel Inc. for Prudential Douglas Elliman Real Estate shows that the median sales price for Nassau homes in the third quarter was $490,000, unchanged from the same period last year, while the median sales price for Suffolk homes for the third quarter was $395,000, down 2.7 percent from the same quarter last year. "In some communities, home prices have stabilized, while in others, home prices continue to rise," says Joe Mamone, president of Coldwell Banker Residential Brokerage on Long Island and Queens. Pearl Kamer, chief economist of the Long Island Association, the region's largest business group, predicts "a price decline of about 5 percent from 2006." Kamer says she expects prices to decline between 10 percent and 15 percent by 2009, when prices will begin ticking up at 2 percent to 3 percent a year. Still, declining prices are opening up the market to new buyers in some communities. In Syosset, for example, "the entry-level buyer is getting an opportunity again," says Marilyn Urso, co-owner of Long Island Village Realty with her husband, Frank. During the first nine months of this year, the median home sales price in Syosset was down 7 percent, from $620,750 to $575,000, Urso says. But by the third quarter the firm had sold 184 homes, up from 136 during the same period a year ago. When determining the appropriate price for a home in the changing market, buyers should ask their agents to provide a list of comparable sales in contract rather than closed sales, says Frank Urso, who is also an appraiser. There is often a lag time of several months between contract prices and closed sales. 3. Look at new construction New developments offer another set of choices, but don't necessarily expect big discounts. Local builders are "pretty much holding their numbers," says Vincent Calvosa, president of the Calvosa Organization in Bohemia and a board member of the Long Island Builders Institute, a trade group. Since May, Calvosa says he has sold half of his 28 Locust Grove town houses in Oakdale, a community for people 55 and older. Calvosa has kept his prices from $399,000 to $499,000, but has incorporated elevators and Energy Star construction into all his units. At his 14-lot single-family subdivision in Bay Shore, Calvosa has not lowered prices (between $479,000 and $499,000), but he says he's willing to customize the homes. "People don't want to hear, 'Take it or leave it.'" Meanwhile, Pulte Homes of New York, a division of Pulte Homes, the large Michigan-based builder, has offered two big sales this year, in June and October. The sales included incentives, such as 10 percent discounts off the price of homes that were built already. The company's units include condos now priced at $295,000 and detached homes up to $650,000. Bruce Orr, Pulte's Long Island vice president of sales, says that most of the incentives are tied to the company's mortgage arm, such as covering closing costs when buyers use Pulte financing. 4. Prepare for financing "The first-time home buyer is in a great situation today" - provided he or she has good credit and is able to come up with a down payment of at least 5 percent to 10 percent,” says Bob Moulton, president of Americana Mortgage Group in Manhasset. Even jumbo mortgages (loans of more than $417,000), have become more affordable since August, when jumbo interest rates spiked, Moulton says. (Jumbo rates in August ranged between 7 percent and 8 percent, compared to about 6.6 percent today, Bankrate.com says.) Still, there's no question that banks have tightened credit standards. "Right now, it's critical that buyers are preapproved so there's no question that they can get a mortgage," adds Marten of the Home Buyer's Resource Center. "Make sure you can afford the monthly payment," says Lita Smith-Mines, a Commack real estate attorney. "And if you have money left over after you pay the mortgage, you'll be a lot happier." 5. Seek 'motivated' sellers In late June, Wilson and Simmie Williams of Rockville Centre put their home of 41 years on the market. Wilson, 80, and Simmie, 79, had decided to move permanently to their second home in rural Virginia, near where Simmie grew up. They listed the house for $365,000 and sold it for $350,000 in 81 days - about half the average selling time now, says Myers, the listing agent along with her husband, Marshall, of Century 21 Laffey Associates in Westbury. "They were educated consumers. They agreed on a price that was close to market value so got multiple offers," Myers says. Of course, other sellers are less willing to adjust their prices to current market conditions. Many still are looking for the numbers their neighbors got in 2005. Moulton of Americana Mortgage suggests asking your agent to look at how long a listing has been on the market. "If it's six, eight or 10 months, the seller may be more motivated than someone who's just testing the waters," he says. Sellers need to be flexible and recognize that today's buyers are a different breed, says Herman of Prudential Douglas Elliman. "Years ago, people said, 'Hey, I have a house, even if it needs updating.' Not people today. They say, 'I don't want a kitchen that's 20 years old. And if we do accept it, it has to be reflected in the price.'" 6. Expect choices, but not perfection In October 2005 there were about 22,800 homes for sale in Nassau, Suffolk and Queens. This year at the same time, there were more than 36,000 homes for sale. While everyone agrees there's a ton of inventory, Bucovetsky, the Shawn Elliott agent, notes that "inventory does not always equal choice. If you're looking for a four-bedroom house in Jericho at a certain price range, the choices are finite. There may be lots of houses, but most don't meet your criteria." In the end, buyers need to shift back to a more traditional consumer mind-set - before the housing boom of recent years, says Hartman of Continental Homes. "Buying a house is a long-term investment, but it's also a quality-of-life issue, and Long Island is still a desirable place to live." Maria Garbe agrees. She and her husband, Steven, are looking for a home in the Commack area because they want a good school district for their three young children, ages, 4, 7 and 9. Maria, 42, a kitchen designer for The Home Depot, and Steven, 43, an employee for a wholesale glass manufacturer, are renting a house in West Babylon. The Garbes bought their first house in North Babylon in 1997 for $115,000, sold it for $199,000 in 2001 and moved to San Antonio, before returning to Long Island three years ago. Living in Texas was a lot cheaper, Garbe acknowledges, but life was too slow for her husband, a native Long Islander. Besides, she says, "business is a lot stronger in New York, compared to the economy down south. Long Islanders are always shopping."
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