First off, I want to wish all my readers a healthy, happy, enjoyable and fun (for some “wild” but don’t drink and drive) July 4th holiday week.
Many potential home buyers, especially the millennials as well as Generation X and Y’s, are having a most difficult and challenging time coming up with their down payments to purchase (the student loan debt). But there is a possibility that many are not aware of: one is called grant money for various types of primary residences for first-time buyers.
This money is provided by Nassau, Suffolk and New York City and its five boroughs. There are income limitations, however, depending on the town or jurisdiction you want to live within. Here is a link to provide further information: https://www.nerdwallet.com/blog/mortgages/new-york-first-time-home-buyer-grants/
Also, One approach is to show these individuals’ foreclosed homes, which can be more reasonably priced, are always winterized, e.g., the water is drained from all pipes, boilers and hot water heaters and electricity and gas are turned off. I do truly understand the reasoning for performing this service during the winter months from late November through April 1, so there are no chances for any pipes to break and cause leaks and potential flooding of the home. But unfortunately, those homes cannot be inspected due to the fact that everything is turned off, so the banks that handle these types of grant money loans, make this a specific requirement in order to approve the financing.
So it’s a Catch 22, “dammed if you do and dammed if you don’t.” However, I discussed this issue about a year ago, with the president of possibly one of the largest receivers of foreclosed properties on Long Island, who will remain nameless, as I imagine he has enough business handling what he currently has had bestowed upon him by the banks and asset managers. I am one of the few brokers who have his cell number, fwhich he had told me that he never gives to anyone. However, due to a very, very funny situation and something I shared with him, which had him cackling with laughter, he provided me his direct contact number, in the event of something that was so urgent and critical after or during business hours that I couldn’t wait. I think I may have called him once.
You’ll notice sometimes I diverge from my content to a short story that may or may not have anything to do with my column, but may be funny, but crucial and critical to my networking agenda and the process I use with other professionals in real estate and other businesses, that enables me to connect with certain high profile or very important people and in turn who may be able to assist a client seller, investor, purchaser, renter or lessee of residential or commercial properties. For me, it’s called “Paying it Forward” like the movie back in 2000 with Haley Joel Osment (remember him? he was in “Sixth Sense,” “Forest Gump” and A.I.”) and Helen Hunt, Jon Bon Jovi, Jay Mohr, Angie Dickenson. It’s one of my Top Ten movies that I believe everyone, especially all of our politicians and Realtors and anyone in sales or consulting, should absolutely be required to watch as a pre-requisite to beginning their careers and jobs and then once a year as a refresher. This movie may just help people understand and utilize what the movie is trying to convey to everyone: If you give enough, not expecting anything in return, it will always come back to you in satisfaction and possible remuneration. As they say, “what goes around comes around.” Build rapport and relationships and they will listen and they will come.
So now back to my point, when I was having this conversation with this high-profile broker, I asked him why is it a rule or regulation to have all the utilities turned off with respect to foreclosures? He explained the potential of broken pipes, yadda, yadda, yadda. I get that. However, I proposed an idea to have him contact whomever he could — regulators, local politicians to suggest that this situation could be adjusted and/or changed. It would solve a major problem that I had been seeing for many years, no matter what the market conditions were – especially when inventory was excessive – as they say in “bubble” territory. I am still waiting for that change, but maybe this column will spark some consideration from our politicos to the idea and make some changes.
The situation is like this: If you are a “flipper of houses,” your only purpose is to find homes at the lowest price that you are able to renovate, upgrade and improve, and then sell to the “end users” to earn the highest return on your investment, and move on to the next one – obviously raising prices within those towns – as we have seen over the last eight years of our booming market economy. However, you, as the investor, are generally paying outright for the purchase (cash transaction) and you are buying the property in “as is condition” with no guarantees or warranties as to the condition. That is the risk that an investor “flipper” takes to earn his or her profit, sometimes huge, sometimes small, sometimes nothing but a loss. This type of one-sided competition and situation completely prevents the typical end user from purchasing at the investor’s cash price due to the fact that an end user is generally financing their purchase and cash is always king in real estate.
Most important, due to being a foreclosure, it does not allow the end user future homeowner to do an inspection, especially when it is winterized, which is a requirement when receiving grant money. Who builds communities: investors or end users? Of course. end users.
My proposal is that the government or banks enact a regulation that allows potential end user homeowners who have come to an “agreed and accepted” contract on the sale price of the particular foreclosure to enable them to do an inspection by having the utilities turned on as well as provide them additional time, which is somewhat limited, before an investor can step in and bid. But there is one caveat: If they do the inspection and it ends up that too much work has to be completed to have the house in a livable condition, or other reasons, then the buyer would have a stipulation in the pre-agreement and/or the contract that if they didn’t go ahead with the sale, the purchaser would be financially responsible and obligated to bear the cost of re winterizing the home at a set pre-determined price. The cost shouldn’t be very much, maybe a few hundred dollars at most depending on the size of the home or number of hours needed to do the job.
That money would be held in escrow, but if the end user were to go ahead with the sale, the monies would go towards the down payment, closing costs, or whatever would be agreed upon or was in the regulation or law that was enacted. But flexibility in the agreement would be important, so the buyer, the seller and the lender could determine where those monies would be used in the transaction.
Building roots in a community has more to do with the end users and families – who so desperately want to stay on Long Island and in New York in general – than someone like me whose only agenda is to buy, fix and flip or even fix and keep to rent out, providing no benefits to the tenant, who is giving away their wealth, appreciation and tax deductions, as I have always stated in previous columns.
What I am proposing will help countless thousands to purchase their homes, build connections and long-term relationships within their communities, especially those who qualify for grant money through the local, state or federal government. However, at this point in time, the one stipulation is that they have to stay in their homes for 10 years, enabling them not to be required to pay back the grant money. This type of situation would only enhance homeownership, just with a change in the rules or whatever regulations that keep homes winterized, especially at this time of the year, when no pipes will break. We are forcing our young people and families to relocate to other less costly states, away from their families and friends.
The brain drain of the smartest of our younger generation has been happening for over 30 years, (I had run for the Town of North Hempstead supervisor — I think it was in 1987 —against Ben Zwirn and John Kiernan, because Tom DiNapoli, our New York State comptroller, then an assemblyman, came up my driveway in Kings Point and then suggested I run). I decided why not, just to see how things worked in the political system and I had the opportunity to speak in front of a crowd in Manhasset as well as on News 12 with Melba Toliver (ex-ABC newswoman) and expressed what I saw happening, back when homes were much, much less.
Nothing has changed and it’s getting much, much worse! When are we going to wake up? We are losing ground to other states and it’s about time that we take a stand and make some critical changes to a very small thing, the winterization process with respect to foreclosures. And if this helps even one family to purchase a home and keep them from leaving Long Island and New York state, then it will be the first step of many that need to be considered as soon as possible to stay ahead of the competition. Let’s start in New York state and then maybe it would catch on countywide! What do you think?
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Ste 180 in Great Neck. He has earned designations as a Graduate of the Realtor Institute (G.R.I.) and also as a Certified International Property Specialist (C.I.P.S.). He will provide you with “free” regular updates of sold and new homes in your town via the Multiple Listing Service of Long Island (MLSLI)or go to WWW.Li-RealEstate.Com as well as a “free” value analysis of what your home might sell for in today’s market without any “strings” attached. He can also provide a copy of “Unlocking the Secrets of Real Estate’s New Market Reality or Our Seller’s or Buyer’s Guides for “Things to Consider when Selling or Purchasing your Home. Just email or snail mail(regular mail) him with your request with your name, email and cell number and he will send it out ASAP. For a consultation, he can be reached by Cell: (516) 647-4289 or by email: [email protected] to answer any of your questions or concerns