Q & A With Barbara Corcoran

---

Q1 - My wife, two daughters and I are currently living in Brooklyn where I pay $1000/month rent for a 2 1/2 bedroom apt.  My wife and I are both in our mid-forties and are contemplating purchasing our first home.  Given the current state of flux with the economy, as well as the fact that we're purchasing our first home at this stage in our lives, would it be a wise move?  My father insists that we should just stay where we are and invest as much money as we can towards our retirement.  

A - If you've saved enough money to put down on a new home, just go for it.  There's never been a better time to buy a house than now, and this time may never come again.  The question you and your wife should ask yourselves is how will you feel five years from now when house prices are going through the roof and you're watching all the action through the window of the same old 2 ½ bedroom apartment?  Will you regret not moving sooner?  

I'm sure your father is well-intended suggesting you save for retirement.  But remember that your father loves you and whenever you ask a loved one whether you should take a risk, they almost always tell you not to.  So thank your father for his love and advice, and do what's best for your family.

---

Q2 - I'm dying to get into the housing market, but even with today's low prices, I think the only way I'll really be able to afford a home is to buy a foreclosure, but I'm too nervous to buy a bank-owned property.  What are the options for someone like me?

A - The best deals today are not only foreclosed properties.  Many more homeowners are willing to short sell their house long before the bank starts to worry.  You'll need to locate a broker who specializes in short sales because they usually know who needs to sell fast and why.  Call the manager of your local real estate office and ask them who is the best agent for the job.  

If you have a lot of energy, you can also spend a Sunday afternoon riding around your own town in search of the worst house on the best block.  You know the one I mean, the one where the lawn is unkempt and the house needs painting and there's too much stuff piled in the backyard.  These are the houses where the homeowners are having a hard time meeting their mortgage payment and paying their taxes.  You can leave a note at their front door saying how much you love the house and expressing your interest in buying it.  It's the old-fashioned way of spotting a steal of a deal and getting there before everyone else does.

---

Q3 - My husband and I bought a one-bedroom condo and since we bought it, it's depreciated more than 15% in value and our mortgage is nearing its second rate adjustment. We need to sell in order to have more space to start our family.  What can we do to get out of our small condo and into a larger home?

A - You're actually in a good spot because today when you sell a smaller home to move into a larger one, you're in a better position to take a lower price or even a loss because you'll more than make it up on the next purchase of a larger home. The best advice I can give you on selling your condo faster is to get rid of all your clutter and clean the condo until it shines.  Buyers can't see past your stuff and every buyer responds well to a sparkling clean home.  Make sure you price your condo low enough.  If you price it 20% lower than all your competition you'll sell it fast and be able to move on to take advantage of a great deal on a bigger house.  

---

Q4 - We sold our home two years ago and lost $10,000 on the sale.  We now have to relocate for my husband's job.  We attempted to do FSBO and the feedback was that our bathrooms and kitchen needed updating. So we took it off the market, did the updates to the tune of about $6000 and have now signed with a Realtor.  We were hoping to walk away from this home with $20,000 profit, but with the way the market is and including the Realtor's 6% commission, even a $10,000 or $5,000 profit would be acceptable. Of course we would like to recoup the loss from our first home as well as the money from our renovations.  Is the market that bad to not anticipate any significant profit and just to get out of the mortgage?

A - How much profit you get out of your house has nothing to do with how much you want because it's the buyers who are in charge of what they will pay.  You were smart to do the renovations because buyers are grumpy today and pass right over houses with old kitchens and baths.  So by spending the money to upgrade your kitchen and bathrooms, you've made your house competitive.  What you need to do now is price the house right to sell it, even if that means  taking a loss.  But remember when you buy the next house, you'll also be getting that one cheaper.

---

Q5 - About 5 years ago I had to turn to the subprime market to get a mortgage. Since then I've made every mortgage payment on time, eliminated all of my credit card debt, and the negative glitch in my credit file washed away. Currently I have a FICO score of about 805. My question to you is with all the government money going into the American banks, where do you see mortgage rates bottoming out? When would be a good time to lock in on a new 30-year fixed mortgage?

A - There's no better time to lock in your interest rate than right now.  And with your good score, you'll have no problem getting the best rate out there.  The fact is nobody knows when mortgage rates will bottom out and you'd be crazy to try to time it.  Let me tell you what happened to me when I got a new mortgage on a property I bought three months ago.  I asked the three smartest bankers I know for advice and they all advised me not to lock in the rate because rates would surely be going lower!  I locked it in anyway because I wanted to sleep at night knowing my decision had already been made.  As it turned out, all three bankers were dead wrong, rates didn't go lower, they went a full point higher!  The lesson here is there's no science in guessing rates, and in my book, sleeping well is worth at least a half point, maybe even more.

---

Q6 - My condo villa has been on the market and vacant in South Florida for nine months. It's the second lowest priced (just under $100,000) of many for sale in this adult subdivision. Every month it becomes more difficult to write the mortgage and maintenance checks, let alone pay the bills for utilities, insurance, etc.  My ability to keep paying is almost completely gone.  Help!  What can I do?

A - First, make your home the lowest priced house, not the second lowest, because there's nothing to be gained by second best.  You probably won't have to drop it by much and your house will have a huge advantage over its competition.  Next you should renegotiate your loan with your lender to reduce your monthly payments.  It will take some of the pressure off you month to month until you have your villa sold.  And if you should happen to have a lot of equity in your house and you don't need your cash out, you can advertise seller financing at below-market rate.  Offering a 4 ¾% mortgage for five years will encourage many hesitant buyers to get off the fence and buy your house.  Your money will also be safe and besides, it's hard to earn more than that by investing your cash anywhere else.  

---

Q7 - For two years my wife and I have been trying to sell our house located in a 55 + development.  Our Realtor put our listing on Craig's list but we've had no inquiries.  Our home is only 4 years old, on a premium lot, with custom millwork and upgrades on all cabinets, appliances, flooring, and fixtures.  Besides lowering the price 20% below comparable homes, can you suggest any other tactics that will move this house?

A - You've done the hardest part already by lowering your price well below your competition.  The next most important thing to do is put your house where buyers will find it.  Craig's list is helpful but it's not enough.  The two Big Kahunas that produce the most sales in the business are the multiple listing services controlled by realtors in your area and also the big newspaper websites that all the brokers use, like nytimes.com. Also make sure your house is listed on the biggest national websites, in particular homestore.com, trulia.com, and zillow.com.  Seven out of ten buyers find their home online, you want to make sure they trip over yours.