Q. & A. with Barbara Corcoran

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Q1 - My wife and I and our two young children live in a 3 bedroom, 2 full/2 half bath Colonial in Sea Cliff, Long Island.  We bought the home, which is fairly small, four years ago for $548,000 and have a 30 year mortgage at 5.625%.  I know we'll need more space in a few years, and since our lot is not that big and the village of Sea Cliff is notoriously strict when it comes to construction, I don't think building an extension is the best option.  Given the current economic climate and declining home prices, should we hold off on selling and buying a bigger home?  Or should we take advantage of today's historically low interest rates and competitive home prices and buy and sell now?

A - This market is made for you and your family!  Even if you wind up taking a loss on the sale of your current home, you'll more than make up for it when you purchase a bigger one at the same big discount.  It's a no-brainer!  It'll be easy to find your next home because there are so many good homes to choose from. But before you do anything, list your home at a price that will move it quickly.

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Q2 - We can refinance our mortgage one percent lower, but after paying closing costs and fees our monthly payment would be the same.  Does it make sense even though we plan to move in four to five years?

A - Rates are cheap now and if you can get a fixed rate mortgage you'll sleep better at night.  Don't forget to shop your current lender first and negotiate lower or no closing costs.  They don't want to lose a steady customer to a competitor.

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Q3 - I am entertaining the thought of purchasing a foreclosure. Can you tell me how I can locate such homes? There are lots of web sites but they charge fees to be given access to this information. Where do I look?

A - Two things you should know.  First, you can get free foreclosure lists from HUD.gov.  But be forewarned that the registration process is a pain in the neck.  You're far better off taking a free 7-day trial with some of the big foreclosure websites that give you a complete list of every foreclosure in your area.  The big ones are foreclosure.com, foreclosures.com (with an "s") or realtytrac.com.  Once the free trial is over it will cost you about $50 a month.  But if you don't have a lot of time, go to a local real estate broker who specializes in foreclosures.  You can find out who it is by calling the manager of your local real estate office.  A good one will not only save you time, but also give you the invaluable information of what the house is really worth.

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Q4 - We are current on our two mortgages and have excellent credit, but we are unable to sell our home due to a significant difference between what we owe and what the house is worth.  Is there any help for us?

A - You can call your lender and ask them to allow a short sale.  Simply put, a short sale lets you sell your property for less than your mortgage amount and the bank absorbs the loss.  So if your house is now worth $100,000, but the unpaid mortgage is $130,000, you would ask your bank to allow you to sell to a buyer for $100,000.  After you call the bank's workout department and speak with a bank officer or supervisor, confirm your request by certified mail, return receipt requested.  Today, making a paper trail is key to getting what you want from the bank.  Once you've had a short sale, it prevents you from buying another house for three years.  A foreclosure would stand in the way of another purchase for six to seven years.

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Q5 - I'm a single mother who owns a house in Queens Village, NY.  The house is old and only has one very small bathroom on the first floor.  The second floor consists of two bedrooms.  I want to dormer the upstairs to add a bathroom.  Do you think that's a good idea?  If so, how do I go about doing it?  I have heard such horror stories about contractors doing shoddy work for massive amounts of money.  Do you have any suggestions on how I can find an honest contractor that will do the work properly?

A - The best way to find a great contractor is by getting a good referral from a friend or the local building inspector.  You can also drive around the neighborhood to find other jobs underway and introduce yourself to the homeowner.  Before you hire the contractor, check out his truck.  If it's neat and organized your job will be well run and if it's a mess your house will be a mess too.  The dormer and bathroom are a great addition and you'll likely get your money back when you sell.

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Q6 - I have about $500,000 to spend on my first real estate deal. I'd like to buy a three family home in Northern New Jersey. Which areas do you think are the best for investing?

A - Try Fairlawn.  This charming little town has one of America's prettiest planned communities and has small bridges, stone and wooden homes, large parks and a handful of brick apartment buildings.  Houses in Fairlawn cost around $450,000 and rent out very easily.  A smart investment there will provide a good return.  

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Q7 - I put my house in Houston, Texas up for sale last year due to a job transfer. After six months on the market it did not sell so I was forced to lease it out to make the payments. I still need to sell the house but I can't put it back on the market until next fall. Do you think the market will have improved by then? And is smart to lease a house that you worked so hard to get ready for sale?

A - First off, you already leased your house so it makes absolutely no sense to wonder now if you did the right thing.  By leasing it, you bought yourself some time and avoided taking less money for your house than you wanted.  And if you hadn't been able to sell it in six months' time, leasing it was probably your best option.  After all, it's no fun paying for a house you're not using.  So far as putting it back on the market in the fall, wait and see.  The whole world could change then and nobody knows when real estate prices will bottom out.  And remember, if house prices continue to go down, rent prices typically go up.

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