Looking for what's new and what's now in the real estate world. The Jersey Group and Bob The Broker have joined forces on this blog dedicated to all aspects of the real estate business.

Now more than ever it is important to establish good credit if you are considering being a homeowner.  With everything that has gone on in the mortgage industry over the past year, getting a mortgage with bad or no credit is much more difficult.  Even worse are the rates for these borrowers.  My advice, meet with a qualified mortgage planner well in advance to map out a plan of attack to best position yourself to purchase your dream home.

If you’ve never had credit in your own name, it can be difficult to get a car loan or credit card. Having no credit history can be as much of a problem as having a bad credit history. Students, other young people, and newly divorced or widowed women who have always obtained credit jointly with their husbands often find themselves in this situation.
It seems like a vicious circle: you can’t get credit because you’ve never had credit, but you’ve never had credit because you can’t get credit. What’s a person to do?
Don’t despair. Here are a few tips to help you establish credit in your own name.

~ The best way to establish a credit history is to apply for a small loan or line of credit from your local bank or a credit card from a local department store. Ask whether they report to a credit bureau.  If they don’t, having the card or loan won’t help you establish credit.

~ To get a credit card without a cosigner, you must be at least 18 years old and have a source of steady income. Gas cards are relatively easy to get. Apply for one and use it to establish credit, but pay it off every month to show that you can pay your bills responsibly.

~ If you can’t get a small loan or gas card or department credit card on your own, try to find someone to co-sign for you. Again, make payments regularly and on time.

~ Increase your chances of getting the loan you’re applying for by coming up with a large down payment. If you don’t have the cash, consider borrowing from a family member.

~ If you don’t have a checking account, open one. You have very little credibility with lenders if you don’t have at least a checking account and preferably a savings account as well.

~ Just as importantly, be sure not to overdraw your bank account. Bouncing checks sends a signal to potential lenders that you can’t manage your daily finances and are therefore not a good credit risk.

~ Know what lenders and credit card issuers look for when issuing credit. There are other factors that affect credit approval besides just your payment history, such as how often you move and how often you change jobs. It also helps if you’ve had an apartment or utility in your own name. If you don’t have a telephone number in your own name, you may find it more difficult to get credit.

~ If worse comes to worst, you may find it necessary to get a secured credit card. These cards require you to deposit money in an account to secure the loan or credit limit, and they often have fees and higher interest rates. If you default on your payments, the lender takes the money from your account. After a few months of making payments on time on the secured credit card, you may be able to obtain a regular credit card. Remember to make sure the company reports to a credit bureau before applying for a secured card, or the card won’t help you establish a credit history.
Before you apply for a credit card or car loan, get your ducks all lined up. Think like a lender. Applying to a number of credit cards in a short period of time can decrease your chances of getting approved. Lenders see this activity on your credit report and steer clear because they think you’re getting in over your head, so pick and choose carefully and have a plan of action.
Being rejected for credit can also look bad. Apply only to cards whose requirements you are likely to meet. Read the small print and call the company to make sure your income and other factors qualify you for the card. Just because you get an offer in the mail doesn’t mean you qualify.
With careful planning and a little knowledge of how lenders issue credit, you CAN establish a credit history fairly painlessly. There are many businesses waiting in line to take advantage of you by charging exorbitant fees or interest rates, so be careful out there.

For a Free Copy of your credit report visit www.annualcreditreport.com.  This site is provided by the three major bureaus; Experian, Equifax, and Transunion.  You can get your free report once a year from each of the three bureaus.  The only problem with this website is that you will not get your FICO scores, just what is on your report.

If you would like a Free Analysis of your credit situation for the purposes of obtaining a home loan, please feel free to contact me.  I will be more than happy to counsel you and to help you put together a plan to develop good credit or restore bad credit.

by Dave Cox of The Jersey Group

There’s a widely-held tenet in the brutal world of the National Football League that says if you don’t want to get hurt, you go full speed. You do the hitting, instead of getting hit. It’s when a player eases up a bit that he is most likely to get himself injured. Now, I’m sure this approach to injury-avoidance isn’t 100% effective on the turf, but the fact that so many teams and players subscribe to it certainly gives it a good degree of credibility.

There’s another group of battered warriors who might be wise to adopt that gridiron philosophy: today’s home-sellers.

Whether you’re just moving into a nicer house across town, or you’re trying to get the heck out of New Jersey, if you want to be an effective home-seller in this market, you have to strap on the shoulder pads and start hitting. Sure, you might get a little bruised up, but at the end of the day, you just might have sold your house.

Before we go any further, let’s all get on the same page about a couple things. First of all, the real estate market is slow and there’s nothing on the horizon that is going to change that. Forget property taxes, forget sub-prime mortgages, forget the Fed raising and lowering rates, forget easy credit, forget transferring the dot-com bubble to real estate...the real driver behind the boom of the last few years was: hope. Good old-fashioned American optimism about the future.

The bidding wars of circa 2004 weren’t fueled by low rates, they were fueled by the buyers’ confidence that whatever they paid for the house today, it will be worth $100,000 more in two years. Because let’s face it: if you bought a house in Northern New Jersey in 2004, you probably saddled yourself with a decent-sized mortgage. Even a $400,000 house with a 10% deposit and $5000 annual property taxes left you with a $2,500 monthly mortgage payment. That’s not chump change (and those are pretty conservative numbers!) So those people weren’t buying that house because they had an extra $30,000 sitting around every year and nothing to do with it, they were buying because they figured that two years into the future the house would be worth $500,000 and that pattern of price appreciation would last forever and ever. Pure, unadulterated, unbridled optimism.

And now that’s all gone. The fact is that today’s buyers are sitting on the sidelines asking themselves, “Why buy today when 6 months from now houses will be cheaper?” Whether that thinking is accurate or not is not nearly as important as the fact that it exists at all. One of my clients recently decided that he still wants to sell his house (thank goodness, I’ve spent time and money marketing it!) but that he is no longer planning on buying a house when this one sells. In fact, he’s already signed a lease to rent an apartment. His reasoning? He’s afraid of paying “$400,000 for a house today only to wake up next year and it’s only worth three.” Again, even though those numbers might be a bit drastic, the fact that he has taken himself out of the buyer pool altogether is what’s more significant. For the rest of the sellers out there, there is now one fewer buyer in the market.

For this thing to turn around, the buyers are going to have to have a completely different mindset, and that’s not going to happen any time soon. After years of not being in control of the housing market, buyers have only just begun to realize that they’re in the driver’s seat. The housing market needs a correction. Make no mistake, the pendulum will swing in the other direction for a while. But as of now, it has hardly even moved. The fact is, it’s the sellers who are going to have to blink first.

So, now that we all agree that the market is generally moving downhill and the outlook is for more of the same, what is today’s seller supposed to do about it? First of all, come to grips with reality. You are selling a house in 2007. It is no longer 2004. You could have probably gotten more money had you sold a few years ago. If this fact bothers you and you can’t stomach the thought of selling for less than your neighbor got a couple years ago, TAKE YOUR HOUSE OFF THE MARKET. You are wasting everybody’s time, including your own. Put your mind on other things. It will be good for you. Accept the fact that you are going to be living in this house for a few more years and spend your “real-estate energies” on improving the house. We are just wrapping up year two of this downturn. Try selling again in 3 or 4 years.

If, however, you need to sell now and you’ve accepted that this is the market you’ll be working in, be aggressive about it. And the thing to be aggressive about is (9.5 times out of 10), the PRICE. Today’s buyers are no longer willing to take on every single piece of real estate regardless of shabby condition or terrible location. A house that may have sold in a heartbeat a few years back despite some serious flaws, may have enormous trouble finding a buyer today. Today’s buyers know that they have options and that they can afford to be picky.

The counter-attack for the seller, then, revolves entirely around price. Price your house to spark interest and get buyer activity. Too many sellers start with a price that is too high. Over time, they slowly accept that they need to lower the number, but they make too small a change. Some time down the road, they do it all over again. The problem is that the market keeps dropping, and these sellers never make the move that gets them in front. Instead, they “chase the market down.”

A good example is a house that recently sold in an affluent section of Morris County. It sold in March 2004 for $1,050,000. It was offered for sale in June 2006 for $1,469,000. That would have been a nice $400,000 profit in just over 2 years, huh? Unfortunately, the seller missed the moment, and then never caught back up. In August ’06, they moved the price to $1,395,000. Kept it there until the listing expired in December ’06. Re-listed in April ’07 at $1,250,000 and sold it this month for $995,000. $55,000 below the sale price in March 2004. Makes you wonder what would’ve happened if the seller had started at $1,250,000 in August 2006? Might have actually turned a profit.

Or how about the Bergen County house that originally listed in February 2006 for $589,900 and has basically been on the market since then at that same price! With an annual property tax bill of nearly $15,000…that homeowner has paid over $20,000 in property taxes in the time that they’ve been on the market! Might’ve made more sense to list the house for $20,000 less and just get rid of it, no?

Of course, these sellers didn’t know then what they know now. Too bad for them. But you do. If you’re selling a house right now, or if you’re about to…you need to understand what is going on around you. Or you need to hire a Realtor who has the guts to tell you. Don’t chase the market down, don’t sit on the sidelines waiting for a buyer to show up from 2004. Get aggressive and make something happen for yourself.

Here’s the best part about putting your house on the market in uncertain times: you can always say “no.” Worst-case scenario for a home-seller who wants to get, say, $500,000 for the house might be to put the house on for “only” $450,000. They’d probably rather wait for months at $500,000 so that a buyer might show up, offer $460,000…negotiate to $479,000 and the seller will be thrilled. But what happens if nobody ever shows up? That’s when you realize that $479,000 was a figment of your imagination, a phantom number that no longer exists (if it ever did). And every month that goes by, you continue to pay a mortgage and New Jersey property taxes.

What about this instead: you hit the market at $450,000. Buyers recognize it as a good deal. They jump on it and give you full price (or maybe two buyers compete and you get more!). Sure, $450,000 is less than you were hoping for, but remember that $479,000 never really existed, and besides, you aren’t making mortgage payments while you wait. And if you put the house on for $450,000 and nobody comes along to buy it, you know for absolute sure that no one was going to come along if you had been listed for $500,000! And lastly, if you put it up for $450,000 and the best offer you can find is for say, $435,000…at least you have something concrete to wrap your head around. You can actually sit down, do some math, and figure out if $435,000 can work for you. If it does, take it. But if it doesn’t, say “no” and TAKE YOUR HOUSE OFF THE MARKET. See, that’s the other advantage of being aggressive and getting an answer quickly – even if the answer is “no,” at least you have an answer. You can take your house out of the mix, cross “sell my house” off your to-do list, and move on with your life. That’s better than sitting on the sidelines hoping that 2004 is going to call, isn’t it?