Connecticut Real Estate Blog - Real Real Estate in CT

I’ve been lucky so far with my tenants but my in-laws have not.  They just moved out tenants they’ve had for a couple of years and it isn’t pretty.  If you want to be a landlord, look at these photos.  While I can’t share with you the before pictures, I can tell you that the house was built in 1974 and was mostly remodeled 4-5 years ago, before these tenants moved in.   

Luckily for all of you, the Internet is not capable of bringing you the full experience of all the senses.  On the cat urine smell-o-meter scale, this house was a 10 on a scale of 1-10.  (Remarkable, since the tenants were not allowed to own cats!)

Ta da!  Here’s the stunning entry into the house.  What you can’t see is me holding my nose - this was the cats toilet room.  Cat pee and plywood - not a good combo.  All of the plywood and sheet-rock will have to be removed because it is swollen with liquid.

At least they tried to fix the hole in the wall with some Spackle or is that toothpaste?  This is one of many holes.

The tenants really had a thing for punching and kicking holes into the walls and doors.  Every single door has to be replaced.

This was one of many closets filled with garbage.   Under and among all of it and on all the carpeting were little petrified kitty poo packages.  The yard was also littered with trash and the basement was full of more garbage, and you guessed it, petrified kitty poo. 

Proof that the tenants owned a vacuum cleaner (it’s the little yellow thing on the floor) but just decided to never actually use it.

Amazingly enough, the tenants were very sure they were going to get their security deposit back.  I don’t think so - the repair, cleaning and trash removal expenses for this house will cost thousands of dollars. 

PS- They also left 9 cats behind.  The neighbors are feeding them until I can trap them, bring them to a vet, spay/neuter them and find them homes.  Anybody want a cat?

According to Inman News,

The homeowner vacancy rate, a gauge of the number of unoccupied units for sale vs. the total homeowner inventory, was 2.1 percent (the national average) in first-quarter 2006 and has risen for seven consecutive quarters. A high vacancy rate can indicate an oversupply of housing units while a low vacancy rate can indicate a shortage in supply of housing units.

The homeowner vacancy rates in the Northeast are the best in the nation, at 1.9% for the first quarter of 2007, compared to 3.2% in the South, according to a recent report by the US Census Bureau.  1.9% represents an increase from the first quarter of 2006 when the rate was 1.7%. 

While we are certainly in a buyer’s market in the Northeast, the homeowner vacancy rate seems to indicate that our buyer’s market is not as deep as it is elsewhere. 

The rental vacancy rate in the Northeast was 7.1% in the first quarter of 2007, a decrease of .2% from the first quarter of 2006.  The South had the highest vacancy rates, at 13.1% and the West had the lowest at 6.5%.  This means that rentals will be a little more difficult to find and rental rates are likely to continue to edge up higher. 

Last week, I was driving to an appointment to show a young couple a property in the Rockville section of Vernon.  It’s a beautiful Saturday - I’ve got my sunroof open, windows down in my car.  If you’re familiar with Vernon at all, it’s a relatively affordable suburban community next to several pricier towns like Ellington and South Windsor.  Rockville is the old commercial/downtown part of Vernon that has been trying to reinvent itself as the historic district. 

We drive past a few police cars, then a very loud and lively house party, then more police, then more people out in the street yelling and then we pull up to the property. 

As we’re getting out of the car at the house, several streets away from the previous police activity, people are everywhere - yelling at each other, at their kids, at the dogs, at themselves, who knows.  We look around the house and we can hear sirens, music blaring and several police cars go speeding by.  As we’re leaving the house, a naked kid runs through the neighbor’s back yard and a neighbor yells to another neighbor, “What the F&%! is going on!?”

I love a good swear word just as much as the next person but swears don’t sell houses.

No offense to Rockville residents but R.E.M. did a song called “Don’t Back to Rockville,” and I’m beginning to think that they had this Rockville in mind when writing the chorus. 

My clients didn’t need to ask, “How’s the Neighborhood?” They are from the area and know Rockville.  And, our showing didn’t do anything to improve their perception.

But when I have someone ask me about a neighborhood, I can’t and shouldn’t say what I really think, whether it’s good or bad. While my clients are seeking out my opinion, I cannot legally say anything that may be perceived as steering or discriminatory.  In addition, tastes are completely subjective.  My perception of a neighborhood may be based on some experience that has nothing to do with actual facts and figures. 

The right thing for me to do is to direct my clients to finding out the answers for themselves, since legally I can’t say very much.

• Drive through and around the neighborhood at peak activity times - during the week around 6 PM and weekends.
  • Pay attention to the condition and types of properties in the immediate vicinity. Are neighbors mowing their lawns?  Are there a lot of kids playing in the street? Does the property conform to its surroundings?  If it’s the only single-family on a street of multi-families, then the value of the single-family is negatively impacted by the properties around it. 
• Call the local police station and ask to speak with someone about getting crime statistics for the neighborhood.  I did this before buying a property and the officer I spoke to was very helpful, explaining why certain figures were high or low and what they meant.  He also told me that their department almost never gets calls for this information by prospective homeowners and he was pleasantly surprised that I had called.  This information helped me to make an informed decision about buying property in a neighborhood that concerned me.
• Sites like Family Watchdog and the CT Sex Offender Registry can give you information about sex offenders in the area.
• The EPA can give you information on the environmental conditions of an area.
• For demographics information, you can visit the US Census site or CT has a site where you can view town profiles.
• For school information, the CT Department of Education has a site with school profiles by district as well as by individual school. Great Schools also has some good information and features parent reviews.

Here are the most recent statistics for the Greater Hartford region, from the Greater Hartford Association of Realtors.

As you’ll see in the data, single-family housing inventory is up.  The time it takes to sell a home is increasing.  But, the average home sales price and median sales price are still moving upward.

This is the eleventh post in a series of twelve on buying a home.  Click here for other posts in this series.

Once the home/condo has passed inspection and any repair items have been negotiated, you can begin to shop for homeowners insurance.  Lenders require that you carry homeowners insurance but you can still shop around for the best rate and coverage.  You will need to have proof of an insurance binder at closing.  Here are some things to consider:

According to the Federal Citizen Information Center, you may be able to save money using some of these tips.

• Consider a higher deductible. Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
• Ask your insurance agent about discounts. You may be able get a lower premium if your home has safety features such as dead-bolt locks, smoke detectors, an alarm system, storm shutters or fire retardant roofing material. Persons over 55 years of age or long-term customers may also be offered discounts.
• Insure your house NOT the land under it.After a disaster, the land is still there. If you don’t subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should.
• Don’t wait till you have a loss to find out if you have the right type and amount of insurance.
• Make certain you purchase enough coverage to replace what is insured. “Replacement” coverage gives you the money to rebuild your home and replace its contents. An “Actual Cash Value” policy is cheaper but pays only what your property is worth at the time of loss-your cost minus depreciation for age and wear.
• Ask about special coverage you might need.You may have to pay extra for computers, cameras, jewelry, art, antiques, musical instruments, stamp collections, etc.
• Remember that flood and earthquake damage are not covered by a standard homeowners policy. The cost of a separate earthquake policy will depend on the likelihood of earthquakes in your area. Homeowners who live in areas prone to flooding should take advantage of the National Flood Insurance Program at www.floodsmart.gov.

For more detailed information, you can visit this link at Federal Citizen Information Center’s website, which will give you additional tips on how to save on your homeowners insurance.

Lastly, one question I’m asked often is whether shopping around for insurance will hurt a buyer’s credit score.  The answer is probably not.  Your lender will recognize the fact that you need to buy homeowners insurance before you can close and that the insurance companies will runa credit check on you.  As long as the inquiries are of a similar nature and are made within a limited period of time, buyers should see no negative impact on their credit. 

The state of Arizona recently told Zillow.com to stop providing Zestimates, their version of property value estimates.  The issue is that Arizona feels Zillow is providing appraisals and they do not have a license to do so.  Zillow argues that their Zestimates are not appraisals and the public does not think Zillow.com is providing free appraisals.

You decide.

Are Zillow.com Zestimates appraisals? 

The definition of an appraisal: 

“An estimate of quantity, quality or value; the process of through which conclusions of property value are obtained; also refers to the report setting forth the process of estimating value.”  From my “Fundamentals of Real Estate Appraisal” textbook.

From Zillow.com, their definition of a Zestimate:

The Zestimate™ (pronounced ZEST-ti-met, rhymes with estimate) home valuation is Zillow’s estimated market value, computed using a proprietary formula.

Although Zillow.com says Zestimates are not an appraisal, don’t these two definitions sound sort of similar??  Both use the words “estimate” and “value.”

Does the general public know the difference between an appraisal and a Zestimate?

There is a good discussion of this issue on BiggerPockets.  You’ll see my response to the issue of the general public being aware of the difference but here it is anyway:

While real estate professionals understand that a Zestimate is not an appraisal, consumers do not. Not only have clients of mine referred to Zillow to make buying decisions but I just read with horror this past week in my local paper that a taxpayer was suggesting that towns cease hiring appraisers to do property valuations.

Furthermore, the writer suggested residents use Zillow’s Zestimates to fight their town’s property valuations. Obviously, she had not read the site to find that Zillow gets its information from the town and my paper is so clueless that they published it.

My point is that people are not reading the disclaimers, they do not understand how the figures are calculated and they are making important decisions based on this info.

Are Zestimates Illegal in CT?

In CT, you must have a license to issue appraisals and charge for them.   According to the state statutes:

“Real estate appraiser” means a person engaged in the business of estimating the value of real property for a fee or other valuable consideration.” 

No person shall act as a real estate appraiser…without the appropriate certification…unless exempted by the provisions of sections 20-500 to 20-528.

Exceptions would be:

…any person under contract with a municipality who performs a revaluation of real estate for assessment purposes…any licensed real estate broker or real estate person who estimates the value of real estate as part of a market analysis…

I don’t know if the Zestimates are illegal in CT or elsewhere.  But I do know that Zillow.com has an issue with Zestimates at least being perceived as such. 

To pile onto my last post about a listing agent who was practicing buyer agency and not doing a very good job of it, I’m including two links to articles written recently by June Fletcher of the Real Estate Journal.

Finding the Best Match When Shopping for a Buyer’s Agent points out that only 64% of consumers use a buyer’s agent when buying a home and only 2% of all the buyer’s agents are exclusive buyer agents.  That means that 98% of agents practice dual agency or designated dual agency.

The system, as it exists now, is hardly ideal for buyers. Most people meet real-estate agents by visiting open houses or inquiring about ads they’ve seen in the newspaper or on the Internet. Inevitably, an agent will ask you if you are “working” with another agent. If you say no, he will send or give you some listings and ask if you’d like to visit some of the houses. If you do, he will “claim” you, at least when it comes to that house. In some states, you may also be asked to sign an exclusive buyer’s agency agreement. Should you decide to buy the home, the agent will expect to represent you during the sale.

This practice has obvious time-saving advantages for agents, but it’s not ideal for buyers. Shopping for an agent is a lot like dating: You’re unlikely to fall in love with the first one you encounter. Even if first impressions are good, you may decide that the chemistry isn’t working after you’ve spent a day or two touring houses…or you may decide that you’d like to play the field a bit before committing to a particular person. 

The article favored exclusive buyer agency but admitted that finding an agent who only represents buyers can be hard.  Apparently the article inflamed some agents who claimed that exclusive buyer agents don’t know enough about real estate because we only handle one side of the deal.   One agent wrote in:

“If you never negotiate from the sellers agent perspective, you are less prepared to position negotiations effectively with sellers in service to your buyer….many [clients] can’t buy until they sell. You’re suggesting not to use one agent for both?”

June Fletcher’s response is perfect:

Well, yes I am — if you can find an agent who specializes in working just with buyers. The idea that exclusive buyers agents can’t understand a seller’s perspective is hogwash — and somewhat akin to the notion that a man should never write a novel from a female’s perspective, or vice versa (under that logic, we’d wouldn’t have “Anna Karenina” or the “Harry Potter” series). It isn’t at all unusual for people to deal with two different agents — one to assist in selling their home, and one to help them buy a new one — especially if they’re moving to a different town.

Readers Respond - Using a Buyer’s Agent