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Heated Driveways: A Shovel-Free Solution in Snowstorms

If you live in the Northeast, you might be feeling like a prisoner in your home during this month’s massive snowstorm. With snowdrifts reaching 1 to 3 feet, there’s a good chance you’re under a snow-induced house arrest or you have lots of backbreaking snow shoveling ahead of you. If you’re lucky, you have a local service that’ll clear your driveway for you—if it ever gets around to your house. Or you can pay the neighborhood kids to shovel it, if you have the patience. But what if the snow could melt all on its own? It’s not the stuff of dreams anymore––even you could live a shovel-free life each winter. That’s because heated driveways, long a luxury that only the wealthiest of the wealthy could afford, have become popular as they’ve become more affordable, said Bryan Morris, director of sales with Warmzone, a provider of radiant heat products and services. “We’ve reached a break-even point between the electric bill versus having the kid next door shovel your driveway––if he wants to do it in the first place,” Morris said. You don’t have to live in the Arctic Circle to justify investing in a little extra warmth. Park City, UT, currently leads the nation in the number of homes for sale touting heated driveways, according to an analysis of realtor.com listing data. With at least 200 home listings boasting this feature, the home of the Sundance Film Festival has 20 times the number of homes with heated driveways for sale as Anchorage, AK. So how do they work? Think of a heated driveway as a radiant floor––only outside your home. A heating element, such as electric wires or a hydronic system (which pumps hot liquid through tubes), warms up the driveway surface so that any snow just melts away. There’s even a device so you can set the driveway to heat only when it senses moisture. A heated driveway is a consideration when building a new home; but, in some cases, a heating system can be installed in your existing driveway. This usually involves cutting grooves into the asphalt or concrete, laying a wire system into the grooves, and then recoating the driveway with a layer of asphalt or concrete. But if the contractor runs into obstacles that prevent installation, your driveway will need to be demolished and rebuilt. Not everybody wants to do the entire drive, instead opting to heat just the space beneath the tire tracks, Morris says. The cost of materials to cover the tire tracks of a single car in a 50-foot driveway will cost about $2,500. You’ll also have to shell out for the contractor to install the system. After the installation, there’s the cost of actually using the heating system in your driveway, which can vary based on your local utility rates. But the costs probably won’t break your bank. If you’re paying, say, 10 cents per kilowatt-hour, you can pay under $6 to run the system during a six-hour snowstorm. You’re probably paying more than twice that to have someone shovel snow for you. And, if you’re doing the shoveling yourself, you should consider the time and labor saved. Thanks to their affordability, electrical wire/mat systems are the predominant form of heating installation––the only regular service they require is a cleaning of the temperature sensor. But homeowners with larger driveways may have to use hydronic heat, Morris notes. That’s because most homes are outfitted with a 200-amp service panel, which may be an inadequate power source for electrical driveway heating systems. But be warned––hydronic systems require more care and maintenance over time. If you’re not yet convinced that you can handle another winter, keep in mind that driveways aren’t the only areas of the home where you can lay down some radiant heat. “I have customers who do their patios and heat the paths to their hot tubs,” Morris said. “From a safety standpoint, it makes a lot of sense.”

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Safety Concerns Changing How Consumers, Realtors® Interact

In the wake of the kidnapping and murder of Arkansas real estate agent Beverly Carter last year, agents have been beefing up their safety measures when it comes to showing houses to new clients. Many brokerages have hired safety experts to teach Krav Maga self-defense techniques, and real estate coaches are promoting smartphone apps such as SafeTREC, EmergenSee, and Real Alert—all in an effort to keep agents safe. There is widespread discussion at the broker level about safety, and now those talks are shifting to the consumer. New guidelines for client interaction For many years, people have been treating the home-buying process like a recreational activity. They see a “for sale” sign, call the number, and expect an agent to show up and show them the house immediately. This is not just a bad business model, it’s also a safety hazard—but that’s going to change. The real estate industry is responding with new guidelines to shape the way agents interact with new clients in an effort to protect them both. “We have to reeducate the public about their expectation of us,” said J. Philip Faranda, broker owner of J. Philip Real Estate in Briarcliff Manor, NY. “Even a $1,200 used-car dealer requires a driver’s license to verify that you can legally drive that car. We have to do the same.” Many real estate companies are setting new expectations for how their agents do business with strangers: All potential clients are asked to meet the agent in the office for an initial consultation. All potential clients are asked to present identification upon meeting the agent. All potential clients are asked to be pre-approved by a lender before seeing properties. How does this protect consumers? These new initiatives ensure that everything is aboveboard. It provides a paper trail for the brokerage, while also providing a sense of accountability to the seller. With these initiatives, homeowners no longer have to fear that random strangers are walking through their house. Each prospective buyer is qualified and verified. “This is a smart business move. We’re not just concerned about safety; we don’t want to waste the agent’s time either,” said Faranda. He says serious buyers want to be pre-approved and will follow proper guidelines without taking offense. Furthermore, there are millions of vacant homes on the market. Real estate agents and consumers alike should want a paper trail or electronic log of where they are going and whom they are with. “Who knows what’s lurking behind the closed door of a vacant house,” said Gary Isom, executive director of the Arkansas Real Estate Commission. Most consumers are honorable, he said. It’s that other percentage that we have to develop guidelines around, he added. The National Association of REALTORS® spends $35 million annually on public awareness, said NAR President Chris Polychron. Safety is his No. 1 priority. “Primarily we educate our REALTORS®, and we want to make sure they educate the consumer,” he said. NAR is unveiling new safety initiatives in May. NAR advice for sellers Physical harm is a major concern, but theft is also an issue. Touring properties is a trust-based action. Agents can do their best to make sure they know whom they’re dealing with, but they can’t weed out all the bad apples. To help, the NAR has developed the following guidelines for sellers: Stow away valuables. During showings, sellers cannot always depend on the agent to watch every move a client makes. Be sure to safeguard all jewelry, prescription drugs, and small poachable items. Remove family photos. Agents have often told sellers to do this as a way to allow potential buyers to envision themselves in the house. It’s now a safety concern. What if a pedophile is the buyer prospect and he’s checking out pictures of your children? Do not allow unscheduled showings. With mobile listings, people know when your house is on the market. It’s not unusual for prospective buyers to ring your doorbell and ask to see your house. Don’t let them in. All showings should be coordinated with your listing agent. Before leaving the house for a showing, turn on all the lights. This way, both the agent and the prospective buyer are safe while touring the home. It would also prevent burglars from taking advantage of dark corners.

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Builders Bet on Strong Spring With Speculative Homes

Home builders are ramping up their construction of speculative homes—those built without a buyer lined up in advance—in anticipation that the recent pickup in sales will carry through to the spring home-buying season. At the end of December, builders had 218,000 homes listed for sale that either were under construction or completed, according to Commerce Department data released Tuesday. That is up 17.2% from a year earlier, indicating that builders are optimistic that spring sales will exceed last year’s lackluster result. If builders’ hunch about a strong spring are correct, the increase in sales will provide needed momentum to the housing market and the broader economy. It has picked up of late; The pace of new-home sales in December was the highest since June 2008. But there is ample room for growth: Last year’s total for new-home sales—435,000—was an increase of only 1.4% from the 2013 total and stands at roughly 58% of the annual average since 2000. “It appears that builders are more optimistic, and that’s why they’re building more spec homes,” said David W. Berson, chief economist at Nationwide Insurance. “But it doesn’t appear that they’re getting ahead of sales, since the number is so low historically.” Indeed, while the 218,000 spec homes on hand last month marked the highest December total since 2009, the spec-home tallies of recent years still are at low levels last seen in the late 1960s, Mr. Berson added. That is why few, if any, economists and builders at this point are concerned about overbuilding. In addition, despite the rising spec totals, new-home inventory remains relatively tight. The new-home market in December had a supply of 5.5 months—the length of time it would take to exhaust the available inventory, according to Mr. Berson. The long-term average is 5.9 months, he said. “We’re coming out of a time period in which builder inventories were exceptionally low,” said Brad Hunter, chief economist for housing research firm Metrostudy, part of Hanley Wood LLC. “Now we’ve gone from inventories being extraordinarily low to being normal. We haven’t yet gone above normal in most cases.” D.R. Horton Inc., the largest U.S. builder by closings, is leading the charge into the spring season. The builder reported Monday that it ended 2014 with 4,500 completed spec homes, roughly 1,100 more than at the same time a year earlier. D.R. Horton also posted a 35% gain in sales contracts for its fiscal first quarter ended Dec. 31—exceeding analysts’ consensus forecast of a 25% gain. “We are in a strong competitive position for the upcoming spring sales season with a well-stocked supply of land, lots and homes,” said David Auld, D.R. Horton’s president and chief executive, during a Monday conference call with investors to discuss the builder’s quarterly results. The spring selling season typically starts after the Super Bowl and hits its stride around March and April. Builders tend to keep a set number of spec homes for each of the communities they are building. Therefore, as builders open additional communities, which many have done aggressively in the past year, their spec count will grow. However, some signs point to the recent increase in spec homes being propelled by more than just community-count expansion. For example, KB Home averaged two spec homes per community as of Nov. 30, up from 1.8 a year earlier. Similarly, another big builder, Lennar Corp. , averaged 1.5 spec homes per community as of Nov. 30, as compared with 1.2 a year earlier. In North Carolina, closely held builder ForeverHome LLC intends to boost its spec count when it opens a new 500-lot community near Durham in March. “We’ll start a pretty good spec inventory, probably starting with 15 a month there,” ForeverHome Partner Mark Ward said.

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2015: Buy Now, Before the Fed’s Patience Ends

By now you’ve probably heard that 2015 is expected to be a pretty good year for real estate. It’s a prediction that we chief economists are all fairly aligned on. But what I can’t emphasize enough is why I’m so confident this is a defining year for the housing industry. It comes down to three simple factors: Home sales will increase. Prices will increase. Mortgage rates will increase. When combined, those three indicators point to an extremely strong real estate market. And potential home buyers should move fast if they want to spend less. Buy before it’s too late Buyers should act now––delayed purchases will only result in higher monthly mortgage payments as prices and rates rise. In fact, our forecast data show affordability may decline as much as 10% over the course of the year. Plus, we won’t get another head fake on mortgage rates like we did in 2014. The economy is much stronger now, and the Federal Reserve continues to communicate loudly to the financial markets that it will raise the target for the federal funds rate this year. Right now, the Fed is using the word “patient” to describe its approach to picking the time to raise the target rate. However, when the Fed “loses patience,” rates will go up at least 20 to 40 basis points in anticipation of the target rate officially going up. The last time the word “patient” disappeared from the Fed’s language, it raised the target two months later. And when “patient” disappeared from the Fed’s language, mortgage rates went up in anticipation of the official move. So, buyers beware: The clock on these low mortgage rates may be ticking. Job growth, global economy will boost housing From a macro level, the economy and the housing market are in far better shape now than a year ago. We are creating jobs at a pace now that we haven’t seen in 15 years. Friday’s initial report on fourth-quarter GDP came in at 2.6% growth. Underneath the number was mounting evidence that consumer spending is indeed strong and wage growth is finally accelerating. Low prices at U.S. gas pumps have turbocharged consumer confidence and are enabling households to spend more and save more for big purchases—say, buying a home. Besides global factors that bode well for buyers, the U.S. housing market is also in much healthier shape. Foreclosure inventories have fallen to nearly normal levels everywhere except for a few slow markets. As a result, distressed sales are no longer weighing on the market. We’re back to a normal and upward trajectory for housing prices, and there’s little risk of prices declining because inventories are very low. I’m actually more worried about listings and new home construction not keeping up with the demand. Market is primed for first-time buyers, sellers I’ve said it before and I’ll say it again: 2015 is the year of the millennial when it comes to real estate. Millennials are at a critical demographic tipping point where their sheer numbers will naturally drive demand for more home sales. Most first-time buyers move into their first home when they’re between the ages of 25 to 34. Sellers should also be encouraged—especially if they’re sitting in affordable homes waiting for a long-overdue upgrade. With recent clarification of mortgage standards, new low-down-payment programs, and lower FHA insurance premiums, access to credit should improve. That means those folks who’ve been sitting on equity in entry-level homes can finally upgrade to bigger homes and retirement homes. What are the downsides? There are some risks to keep in mind. Supply must keep pace with demand, otherwise affordability declines more rapidly and would-be buyers can’t find the home of their dreams. The U.S. economy could hiccup from global weakness. Consumers could take the money they’re saving on gas and buy lottery tickets instead. The probability of those risks completely reversing the recovery is slight, but it is strong enough to limit the potential. On the flip side, if the economy ends up growing more than expected and first-time buyers come roaring back, we could end up in an even stronger market. Here’s to a robust and strong 2015! Jonathan Smoke is chief economist at realtor.com®.

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