Real Estate: Making an Offer to Buy a House Contingent on the Sale of Your Current One

I have a lucky client: fiscally able to carry two mortgages at once. She has her current home listed for sale with me. And she found one she loves that feels like home in a neighborhood she loves even more. So we are considering writing an offer contingent upon the sale of her home. In this particular case, the sellers, who would normally (and understandably) be skittish about doing that - taking their home off the market while they wait for a closing to occur - would get a good report from my client's mortgage lender assuring them of her ability to own two homes, even if it's a substantial period of time. Her home, my listing, is fabulous, so I am confident that someone will want to buy it. What no one can predict is how soon that will occur.

Most of us are not in the position to carry two mortgages. Most people (buyers) who make an offer contingent on the sale of their home are basically hoping their home will sell so they can buy the one they found and like. In these cases, the State of Ohio and our purchase offer process allows buyers to have essentially a 'right of first refusal' with a '48 Hour Clause.' This means, the sellers keep their homes on the market and actively show it to potential buyers. If someone else makes an offer, then the original buyers (the ones who have a contract with the sellers) have 48 hours to 'make things good' - or bow out. Some people get their ducks in a row so they can get a bridge loan if that scenario happens. Not everyone is lucky enough to qualify for a bridge loan either. Some have to bow out and then the new buyer is able to purchase the home.

Either way, sellers are skittish about this idea because one, it's not common that it works out; two, they feel like they lose time on the market. Even if it's a 48 hour clause, if the contract they are in is with buyers who definitely cannot afford the house without a bridge loan or a sudden windfall, then they tend to shy away from accepting this type of offer. Not always, but usually. It IS true, that there are many houses for buyers to pick from, and this idea may be appealing to more sellers than normal.

I would be really careful about this, do your homework with a reputable mortgage lender who can clearly advise you about a bridge loan, and who will honestly evaluate your financial situation regarding your ability to do this. Have your Realtor® advise you about the process. And try to evaluate your level of potential stress if the 'what if I own two homes' scenario comes to pass. Even a buyer like my current one, who can afford two mortgages, has to decide for themselves if this extra out of pocket money will leave them with too little cash flow if an emergency arises. I just googled this and there is an article in the Minneapolis-St. Paul Star Tribune that talks about this type of purchase offer. It's worth a read but I just realized you will have to sign up to read it and that could be annoying. So here is another article from the Seattle Times.

Peace Out - 3C

Strip Clubs and Higher Sales Taxes All In the News

Condo owners in Stonebridge, according to WKYC news tonight, came out against a proposed series of strip clubs on the east bank of the Flats. Mayor Jackson said he knew it was controversial but it was a good spot for it. The City would create a new District for it. I can't find a web link for this story but I'm sure by morning I will and will add it. (okay I found it here on Cleveland.com)

Councilman Zak Reed and the Republican party are saying they will start a petition drive to allow us to vote on the issue of a raised sales tax instead of it being handled the way Commissioner Hagan and Mr. Dimora wanted it done....well you know, like the proverbial railroad train running through our lives. Tom Beres and WKYC reported the story tonight. Hats off to Councilman Reed and the Cuyahoga County Republican Party for stepping in before it was too late. I'll give more details when they announce the specifics about the petition drive. For sure, whether you would support a sales tax increase for a Convention Center and Medical Mart or not, you should have the right to vote on it! It's your money! So take that Hagan and Dimora.

Peace Out - 3C

Real Estate and LIfestyles: Money Magazine's 2006 Top Ten Places to Live

We have been talking a lot on Cleveland blogs (OK everyone everywhere is talking!) about what we need in Cuyahoga County and Cleveland in order to feel the economic and Sense of Place vibrancy we all crave. I thought it might be helpful to look at this 'best' list. CNN/Money did a poll and Househunt.com reports the findings. Here is their Top Ten Places To Live List:

1. Fort Collins, Colorado
2. Naperville, Illinois
3. Sugarland, Texas
4. Columbia/Ellicott City, MD
5. Carey, NC
6. Overland Park, KS
7. Scottsdale, AZ
8. Boise, ID
9. Fairfield, CT
10. Eden Prairie, MN

There were commonalities and differences, but a few things stood out: all ten economies are vibrant, job growth is up, the population is diverse (including the fact that not everyone is rich or poor) and there is an affordable housing stock as well as a higher priced mix. Most of these places also had a population that averaged around 125,000 residents.

**They all seemed to be just far enough away from metropolitan areas, but yet close enough to get there quickly. For example, Fort Collins is one hour away from Denver or one hour away from Cheyenne Wyoming. And Naperville is only 28 miles West of Chicago (hats off to Naperville, I know two wonderful agents there, Eileen Landau and Angus Woodbury).

**They had 'perks' - a strong educational community, home sale prices going up not down, and a biggie, job growth. Yes, I know I mentioned it twice.

**They all seem to offer a lot of green space, recreational areas, rivers, lakes, mountains, depending on their location. So as the House Hunt Inc. site points out, they have the best of both worlds. Fort Collins boasts an average of 300 days a year of sunshine.

One thing I found odd and I have to put it here. Naperville Illinois was voted most 'kid friendly' city in 2006 by Zero Population Growth. Isn't that sort of an oxymoron??? Maybe my Naperville friends Eileen or Angus can explain it to me :-)

So I guess we don't need much to get on this list! We certainly have the green space; our Emerald Necklace alone is unbeatable. We have the affordable housing stock. We have a diverse population; we were voted one of the most literate cities so we can compete with these ten cities on good library systems. We have the higher education community a lot of people would love to have in their cities. The biggest weak link I see for NE Ohio (besides the sunshine.... does Fort Collins really get 300 days a year? That would be wonderful I have to admit) is jobs.

Peace Out - 3C

National and Cleveland May Home Sale Statistics + New Tax Abatement in Shaker

May is one of those 'go to' months when predictors well, start predicting based on first quarter results and May is a big real estate sales month. This Market Watch report talks about the high inventory of homes on the market Nationwide, but also talks about May sales being stronger than expected.

Just a Cleveland stat: during the month of May, 157 homes and condos sold in all west side Cleveland areas (these stats reflect sales listed with brokerages). Here is a comparison for sales in May in all of these areas for other years:

May 2006 = 164
May 2005 = 151
May 2004 = 185
May 2003 = 155

Peace Out - 3C


As an aside, the City of Shaker Heights applied with the State of Ohio to offer tax abatement. You can look on the City website here and get the details.

Budget Director Says Ohio Budget Shortfall Rests on Shoulders of Housing Market?

To me it's a 'chicken and egg thing.' The second biggest reason mentioned is the slow job market. I could be wrong, but in most cases I think you need a job in order to buy a house. The Columbus Dispatch did an article on Budget Dir. Sabety's remarks.

We kvetch about the brain drain and a good program was established to establish a State scholarship fund for students entering science, technology, engineering or mathematics (STEM). It was scheduled to start receiving monies ($50 mil) this coming school year and now that might not happen. Again I think about how serious this is. We are $167 million short in our state budget; we need jobs to counter the problem; we need students to excel in fields of study like the STEM areas and the budget shortfall might keep us from beginning this program that encourages our grads to stay here. It might just be Catch 22 and not the chicken and the egg dilemma. Does all of this make you a bit subdued? I find myself reacting that way.

Go to the Kent State website; you will see them announcing a 2007 STEM scholarship program in geology, computer science, etc. Maybe someone out there can tell me if this is a separately funded program that can still move forward in 2007?

Back to the Budget woes and housing. "....Sabety told Legislators that the “key driver” in the lower tax revenue estimates is the housing market..." And then there is the large amount of inventory (homes listed for sale) in most of our communities.

This is not just a City of Cleveland and inner ring suburb issue. We have a house listed in Strongsville. We have spoken to agents from other companies who have homes listed in this same subdivision. No showings, at least not more than one or two a month. And between the four of us (agents in different companies) we have homes in different price ranges and the price differences are not making anyone look at the homes. One clue could be that there are 352 single family homes for sale in Strongsville as of today (I am speaking of the ones listed by brokers on the MLS computer listing service).

Some other communities: Shaker Heights, 394; 279 in Medina; 302 Old Brooklyn/South Hills/Memphis Road. Garfield Heights is a community very hard hit for about six months (at least) now with predatory lending and foreclosure issues (although no one is spared really). In the Winter Garfield Hts. was averaging over 600 homes on the market (single family) and as of today there are still 503 listed. Folks, this is a huge amount of inventory that can take months to absorb. I have been really busy with buyers the last four to six weeks. But we don't have enough buyers for even the 2,878 homes I mentioned in the communities above.

Sometimes I feel like going to Frederick Maryland or Tyson's Corner Virginia or NYC with a sandwich board on my body that says please relocate your business to Cleveland - you won't be sorry.

Jobs would help. Students dying to fill jobs in STEM areas would attract jobs, I know it. What are the solutions to the Budget Shortfall? Peace Out - 3C

Housing and Mortgage News

I went to our Finance Manager Bob Wilson (Howard Hanna Mortgage Services) for some updates on the state of the housing economy. The first thing he sent me was information that can affect interest rates, expected out in June. We already know that they were spiking at the beginning of the month. Bob pointed out the Bond prices falling. That happened again a few days last week. The current rate is about 6.5%, although those pesky rates change depending on your own situation.

Here was his list of important June activity:

Housing Starts
Tuesday, June 19,
8:30 am, EST
Down 2.8% (Bureau of the Census Info)
Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates.

Leading Economic Indicators
Thursday, June 21, (PR Newswire Info)
10:00 am, EST
Up 0.2%
Important. An indication of future economic activity. Weakness may lead to lower rates.

Philadelphia Fed Survey
Thursday, June 21, (Bloomberg.com reports on this)
12:00 pm, EST
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.

Mortgage rate info Peace Out - 3C

Is East Fourth Street The Pulse of Cleveland Again?

I had a gentleman walk into my office a week or so ago. He moved here from Kansas City and worked in a western suburb. He'd only been here a few days, but could already tell he really wanted to live in Cleveland. He wants to rent so we set out to explore a few things; our first efforts did not work out and this week I found myself down on East Fourth Street looking for rental possibilities. I trekked over there when the Corner Alley bowling/martini bar opened because it sounded exciting (it was). It was even more exciting to see it and everything else all decked out for summer, neon-blazing and streets closed to cars (not in the way Euclid Avenue is lol...it's a pedestrian delight on East Fourth). It really felt, for the first time, like a NYC street in Cleveland.

Now today even better news! A terrific article in the PD written by Bill Lubinger who was positively glowing about the vibrancy of the Street --a shout out to Bill because this was a positive article on Cleveland City! It is definitely worth a read.

Two points over and above the synergy part of the story (new restaurants, etc) struck me the most. The first is a comment by Michael Symon of Lola (and others) fame who hit it on the head: he wants Lola to succeed on East Fourth but not "....at the expense of Ohio City and Tremont...." He knows that one street isn't going to carry the load (just like LeBron couldn't be expected to do all the work last week, but I digress).

Back to the apartments. I knew they existed; Bill Lubinger tells me there are 160 apartments now, above the entertainment/retail establishments and that more are coming. I know I found myself down there on Monday because of the affordability of one of the buildings. The point is that mixed use development is what is really going to create the synergy we need in all areas of Cleveland, be it Chinatown, the Euclid Avenue Corridor, The 'west of Ohio City' portions of Lorain Road that extend all the way to Fairview.

I was on E. 185th in the Historic Shopping District there last weekend and it made me feel alive to be there and see all the people at the coffee shop, stores, etc, enjoying their neighborhood and supporting the businesses. The Warehouse District already proves that housing adds to the after hours life of an area. Anyway, thanks again to Bill Lubinger - It's a great time of year to check out East Fourth Street and put a smile on your face. Happy Summer everyone ! Peace Out-3C