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Tips for buying a home in LI's tight market before interest rates rise

After Carlos Ramirez and Michelle Delvalle, seen on

After Carlos Ramirez and Michelle Delvalle, seen on Aug. 3, submitted a loan commitment letter from their lender, their offer on a Patchogue home was accepted the same day.  Credit: Johnny Milano

Over the last few months, Michelle Delvalle and Carlos Ramirez made offers on eight homes in Ronkonkoma, Holbrook, Centereach and Patchogue, most $5,000 to $8,000 above the asking price, but they kept getting outbid.

Delvalle, 27, a private duty nurse, and Ramirez, 29, a sous chef, eventually took the advice of their real estate agent, Adrienne Delio of Coach Realtors, to get a loan commitment letter from their lender, which includes verification of the buyer’s financial information and all the terms of the mortgage, instead of a preapproval letter, which only shows that buyers can qualify for a loan.

Their offer of the asking price on the first house they saw after getting the commitment letter, a three-bedroom, two-bathroom Cape in Patchogue, was accepted on the same day. They were set to close Aug. 15 for $329,000.

In Long Island’s tight entry-level housing market, with inventory in short supply and interest rates poised to rise, real estate experts say it’s important to use strategies like Delvalle and Ramirez did to beat the odds.

The state of the market

The entry-level housing market on Long Island has seen unprecedented sales growth — the total number of sales in the second quarter of 2017 was 20.2 percent higher than the 10-year quarterly average, according to Jonathan Miller, president of Manhattan-based real estate appraisal and consulting firm Miller Samuel.

Home prices are still climbing, up 6.8 percent in Suffolk in July to $390,000 compared with July 2017, and up 3.8 percent in Nassau to $540,000, according to information from the Multiple Listing Service of Long Island. 

Miller says that since wage growth hasn’t kept up with the rise in housing prices, and because the new tax law will limit the amount of state and local taxes homeowners can deduct from their federal return, there may be a slowdown in sales.

“We’re starting to see some indication that we’re slowing down,” Miller says, noting that the number of contracts signed in the second quarter of 2018 were down nearly 13 percent from the same time last year.

“I think that narrative is changing at this very moment,” Miller says. “That’s not to say there won’t be bidding wars and tight markets, but there will be less of it.”

Rising interest rates will also have an impact, though Miller says he sees rising prices as more of a problem than interest rates.

Nancy Jarvis, the sales manager in the Carle Place office of Daniel Gale Sotheby’s International Realty, says that the market has been slowing as prices have climbed.

“The sellers are overpricing their houses because they read in the paper three months ago that the prices are skyrocketing,” Jarvis says. “The sellers have to come down to reality . . . Even now, if a house is priced correctly it’s going to sell the first weekend, and if it doesn’t sell the first weekend there’s something wrong.”

It’s not clear when a slowdown will hit, however.

“Uncertainty is the new overused word for real estate, other than location,” Miller says.

Getting smart about financing

Chris Gonzalez, the branch manager at Fairway Independent Mortgage Corp. in Freeport, notes that not all financing is created equal.

“There are a lot of mortgage people out there who simply aren’t very good at what they do,” Gonzalez says. “They preapprove people without really digging in and asking the right questions.”

When an issue that will cause a rejection -- or a big change in the terms a lender will offer -- goes unnoticed, a buyer and their real estate agent will waste many hours looking at homes, dealing with the stress of the bidding process, getting excited and working on the paperwork for the loan only to find they get rejected or the payment and/or costs to close are not what they expected. The seller then has to start all over and may lose a deal on the house they are trying to buy, and the agent's reputation gets a black eye.

Gonzalez says that whether buyers get a preapproval or mortgage commitment, using a lender that is well-regarded among real estate agents will give them a leg up.

“If the seller’s agent knows who your lender is, they will be happy to work with you,” Gonzalez says, adding, "Every preapproval letter has the lender's contact information and the name of the loan officer. Like any business, people know which people have a good reputation. 

Gonzalez also recommends that buyers submit a letter with their offer about how buying the house will impact their family.

Pick the right real estate attorney

Client’s of Delio’s nearly lost a house when the attorney they were using, who was recommended by a friend and wasn’t specifically a real estate attorney, delayed the contract, she says. The clients quickly switched to a real estate attorney Delio referred and the contract was signed shortly afterward.

David Mirabella, a real estate attorney with Mirabella & Franzi in Garden City, stresses that attorneys should strike the right balance between protecting the buyer while making sure to get into contract swiftly.

The attorney should be familiar with the major issues to be concerned about, and whether they’re easily correctible or will cost a lot of money to fix.

“I’ve had numerous cases where the buyer’s attorney was a little more particular, and with other offers coming in the people lost the house,” Mirabella says.

Pick your battles and be persistent

On that same note, buyers should also be prepared to overlook issues that don’t appear to be deal breakers and work quickly and respond to issues.

Last year, Antonio and Pamela Corcella submitted a bid on a four-bedroom, two-bathroom house in Port Jefferson — the first house that they saw and bid on shortly after getting married.

The home had been listed for $498,888 and there was an offer already in, but the sellers had held an open house to find a more competitive offer.

Antonio Corcella, an attorney, says the buyers who had submitted the first offer had asked for a concession because they thought the attic ventilation could have been better. The Corcellas submitted the same offer with no concessions and closed on the house in December for $435,600. They installed a fan in the attic for $175.

The Corcellas worked with a lender at Bethpage Federal Credit Union who Antonio says was quick to respond to emails and requests. The couple was also prepared to move quickly with their agent, Lisa Jaeger of Douglas Elliman Real Estate.

“The faster you can put the decision-making in their hands, the faster you get to the table,” Corcella says. “The longer you wait -- there could be a change in the rates. I was also persistent with our broker. When she asked me something, I responded.”


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