REAL ESTATE

Trying to buy a home in the region?
Good luck

Noreen Seebacher
For The Journal News

ity the person who wants to buy a house.

What should be a pleasant quest has deteriorated to a chore. While the economy stumbles and residential real estate prices in locations from Manhattan to Silicon Valley slip, the market in Westchester, Rockland and Putnam counties remains inexplicably strong.

Rohanna Mertens/The Journal News

Peter Bell, owner of Balch Buyers Realty in Mamaroneck, stands in front of a 3-bedroom, 1 ½-bathroom Colonial in White Plains that recently sold for $355,000.

Buyers rush to be among the first to see any property that hits the market. They make snap decisions to buy investments of a lifetime, and base those decisions less on desire than on the reality that if they don't make a bid — now — someone else will.

They gamble at outbidding other prospective buyers, often offering more than the list price for a home they know in their hearts may be worth a fraction of what the owner is asking.

"Sellers have the power," noted Peter Bell, owner of Balch Buyers Realty in Mamaroneck. "They're dictating the terms."

Buyers have fewer choices. About 11 years ago, there were more than 10 houses listed for sale in Westchester for every sale that closed. In the first quarter of this year, the ratio had dropped to about 2-to-1.

Westchester County's housing squeeze has also played out in neighboring Putnam and Rockland, where supplies have also tightened.

In the past few months, Bell said some sellers have become increasingly arrogant. It's a reflection of the market and, at least in part, of the way real estate sales are handled in New York. Until the house goes into contract, which occurs after the seller accepts the price and the buyer completes any home inspections, the deal is sealed with only a handshake.

Legally, either a seller or buyer can back out without penalty until a contract is signed. But traditionally, both buyer and seller have honored offers to buy or sell unless the house failed its engineering inspection.

That's not the case anymore. Bell said one seller recently canceled a pending sale after the prospective buyer had paid to have the house inspected. The buyer had won the bidding war, but the seller wasn't satisfied. "He said he wanted to get more bids," Bell said. He did — and the house ultimately sold for even more.

In other cases, sellers are rejecting buyers who plan to put small down payments on the house — even if they have a mortgage commitment from a lender. It shouldn't matter to a seller whether a buyer makes a down payment of 3 percent, 20 percent or 50 percent, since the seller gets full purchase price from the lender at closing.

But sellers who are getting top dollar for their homes — and concerned that the home will not prove to be worth as much as the sales price when its appraised, are cautious. They're opting for buyers with more cash on hand, so if the house fails to appraise, the buyer can get a larger mortgage and pay the seller the difference between the appraised value and the purchase price in cash.

The irony is that most sellers are also buyers. They may want a bigger house or a smaller one, but they still need a place to live. Unless they're retiring or relocating, that new home is usually within the metro area.

They have control — and the potential to make significant profit — when they sell their house. But they're at the mercy of another seller when they're buying — and the profit they make on the sale of their own home is likely to evaporate when they become buyers.

"Buyers are going into important negotiations on the weak end of the deal," said Greg Rand, vice president of operations for New City-based Prudential Rand Realty.

So many homeowners who want to move are staying put. They're remodeling, adding on, making do — anything but selling.

The result: a severe shortage of inventory. Gil Mercurio, executive vice president of the Westchester County Board of Realtors, said there were 3,200 properties on the market in Westchester at the end of the first quarter of 2001 — down from nearly 4,900 in 1999 and 8,641 in 1997. The trend is similar in Putnam County, where there were 580 single family homes and condos on the market at the end of March, down from 864 two years ago and 1,029 four years ago.

In Rockland, there were 722 listings at the end of March, down from 872 in 1999 and 1,289 in 1998.

"It's a very simple equation. Sales activity has outpaced the growth of inventory," Mercurio said.

Real estate agents complain there's little selection of every type of home — whether its single-family, condo or cooperative apartment — in virtually every price range in just about every community in Westchester, Rockland and Putnam counties.

Buyers are finding it hard to find homes — and real estate agents are equally pressed to get new listings. As a result, multiple agents scramble to get one of the few listings that come on the market each week.

In many cases, it appears that the real estate agent that suggests the highest sales price for the home — whether it reflects fair market value or not — gets the listing. Sellers know it's a hot market, and are often willing to take their chances with a high list price.

If the house sells, they're happy. If it doesn't, the experience cost them nothing. Since real estate commissions are paid at the time of closing, a seller can list a house over and over with multiple agencies and never pay a dime for the advertising or efforts of the agents.

Throughout the three-county area, there are a few obviously overpriced homes. "The owners are just waiting," Bell said. "They'll sell if they get their price, but otherwise, they won't. They aren't willing to negotiate."

It doesn't take a rocket scientist to understand the effect.

There are too few homes on the market.

The ones that do come on are often priced well over appraised value.

But investors, battered by the stock market, are turning to real estate as an option.

Since demand exceeds supply, desperate buyers are paying at least as much as list price — or more — to get a home.

Some sellers are profiting, but many other potential sellers are too concerned about where they'll go when they sell their home to even consider moving.

Little new inventory comes on the market.

And the cycle continues.

The nagging question for both buyers and sellers is whether the market has reached its peak. Inventory has been edging up slightly in recent weeks, a signal that at least some sellers are convinced that prices have reached their zenith. But new listings are still being snapped up quickly in all but the highest price categories.

"There's a lot of pent-up demand," Rand said.

There's no guarantee that prices will be any lower or the supply of homes significantly greater six months from now. But there's no guarantee the bottom won't drop out of the market, either — right after you purchase a home.

Rand said he's thinking seriously about buying a home himself in the near future — seller's market or not. "I'm always an optimist when it comes to property values," he said.

Looking for the Balch Buyers Realty's home page? It's here.
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