Wednesday, April 26, 2006

Saga of a house from lot to finish

Saga of a house from lot to finish
Two years and counting, a diary follows a builder's struggle to build and sell a house that started with an imperfect lot with wetlands and a propensity for cave-ins. In hindsight, it was an
omen. Cliff Fetner planned to clear trees from the 2-acre lot in Lattingtown where he was starting work on what would be a 5,500-square-foot cedar-sided home. A tree-clearing company was hired, and all was set to go. Then it snowed several inches. It wasn't until a week later in January 2004 that the trees could be removed. But this would be only one of the problems - including hitting water - that he'd face in building the house. As large tracts of undeveloped land have become scarce on Long Island, builders have increasingly been doing in-fill development: building on the scattered lots left in fully developed areas, said Robert A. Wieboldt, executive vice president of the Long Island Builders Institute, an Islandia trade group. Some lots never attracted developers because of apparent problems, such as slopes. Even experienced builders' costs can escalate in overcoming such challenges, Wieboldt said. But as vacant land becomes scarcer, "the difficult site is becoming more common," he added. For Fetner, president of Jaco Custom Builders in Hauppauge, the Lattingtown lot's challenge was that nearly half of the 2-acre lot sits on wetlands. There was the potential of striking water when holes were dug. Plus, in addition to the usual building approvals required from government agencies, he would need approval from the state Department of Environmental Conservation.The lot hit the market in 2001. Fetner made an offer "in the 6's" based on an appraisal of $900,000. "For me," he explained, "it was worth buying at a discount." The contract, signed in April 2002, came with the proviso that the sale wouldn't close until the approval process ended and a building permit was in hand. That process took a year and a half and cost $36,275, "all on property that I may not have purchased," Fetner said. Nearly an acre was "flagged" as wetlands that had to be left untouched. Finally, in October 2003, Fetner had his building permit and closed on the purchase.He started the project without a buyer, building "on spec" because most people can't envision from plans what a home will look like when it's finished. In addition, construction moves faster when there's no buyer making changes.But because real estate markets can change overnight, Fetner wanted to find a buyer while the market was still hot in 2004. He listed the not-yet-begun home with associate broker Debra Quinn Petkanas of Daniel Gale Associates in Locust Valley for $2.3 million.Fetner, a third-generation builder who has completed more than 30 custom homes in the past 12 years, said he hoped his experience and the research he did on the land would limit problems.He said the home should be sold and completed within six to seven months, barring more inclement weather than usual. But experience taught him to base his asking price on taking a year to complete the home because of unforeseen problems and costs.In reality, it took Fetner more than two years to finish the home. What follows is a diary of what occurred.2004March: "We've struck water!" The excavating contractor begins digging the foundation. When he returns the next day, 4 inches of water are in the 500-square-foot hole. He continues digging in another location, but still finds water. He and Fetner decide to go 1 1/2 feet below where the structure's footings will rest and fill the space with stone.The footings will sit on a stone bed instead of in a hole that could fill with water. Because a rainstorm leaves the site muddy, dry soil is carted in so a dump truck can get to the foundation hole and drop the stones.April: The cruelest month, weatherwise. It rains every day for 2 1/2 weeks. Fetner needs one sunny day for the site to dry out before he can bring in cement trucks to pour the footings. "I'm about a month behind schedule," Fetner says. Finally, on April 21 trucks bring in the concrete.May: Waiting, wondering. The foundation is in, waterproofed and backfilled. Because April's rains delayed work into May, the framing contractor is backlogged. He promises to come soon. Fetner calculates that striking water while digging the foundation added $65,936 in unexpected costs.June-July: Cesspool problems. With the framing company still not in sight, Fetner instead brings in a firm to install the cesspool. A hole is begun, but it caves in an hour into the digging. Fetner tries another spot 15 feet away. Water is struck 24 feet down, and the hole caves in again. The cesspool can't be installed the traditional way.Instead, he must use heavy-duty support rings to prevent cave-ins. These are wider and stronger than the cesspool rings and are stacked one on top of the other as the hole is dug, keeping the hole from caving in. Then the standard concrete cesspool rings are placed inside and the heavy-duty rings removed.The revised method takes longer and costs $40,000 more. It also requires a week to get the materials. In mid-July the framer arrives. By month's end, the foundation is finished and most of the first floor framing is done.August: Uneventful with one exception. The weather is cooperating, and the framing is done. Fetner also meets with Petkanas, the real estate agent. Once the shell is complete and windows, roof and trim are on, Petkanas will hold an open house because buyers will have something to see.One new problem, however: Due to a Long Island Power Authority policy change, Fetner must now get a DEC permit before utility lines can be brought onto the property. The permit will take time to get, and because of the wetlands it will cost thousands of dollars more than usual to bring in lines, he says.September-October: Initial interest. The roof, plywood sheathing and trim work are done. Plumbing and window installation is under way. As October ends, Petkanas brings the first interested buyer to Fetner. No sale.November: A weather-tight house. The DEC finally amends Fetner's permit so electricity can be brought in. But he's told it will be months before the lines can be run.Meanwhile, as the window installation wraps up, work begins on the exterior cedar shakes. The home is now weather-tight, and Fetner is four months behind schedule. Petkanas holds an open house, which "is unsuccessful," Fetner says. But a strong market and rising prices let him increase the home's price tag to $2.495 million.December: Steady progress. The plumbing and insulation are completed, and the village building inspector looks the work over and declares everything up to code. The wallboard contractor can begin.2005January: A new year, a new problem. The contractor installing the cedar shakes is not showing up, and his completed work is poor. Fetner fires him and hires someone else.A Jan. 22 blizzard delays things two days. In addition, the house is still without electricity. Fetner wants to place the meter away from the structure. But because of the wetlands and a change in village code, it must be attached to the house.February: Progress slows. The wallboard is spackled and the cedar shakes are 99 percent done. But Fetner procrastinates on picking kitchen cabinets and counters because, he says, "I hate doing that myself." He says he's hoping a buyer is found to make those decisions.March: Still no electricity. The electrical lines are in, but the power isn't turned on because of the long and complicated process of installation and approval. Fetner can't start the wood trim because it would crack in an unheated space. Little work is done as he begins negotiating with two potential buyers.April-June: Hold, please, for the next available buyer. The electricity is finally on, allowing the plumber to install the boiler, but everything else remains on hold. One set of buyers falls through, but Kathy Wallach, an associate broker from Daniel Gale's Locust Valley office, finds another interested couple in June.Fetner is giving the couple until the 30th to sign a contract. If it isn't signed by then, he decides, he'll select the kitchen himself to avoid further delays.July: Houston, we have a buyer. Three weeks into the month, Wallach's buyers sign a contract for the $2.495 million asking price. They will pick the kitchen and other finishing touches. "It's great to have a buyer," Fetner says. The home should be done in the fall, he adds.August: Waiting again. The buyer leaves for vacation, returning at month's end.September: Progress. Ceramic tile, vanities and other items are selected and installed. By month's end, the only thing left to choose is the kitchen cabinetry which takes six to eight weeks to arrive, Fetner says.October: Moving along. The heat is turned on and interior doors, trim, crown molding and wood floors installed. The buyer still hasn't finished picking the kitchen components. Fetner also finds that despite record rains, no water comes in the basement. The extra money spent on the foundation and cesspool has paid off.December: Decisions made. The buyer's choices are ordered. "Now I'm crossing my fingers and hoping everything comes in correctly," Fetner says.2006January: "It's not the blue I picked." The tile contractor begins and is 90 percent done throughout the house when the buyer says the blue stone tile chosen for the master bathroom - and not yet up - is the wrong color.Everything stops while the contractor looks into getting the right tile.February: Kitchen cabinets, tile and paint, oh my! The kitchen cabinets arrive and are installed in a day. The painter is still not finished, however, because the buyer has not finalized color choices.As for the master bath tile, the supplier maintains the right color was sent. Six boxes are opened and spread around the floor. Because they are a blue stone, the color fluctuates.Once the buyers see this, they agree the color is in "an acceptable range of the sample they saw in the showroom," Fetner says.March: Toward the end. The last bits of plumbing and painting are finished, and the building department issues a certificate of occupancy.A closing date can be scheduled. There will undoubtedly be things the buyer wants corrected after moving in, but for the most part, Fetner's days at the house are ending.And how did Fetner fare? Although a builder's profits vary, many typically net in the 10- to 15-percent range, said Wieboldt, of the Builders Institute.Although a final accounting hasn't been done on Fetner's project, his profit should fall within that range, he said."I was fortunate that the market was still going up [throughout construction], so I was able to raise the price and cover all the extra costs."

Saturday, April 22, 2006

Buyer emotions

Buying or selling a house -- or at least the decision to do so -- is fraught with emotional bombshells. As you approach the prospects of buying your next home or investment property or selling either, for that matter, keep in mind that you're about to go through a Grand Canyon of emotional ups and downs.
One sales training website I came across says, "People buy products to gain emotional rewards and justify buying with logical reasons. Your ad copy must trigger emotion(s) that will persuade your prospects to buy your product."
Having spent a few years in various sales positions, I can tell you the above is very true. The reason people buy a lot of products is because of the emotional factor. A University of Florida study on emotions and their effects on the buying process, headlined that "Americans More Likely to Let Their Emotions Do the Buying." The study contends that "emotions were nearly twice as important as knowledge in buying decisions."
In fact, sales training courses have techniques, such as the Embarrassment Close, where the sales person makes the consumer feel embarrassed for not buying. The Emotion Close is designed to trigger identified emotions that push consumers into signing the bottom line. Sales Training University even has a course entitled: "Emotional Response Marketing - The Key To Producing Results."
Where do you stand with your emotions in the process?
It's not that emotions have no place in the real estate purchase process. I'm as guilty as any other American consumer of buying because I liked the way a product appealed to my pride, sense of image, or even covetous desires to just have more than the Joneses. So don't think you're going to be able to buy a house with an emotionless stoicism to ensure your decision is only logical. In fact, it shouldn't be just logical.
If we all purchased homes based on what was logical -- we would be living in the most basic property that met our basic needs. Besides, the 1,200 square foot, $200,000 condo protects me from the elements as much as the 8,500 square foot, $2 million estate. Thus, there's somewhere in the middle where you should aim your buying arrow.
The UF study pointed out "marketers should focus more on understanding how to connect with their audiences on emotional as well as intellectual levels," and encouraged buyers to understand what is going on with themselves emotionally as they make a decision -- especially on big-ticket items.
Frankly, part of the real estate frenzy of the last several years was purely emotional driven. Yes, a lot of money was to be made in the hottest of markets, however, it was the emotional high from believing in the instant riches that would follow the purchase that got more people into real estate than the fact that it is a good investment. Real estate investing has always been a great investment. What's interesting is that any investment expert will tell you to buy low and sell high on your assets -- not buy high and sell higher. But the emotional exuberance of buying a house with a $25,000 deposit and flipping it in 6 months to the tune of a $100,000 profit, continued driving prices up and markets hotter.
Now that the markets have returned to normal -- the commonsense investor and home buyer can really profit from approaching the transaction from a left-brain, number-crunching approach, balanced with the emotional joy of owning a really nice house.
As you walk through houses for sale, the old hand agents will still tell you, "You'll just know when you've walked into 'your' house." And they are exactly right. The commonsense side of the decision is: can I afford it, does it meet within our financial limitations? (The logical approach.) Meanwhile, there should be the balance of: "Wow … this is the place because I feel at home." (The emotional response.)
And with that, I'll leave you with a totally emotional greeting: Good luck and happy buying.

Wednesday, April 19, 2006

Talking House in the news.

Up for sale and on the airA radio transmits a sales pitch from a property on the market to house hunters who can hear it in a car at the curb; now we're talkin' house

BY JONATHAN McCARTHYSpecial to NewsdayApril 7, 2006

Pat Sullivan needed to sell her house. Her five-bedroom cape in New Hyde Park, listed at $584,500, had been on the market with an agency for months.So she decided it was time to find a new agent - one who would do whatever it took to sell her house.

"We wanted the agent with the most to offer," said Sullivan, whose house is now in contract with prospective buyers.Little did she know that her house would become one of a small percentage of homes on Long Island to use a new service that - so to speak - lets the house do the talking.The technology is called Talking House, and Sullivan's agent, Laurie Miner of ERA Caputo Realty in New Hyde Park, is one of a growing number of agents using the system in the area as another way to sell a home as the market softens.To make it work, the agent records a message onto a VCR-size transmitter that gets placed in the house. The transmitter then broadcasts the message on an AM radio frequency in digital format. The broadcast can be heard for 300 feet.A sign is placed in front of the house referring potential buyers to the radio frequency - and the house, in theory, should sell itself."It is very successful," Miner said of the technology, which has brought her more inquiries on properties she has listed. "It makes your house stand out, and I've gotten more inquiries just based on curiosity alone."Tuning into potential buyersFor Sullivan's cape, Miner said she used two separate recordings. The first one touted the house - how many bedrooms and bathrooms, and the decor. The second message talked about the neighborhood, the school district, nearby parks and some of the services other than real estate that Miner provides."Your family will love this beautiful brick cape here at 507 North 11th Street," the bubbly cheerleaderlike spokeswoman said in the first recording on 1670 AM. "Parents, how would you like to have your kids attend the award-winning New Hyde Park schools?" she asked on the second.As soon as the transmitter was installed in February, Sullivan said, traffic to her house picked up. And now she's living in Tampa, Fla., hoping the extra advertising will have netted her a final sale.The transmitters cost roughly $300, and the service is provided as part of a contract that sellers sign with a registered Talking House agent. Homeowners cannot buy the transmitters themselves.For Miner, Talking House gives her an edge with both buyers and sellers in an industry that has been racing to keep up with competition on the Internet. Miner says that 60 percent of her clients are currently using the Talking House service. According to a recent survey by the National Association of Realtors, 77 percent of buyers used the Internet to search for a home in 2005. That's up from 2 percent just 10 years ago.It is the uniqueness of the Talking House service that seems to attract most agents."Almost 80 percent of new agents fail in the first year because they don't get enough listings," said Scott Hagerman, who is a Talking House "success coach," which means he markets the product. "This makes them stand out."That was true for Sullivan, she said."For me, ERA came up with stuff that other agencies weren't doing," Sullivan said. "I wanted to get the most for my money."Broadcasting ingenuityStanding out from the crowd and offering value to his clients is part of the reason that Mark Anthony LoCorriere said he began using the Talking House product. An associate broker with Coldwell Banker in Port Jefferson Station for the past 12 years, he first started using Talking House after it was mentioned in a real estate magazine

"It is great for the seller of any specific house," LoCorriere said. "People are intrigued by it, and it causes a commotion in the neighborhood."The Talking House product is designed for use by agents and by homeowners selling their houses themselves. Each transmitter comes with a marketing plan. Agents are instructed to use the device not only on their listing, but on their own house as well.

Miner has a sign in her own front yard in New Hyde Park, where the message speaks about the services she provides as an agent and explains that although her house isn't for sale, she can help you get into the neighborhood."If it helps with one house or one client, it pays for itself," Miner said. In hopes they may tell their friends or neighbors about her service, she also rents the transmitter boxes for $60 a month to sellers who are not using an agent.Talking House is in just 1 percent of the nationwide real estate market, with some 12,000 agents registered to use the product. There are roughly 20 such agents on Long Island to offer the package, according to TalkingHouse.com.The company started in Fond du Lac, Wis., and has been offering the product for 20 years. It switched from analog radio to digital radio four years ago and went national five years ago when it was sold to Broadcast Marketing Llc of Illinois.Its marketing plan is considered key to the company's success. Representatives claim a 95 percent satisfaction rating with agents who have used the product for at least three months.Each transmitter comes with tips on how to make better recordings and provides agents with a presentation to help close the deal with potential customers."Most of the time, I don't have to say a word," said LoCorriere, who has used the product on more than 10 listings this year and offers it to all his clients. "I get more comments on that than anything else I offer. People are impressed."Real estate agents "often run into problems with training," explained Hagerman. This is often because they are all independent agents working for themselves. Other agents in their broke`rage are also the competition. "We help give them a plan and a strategy," he said.Sending the right messageIt is a strategy that not every agent thinks will work."The Talking House allows people to eliminate a house before they should," said Kathy Martin, an agent with Century 21 Northern Shores in Northport. "Sometimes [the recordings] don't do the house justice."Martin has specialized on the North Shore, specifically eastern Nassau, Huntington and Smithtown, for 25 years. "You have to weigh the benefit of technology before utilizing it," she said. "Buyers and sellers are more sophisticated and much more knowledgeable."LoCorriere said he has similar concerns."My job is to get buyers into a house, and you don't always know what will turn a buyer off," he said. To combat that, LoCorriere said he tries not to oversell in his recorded messages. "People want to hear about the house, not me," he said.For Martin, the best way to get an edge on the competition is to know the inventory. "Most clients have already started their search on the Internet," she said. "I go to as many broker open houses as possible so that I can speak intelligently about the houses in my area."The thing that may hurt the product most in the long run, however, is popularity, LoCorriere said. "It is a novelty. If it were more prominent in the market, it ... wouldn't be so special."Talk about your homeTalking House transmitters are offered by registered agents. There are more than 20 agents registered on Long Island. You can find one by visiting www.talkinghouse.com.The cost of the service is normally part of the commission deal arranged with each real estate agent, and prices can vary.If you are selling your home by yourself, you can rent a Talking House transmitter from a registered agent. Agents charge between $60 and $70 per month for use.Talking House transmitters are not for sale to the general public. - JONATHANMcCARTHYThe Talking House transmitter weighs only 4 pounds, but its "high-tech look will impress," says the company. It will record a message of up to five minutes on its inner computer chip and program it to repeat immediately with no dead air time. You can set it to play on any AM station, but 1610 is the most popular, the company says, because it's available everywhere.