When designing a purchase offer, you need to know and understand real estate:

DO:  Know that homes will sell at market value. Market value is determined by what a buyer is willing to pay.

DO:  Know that market value is not a fixed price, but a range of value.

DO:  Know the two types of buyers.

The traditional buyer looking for a good home at a good “value”

Buyer #2 is a little less concerned with timing or even suitability of the property and much more concerned with value, not only in the context of value today but in terms of anticipated value tomorrow or next year.

Don’t offend. Unless you are offering on a property which has been held purely for I           investment, the seller is emotionally invested in his property.

DON’T TRUMP:  Do not try to be Donald Trump; trash-talking the seller’s home is not a winning strategy.

Do know the seller’s circumstances. Does the seller want to move or does he need to move?   Circumstances will dictate whether there is a bargain on the horizon, and knowing this in advance can save everyone the aggravation of a long trip to nowhere.

•   Sellers will continue to face falling home values in the new year because they’ll be competing with banks and builders who are slashing prices to sell off the still-huge inventory of foreclosures and new homes.

• The Obama administration will act on its plan to crack down on abusive lending practices.

• Mortgage holders in danger of losing their homes will receive more assistance from a variety of programs since the Senate’s Joint Economic Committee has predicted two million foreclosures in 2009.

• Banks’ restructuring should bring increasing calm, making loan modifications and short sales easier to obtain. Eventually this will lead to a decrease in the number of bank-owned properties on the market.

• Mortgage applications will continue to receive a comprehensive review, requiring borrowers to provide extensive income and debt documentation. Those with the best credit will get the best rates.

• The foreclosure crisis has created wiser consumers, with a deeper understanding of real estate, mortgages and credit, enabling better decision-making going forward.

• Green is good with increasing numbers of buyers opting for smaller homes that are within walking distance of school and work.

• Buyers and sellers will be more and more tech savvy, relying on tools like video, webcasts, and mobile search. Consumers and practitioners will benefit from being ahead of the curve.

• Prices will be low as will interest rates, creating great buying opportunities, and likely, inspiring reluctant buyers to make their move.

• The recession will end and buyers will regain confidence in the market.

Title Insurance…A Case Study

Do you wonder if it really has happened?  You know, a buyer thinks they bought the perfect property only to find out…it’s not so perfect after all?

Over time, it’s quite possible a property’s title may have some unexplained mysteries.  Let’s put our sleuthing to work and run through this case study.

• By 1970 someone assembled the 10 lots to create the aforementioned 3.2 acres
• A vacation home was built over former Lot 159.
• In 1990 a title agent insured a first mortgage against the 3.2 acres for $187,000.
• By 1993 the loan defaulted and the lender foreclosed.
• The lender interested a buyer who, in turn, hired an attorney to examine the title.
• There was an issue with old Lot 159
• There is no deed of record out of Charles F. Hill
• Therefore, no chain of title linking Hill with the supposed owner in 1970.
• Even though no one else claimed ownership the prospective buyer won’t go forward until the lender can provide marketable title, free of cloud or defect.
• It turns out there were three Charles Hills listed in the Boston City Directory around 1894.
• The question of how far back one should search land records is usually governed by local custom and practice.
• In some localities a 10-year search is customary, in others it may be 60 years.
• In most jurisdictions an attorney’s failure to spot this issue would probably not be considered negligent, and there would be no liability under the attorney’s opinion letter.
• And even if a case for negligence could be made, in all likelihood the attorney would not be obligated to take any action in the absence of a real live adverse claim.

FORECASTS:  What’s in store for the Real Estate Market in 2009?

After perusing many articles relating to Real Estate and where it’s headed in 2009, it seems as though we are about to see real estate take a turn…there are pluses on the horizon…just look for that silver lining in the clouds and this is what you will see…

o        Mortgage rates have hit close to a record 50 year low and have come down more than a percentage point since 2009.

o        Economic forecasters at Wells Fargo predict the current recession is coming to an end and we should see a turn around during the second half of 2009.

o        Wells Fargo’s senior economist, Scott Anderson, said pent-up demand in housing and low interest rates will lead the country out of recession once consumer confidence turns around — something that’s already underway – housing is about to turn a corner…moving us out of recession.

o        Lawrence Yun, Chief Economist for the National Association of Realtors, has estimated that 500,000 re-sales could be stimulated by a one point drop in rates like we’ve just seen.

o        Yun believes that, even with higher unemployment, there is a huge pent up demand to buy houses in many parts of the country — especially first time purchasers who see prices at 2003 and 2004 levels.

o        Do the math…those bargain prices + rock bottom mortgage rates + thousands of potential buyers in the coming months may well = what are you waiting for? This is about as good as it gets!

o        We can already see the signs of increases in markets flooded with foreclosures, REO and short sales dominate local real estate listings.

o        Extreme example of this:  Detroit – the single hardest hit market of the decade in the U.S.

o        Detroit has been the epicenter of a regional economic downturn for years

o        Detroit has racked up a 47 percent increase in home sales this year, compared with 2007.

o        It’s not surprising that a lot of those sales were REO; BUT How else can the turnaround process begin?

It’s all in the silver lining….

1. The first step in acquiring a home mortgage is to gather the information you’ll need to include in a mortgage application.

2. Review your credit report by ordering a copy from the credit bureaus used by local mortgage lenders.
3. Prequalifying for a mortgage lets you know how much you can afford and makes you a more attractive buyer.
4. Conventional mortgages limit housing costs to 28% of gross income and total debt payments to 36% of gross income.
5. Mortgage terms are usually 15 or 30 years. The longer the term, the lower your monthly payment, but the higher your overall interest costs.
6. Thirty-year loans often permit additional principal payments. One additional monthly payment per year will reduce a 30-year loan to 22 years.
7. Interest rates are fixed or variable over the term of the loan. Variable rates may be best for buyers who plan to sell within three years.
8. Generally speaking, one point is worth 1/8 of 1% off the loan rate.
9. A balloon payment is a lump sum payable at the end of a specified term.
10. Points and interest on mortgages or home equity debt are usually tax deductible.

Looking for good news relating to 2008? Read on.

On Jan. 29, 2008, Floridians approved Amendment 1, providing needed property tax reform. In approving Amendment 1, state homesteaded owners increased their property tax exemption and gained the power to port existing property tax savings from Florida’s Save Our Homes amendment to a new home. Businesses gained a yearly 10 percent tax assessment cap effective in 2009, and a $25,000 exemption for tangible personal property.

While additional property tax savings never made it before voters after the Florida Supreme Court tossed out Amendment 5, the victory of Amendment 1 remains intact. In the shadow of a slower housing market, the small wins can be forgotten, but the passage of Amendment 1 represents a victory for Florida homeowners and business generally, and to members of the Florida Association of Realtors specifically.

Rate Terminology

Here are some terms that would be helpful to know.   Feel free to ask which of these you may qualify for:

Basic Rate: The rate charged to a consumer who does not qualify for a reduced rate such as, but not limited to, the reissue rate or simultaneous issue rate. (see below).

Reissue Rate: The reduced rate for an Owner’s Policy issued on a property which was previously insured within some period of years. In some states, the term is also used for a refinance rate (see below).

Simultaneous Issue Rate: The reduced rate for a Loan or Owner’s Policy issued on the same property or loan at the same time as another policy. The term usually refers to a Loan Policy issued at the same time as an Owner’s Policy when a property is purchased.

Refinance Rate: The reduced rate for a Loan Policy issued on the new loan in a refinance transaction, in which the original loan was previously insured within some period of years.

Risk Rate:  A rate that does not include the cost of researching the title or the cost of conducting the closing.

All-Inclusive Rate: A rate that includes at least some part of the cost of researching the title or the cost of conducting the closing.

How Title Insurance Rates are Set

How title insurance rates are set varies from state to state. Some rates are set by the companies themselves and some are set by the State Department of Insurance. For those states that set the rates (Florida, New Mexico, and Texas), each title company is required to charge the same for title insurance for each different type of policy and for each different type of rate. Some other states, including but not limited to, NY, PA, NJ, OH, and DE, which have rating bureaus authorized under state law, may have uniform rates as well. When shopping in the states listed above, you will receive similar rates for title insurance from each company. While title insurance rates may not be as “shoppable” in these states, the cost of other services provided by the title company may or may not be included in the rate so you can shop for those services. Talk to your local title company for how rates are determined where you live.

As mentioned above, some rates may or may not include other services provided by the title company such as conducting the closing, preparing and notarizing documents, adding endorsements to the policy which may be required (usually by the lender or buyer), and other services. When comparing one rate to another, be sure to get detailed information on what is included in that rate, so you are comparing equally.

Tampa Area is HIP

My last post highlighted investors and how they are keeping their eyes on Florida as a viable area for Real Estate ventures.  This post has even more good news! 

Recently, among singles looking to relocate, Tampa has been ranked as on of the TOP metro areas to live in, in Florida.  What’s more…The Tampa Bay area ranked 11^th in the nation’s top 100 largest metro areas!

Due to our area’s cost of living, job growth, unemployment rates, education and the vast array of recreation available, it makes relocating to Tampa Bay and the surrounding suburbs very attractive.  The ability to assimilate into a community is a huge plus for those relocating in to the area.  The community characteristics listed above makes it very easy for someone to relocate and “plug in” to life versus other communities without such resources. 

Is Florida Hot Again?  3Q Shows A Strengthening Market!

Home buyers and investors are looking at property in Florida again.  The 3^rd Q sales statistics show a 5% increase in sales for the quarter compared to last year during the same time period.

The Florida Association of Realtors reports sales have rose to more than 33,000 across the state for the quarter. Even though there were lending restrictions, buyers took advantage of the opportunity found in Florida right now.  Many of these buyers are parties who are interested in making long term investments for their future.

It appears as though people have not lost their faith in Florida as people are showing interest in the state overall.  Florida real estate hotspots include:

Ft. Meyers

Ft. Pierce

Ft. Lauderdale

Panama City

Jacksonville