Central Florida & metro Orlando real estate services

The Federal Housing Administration (FHA) has announced that it will be allowing borrowers to refinance their higher risk loans into more sensible FHA loans beginning January 1, 2008.  In addition to the recent Fed rate cut, this will help many borrowers with much riskier adjustable rate mortgages (ARM's) and teaser rates to get out of those mortgages.  Over the next 2-3 years many ARM's are adjusting from what were once decent interest rates to new rates that are causing monthly payments to spike up hundreds of extra dollars per month. 

These FHA programs are not any sort of welfare or government assistance.  FHA loans are private money but are insured through the U.S. Department of Housing & Urban Development (HUD) by upfront and additional monthly payments paid by the borrower and known as a mortgage insurance premium (MIP).  Thus the program pays for itself.  You can find out more details about this new program known as "FHA Secure" on HUD's website.

This is yet more positive news for the industry.  Hopefully these new federal interventions will help the real estate market to finally bottom out.

A little over a week ago the Federal Reserve made an aggressive 1/2 point rate cut to the federal funds rate.  This will help to lower the interest rates on many of the HELOCs (home equity lines of credit), business credit lines, and credit card rates.  As rates drop, monthly interest payments for these variable rate products should drop as well.  Hopefully this will help out some people teetering on the edge of financial disaster by lowering their monthly payments at least slightly.

This is good news for the real estate and mortgage industry.  The news did help the stock market to surge some because the rate cut was higher than expected.

On the reverse side though, the interest rates paid by banks on certificates of deposits and savings accounts will drop as well.  So if you are on a fixed income relying on those monthly interest payments from your bank expect to receive a little less next month.

This rate cut while helpful to the overall real estate industry is just a band-aid on the real issue which is liquidity of assets.  Home buyers are still scarce, and investors are still afraid to loan money to the riskier borrowers.  It will still take many months before things turn around, but it is always good have some positive news.

I originally posted this article on our company website in July 2007. 

According to the Mid-Florida Regional MLS statistics, in month ending June 2007 in Orange & Seminole Counties there was only 1 sale for about every 18 properties on the market (1,431 sales closed vs. 25,923 listing inventory), so in order to sell you need to make your house stand out in a big way. These are general suggestions for helping to sell your property:

1. Price it right - below market value preferably. We typically recommend 5-10% under the other active listings nearby. For condominiums, townhouses, properties in outlying areas, and properties in areas where you are competing directly with the builders, we typically recommend 10-15% under the other active listings nearby. Unfortunately, price is the main thing. Once the property's price goes over the median value which in May was $249,900 in Orange & Seminole Counties, the percentage of buyers that can even afford your house goes way down. The PITI payment of a 249K house with 100% financing at a decent mortgage rate will be almost $2,000 per month (which means the buyer/family needs to earn about 6K per month or 72K per year for the median priced home). There are ways to buy down the interest rate by paying points to the lender. Most cities and counties have down payment assistance and bond programs which can help lower the monthly payment also.

When pricing consider the bracket it is in and the psychological impact it has. For instance a price of $299,900 looks extremely better to a buyer than a price of $305,000. This lower price also puts the property into a lower price bracket on sites like Realtor.com and FloridaLivingNetwork.com. Proper pricing should greatly increase the MLS & internet viewings and ultimately the showings of your property.

2. Offer incentives to buyers and Realtors - closing costs and concessions to buyers, bonuses and higher commissions to Realtors. This is what many of the builders are doing to move out their inventory. We have seen everything from plasma televisions, Rolex watches, Bahamas vacation packages, a Mini Cooper car, and the obvious monetary incentives like paying property taxes, condo or HOA dues, or mortgage payments for a given amount of months. Of course any concessions have to be disclosed to all parties in the transaction including the lender.

3. Offer creative terms like seller financing or lease purchase (rent-to-own), if you can. Even offering to hold a 2nd mortgage or take a trade of something for a down payment (car, boat, land, stocks, etc.) can help to attract buyers. To cash out, the seller financed note/mortgage can be sold to a note buyer at the closing for a discount.

If you absolutely get stuck and cannot sell, you can try and re-negotiate your loan with your lender by doing a forbearance agreement, mortgage modification, or a short sale. A seller might consider selling "subject to" their existing mortgage and allow the new buyer to continue making the mortgage payments while not paying off the loan until some time in the future - this option must be carefully considered because the seller's liability and credit are still affected until the loan gets paid off in full. You can also try and rent out your property to a tenant until the market rebounds.

4. Make sure the property shows great. The most important things are curb appeal (most people make up their mind of whether they have any interest within a few seconds of seeing the house from the street), kitchen and baths preferably upgraded (the most important rooms), bonus/sizzle features to be a pleasant surprise to the prospective buyers (crown molding, Jacuzzi tubs, stainless steel appliances, etc.). Also make sure the house is clean and tidy so as not to distract or turn off the buyers once they get inside. Builders and homeowners are also "staging" their properties with furniture, pictures, and decorations to make a house look lived in as opposed to sitting vacant.

Selling a property as a fixer-upper or handyman special can often be a big mistake unless you are planning to sell it at a wholesale price of 20% or more off of retail. Most people have no imagination and cannot see beyond even cosmetic repairs. Jobs that might truly cost only $2,000 can seem like $10,000 to a first-time homebuyer. On top of that the house may not pass a conventional lender's inspection or a 4-point insurance inspection and thus the amount of buyers available are limited.

Selling a property "as is" even if it needs minimal repair can still be intimidating to a buyer. As is properties seem to be stigmatized in the minds of many buyers, and thus they expect a big price adjustment to compensate. The whole idea of "as is" can often spook buyers from making an offer just because they are afraid there might be all sorts of hidden defects.

5. Make sure the house is easy to show. If buyers and Realtors have to jump through a lot of hoops and schedule appointments at inconvenient hours to see inside the house, then they might just skip over your house and move on to the next house that is vacant with a lockbox on it. If you are using voice mail or an answering machine for people to leave messages, please return your calls promptly. One of the biggest complaints we hear from buyers and Realtors are that sellers take hours or even days to return a phone call. Not returning messages quickly is a great way to lose a showing - a showing that might have resulted in a sale of your property.

6. Advertise heavily and target it toward the type of person that would most likely buy the property (i.e. young couple, retired person, people working at specific employers, people with children in specific schools, investor, etc.). You cannot violate any fair housing laws in your advertising, but you can definitely try to market your property to the type of person that you think would most likely want to live in your property. Besides the traditional MLS, Realtor.com, a For Sale sign, and an ad in the newspaper, there are other targeted ideas. Newsletters in the community, various internet sites like Craigslist, a virtual tour, postcards to the neighborhood, directional signs, real estate auctions on Ebay, and advertising at specific employers or churches are some ideas to ponder.

Hopefully these suggestions will give you some ideas to help get your property sold quickly.

I will be happy to help anyone evaluate their property and come up with a marketing plan. 

Copyright © 2007. Sand Dollar Realty Group, Inc. All rights reserved.

Rob Arnold, ABR, CPL, GRI, Full service and investor friendly Realtor, Managing real estate broker, Licensed mortgage broker, Notary Public

407-389-7318 http://www.sdrhouses.com/ http://www.webuyhousesflorida.com/

We all get them.  Solicitations come over the fax machine at all hours of the day and night. If you have a home office, they can wake you up in the middle of the night.  Life insurance, refinance today, the latest stock investments, etc.  Heck I get a lot of these solicitations from fellow Realtors and mortgage brokers. 

Most people consider these annoying.  I did for years. On the fax printout, they have a number to call to "unsubscribe" to their services. All unsubscribing seems to do is get them to send you more.  What many people don't realize is that these fax solicitations are not only annoying and a waste of paper, they are illegal under federal law and most state laws unless you have an authorized business relationship with the person you are faxing to.  Federal law allows for a civil fine of $500 per page along with criminal penalties.  Send out 50 of those and you might be headed into bankruptcy court, if you get caught.

A couple of years ago I found out about a very cool service called Fax Recovery Systems.  Basically you fill out an agreement with them, mail the illegal faxes to them, and they track down the person that sent you the fax.  Once they track them down, they hire a lawyer to SUE the person that sent the fax and recover the $500 per page. 

If they are successful in the lawsuit, Fax Recovery Systems sends you a check for $50. They pay the attorney's fees and all costs.  Obviously they keep the bulk of the money, but heck it costs me nothing.  And more importantly my junk fax count is way down.  I have gotten 4 or 5 checks over the past 2 years of using this service.  Finally some revenge on these illegal faxers.

Oh, final note: Out of respect for my colleagues, I don't send them any of the junk faxes I get from Realtors, mortgage brokers, and builders.  But I very well could and so could anyone else, so be very careful when you send out fax solicitations to anyone.

The proposed constitutional amendment that would dramatically change the Florida homestead property tax exemption laws is under major challenge today.  A judge in Leon County has ruled that the language going on the ballot in January is "misleading and inaccurate".  This ruling may be a blessing in disguise.  Hopefully this will force the legislature to go back to the drawing board and give us some real relief for not only homesteaders but also for rental properties and businesses.  There is an article with more details about the ruling in today's Orlando Sentinel.

The Florida legislature is meeting again for a special session in October to enact budget cuts.  Who knows, they might spend some of that time working on property taxes now.  I wouldn't hold my breath though.  If they do not and this amendment is not on the ballot in January, the legislature will be under a lot of fire to do something else during the normal Spring session. In my opinion, they really need to make some radical changes to the property tax structure or else people will not be able to afford living in this great state.

We have several new listings that have come in over the last few days.  Below are some featured listings to look over. 

These properties are not on the market any longer. 

You can do a full MLS search on our firm's website.  We have many great listings for you to review.  Some are full service listings and some are flat fee, MLS only listings.  Regardless of what they are, we will still provide the same great customer service on any property you are interested in.

Yesterday marked the first day of Autumn.  It still does not feel like it yet here in Central Florida.  The unofficial first day of Autumn in my book is October 15.  Somewhere in mid-October the weather always seems to change.  The humidity we have had for 5 months disappears, we get our first cold front of the season (at least a mild one), and we get the next 7 months of absolutely wonderful weather (high in the 70s and 80s instead of 95).  It has been so hot this summer that I am quite revved up for a little chill in the air.  Seems like the power bills have been through the roof lately. 

I was born in Orlando, so I thought I was used to these brutal summers, but lately it just seems so unbelievably hot.  Guess I'm getting old or else this global warming thing is legit.  Who knows?  I am looking forward to the next 7 months of perfect weather.  It's why people love coming to Florida.

Apparently many investors and business owners are just as fired up as I am over these property tax TRIM notices.  Florida Speaker of the House, Marco Rubio, has recently stated that property tax reform will be another big issue for the 2008 legislature. That's great news. I did speak with the office of my representative David Simmons about 2 weeks ago and his position is that we need some sort of super exemption for non-homestead properties as well. 

Governor Charlie Crist sent me a long email about all the great tax savings I will be getting because of this new legislation just enacted.  I responded to him that taxes on most of my properties went up and in fact I am paying about $4000 more this year than last year.  He has yet to respond to that.  He has been traveling the state to promote the proposed super homestead exemption. Unfortunately this really only helps people that want to buy a new property to make their homestead.  It does little if anything to help existing homesteaders and nothing for investors and business owners.  According to some counts about 2/3 of all properties in Florida don't have a homestead exemption.

Hopefully something good will come next year regarding real estate property taxes.  I have still not made up my mind about the proposed Constitutional amendment on the ballot in January, but more and more I think I am going to vote against it.  We all need to stand up and yell loudly to all of our politicians that property taxes have gotten way out of control.  There is plenty of fat to trim in their budgets.

The market has been quite unsettling for everyone in the real estate industry for the last year-and-a-half or so.  It seems every day the inventory of unsold houses creeps up and the media just expounds (or even thrives) on the bad news. I want to discuss a little bit about the transfer of wealth during the bad times.

When I first started in the title insurance industry in the early 1990's, I had to learn many things about titles and abstracts affecting real estate.  One subject that I learned about was what the industry terms as TIITF deeds.  TIITF stands for Trustee's of the Internal Improvement Trust Fund.  Basically these are deeds from the State of Florida to private parties.  These deeds typically contain reservations for mineral rights, road right of ways, and such that are held by the State of Florida even though title to the land is now in a private party's name.  We had to dig back into the 1940's to find these deeds because these reservations would be an exception on a title insurance commitment and policy and could cause big issues for lenders or in eminent domain proceedings.

Basically what happened was that during the 1930's the USA experienced the Great Depression and many people fell upon very tough times.  If you do a title search back through the old record books in most counties you will find thousands upon thousands of real estate transactions during the 1920's, then in the 1930's you will only find a handful (and I mean literally maybe 5-10% of the transactions that occurred during the 1920's), then in the 1940's the transactions start picking up again.  Very few real estate transactions at all occurred during the entire decade of the 1930's in Florida.

Now the dilemma came up that because people were having such a hard time, a large percentage of people did not pay their property taxes.  But what is very different from today is that nobody was buying the tax certificates either.  When that happened, there was little money for the local and state governments to function.  So the State passed in 1937 what was known as the Murphy Act.  The act basically stated that all properties with unpurchased tax certificates in 1937 that remain unpaid in 1939 will become property of the State of Florida. Hundreds of thousands of properties were retained by the State.  Then the state slowly sold off all of these reclaimed properties for pennies on the dollar from 1939 through about 1946. 

I discovered through research and my own observations that anybody who had the ability to purchase these back then when nobody else was buying became very rich later on. Several giant cattle ranches all over Osceola, Lake, and Orange County were acquired back during much of that time period.  Those ranchers have long since sold off most of their properties to developers and made millions and millions of dollars.

A similar incident occurred between 1989 and 1996 with the Savings & Loan crisis and the Resolution Trust Corporation (RTC) bailing out so many failed thrifts and unloading their real estate and mortgages for deep discounts.  In my opinion, we are on the verge of something similar happening right now because of the sub-prime mortgage meltdown.  Millions and millions of dollars in real estate and mortgages will be purchased at deep discounts.

The question is, are you going to sit on the sidelines while others take advantage of this opportunity?

Copyright © 2007. Sand Dollar Realty Group, Inc. All rights reserved.

Rob Arnold, ABR, CPL, GRI, Full service and investor friendly Realtor, Managing real estate broker, Licensed mortgage broker, Notary Public

407-389-7318 http://www.sdrhouses.com/ http://www.webuyhousesflorida.com/

With the market as tough as it is for sellers right now, it is a great time to buy if you have a good exit strategy in place.  We just closed on a block house yesterday in a nice area of College Park in Orlando.  It was listed in the MLS for 249K.  It was a probate situation and the heirs were fighting between each other.  The house does need some updating, a roof, and has some serious termite damage but otherwise appears to be pretty solid.  There are plenty of comparable sales around it for the 249K price, but the visible termite and roof damage was scaring all the buyers away.

The listing agent really earned their commission on this one.  We were able to negotiate the price down from 249K to 157K.  There are no sales anywhere nearby (even for junkers) that are under 200K.

We are going to fix it up and try to re-sell it in the 220s to move it fast.  But even if it doesn't sell, it should positive cashflow as a rental.

So MAKE SOME OFFERS - just be very conservative in your offering prices.  There are plenty of deals to be had.  As I have said before there is an old saying, "Buy when there is blood in the streets."  The biggest transfers of wealth occur during the bad times not the good.