Buyers are you worried when your pre-approval letter says you are approved for more?

Money Money MoneyA colleague recently asked if he should get a new approval letter for his buyer. The reason was that he was negotiating on a house, and was planning on offering less than the approval amount that the buyer could afford. I’ve also been in a situation where my buyer has cash in the bank for a cash purchase, and the bank balance is far more than the purchase price.

The question is:  Are you giving away too much information by letting it be known that you CAN spend more than you want? Perhaps, but I don’t think this is a significant objection to overcome.

Let’s say a buyer has a mortgage approval for $400,000. A house is listed for $375,000 but is only worth $360,000.   Will it make negotiations more difficult if a seller sees a letter that says the buyer can spend $400,000? Not if I’m good at what I do.

There is absolutely no justification for a negotiation to include a dialog of “but he has the money.” What in the world does that have to do with the price of Tea in China? Nothing.

This reminds me of sellers that “need to get” to a particular price in order to buy a new property. How is that my problem? It’s not. The house is worth what the house is worth. If it’s like all the other houses on the block, it’s probably worth close to the other houses. If it’s unique, it’s worth what a buyer is willing to pay. It’s certainly not worth what my bank balance says I have. That’s like my other favorite saying “How can I be overdrawn? I still have checks left!”

Next thing out of my mouth when someone says that to me is: prove it. Show me some justification for your price. I’ve proved my client can buy it. Now you prove your worth. If you can’t? We’ll be on our way.

Could hurricane Harvey push Florida insurance rates higher?

Lynne McChristian, spokesperson for the Insurance Information Institute, an industry organization, said that Florida homeowner insurance rates shouldn’t be affected for one simple reason: rates are set at the state level and are based on what happens within the state. “What happens in Florida stays in Florida, what happens in Texas stays in Texas and that is the way it works in every state,” she said.

Check out the full article…

 

Can I use my condo in South Florida as a short-term rental or Vacation Rental By Owner?

Your Guru gets asked every now and again to help a buyer, who fancies himself/herself an investor, locate a condo that can make a little income (or perhaps a lot of income) on the side.  You should know that there are virtually NO condos in the area that allow AirBnB, VRBO or short term rentals.

Why can’t I rent my condo short term?

Here’s the reason:  The over-supply of condos in 2005 heralded the “beginning of the end’ of the condo building boom in South Florida.  We led the nation in the real estate “bust” and in turn, led the nation in the recovery.

Cash investors bought up the bargain-priced inventory and used those condos as rental properties – in any way they saw fit.  There were traditional long-term rentals, but those investors also treated their investments like short-term rentals and even as alternative to hotel rooms.

Lending on condominiums ground to a halt because so many condos had more tenants than owners.  Most lenders didn’t see condominiums as viable investment for their lending portfolios – they believed they’d lose money on every one of them.

Condominium boards also got an earful from angry residents as tranquil buildings turned into transient communities and party-pads.  Associations responded by enacting rules requiring anything from a year of ownership before an owner could rent their unit, to restrictions on lease length, and outright bans on short-term leases.  In most cases here in South Florida you’ll find a condominium association will have a minimum of a 6-month lease, or 12 month lease, or a restriction that a unit may only be leased once or twice per year.

Our marketplace and season has matured as well.  We don’t get as many snow-birds as in the past who drove the short-term rental demand.  The Fort Lauderdale and Miami metro areas are not as tranquil as they once were, contributing to the decline in demand for quiet short term housing.

Do You Really Need A Lockbox When Selling Your Home?

I had a conversation with a colleague this week about using lock boxes.  She hadn’t been able to convince her seller that using a lock box was advantageous and whether having a lockbox on her door was even necessary to sell her home. Those of you that don’t know, a lockbox is an apparatus that usually holds your front door key securely inside; your listing agent will attach it (the lockbox) in a convenient location somewhere on or near your home, making it very easy for the buyer’s agent who wants to show your home to gain access.  To get the key out of the lockbox, a Realtor would use an electronic key or an app on their smart-phone to access the lockbox.

 

In the South Florida market, Real estate agents have become very accustomed to lockboxes and almost expect them for the convenience they afford.  Often agents will schedule several homes to show with their buyer and will want to have the ability to quickly go from one property to another without having to worry about keys. If your home is one of the few properties without a lockbox, it puts a monkey wrench in the flow of things.  Homes without lockboxes run the risk be tagged “Difficult to Show.”

Without a key on site (in a lockbox) there are usually only few other ways to gain access to your home; none of which agents care for:

  • Seller has to be home to let you in
  • The buyer’s agent has to go to (listing) agent’s office to get and later return the key
  • Listing agent has to go to your property to unlock the door and wait at the property with the showing agent until done

Agents don’t have time to worry about keys nor do they like having to schedule around other people’s time such as the home owner or listing agent.  Thinking you will always be home or that your listing agent will always be available to accommodate another Realtor’s showing schedule is not realistic.  A showing can happen at anytime and arrival time to your home is usually within a broad time-frame which fluctuates within a half hour to an hour.  It is usually inconvenient for the listing agent to sit around your home waiting for a showing, and it’s often challenging for a buyer agent to keep a precise schedule.

Agents are like water, they follow the course of least resistance.  If your home is difficult to get inside an agent may drop it from their showing schedule.

What would be your objection to a lockbox anyways: Safety? Security? Someone coming in your home unannounced?  The South Florida MLS uses a lockbox system call Supra. It is very secure and affords Realtors many options controlling the lockbox functions.  Once you see the lockbox firsthand and understand how secure it is (holding your key inside) and all the control you and your listing agent have over others having access to the key inside. The box itself is virtually indestructible and it would be far easier for a nefarious intruder to break down your door instead of trying to gain access to a lockbox.  Going that extra step to assure your home accessible at any given time will go along way in helping you sell your home.

Realtors in South Florida using the Supra system can:

  • Block-out showing times;
  • Provide you (the seller) with online access where you can restrict showings;
  • Require all showings to be confirmed by you, by me, by both of us, or completely automatically;
  • Know exactly when any Realtor accesses the lock box in real-time;
  • Post all showings and agent feedback in real time online.
Block-Out Showing Times Feature:

You can ask your agent to automatically block off showings (and disable your lockbox) for any specific time or recurring time frames.  Unless otherwise objected, I like to restrict home showing times to fit between: 9AM to 7PM daily; before or after that time-frame Realtors can not automatically schedule a showing online and the lock-box goes into complete lock down – The lockbox is completely disabled and no one has access.  It’s also good to know for example, when when an owner has a vacation home and wants to “use” it for the weekend they can block out times days or weeks in advance.  It’s simple to block out those days and time they plan on being at the property.  Scheduling block-out times is very easy. Another option is the do not disturb feature. This gives a seller the ability to disable the lockbox ANYTIME desired.

Do Not Disturb (DND) Feature:

You have total control when someone can use the lockbox. You can disable the lockbox on your property at any time – from the comfort of your home.  Say for instance you are feeling a little under the weather, took the day off from work and are at home bedridden; you called your listing agent and asked them not to schedule any showings for the day but … you keep thinking about the key in the box outside.  Not to worry, all you have to do is enter a simple code (provided by your agent) and that code will completely disable/lockout anyone that tries to get access until you turn off the DND function.  You can keep it off for minutes, hours or days – you have total control over that lockbox.

Showing Record:

Every Time your lockbox is accessed by a Realtor their unique electronic key instantly embeds their personal identification, date and time of access and the information is then transmitted wireless to Supra which can be accessed online. We always know who was at your property and when.

Sellers’ Gateway:

In addition to documenting who has accessed the lockbox, the Sellers’ Gateway also solicits agents’ feedback about your home, keeps a tally of all the showings you had, and will even show future showings.  Our sellers love this feature and it’s only possible when using both the Supra lockbox and our ShowingTime scheduling system.

Going back to the question at hand – Should you use a lockbox when selling your home? Of course I feel strongly that it is in your best interest as a seller to use a lock box.  A lockbox makes a home much more accessible to buyers and their agents and  provides you with a complete and accurate record of showings.  The key inside is safe and secure and you always have total control.  When I visit for a listing presentation I will bring a sample lockbox with me.  I will show you all the features of the lockbox firsthand and how we interact with it.

Having a lockbox at your home increases the number of showings and foot traffic through your property. The buyer’s agent still needs to make an appointment with the listing agent to show the house and no one can gain access to your home without your knowledge.

What is the difference between a fee simple home and a condominium

Searching for town homes and row homes can be confusing to buyers with FHA or other low down payment mortgages

Low down payment buyers are often surprised to learn that a condominium might not be a good fit for their loan program. Single family homes are not always affordable in areas where buyers are looking, so looking for town-homes might work – if you can find the right one.  Some townhomes are just like single family homes as far as ownership is concerned; and others behave more like condominiums.  Learn about the differences in the video:

Mortgage interest rates don’t vary much between lenders like they can with credit cards or car loans

Mortgage interest is consistent among various lenders

A client asked me about shopping around for mortgage rates this week.  She thought that mortgages were similar to car loans or credit cards and that they could vary greatly depending on your credit score and credit blemishes.  In reality, mortgage interest rates among lenders are pretty similar.  However other features of the mortgage can change such as mortgage insurance, down payment and other terms.  Check out the full video:

Hesitant to sell in today’s market because you’d also have to buy? Not so fast…

Conventional wisdom has it that when you sell, and might buy in the same market, you’ll be buying in the same market conditions as well. You’d be mostly right, but not always. It pays to have a grasp of what’s happening in different segments of the market and take advantage when conditions are right.

At the moment, the South Florida market is pretty hot. Single family home inventory is low and good inventory sells quickly – often with multiple bidders. If you’re trying to buy in the “Sweet Spot” right now – between $300,000 and $500,000 – you’re probably having challenging time. It’s even more competitive if you’re shopping for a single family home below $300,000 – the market is best described as “insane.”

But what if you’re in a position to “move up?”

You bought your current home a few years ago or more, and you’ve taken great care of it. Today you find yourself seeking more space, perhaps a pool, or more bedrooms? Your current home that you bought for $250,000 is now in that magical sweet spot and should sell for $400,000 – that would be amazing, wouldn’t it? Except you’re worried that selling at the top of the market means that you’ll also be buying at the top of the market? Maybe not so. This is why having an expert in in the market can pay big dividends for you.

That new home priced between $500,00 and $700,000 might be a pretty good deal right now. The market for homes priced higher than yours is not as hot. Sluggish even? Check out the stats…stats1

 

Your current home priced between $300,000 and $500,000 is clearly in the heart of “Seller’s Market” territory.  However take a look a that $500,000 to $700,000.   Almost into “Buyer’s Market” territory.

 

 

 

 

stats2

Check out the next slide.  Non-distressed homes priced between $500,000 to $700,000 are even further into the “Buyer’s Market” territory.  See what I mean?  There’s opportunity here for a buyer in just the right situation.  Could that be you?

 

 

 

 

Check out the last slide:   Current market conditions are favorable in several price ranges to take advantage stats3of a hot market to sell in, and a sluggish market to buy in.  Despite the lower total number of sales in the $200,000 to $300,000 price range, the number is primarily due to lack of decent inventory.  Price increases in the same range are steep.  So if you’re ready for a leap into the $500,000 to $700,000 price range, moving up from nearly any price point is advantageous.

The same can be said for moving from $750,000 into any price point over $1-million.  If you might be interested in a condominium priced over $1-million the market is truly your oyster.  Sluggishness in the new-construction market has caused developers to offer a slew of new incentives to capture a dwindling number of buyers that are interested in luxury condos.

I have more information available and if there’s a particular segment of the market that you are interested in, please reach out.  I’d be pleased to share what I have.

 

 

 

Your home insurance will cost more in South Florida than your lender estimate

I love it when a blog post writes itself.   This was a conversation I had with clients who were seeking insurance on their new home in anticipation of closing in a few weeks.Creative real estate security, home protection and insurance business concept: residential house cottage floating in blue sea water ocean in red umbrella parasol

Hey Bob, you can get back to me tomorrow, no rush whatsoever. I just realized the quote you sent me is 2000 higher than what my mortgage broker factored in. So that will make my mortgage about $170 more per month and I don’t want that obviously. Do I have any options and if I do what do you think is best?

Yeah – about that…

Your mortgage broker should have known.

Most mortgage brokers in the country use an estimate of what your home owner insurance will be of around 1% of purchase price.   Per year.   Divided by 12 of course to get your monthly cost.  So I could have forgiven a national mortgage broker for doing it that way.

But your mortgage broker is local.    She should have known better but perhaps I’ll give her the benefit of the doubt because her company is a national company and maybe their system for generating Good Faith Estimates won’t let her change the number.

But alas we live in hurricane country.   And we picked an old house without any hurricane protection.   (Which was sorta given considering our price range.).   But yeah – this is what home insurance costs down here.   It’s breathtaking.

I’ll send your info to another insurance broker and see if he can come up with a better quote/policy but it won’t be much better – like the best I would wager is like $500 less.

I think we went over this once – but of course we went over a bewildering amount of info along the way.    I usually coach my clients to plan for 2% as the cost of insurance rather than the piddly little 1% estimate.    Better safe than sorry.

What if i was to pay the amount up front? Could i do that? Like for the whole year?

Oh no – wait for it…..

YOU ARE!   Twice!

You’ll be paying for a year of insurance up front at closing.   AND you will be paying monthly for it.   Because you have to pay a year up front and then escrow enough money to pay it again next year.     It will be required by your mortgage company.     If you made a HUGE down payment, the lender would let you pay your own.   But on a nearly-nothing down mortgage the lender wants to be absolutely positive that the bill gets paid every year.   So they escrow for it.    Taxes too.

Christ on the cross….ok, got it.

How do I sell my timeshare in Florida?

Or is the better question: CAN I sell my timeshare in Florida?Resport

I get questions from colleagues around the country asking for referrals here in Florida for agents that can sell a timeshare.   Since it’s the magical time of the year when folks start planning for their winter get-aways down to Sunny Florida, here are my tips for buying, and selling, a timeshare.

Plan Ahead and Buy Smart

The first thing to know is that you will over-pay for a timeshare if you buy from the developer or the on-site agent.   There’s a tremendous markup for the developer when selling timeshares right on the property.  However in established timeshare communities there are often timeshares that can be found on the secondary market for less than half the price the developer is offering, and can be as low as a dollar.    Yes.   $1.   A buck.

But don’t forget that your timeshare costs far more than the purchase.  The annual fees can amount to thousands of dollars.   Typically around $7,500 per year.

Check out eBay timeshares and see for yourself:   http://www.ebay.com/sch/Florida-Timeshares-for-Sale/15897/bn_18950828/i.html

When buying, consider forming a Limited Liability Company to take title to the timeshare.    Friends of mine have purchased several timeshares in the name of the LLC and when they decided they didn’t want the timeshare anymore, they just stopped paying the maintenance fees on it.   Eventually the timeshare company will take the timeshare back although they won’t want to.    The LLC limits the liability to the assets of the LLC so the timeshare company can’t come after you to pay the monthly maintenance in arrears.

If you haven’t planned this far in advance, you probably own the timeshare personally.

You might be able to try the same tactic with the timeshare management company – stop making your monthly maintenance payments and try to negotiate for the company to simply take the timeshare back.   However this isn’t always successful and you could wind up with derogatory marks on your credit report because of the late payments.  At the very least, expect that your account will be turned over to a collection agency and that they will begin a campaign of merciless harassment by phone and mail to get you to pay your past-due maintenance fees.

Sell with a timeshare liquidator

One of the largest timeshare selling companies is Sell My Timeshare Now:  www.sellmytimesharenow.com however this is more of a listing company for folks trying to sell “By Owner” on their own.

Another is Buy a Timeshare: www.buyatimeshare.com.  This company is more like a listing company that charges a fee to broker your timeshare sale.

There are a few companies that will purchase your timeshare from you – often times at a huge discount.   But if you just want to get out from under the maintenance charges, this might work for you.  They come and go so quickly my recommended companies are no longer in business but a Google search should turn something up.   Just make sure that during the transaction, the company takes on full responsibility for the maintenance and any other payments.

There is a Timeshare Users Group with loads of user-generated content about selling un-loved and un-used timeshares.  www.tug2.net

Last but not least is Redweek: www.redweek.com where users can post their timeshares for sale or for rent, or try to GIVE them away to other users.

Is your timeshare worth anything?

Do your research.   A great website to see if there are recent sales in nearly any timeshare resort is Sharket:  www.sharket.com

Avoid the scams

Since we have already determined that a local Realtor may not be able to handle the transaction, and you’re anxious to be free of the monthly maintenance and other responsibilities, know that thousands of other folks are in situations just like yours.   Watch out – there are probably dozens of timeshare peddling scams going on at any given time.   A good rule of thumb: don’t deal with a company that has any upfront costs higher than $100.    You really should only need to pay a “By Owner” type of marketing company for the use of its website, its promotional prowess and good name.    You should only pay a company that works as your “Agent” in facilitating your sale after the transaction is successfully consummated or closed.