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2009 (2)
2008 (9)
2007 (6)
Tuesday, April 07, 2009

Understanding an REO

With today’s considerably lower Miami Beach real estate prices, the large inventory of foreclosures and bank owned property the question becomes more of what kind of property is worth investing in than anything else.  For purposes of this article, we’ll focus on bank owned properties, also known as REO (real estate owned) property.

A home becomes real estate owned if it doesn’t find a buyer during a property auction.  Since banks aren’t necessarily designed to function as Miami Beach real estate property-owners, they’re usually very eager to get rid of them which can result in considerable discounts.  However since an REO is not the same thing as a foreclosure, lenders can still earn a profit from them so don’t expect as deep of a discount.

A perk of buying a Miami Beach real estate REO is that there’s much less of a risk of dealing with liens, taxes and other unforeseen costs that come with a foreclosure since lenders will take usually deal with them before the sale is closed.  However an REO can still be in bad condition like a foreclosure so it remains important to get a home inspection or check the home out yourself, lenders are not at all obligated to make any repairs on the property but they will allow you to back out if something is seriously wrong.

 
Posted at 10:24:21 AM

Thursday, March 05, 2009

Examining the Interior of a Home

If you’ve been browsing through Miami Beach real estate on the internet, you’ve more than likely come across numerous resources thoroughly explaining how important it is that you carefully consider where the home is located, the values of neighboring homes, etc.  If you’ve done your homework, perhaps it’s time to narrow down your assessment to the home you may soon be living in by giving the interior a meticulous examination.

Perhaps you’d like to start off with the electrical wiring.  Depending on your familiarity, you may wish to leave this to a professional or have it done as part of the home inspection report, should you request one.  Always check this part out regardless of whether the home was built ten years ago or five years ago.

The plumbing is a little easier.  Leakage can often be discovered just by taking a look behind sinks since that’s the spot where mold has the best conditions for accumulating.  A leaky sink could be an indicator of bad pipes and thus plumbing, something you likely want to bring to the appropriate person’s attention before signing off on the dotted line on your Miami Beach real estate purchase.

Not all homes come with an addict but if there is one, you may wish to make it your first stop.  If you want to examine the roof, the attic is the best spot to do so.  If there’s wood that shows wear and tear, this could lead to leakage later on.

 
Posted at 11:00:29 AM

Wednesday, November 26, 2008

Compiling Comparable Sales

With the advances in technology and the widespread availability of the World Wide Web, there is more real estate information available than ever.  Realtors have a number of resources available to help them with their seller and buyer assistance efforts and among these, it’s important to have a good idea of average sales prices in any given neighborhood, officially known as comparable sales and often referred to simply as comps.

Depending on the state where the realtor is doing business, obtaining information on comps can be done by simply heading over to the local courthouse and browsing through public records or reading newspaper listings to get a glimpse of recent sales figures.  However this method means that such services need to actually be provided in order to make use of them.

The most readily available resource is the internet since there are many websites available which can be used for finding comparable sales information while removing the need to do a lot of unnecessary and possibly fruitless legwork.  Keep in mind though that there is no guarantee as to how current this information may be.  A similar approach is to subscribe to service companies which can mail or offer this information via other means besides the internet.  Even so, the same problems of encountering outdated information are still there.

The MLS can be extremely useful and if the person using it is already a licensed realtor then they have access to a wealth of information on multiple listings which is more often than not kept up to date.

At the end of the day however, perhaps the best way to have the sharpest knowledge on comps is to take the self research approach and focus on a certain neighborhood and staying abreast of sales.

 
Posted at 4:43:12 PM

Friday, October 31, 2008

Existing Home Sales Rose Nationally Last Month

While the economy seems bleak with the stock market fluctuating daily and a steady amount of major companies going bankrupt or merging, the real estate market seems to be headed down a different path. Month-after-month the real estate market has slight improvements. Experts think the worst declines in the real estate market have already past while the economy still has a while before it stabilizes.

Recent reports from the National Association of Realtors (NAR) show an increase in existing home sales. Home sales were up 5.5 percent with a total of 5.18 million units sold across the country in the month of September which was higher than the previous month by 1.4 percent. Lead economist for the NAR Lawrence Yun suggests this is part of “a sales turnaround which began in California several months ago…” and “is broadening now to Colarado, Kansas, Minnesota, Missouri and Rhode Island”. 

The cause of this influx of real estate business, according to NAR President Richard F. Gaylord is “low home prices and low interest rates”. The nearly thirty percent discounts in home prices in major cities and rural areas have attracted buyers back to the real estate market in certain areas of the country. Richard F. Gaylord is optimistic about recent gains and thinks the real estate market is on its way to recovery.

Lawrence Yun, while also optimistic about the recovery of the real estate market, warns of “market disruptions” on the road to real estate market recovery. The credit markets have a significant impact on the real estate market and as they experience tough times it may have averse effects on the real estate market. But that aside, the NAR is predicting that the worst for the real estate market is over and that it will recover sooner than the economy itself.

 
Posted at 10:53:28 AM

Friday, September 05, 2008

Environmental Awareness

Global warming, damaging fuel emissions, they’re all more of a concern on people’s minds these days as they become more and more aware of their long term effects on the environment and how important it is to try and incorporate “green practices” into your daily lifestyle whether that means doubling up your recycling efforts or reducing the amount of time you spend sitting idly in traffic.

In real estate, many developers have taken into account how they too can make homes “greener” and many have made use of natural resources to create environmentally friendly condo buildings like Ten Museum Park which uses its glass design to allow tons of natural sunlight to come into the building, thus reducing the need to flip on artificial lights, at least during the day.

The Ten Museum Park condo is only a small part of a bigger picture.  Its home, downtown Miami is recognized not only by its sweeping business and condo skyscrapers, but also the numerous and elaborate light displays that bring the city to new life during the evening.  Obviously all this visual eye candy, while certainly nice to look at does not do the environment any favors.  Thus, to reinforce the message of how important it is to turn off nonessential lights whenever possible, Ten Museum Park and all those other high rises in downtown Miami’s will turn off their own unimportant lights on March 29 in a global effort to encourage environmental awareness.

Regardless of whether you live in a Miami single family home or a luxury condo, the efforts required by you to help out the environment even a little are that simple: turn off lights when you leave a room, drop a plastic water bottle or soda can into a recycling receptacle instead of the trash.  It may seem useless but it’s always good to know you’re doing your part in making the world you share with everyone else that much more pleasant.
hat require little to no repairs.  Don’t get caught up in the fierce competition without having a limit of how far you’re willing to bid, always remember the winning bid is only a component of the other fees that follow.  As you learn the ropes, you’ll eventually get a feel for how real estate auctions work and who knows, if you become good at it, they may become your preferred method of buying Florida real estate.
 

 
Posted at 2:50:44 PM

Tuesday, June 24, 2008

International Florida Real Estate Assistance

To some degree the foreclosure situation has transitioned from how to prevent foreclosures to how to get rid of the hundreds of foreclosure properties already available on the market.  South Florida homes are among the highest in foreclosure filings, contributing to an already overcrowded housing glut.  The answer to appeasing the situation may lie beyond the U.S. borders.

Strategic Real Estate Advisors is an asset management firm situated in London that plans to raise $1 billion dollars in order to purchase luxury property like Miami Beach oceanfront condos currently owned and being sold by the banks through the Florida Prime Residential Opportunity Fund.

It’s interesting to note that not only is Strategic Real Estate Advisors located outside of the United States, the majority of the funds which will go towards the purchase of all these luxury properties will be coming from well to do investors and funds located throughout Europe and the Middle East.  Recent reports have consistently pointed towards international investors and buyers as integral towards maintaining interest in Florida property investments and sales.

Critics may see Strategic Real Estate Advisors’ initiative as ineffective since they won’t be making a profit.  The firm actually plans to buy and then hold onto these properties for next six years or so, a move that may cost considerable funds as the market fluctuates but which should bring considerable profit by the time it decides to sell them off as a residential property investment or something else entirely.

Within a seven year timeframe home values and the real estate market in general will certainly be in much better shape and buying activity will likely have increased so in a sense Strategic Real Estate Advisors are providing a worthwhile short and long term solution.  Is this just another flash in the pan or is it a viable strategy?

 
Posted at 12:30:39 PM

Wednesday, May 28, 2008

Homes Are Selling Again

Amidst the doom and gloom of housing market reports comes a recent report suggesting the real estate market is showing strong signs of life. In these tumultuous times it's easy for people to think that the economy is headed for recession or even a crash. Despite current market reports that suggest we are beginning to see slow signs of recovery there are still those who would rather build a bunker under their homes to prepare for an apocalypse then invest in real estate.

The last half dozen months have not seen much progress in the way of homes sold. The highest percentage of drop in home sales occurred during that period leading many to believe that the market would eventually begin to recover—and it did. In April homes sales increased slightly, which wasn't enough to ease all tensions in the housing market but enough to show that the market is on the right track to recovery. 

Property value also rose slightly across the nation showing encouraging signs of the real estate market's enduring strength. Though the median home value is comparably low to just four years ago the fact that property value is stabilizing across the country is a sign that things will return to normalcy sooner than later. When property values experience steady rise it will be more practical for people to sell homes and to convince investors to buy homes. 

So, how should one react to recent reports of trends reversing in real estate? Real estate transactions rising are a sign that demand for property is still alive. Prices are almost at a low enough level that many people sitting on the fence on whether or not to invest will soon become active. As sales increase, so will home values and soon real estate investments will become stable enough to return to business as usual.

 
Posted at 10:09:56 AM

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Updated: Saturday, October 24, 2020


The Differences Between Financing New Construction and an Existing Home

Financing for new construction as well as financing an existing home both involve getting a loan with real estate as the collateral. Theyre both the same in that manner but clearly different in others. Lets look at the differences between financing new construction and financing an existing property.

When someone decides to buy an existing home and take out a new mortgage, the options are nearly unlimited. First, there are fixed rate and adjustable rate mortgage options. Fixed rate programs simply mean the selected interest rate remains the same throughout the life of the loan. This provides easier financial planning for those who intend to keep the property for the long term, knowing what their mortgage payment will be in say year 28. The payment will be exactly the same as in year 1. These loans can have terms ranging anywhere from 10 to 30 years, with some portfolio type mortgages being as long as 40 years.

An adjustable rate mortgage as the name implies can adjust but to do so the loan must follow very specific rules laid out in the note. An adjustable rate mortgage, or ARM, can adjust based upon a selected index and then adding a margin to that index to arrive at the new mortgage rate until the next adjustment period. There are also consumer protections called caps that limit not only how much the rate can move at the new adjustment period but also how much the rate can adjust over the life of the loan. ARMs also can have various terms. In general, for both types of loans, the shorter the term, the higher the monthly payment but at the same time there is less overall interest paid over the life of the loan.

A construction loan is used to finance new construction. Mortgages used to finance an existing property cannot be used to finance new construction. Construction loans are issued only for as long as it takes to build the home. Once the home is completed, the construction lender sends out an inspector for one last inspection to make sure the home is finished and is ready for occupancy. When this determination is made, the construction loan must be replaced by a permanent mortgage, the same types of home loans used to finance an existing property.

When a construction lender provides financing for a new home, the loan amount is based upon the plans and specifications laid out by the builder. All the costs, both hard and soft are added up. These loans also typically ask for more initial equity from the borrower. While a home for an existing property can have very low down payments, sometimes zero, a construction loan might ask for a down payment of something like 20. If the borrowers already own the lot on which to build, the lot typically accounts for the initial 20 equity required. A loan for an existing home can be found at a mortgage company or through a buyers own bank, while a construction loan is usually provided only by a bank.


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What Are the Differences in Mortgage Pre-Qualification and Pre-Approval?

When youre considering buying a home, there are two terms youll hear, both of which are >

Understanding these terms is critical because theyre going to help you know what you can afford as you search for a home, and theyre also how youre going to demonstrate youre a serious buyer to a seller.

Both are similar in that they are steps along the way to get a mortgage, but if you have a preapproval, you dont necessarily need a prequalification.

What is Prequalification?

A mortgage prequalification means that you provide a lender with some general financial information. The goal is to help provide you an estimate of how much you can afford when youre buying a home.

The information you provide for prequalification is usually self-reported. Most of the time, it doesnt include verification of your credit report. You can get a prequalification without dinging your credit report with a hard pull.

When youre prequalified, you receive a letter that will show you can afford to buy. You can show it to your agent and sellers, and it may be helpful in the process, but not as much as a preapproval.

What is Preapproval?

A preapproval carries a lot more weight in the buying process. When youre preapproved, youve submitted your financial history and the lender has verified the information you provide by checking your credit report, your employment and income, and your assets and debts.

For a preapproval, youll have to submit information like your total monthly expenses, W2s, pay stubs, and if you already own property, your mortgage statement.

Once you submit all the necessary documents, you receive a preapproval letter. This letter will outline the amount youre approved for, and the type of mortgage a lender will give you as well as the terms.

A preapproval serves as an offer by the lender to you, and there is usually an expiration of the offer. For example, you might have 90 days to buy a home based on your preapproval.

How Do You Get a Mortgage Preapproval?

The following are steps to follow to get a mortgage preapproval:

Get your own credit score. The higher your score, not only the more likely you are to be approved but the better the terms youre likely to be offered. With most lenders, if you have at least a 740 credit score, youre likely to qualify for the most favorable terms.
When you check your credit score, go over your report and make sure there arent errors that need to be addressed.
Calculate your debt-to-income ratio. To buy a home, you should aim to have a ratio of 36 or less. Your DTI is a ratio of your gross monthly income that goes toward paying debt.
Gather the documents youre likely to need to submit, such as your tax forms, employment details, and banking and account information. If youre self-employed anticipate showing at least two years of income tax returns.

Finally, when youre applying for preapprovals, shop around and talk to multiple lenders. This will help you find the lender thats right for you so you increase your chances of getting approved, but also so that you can save money on interest with better terms.nbsp;


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Enforcing "Nuisance" Provisions

"Nuisance" has been defined as "something that causes harm" and "a bit of a bother." Nuisances are a pretty common occurrence in homeowner associations since living in close proximity is bound to create friction from time to time. Most HOA governing documents include language like: "No resident shall engage in offensive activities which are a nuisance, or interfere with the quiet enjoyment of other residents."

These "nuisance" provisions trigger the need for the HOA to control certain resident behavior. The problem is there is a growing belief in the legal community that these provisions themselves may be a nuisance for the boards responsible for enforcing them.

One problem is simply defining the term "nuisance." The obvious goal of nuisance provisions is to prevent residents from making other residents miserable. But the broad wording of typical nuisance provisions leads to arguments of whether such provisions apply to almost any activity, or none of them. This ambiguity causes board members charged with enforcing them to echo former Supreme Court Justice Stewarts statement about the difficulty of defining obscenity: "[I cant define it], but I know it when I see it."

In the same vein, many HOA boards would agree that they recognize a nuisance when they see it. However, this approach has mixed results. Behavior that infuriates one person might go unnoticed or overlooked by another. Hyper-sensitive residents may deem all sounds as offensive, while others may refuse to recognize how their neighbors could find the most offensive behavior unacceptable.

The typical nuisance language in HOA documents doesnt offer much guidance to the boards who must mediate these disputes. One option is to list the activities or behaviors that will constitute a nuisance. Generally, the board has the authority to adopt resolutions "to clarify" the governing documents. A nuisance resolution could include:

nbsp;

Barking dogs at any time
Unsupervised pets in the common areas
Loud music, TV, singing. etc. between 10 p.m. and 8 a.m.
Obnoxious odors
Use of chemicals or equipment that cause life or fire safety concerns
Tobacco or barbecue smoke that migrates between units
Housekeeping that causes fire safety or health conditions overly cluttered, attracts vermin, mold, etc.
Other activities that the Board deems to be a nuisance catch all provision

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Is a nuisance a bit of a bother or something that causes harm? Good question. But this is an area in which the board needs to establish a policy that works most of the time and then focus on those special cases that require more thought or mediation.

Excerpts used with permission from an article from HindmanSanchez.com


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