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 5, 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 5, 2008
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.
Itâ€™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 Advisorsâ€™ initiative as ineffective since they wonâ€™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 recoverâ€”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.
When it comes to home staging, there are typically two buyer camps: The first thinks its a waste of money and doesnt want to pay more to potentially make their home more attractive to buyerseven if their real estate agent says theyll make it up and then some; The second realizes the value and is willing to make that smart investment.
But just how do those two contingents break down? The National Association of Realtors NAR 2019 Profile of Home Staging provides some insight. The study separated the study into three categories: Buyers Agent Perspective, Sellers Agent Perspective, and Buyer Expectations. Were taking a closer look at the key points.
Home Staging: Buyers Agent Perspective
According to the study, 40 percent of buyers agents cited that home staging had an effect on most buyers view of the home and 83 percent of buyers agents said staging a home made it easier for a buyer to visualize the property as a future home. Buyers agents also noted that, Staging the living room was found to be most important for buyers 47 percent, followed by staging the master bedroom 42 percent, and staging the kitchen 35 percent.
Home Staging: Sellers Agent Perspective
Per the study, 28 percent of sellers agents said they staged all sellers homes prior to listing them for sale, and 13 percent noted that they only staged homes that are difficult to sell. The living room 93 percent, kitchen 84 percent, master bedroom 78 percent, and the dining room 72 percent were the most commonly staged rooms.
Sellers agents offered to do the staging 26 percent of the time, and, The median dollar value spent on home staging was 400.
Call it the HGTV effect: A median of 10 percent of respondents cited that buyers felt homes should look the way they were staged on TV shows, while 38 percent of respondents said that TV shows which displayed the buying process impacted their business.
The real effect of staging
Now that we have the buyers agent, sellers agent, and buyers perspective, lets look at some real data about staged homes. According to the NAR study, 22 percent of sellers agents reported an increase of one percent to five percent of the dollar value offered by buyers, in comparison to similar homes, and 17 percent of respondents stated that staging a home increased the dollar value of the home between six and 10 percent. 28 percent of sellers agents stated that there were slight decreases in the time on the market when the home is staged, while 25 percent reported that staging a home greatly decreased the amount of time the home was on the market.
Of course, time on market and sales prices can range depending on a number of factors, like age of home, location, square footage, and price point. The Real Estate Staging Association has found, overall, that staged homes sell 73 faster, on average, than their non-staged counterparts, said The Mortgage Reports.
When youre buying something major with a loan, namely a house, you likely need a down payment. A down payment covers part of the purchase price.
Your down payment plays a role in whether you are approved for a mortgage at all. Down payments also impact your interest rate and the borrowing costs throughout the life of your loan.
Your down payment usually comes from your savings. The down payment should be a percentage of the total purchase price, and then you pay off the rest of the loan by making installment payments.
If youre buying a house for 200,000 and want to make a 20 down payment, its 40,000. You would pay that when you close on your home loan. Then, youre actually only borrowing 160,000.
There are arguments to be made both for and against making the biggest down payment possible. There are also pros and cons of a larger down payment.
The Pros of a Bigger Down Payment
If you save the cash and want to make a bigger down payment, one big benefit is reducing how much youre borrowing. When you have a smaller loan, youre going to pay less in total interest over the life of your loan.
Youll also get lower payments each month.
You can use a loan calculator to see how much a larger down payment has the potential to affect your payments.
With a bigger down payment, you may qualify for lower interest rates. A lender likes a bigger down payment because theyre taking less risk on you. If you default on your loan, they see that theyll be able to get more of their money back.
If you can manage to make a down payment of at least 20, you can avoid paying private mortgage insurance.
Since down payments that are larger mean a smaller monthly payment, youll have less stress in this area.
There are opportunities to borrow against assets such as your home. The home is an asset that serves as collateral. The larger your down payment is, the sooner you build equity in your home. Then, you can borrow against that equity.
Why Would You Make a Smaller Down Payment?
While theres a significant upside to maxing out how much you put down on a home, its not always the right situation. We tend to see a bigger down payment as always being better. In reality, it depends.
One reason to go with a smaller down payment is that it can take a long time to save that much cash. You may not want to wait so long to buy a house.
Even if you do save enough money for a large down payment, it can create stress to think about putting the money into a house. If you were to face an unexpected situation and had less of an emergency reserve, it could create problems.
Another reason a lower down payment could make sense for you is if you want to make any repairs or potential upgrades to the home after you buy it.
Most lenders will set a minimum down payment required, and you can always pay more than that.
Down payments will show a lender youre serious and that youre putting yourself on the line as far as taking a risk but think about your personal financial situation before
When youre shopping for a new home, there are a lot of steps in what can be an overwhelming and frustrating process.
Much of that frustration comes from getting mortgage financing.
Before you start to look for a home, you might decide to get pre-qualified or pre-approved. Theres also the option to go through pre-underwriting. When the housing market remains competitive and bidding wars are common, there are some benefits to pre-underwriting, which we detail below.
What is Pre-Qualification?
Pre-qualifying for a loan is a single step on your way to a pre-approval. Pre-qualifying is part of a process when you work with a lender, and they decide the type of guarantee they will give you.
Then, once you get pre-qualified, you would move on to get pre-approved or pre-underwritten.
You dont have to pre-qualify to do either of the next possible steps, but some people like to do it as their first step because they learn more about what they can afford.
Its a soft pull when you do a pre-qualification before your pre-approval. The pre-qualification wont hurt your credit score, which is important for your interest rate and whether youre approved at all.
A lender needs a few basic things for a pre-qualificationyour monthly income, estimated monthly debts, and the down payment you can make.
The figure a lender gives you as a pre-qualification amount is estimated and based on assumptions of your financial situation. The number indicates a figure that a lender might be willing to give you, but its not definite.
Youll probably need an actual pre-approval letter to start working with a real estate agent.
Getting a Pre-Approval
While a pre-qualification is a figure the lender would likely lend you, a pre-approval has the terms detailed for their theoretical offer. The details in a pre-approval will include your allowable purchase price, interest rate, and lending fees.
It would be best if you went into the process to shop for a mortgage with a pre-approval in hand. This is what a real estate agent wants to see to work with you to ensure youre not wasting anyones time.
The pre-approval letter is a tentative amount of money that a lender says they would loan to you.
A pre-approval will require a hard pull.
Your lender will probably ask for quite a bit when doing a loan pre-approval. Theyll want to see all your financial information, including your tax returns and bank statements for at least the past 60 days. Theyll want retirement and brokerage statements for the past 60 days, totals for your monthly debt payments, and documents >
Then, Theres Underwriting
Underwriting is the last step to actually getting financing to buy a home. After submitting everything to get approved for a loan, your loan goes through underwriting. This is a time when the lender will closely assess all of your finances to determine their risk level in extending you a mortgage.
This is where youll probably run into most of the delays.
Pre-underwriting is when you can go through this step before youre under contract for a house. An underwriter can do everything on their end that would otherwise come after your offer is accepted before you start looking at properties.
With pre-underwriting, sellers know youre someone they can have confidence in. Youre showing them there are limited opportunities for surprises or things to go wrong.
In a competitive market, pre-underwriting can be a tool that makes you a very strong candidate, and it can help you win a bidding war, even more so than offering more money.
Pre-underwriting is a somewhat new option, so your lender may not offer it, but if so, it can take some of the stress off of you and make it more likely you will get the home of your dreams.