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.
Would you like to unload your house faster and for more than you expect? That, in rough terms, is what home stagers promise.
All the Homes a Stage
My farmhouse house, I will disclose, is as backstage as it gets. Books fill the bookcases. This is a big no-no in the staging profession. A vice grip is as likely to be on the dining room table as a floral centerpiece. A vice-grip is not a character flaw. My idea of decluttering is to straighten the pile of reading newspapers by the couch.
Now I find nothing wrong with a seller doing clean up, paint up and fix up before offering a property for sale. I would not be the first to do any of those activities, but I endorse putting onersquo;s best foot forward, given the alternative, with which I have had more experience.
Staging property is like set design in the theater. It leads the audience to look at focal points in ways that lead to certain feelings about the play. Good sets invite the audience to them by invoking emotional responses.
House stagers do the same. They use props like plants, smells, visual accents, space, angles, lights, colors, textures, airiness, and furniture to lead a buyer to imagine living in this set.
They deploy tactical rental furniture and art in empty houses to create the imaginative magic of theater. Staged properties are clean, clutter-free, spruced up and depersonalized. Staging is intended to draw the buyer into its pretend world.
The object of this mind-tweak is to get buyers to become emotionally invested in a staged house, then make a spontaneous offer, then pay more than they should.
A Growing Industry
Staging is now an industry that describes itself as ldquo;self-regulating.rdquo; Stagers can become trained, accredited and join a professional group, such as the Real Estate Staging Assn. At the Real Estate Staging Association, hundreds of thousands of real-estate agents and others have been trained.
Staging is sophisticated, customized marketing. It works. Itrsquo;s not dishonest in the sense of pulling a rug over termite damage in hardwood floors.
But it is intentionally manipulative. Stagers orchestrate the presentation of space to twiddle with a buyerrsquo;s mind so that he does something that he might not otherwise do. Admittedly, our way of doing business with each other often tries to convince buyers that the sellerrsquo;s deal is better than it is.
So how can buyers defend against a Martha Stewartly correct Ficus Benjamina in the entrance, a potted tree so disgustingly symmetrical and repulsively tasteful that sunbeams dance in marching-band formation on its just-spritzed leaves?
Educate yourself about staging, its purpose and how itrsquo;s done. An Internet search will lead buyers to informative articles. Stagers have written books. An agent working for the buyer should be asked to ring a staging alarm when entering a magic kingdom.
Identify stage props as a way to strip them of their persuasive power. Note fluffy bath towels, linens, greenery, wildflowers in dark rooms they suggest sunlight, yellow roses on a dining-room table, compulsive decluttering, clean-plate closets, new furniture, non-casually tossed toss pillows, items arranged in threes, cleared-off counter tops, furniture angles that draw you into a room, a bowl of limes and lemons and other focal points that thrum ldquo;Look at merdquo; using a low C in a harprsquo;s bass clef.
Outside note fresh paint, recently whacked shrubs, new shutters, fancy grill, ceramic yard frogs, rope hammock, an antique-looking weathervane and a new picnic table. The last five vanish at closing, if not before.
The Power of the Prop
The power in these props is that, together, they represent the life>
The stager scrubs away dirt and traces of the current occupants. The stager wants the buyer to think of the sellerrsquo;s house with all props in place, not empty and not full of the buyerrsquo;s stuff.
Once a buyer recognizes staging, it becomes transparent and funny. ldquo;My, my, what a fetching woven rug with bulging knots Is it pre-Columbian? The limes, the limes. [Kiss your fingertips.] Quel limesrdquo;
Consider not looking at staged properties. Stagers boast that their properties get three to ten percent more than unstaged properties. I believe them. On property that is worth 500,000, staging puts an extra 15,000 to 50,000 of buyer money in a sellerrsquo;s pocket. Some of that extra might go for paint and shrubs, things that convey to the buyerrsquo;s benefit.
But the buyer pays most of this staging premium for looking at props like candlesticks and couch pillows that will disappear like a traveling peep show. Staging succeeds in getting buyers to pay for something that often amounts to nothing.
Since all of us are equally vulnerable to the stagerrsquo;s skills, perhaps a buyer should tell agents to eliminate staged properties from his look list.
Consider the Bare Bones
Agents working for buyers might discuss ways to evaluate staged properties with their clients. Donrsquo;t look at the props. If a buyer visits a staged property, imagine the house buck naked and empty. Thatrsquo;s what yoursquo;re buying.
Working farms usually are well organized with a few rough edges. If you find no edges in a farmyard, piles of weathered materials, pieces of equipment, scrap from the last century, Irsquo;d be suspicious. Farmers always need such backup.
Some farms are perfectly maintained in every nip and tuck. These farmers take great pride in neatness and upkeep. If you see every fence as tight as a prison door, every road newly graveled, every gate painted thatrsquo;s great. Be prepared to pay for perfection. This isnrsquo;t staging; itrsquo;s compulsive-maintenance disorder.
The reasons to cross off staged properties is that you will pay too much for what yoursquo;re getting, and yoursquo;re likely to be competing against stage-struck buyers who have fallen under stagerrsquo;s Spell.
The seller has paid for the stage show, usually a minimum of several thousand dollars but often much more. Statistics from Home Gain indicate that for every dollar invested in staging, a seller gets 4 to 5 back in additional sales price. Where, a buyer must ask, do those extra dollars come from?
Staging raises seller expectations. Itrsquo;s hard to negotiate with a seller whorsquo;s both out hard cash and hopeful to boot.
Since staging works, it is ever more common. My advice to buyers is to factor out staging and stick with a price that makes sense to them.
For buyers: All of what you see is not all of what you get.
Curtis Seltzer, land consultant, is the author of How To Be a DIRT-SMART Buyer of Country Property at his website.
The HOA has the right to expect all residents, whether owner or renter, to play by the rules. But with renters, its up to the landlord to enforce them, not the HOA. So, the board should adopt a policy that requires all landlords to provide a set of the governing documents and all rules that have been adopted that affect the renter. The Board can also require that all rental agreements specifically make reference to and be subject to those documents. If a tenant violates a rule, the landlord should be informed of it immediately along with the expectation of enforcement. If there is a fine or penalty, the landlord should be levied for it as if he did the dirty deed himself. Its up to the landlord to get reimbursement from the tenant.
There are several exceptions to the landlord middle man enforcement process. If a tenant parks illegally in a fire lane, the HOA has the authority to have the car towed and the tenant will, naturally, pay to retrieve the car. There are some things the HOA should not interfere or get involved with. When a renter crosses the line between HOA rule and civil law infraction, the HOA has the right to call in proper authorities. Those authorities include the police, fire safety, FBI and drug enforcement.
Short vs. Long Term Rentals.
Most HOAs deal with renters who have entered into long term rental agreements 30 days or more. Most governing documents, in fact, require that the rental agreement be long term to avoid what would be a hotel operation. In resort areas, mountains, beach, etc. the HOA may have been expressly built and sold allowing owners to rent their homes short term. These homes or units are owned outright and are not timeshares with professional site management. However, unless virtually every owner has that in mind, there will be an ongoing clash between permanent residents and short term renters. Short termers have no allegiance to the community, dont know the neighbors and frequently are in party mode.
These factors point to ongoing problems with the locals. If this is a reality, its important for the board to press for consensus among the owners. If the majority want the flexibility to short term rent, it makes sense to have an onsite manager to control these issues and others like key exchange and housekeeping. The manager could be funded partly by the HOA to handle regular maintenance and partly by landlords to care for rentals. Its a win/win.
Renters generally are no better or worse than owner residents. Ongoing problems result from lack of landlord standards or enforcement of those standards by the HOA. Here are Landlord Standards, which all HOAs should adopt:
bull; Landlords must provide a set of governing documents CCamp;Rs and rules to renters before move in. bull; HOA rules amp; regulations must be a condition of all rental agreements. bull; Landlords are held accountable for renter infractions. bull; Renters must communicate requests to the HOA through the landlord. bull; Board may demand termination of a tenant with multiple rule violations. bull; Landlord must provide a copy of each rental agreement to ensure compliance with the HOAs standards and for emergency contact purposes.
Renter Surcharges amp; Fees.
Some HOAs impose a Move In/Move Out or Renter Fee on landlords. Unless this fee is imposed on all residents, owner or renter, it is discriminatory. If a particular renter causes damage to the common area moving in or out, the landlord should be charged for it. Never surcharge >
Communicating with Landlords.
All tenant violations should be directed to the landlord in writing along with specifics, including date and time. The communication should be clear on what the landlords course of action should be. It should also reinforce that its up to the landlord, not the HOA, to deal with a renter.
At one time or another, someone may press to limit rentals. There are right reasons for doing so, but avoid the wrong one: The belief that renters are undesirable. While some tenants may be problems, so are some owners. Each must be dealt with as individuals, not a >muster with most lenders. Falling below that level causes closer scrutiny by some lenders. When lenders scrutinize, it usually means the interest rate or fees go up. Restricted financing options cause market values to fall.
Limiting rentals to protect financing is a worthy rationale for doing so. However, placing a system in place that allows some owners to rent but not others has many problems. The board must oversee the rental restriction policy and establish guidelines for who gets to rent and when. Also, there will be hardship cases disability, job loss, down real estate market, etc. that will press the board to bend the policy.
And consider if a landlord simply ignores the restriction and rents his unit. The HOA has control over the owner but not tenants who are protected by Landlord-Tenant laws. For a variety of reasons, if limiting rentals is desirable, it should apply to all owners. A total ban on rentals doesnt completely eliminate the boards oversight, but it at least makes it fair to all owners. For a sample Rental Restriction Policy, see www.Regenesis.net.
Renters Have Rights.
After considering the various issues, its important to remember that renters have rights that must be respected. Besides the state Landlord-Tenant laws, the Fair Housing Act speaks to unreasonable rental restrictions. Never impose restrictions based on sex, faith, culture or race. When it comes to HOA renters, do the right thing.
For more innovative homeowner association management strategies, subscribe to www.Regenesis.net
While there are definite advantages to accessing your equity over taking out a personal loan or using credit cards, especially if yoursquo;re intending to use the funds for home improvement, the No. 1 thing to consider before you take any money out of your home is whether you can really afford it. Take out a home equity loan or use the funds from a HELOC and your monthly obligation will increase. But thatrsquo;s not all. Should you have a change in circumstances like a job loss or simply extend yourself beyond your financial comfort zone, causing you to miss payments, you could be putting your home at risk of foreclosure.
ldquo;Because the loans are secured against the value of your home, home equity loans offer extremely competitive interest ratesmdash;usually close to those of first mortgages. Compared to unsecured borrowing sources, like credit cards, yoursquo;ll be paying far less in financing fees for the same loan amount,rdquo; said Investopedia. ldquo;But therersquo;s a downside to using your home as collateral. Home equity lenders place a second lien on your home, giving them the right to eventually take over your home if you fail to make payments. The more you borrow against your house or condo, the more yoursquo;re putting yourself at risk.rdquo;
Should you want to move forward, itrsquo;s important to know the difference between a home equity loan and a HELOC so you can make the decision that best suits your need.
ldquo;HELOCs and home equity loans extract value from your home but add to your debt,rdquo; said NerdWallet. ldquo;The loan is a lump sum, the HELOC draws money as you need it.rdquo; Both loans typically offer a shorter term than borrowers have on their mortgage. ldquo;Home equity loans and HELOCs are paid off within five to 20 years, while 30 years is typical of a first mortgage,rdquo; said Bankrate.
Letrsquo;s break that down a little further.
About home equity loans
Borrowers who choose home equity loans often do so because of the fixed interest rate. The stable payment schedule means they donrsquo;t have to worry if rates go up. But, the fact that this type of loan is given in one lump sum doesnt necessarily track with everyonersquo;s needs. If you are the type that wants more flexibility in your loan, a HELOC may be the better choice. If you get a loan for 25,000 and only use 5,000, yoursquo;re still required to pay on the total amount loaned.
A home equity loan can also be problematic if your homersquo;s value drops after you have tapped all your equity. In this situation, you could find yourself underwater, or owing more than the home is worth. Homes in some hard-hit areas remained underwater many years after the market crash, with ldquo;more than 820,000 underwater homeownersrdquo; who owed more than double what their home was valued for, according to CBS News.
About home equity lines of credit
With a HELOC, you are still borrowing against the available equity in your home, however the funds are provided differently. Instead of having a lump sum, you use a HELOC like you would a credit card, accessing money as you need it and only paying interest on what you use.
ldquo;As a line of credit, a HELOC allows for flexibility around both borrowing and paying back the money you borrow,rdquo; said Credit Karma. ldquo;But it can also require borrowers to stay especially disciplined when it comes to taking out the funds and repaying their lenders.rdquo; Thatrsquo;s because HELOCs typically offer adjustable rates; if the interest rate rises, so does your payment.
ldquo;A HELOCrsquo;s interest rate is usually variable and can change. The interest rate is often tied to the prime rate and can be affected by market forces that could change quite a bit over the life of the HELOC,rdquo; said Credit Karma. ldquo;There may be limits to those changes though, like a periodic cap a limit on rate changes at one time or a lifetime cap a limit on rate changes during the loan term.rdquo;
Most HELOCs also have ldquo;two phases,rdquo; said Investopedia. ldquo;During the draw period ndash; typically 10 years ndash; you can access your available credit as you see fit. Many HELOC contracts require small, interest-only payments during this period, though you may have the option to pay extra and have it go against the principal.rdquo;
At the end of the period, borrowers have to start repaying the principal in addition to the interest, and, ldquo;From here on out, you can no longer access additional funds and you make regular principal-plus-interest payments until the balance disappears. During the 20-year repayment period, you must repay all the money yoursquo;ve borrowed, plus interest at a variable rate.rdquo;
Payment shock often hits at this point because, ldquo;The monthly payment can almost double. According to a study conducted by TransUnion, the payment on an 80,000 HELOC at 7 annual percentage rate will cost 467 a month during the first 10 years when only interest payments are required. That jumps to 719 a month when the repayment period kicks in.rdquo;