Archive for June, 2010

Homes for Sale in St. Augustine: Tax Credit Deadline Ends Today?

Wednesday, June 30th, 2010

by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Follow us on Facebook.

UPDATE: This just in from the National Association of Realtors:

To: All REALTORS®

From: Vicki Cox Golder, 2010 NAR President

Date: July 1, 2010

We are happy to report that Congress has passed a bill extending the Homebuyer Tax Credit closing deadline to September 30, 2010.  This is a huge win for REALTORS® and homebuyers, and NAR worked closely with members of Congress to make it happen.

The extension applies only to transactions that had ratified contracts in place as of April 30, 2010, and have not yet closed.  There will be no gap between June 30 and the date the President signs the bill into law. 

Well, this is the day the $8,000 tax credit deadline for first time homebuyers and the $6,500 credit finally comes to an end.  Or is it?

According to a press release sent out by the National Association of Realtors, the U.S. House passed HR 5623, the Homebuyer Assistance and Improvement Act of 2010, yesterday.  The vote was 409-5. This bill extends the deadline for closing tax credit eligible transactions from June 30 to September 30, 2010.

This is great news…especially for the folks who’ve got tied up in home sales that have run long (especially short sales).   

The bill now moves to the Senate where the outcome is much less certain.  Republicans in that branch of Congress famously filibustered unemployment benefits last week, along with the National Flood Insurance Program.  And they can’t seem to vote on Wall Street reform.  One would hope that the Senate will get off their keisters and at least extend this tax break and help home buyers out.

The contracts still need to have been written by April 30, 2010.  However, if you’re active duty military posted overseas between 2008 and 2010, you have until next April 30 (2011) to write the contract, and until next June 30 to close.

Homes for Sale in St. Augustine: Goodbye to the Real Estate Guru

Monday, June 28th, 2010

by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Follow us on Facebook.

Real estate is a cottage industry unto itself…somebody is always trying to sell us something.  After getting hit three times last week for some pretty underwhelming stuff, I’m over it and I’m done with the real estate gurus.  Click the link to read the post on  my personal broker site.  I hope you enjoy it!

Homes for Sale in St. Augustine: You Can Still Make a Low Offer on a Short Sale

Friday, June 25th, 2010

by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Follow us on Facebook.

Making a low offer is always a bit of a gamble.  Even when a seller prices a home high and says “well, they can bring me an offer,” in my experience that very same seller will shoot down even a good offer.  So buyers get gun shy.

On the other hand, a seller who tells me “I will never, ever, ever go below $X for my house,” will in the end sell their house for $X because the money at the closing table works out.

So what is a buyer to do?

The best place to bring a low offer is on a short sale still active on the market.  The sellers need an offer to get things rolling with a bank.  Ninety percent of the time they will accept any offer, but understand that your offer price has to be in line with the market for the bank to accept it.  For example, if a short sale home is listed at $125,000, and market is more like $150,000, offer the full $125,000…it’s close enough to market that it might get accepted by the bank, and not so low that the bank will counter.  But if you make a $100,000 offer you’re probably just wasting your time if the bank can sell it higher as a foreclosure.  

Another example: a short sale home is listed at $225,000, the market value is more like $170,000, but due to the condition of the home a good price might be $155,000.  Offer the $155,000…the bank will do appraisals and BPOs that support your price and you may get the home.

Now, when not to offer low.

When you’re looking around and you find a house priced at $125,000 that with a little work will be worth $150,000, buy it immediately and don’t dicker with the price. Work scares people.  Aesthetics scare people.  Fortunes are made in real estate by people who are willing to look past an industrial gray berber carpet and spend $1000 to fix it, instead of not making an offer “because it needs updating.”  So when you find that home you can fix cheap, and the location or something else about it is fantastic, just buy it and don’t screw around

Also, don’t offer low when you’re competing against a another offer.  If the full price is a good price then offer full price or a little higher.  Now, if full price is not a good price, offer what you think it’s worth based on what other homes you’ve seen, but understand you may not get it.  We had two competing offers a few weeks back on a  home, one was at full price and one was $50,000 less than full price (and wouldn’t come up).  Who do you think got that home?

Selling Homes in St. Augustine: What the Heck is a “Patio Home?”

Tuesday, June 22nd, 2010

by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Follow us on Facebook.

What the heck is a “Patio Home” anyway?

A patio home is a home where the association fees cover the yard maintenace.  With some patio homes you own the lot the home sits on, on others (called “zero lot line” homes) you own just the patch of grass the home physically rests on.

With a patio home you as the owner have to take care of any maintenace on the home itself, so if the roof goes bad then you are the one that has to take care of it. 

Patio homes are wonderful if you would rather not do any yardwork, but because you are responsible for the upkeep, you can’t just leave them for six months either (without paying someone to look after it while you’re gone). 

If you really want to leave a property on its own for an extendend period, you may want to consider a condo, where not only are the grounds taken care of, but maintenance on the exterior of the building is, too.  If a water heater or pipe broke in a condo while you were gone you’d still be on the hook, but generally the condo mamagement team can take care of it for you if you’re not there.

Homes for Sale in St. Augustine: Empathy for the Short Sale Lenders, But Hurry the **** Up

Wednesday, June 16th, 2010

by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Follow us on Facebook.

There have been a lot of articles floating around the real estate world lately about the big bad banks and how they drag their feet on short sales.

When you try and sell a home for less than is owed on it, it’s called a short sale.  In other words, the market price for the home is less than what the mortgage is.

Short sales are notoriously slow.  Typically it takes 90 days or more to get an answer from the bank on whether or not they will accept a short sale price.  There is almost no communication from the bank during a short sale.  They routinely lose or mislay paperwork, which has to be submitted again and again.  And when they don’t accept a short sale price they will often counter at a price that is demonstratably out of line with the market.

As these loans go into default it costs the bank’s shareholders money, which is bad enough.  But when they drag their feet on a short sale, or reject a short sale, foreclosure is their only other option.  And they don’t get a better price.  And they have to hire two companies to make the sale happen (an REO manager and a real estate agency), which adds more costs, and the shareholder gets hit again. 

The sellers are complaining, the buyers are complaining, the Realtors are complaining…everybody is complaining about this lengthy and wasteful process.  So you may find it odd that I have some empathy for these banks.

Look at it this way.  You loan someone $200 and for whatever reason they can’t pay you back the full $200.  Instead they demand that you take $100 and do it quickly so they can get on with their lives, and by the way, don’t you dare come after them for the other $100.

That’s kind of the way it is with short sales.  The bank lends a complete stranger thousands and thousands of dollars for a house, and now this person can’t make the payments.  So the bank initiates the foreclosure process.  And then the person comes back to the bank and demands that they take less than what is owed, and do it quickly so they can get on with their lives, and by the way, don’t you dare come after the amount owed.  And by the way, the person is not making payments on the house and is either living there rent free, or worse, is renting the house and pocketing the cash.

So if you look at it from the bank’s point of view…heck, I’d make the short sale process a difficult and time-consuming one as well.  I wouldn’t want it to be a pleasant experience.  The idea being it’s like prison, hopefully an experience that you’ll never want to repeat.  Because there are people out there who will get themselves into this situation over and over again if they can manage it.

A little dose of reality now.  The real estate market really did collapse.  Many people who had no intention of defaulting on a loan suddenly found themselves upside down.  These people will never be in a short sale situation again.

As for the bank, please make the best decision for your sharholders.  Foreclosure is bad for the bottom line.  You’re not going to get a better price than the short sale price, and you will incur more costs.   But if you’ve made up your mind and are going to foreclose, just hurry the **** up and do it, and quit wasting everyone’s time.

Homes for Sale in St. Augustine: Sorry, Tenant, the Landlord can Show and Sell the Property

Monday, June 14th, 2010

by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Follow us on Facebook.

Sorry, tenants, a Landlord selling his property has the right to show it at any reasonable time. Click on the link to read the whole post at my personal site, and I hope you enjoy it!

Selling St. Augustine Homes: Good Realtor? Here’s the Buyer You Dump…

Wednesday, June 9th, 2010

by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Follow us on Facebook.

One of the Weichert franchise sales reps stopped by the office yesterday to chat, a real nice guy. 

 We got into a conversation about salespeople.  He had me envision a scenario where I hand a sales lead (a retiree from Ohio two years away from moving down here) to two different agents.  The first agent says, “I only deal with people in the market today,” and slams the phone down.  The other agent says, “Here, let’s see what your looking for and we’ll try and find something.”

I think the Weichert guy wanted me to be horrified at the first agent blowing off the customer.  Presumably, if I became a Weichert franchisee, the company would have a system for treating all leads equally, and in this case, incubating them over the two years it takes the retiree to move down here.

Instead, I said, “If I had a choice of the first agent (who blew off the customer) or the second (who was nice), I would take the first agent every time.”

Here’s why, but before that a quick lesson on how real estate agents get paid.  Real estate agents don’t get paid a salary and they don’t get paid by the hour.  They don’t get paid if they spend three months or three years on a project, they only get paid at the closing table, and only when the property sells:

  • Real estate is sales.  It is the here and now.  A buyer who is retiring in two years isn’t moving for two years.  The prices will be different in two years.  Interest rates will be different in two years.  There will be completely different homes on the market.  A real estate agent that recognizes this and focuses on the here and now will succeed.  A real estate agent that tries to “incubate” leads two years out is destined to starve. 

 

  • Money is important, but TIME is the real estate agent’s most valuable commodity.  I’m taking time today to write this blog post.  I write these posts so you can learn more about real estate, so that you see how we strategize, and that St. Augustine Team Realty is both expereinced and on the level.  This is part of how we promote ourselves, and I feel it’s valuable enough to take the time away from other things that I handle as an agent and a Broker.  Getting back to the two agents, the agent that manages his time effectively will succeed.  The agent who takes his time to set up a drip system and research properties and do follow up is wasting his most valuable asset on a prospect that will not pay off at the minimum for two years, while there are buyers in the market today.

 

  • Experienced agents are smooth operators.  Any agent who has been in the business long enough to recognize an earnest but delusional buyer will handle the situation deftly.  They will not slam the phone down on anyone.  But if the buyer candidate gets too insistent, the agent will tell the person what he needs to hear, but maybe not what he wants to hear.

 

  • These buyers that are one year, two years, some vague time period out from buying are super earnest.  They really do believe that they really will “just buy right now if they find the right place.”  Or that “we’re thinking about renting it out until we retire.”  But the truth is, there is no urgency to buy right now, and these people are not going to be landlords.  Part of cutting your teeth in real estate is that the first one of these candidates that you encounter you hang on tight and never let go.  After two years mine bought a FSBO but I still managed a $1000 referral out of it…and I was one of the lucky ones.  Every Realtor has a sale in their inventory that starts with, “Well, I met these people three years ago…”, but it’s their ONLY sale like that.  Because the time spent on the project took away from so many other projects that were more profitable and more satisfying.          

 

  • There’s an old real estate maxim, “Buyers are Liars.”  Expereinced agents have to have an almost supernatural sense of who’s for real and who’s not, but even agents with decades in the business still get fooled.  My experience has been that someone two years out is usually not talking to just me, but other Realtors as well (no loyalty…which is okay, just don’t expect me to go to the wall for you), that they are looking at other locations (they don’t even know the area well enough to actually want to live here), and only have the vaguest notion of financing what they want to buy (though they usually have good income and assets). 

Yet I still get fooled.  It’s the income and assets that do it everytime…they have the means but they’re just not motivated.  I got hung out to dry last summer for two days on a “two year out” buyer because I bit on the income and assets.  And I’ll never get those two days back.  And it still bothers me.

Selling Homes in St. Augustine: Preventing Roof Issues Down the Road

Monday, June 7th, 2010

by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Follow us on Facebook.

I just did a post on my personal site about Preventing Roof Issues When You Go To Sell.  Just click on the link…I hope you enjoy it!

St. Augustine Homes for Sale: 5 Tips for Buying a New Home

Thursday, June 3rd, 2010

by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Follow us on Facebook.

I was reading an article online today called “Considering New Home Construction?  Top 5 Tips for Buying a Newly Built Home” by Dan Steward.  I put Dan’s comments in italics and weigh in myself after.

1. Choose a Realtor Who Has New Home Experience

The builder’s sales agents are paid to represent the builder, regardless of what they may tell you. Many will use high pressure tactics to persuade you to sign the contract. Due to the high volume nature of brand new home sales, lots of builder’s agents are paid less than a traditional commission; some earn a salary plus incentives, so turnover is important to their livelihood.

The thing about buying new construction is that your negotiating power on a new home is only as strong as the market is weak.  Are the homes selling well in this development?  If they are you will have very little room to negotiate.  If it’s a poor market you’ll have much more room, but instead of expecting to get money off the price, expect them to bulk the home with upgrades.  Just whatever you do, don’t pay for crown molding.  A Realtor who is experienced with new home sales can help you get these extras. 

2. Carefully Evaluate the Seller’s Lender Before Committing

Builders will offer huge incentives to get you into your new home; sometimes up to 15% of the value of the home. However, they will often put one big stipulation on those incentives – that you use their lender. There are many problems that may crop up when you pigeon-hole yourself to one lender – higher rates and higher closing costs are the two biggest.

Upgraded kitchen pakages…upgraded ceiling fans…you can get those “free” if you use the builder’s preferred lender, or they may let you roll your closing costs into the loan.  But your closing costs will be higher, and you will probably pay a higher rate if you go this route.

Advantages?  You will get a much nicer looking house and if you roll the closing costs in it will really improve your cash flow at closing.

Disadvantages?  You’re going to pay that crown molding “upgrade” (stifling a giggle here) and/or those closing costs for the REST OF YOUR NATURAL LIFE. 

Here’s the deal: if you plan on only being in the home for 5-8 years (or less), roll it in and take the upgrades.  The house will look nicer and you will pay more interest, but only for the short term.  If you plan on being in the home much longer, use your own lender and get the best rate.  Otherwise you’ll still be paying for that “upgraded” kitchen 15 years later when it looks horribly out of style and you go to renovate again.  Even worse, if you re-finance down the road, in 30 years when you renovate the kitchen a second time you’re still paying interest on that original kitchen “upgrade” from back in the dark ages.  Interest do take a bite, don’t she?

3. Check out the builder’s Reputation

Talk to the neighbors and scrutinize the construction quality of surrounding homes. Is the builder consistently building same-sized or larger than existing properties, or are homes shrinking in size, which could reduce neighborhood value?

Right now new construction starts are at an all time low, so these days you don’t have to worry so much about slapdash neighborhoods springing up overnight.  There seems to be a real emphasis on quality right now because buyers have a lot of choice in the market.  That being said it is a good idea to talk to the neighbors and scrutinize the construction…if 4 out of 5 neighbors report the same problem, buyer beware.  But they could have good things to say as well.

No neighbors?  Find another community that the builder is working in and ask those folks.

4. Hire a Home Inspector

Many people who buy new construction homes don’t bother to get a home inspection. Most new homes come with a one year “bumper to bumper” warranty that includes everything, and many home buyers feel that they can find out if there are any construction flaws during those 12 months. The problem is that many problems won’t surface until well after the 12-month warranty has expired.

Yes. Yes. YESSSSSSSS! Do This!

Some builders try to discourage this because it “affronts their honor,” but man-oh-man the corners some subcontractors will cut when they build a house.  The most likely problems that a home inspector will find relates to the insulation: it wasn’t blown in correctly, it didn’t cover all the areas of the house (blank spots), or they blew it into the soffet resulting in a house that can’t breathe.  In some cases the insulation isn’t blown in at all.  And yes, building code requires it, and no, nobody catches it. 

5. Obtain Legal Advice before Buying a Brand New Home

Before you sign a purchase contract, talk to a real estate lawyer. Standard purchase agreements are designed to keep everybody out of court, but they don’t necessarily contain language that protects the buyer.

Absolutely correct.

Understand this, a builder’s contract absolutely does not protect you.  But it does protect the builder three generations down the line.  In most cases you won’t be able to change one thing in the contract unless it’s patently illegal, but an attorney can at least explain it to you so you fully understand the consequenses about things like your downpayment and if things don’t work at or after the time of sale. 

Another good bet?  Get a home warranty from your Realtor.  If something minor breaks there will be a lot less hassle calling the home warranty than it will a builder. 

We’d love your comments, please e-mail them to Sean@StAugTeam.com.

Selling Homes in St. Augustine: A Quick Guide to the VA Loan

Tuesday, June 1st, 2010

by Sean Hess (www.SeanHess.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com).   Follow us on Facebook.

In honor of Memorial Day this year, we thought we’d republish the link to a post we did for last Veteran’s Day, a quick guide on how the VA Loan works.  We hope you enjoy it!