Category Archives: Buying or Selling A Home

The One Box You Don’t Want to Open…

gift box blue

There are many wonderful goodies that come in boxes, to name a few:  chocolates (especially chocolate covered cherries), smoked paprika, new computers, anything from Nordstroms – stop me if I break into a version of “my favorite things, but there is one thing you don’t want in the box, and that’s a hurricane!

Say what?hurricane

Those of you up north may have no idea what I’m talking about, but if you’ve lived in or even visited Florida from June through Nov., you may have heard about the infamous “box,” that box which will not allow you to close on your closing date if you have not bound your insurance.

Alright, just where is this box? you ask.

Well, it’s sort of a metaphorical box, rather than a geographical one, but for argument sake, let’s just say it’s somewhere in the Bermuda triangle – sounds more exciting that way, doesn’t it!

Anyway, if there is a hurricane “in that box” (which is just some insurance algorithm determining the location of the storm and its proximity to your property divided by the square root of time minus the price of a one minute advertising spot on the food channel) algorithmthen you will not be able to bind your insurance and you will not be able to close! (unless, or course, you’re paying cash).

The only silver lining I can see here is that, if the house is blown down, you still won’t own it – my apologies to sellers.

So, what’s the moral of the story? Bind your insurance early – as soon as you get that loan approved, and let’s all “think outside the box.”

Ps. Make sure you get a good insurance agent, one who knows when you want to close, one that will watch when a storm is approaching to make sure you don’t miss your window of opportunity. For suggestions, call us.

What would you do with another room?

A little cramped? …… Been dreaming about more space?

Now may be the perfect time to move! 

Certainly, one of the more popular reasons people want a larger home is for the coveted “extra room,” either to accommodate additional children, additional stuff, or for that “special” activity they always wanted to pursue, but never had the room to do so (pun intended). I thought it would be interesting to do a little survey so I asked a number of you what you would do with an additional room. Here’s what you said:

Apparently, there are a few of you out there with a LOT of shoes, clothes and accessories, because the subject of storage/closet came up more than once – even got a vote for a “Big A__” pantry.  There were also, notably, a few that REALLY, REALLY, liked cats, and a few entrepreneurial types that mentioned AirB and B, but, by far, the vast majority of you would use your extra room for your creative pursuits — writing, painting, dancing, music, skeet shooting (?????????), etc. One friend even mentioned a sound- proof “prayer room,” which, I don’t know about you but, I’ve never needed sound-proofing when I prayed. Of course, when I read further on her wish list, I realized that she also wanted to practice the bagpipes –  makes sense now, doesn’t it!  Not sure it was her or a family member that wanted the sound proofing, but either way…

All are perfectly legitimate reasons for another room and more space but while the reasons may vary from person to person, the fact, that now is a great time to take advantage of summer months to move, does not.

Contrary to what some may suspect, all indications are that we are NOT in a housing bubble, like we were before the big crash.  People who are buying homes now are actually qualified to purchase (and more importantly, “to pay off”) their homes.

Even though prices have gone up lately, we are still nowhere near the highs of 2005 and 2006. Plus average annual new housing starts at the beginning of this quarter were not only WELL below 2005-2006 figures but also below new housing starts going as far back as 1980 (when interest rates were like basketball scores.) which leads us to the next big plus – Interest rates — still crazy low – I’m talking hockey or soccer score low – especially when you figure they were about four times what they are now back in the 80s. 

Anyway, if you’ve dreamed of another room or just more space in a different place, call us. We’ll give you the scoop on what you can get for your current home and lay out a plan of action for finding you just the right place, with room for all your shoes, paintbrushes, ballet bars, and bagpipes – and maybe even a cat or two.

Help! I think I need to sell short. Do I need a lawyer?

us-supreme-court-building-free

Before I launch into this  post I want to make it clear that this does not imply, suggest, offer, hint at, or insinuate legal advice, nor should you assume, deduce or presuppose the same!  Also, my purpose here is not to malign the legal profession (actually, they’ve done a pretty good job of that on their own) but to suggest from our experience that you consider using a title company to facilitate your short sale instead of a lawyer.

Now, before Lady Justice smites me with her sword and my lawyer friends start writing me poison pen letters, please let me explain…

the inspiration for this post came from a recent lady-justice-freeclient of ours who hired a law firm, before hiring us, to do their short sale.
The upshot of this regrettable action was that the lawyer (I think we went through two or three at the firm) never returned our calls, often did not return the sellers calls and, as a result, we lost 3 potential buyers and months of time and it’s still unresolved due to no communication– not to mention the expense to the seller.

I decided to dig into this a little further and I’m sharing this info with you so hopefully you won’t make the same mistakes.

When a person is under water on their home (talking financially here), has fallen behind sandbags-protecting-against-flood-waterand can’t keep up with their mortgage payments and/or has to move and is unable to sell their home for the amount owed, a short sale may be a good option.  Sometimes, unfortunately, if a seller is behind by many months and receives a lis pendens on their property, they may panic and call the first lawyer available, concerned that their house could quickly be taken from them, or that the wrath of their mortgage company could result in the death and destruction all life and the universe as we know it – not saying it’s rational – just natural!

There is something you should know, however, about Florida, #1 All foreclosures in the State of Florida must go through the court system.  #2 In MOST cases the deficiency judgement (the difference between the mortgage balance owed by the seller and the amount realized through the sale of the property) is waived.

As far as #1, this means that no one can just snatch your home when you are not looking – even though you may be behind.  man-with-clock-head-freeIn almost all cases, should a lis pendens be filed, you should have time to respond and to sell your property, if that is your best option.  If you’ve waited til the zero hour, even then the short sale facilitator can often negotiate more time by letting them know that there is a viable offer on the property.

As far as #2, in most cases the deficiency judgement is waived.  There are a few exceptions for some home equity loans, for instance, or for a Freddie Mac or Fannie Mae loan with a second mortgage, but these are in the minority.  A title company with a savvy negotiator (called facilitator) will know which lending institutions will allow what and work with them to get you the best possible outcome. The short sale process has been taped and most title company facilitators know what they’re doing.

OK, so you’re behind on your payments, now what? Decide what you want to do.  Will selling your home short get you out from under the debt and allow you to move where you need to go?  If so, call a realtor and if they have a good, experienced title company that can “facilitate” the sale I’d go with them.  Or…

If you’re situation is complicated and you simply want to call a lawyer, make sure to ask them who, specifically, in the firm, will be handling your case.  Will they be reachable by phone and call back? Will they make themselves available to review your documents as the sale proceeds through the closing process OR will they file an “affirmative action” (counter to the lis pendens) with the court, thereby making the bank effectively an adversary and making it more difficult for YOU or a representative such as a title company to communicate with the bank?

A short sale facilitator at the title company told me she had come across cases where the lawyer had filed documentation making it impossible for anyone else, other than that lawyer, to advance the short sale, then, when the seller fired the lawyer, they did not withdraw the actions filed through the courts and effectively stretched out the sale of the property for months beyond when it should have closed. So make sure you check this point and affirm that you or a representative will be able to speak with the bank yourself and that that lawyer will withdraw documents from the court should their status with you change.

The last point on this is that most title company services for handling a short sale are free if you are closing with them.  A lawyer will charge a flat fee or monthly.  If they charge monthly, RUN! No really, don’t even go back for your wallet! The longer that sale is dragged out, the more it will cost YOU and the less likely it is to close! piggy-bankEither way you or your potential buyer will need to pay but, speaking from a buyer’s viewpoint, a $1500 charge to the buyer on top of the purchase price of a home and closing costs is not a great incentive!

To sum it up, in Florida we use title companies to close our real estate transactions.  This is what they do all the time, and most of them are really good at it. Some of these title companies are owned by lawyers and that’s great, but a law firm that doesn’t specialize in “closings” is usually not nearly as experienced as a title company and using one can sometimes lead to complications that needn’t be there, or worse slow the sale. So check with a realtor, who will put you in touch with a title company, who can handle the process at no extra charge. Find out if you qualify for any benefit programs if you sell short, (and by all means speak with your accountant beforehand) and then, if you’d still like to speak with a lawyer, follow the above guidelines and you should be all set.

Understanding “waterfront properties”… the secret code of realtors…

shark floatieIn the real estate vernacular, at least here in Florida, there are four terms that define a property’s status on the water – they are – Waterfront,  Water view, Water access, and Water Extras – simple eh! Not so fast…you see, in real estate, although the term “waterfront” could refer to anything from the gulf, to the oversized puddle the developer was trying to pass off as a pond, “waterfront” is really only one thing – a property (whether it be a condo or a single family home or a townhome) that is directly on the water.  still simple, eh! Not so fast again…

Ok, Ok so you have a property directly on the water, that means you can use the water, right?  Not necessarily.  If you are in a waterfront condo complex, maybe you can – if there is a dock in the community, or a fishing pier (water extras). But, if not, don’t try launching your Boston Whaler from your public lawn – communities tend to frown on that.  If you are in a single family home, you more likely, have access but beware the mangroves!  You may need permission from God to give them a haircut and that water on the other side, may remain an unrequited dream, as you load your kayak on the roof of your jeep wrangler in search of unfettered access.

Alright, so waterfront assumes I have a “water view,” though, right? Well, maybe, but in addition to mangroves (see above) you could be on the non-waterside of the building (in a condo) and may have no view of the water or a very diminished view. It may be that the building is waterfront but that particular unit isn’t. (I really think they should have thought this one out better and only made buildings with one side – the water side – but they didn’t consult me so it’s happened).  Because, believe me, there are buildings in “waterfront” communities that have no views at all, being completely blocked by another unit, or it’s a water-view if you repel down the side of the building and crane your neck around the corner (only practical if you have 8 eyes and can throw webs from your hands).

One other combination of terms, that could have you looking both ways before you hit the beach, is having water views, water access, but not being considered waterfront (how could this be? You ask). The usual reason is that there’s a road between you and the water or the beach.  This little deflection from “actual waterfront” can also drop the price by a substantial amount as well as flatten that new shark floaty you just bought, if you aren’t paying attention!

So, what’s the point of all this?  Be suspicious.  Ask questions, look at the aerial maps or have your realtor call to see where the unit is in the building, if it’s not obvious from pictures. Pretty simple – actually much simpler than my explanations above!

 

What do I do if I can’t buy a home without selling mine first?

Image result for bottle of chateau lafite and a house

The simple answer? Sell Yours! In this market, where many houses are moving like quicksilver, you not only have all your ducks in a row, but they’d better be quacking the same tune! And that tune is, I’m qualified and ready to buy!

“But what if I don’t find what I’m looking for after I get an offer on my house? I don’t want to be homeless with the van packed and nowhere to go!”

Here’s what you do: After you get an idea of what your home will sell for (with a margin for “fickle market syndrome”) ask your realtor to send you homes in your price bracket with the features and proximity that you’re looking for—before you put your home on the market. This way you can let your “fingers do the walking” to familiarize yourself with the market and get an idea of whether or not what you are looking for actually IS available. I’m not saying that some people’s expectations are unrealistic but when you have $2.99 in your pocket it probably won’t buy you a bottle of 1865 Chateau Lafite – just sayin’!

Once you’ve established that it’s possible to find a home you want, in the area and price range you want, and you’ve spoken with a lender to make sure there will be no issues with your purchasing a home, then you can put your house on the market.

When you make an offer, most sellers will consider accepting your offer on their house—as long as the contract on your house is solid and as long as you’re not offering $2.99 for a bottle of 1865 Chateau Lafite!

A good idea is to discuss with your buyers a longer closing period –say two to three months—to allow you to search for and purchase another home. You can also negotiate a contingency that says you can extend the closing date should you need the time. These are all variables that will change from buyer to buyer.
Next, maybe most people’s least favorite suggestion, but if you have friends or family that would be willing to put you up in the interim between the closing of your current home and your new house, at least in an emergency, it’s good to know that you have a fallback position.

Why would I need a backup plan, or how not to do some “unintended camping”

tent in neighborhood

It’s hard to imagine, that is until you’ve worked in the real estate world, how many things can be a stumbling block to a timely closing. .Without the proper mindset and a good contingency plan, you could be doing a little “unintended camping” – now a part of the real estate vernacular.

So you’re under contract and all is right with the world – right? Life is just a bowl of cherries, or to be Florida appropriate, oranges.  You or your buyers have already gotten your preapproval so what could possibly go wrong?

To quote Shakespeare, “let me count the ways”

#1 The home inspection – Bet you didn’t think about the fact that you have a Zinco/Sylvania electrical panel did you?  That could be a problem for some insurance companies, and some inspectors might couch it to their clients as if it would suddenly explode, incinerating your home in a single blast.  They may also not like the fact that there is an open permit on your roof – from 14 years ago – quite possibly before you even bought the house.  Or maybe your attic has become a vacation “hot spot” for the local rodent population and they really do love all that new insulation you blew into the attic two years ago.  Our suggestion is, if you are not one of these “hands on, really handy” individuals, who spend their free time re-plumbing the bathroom just for fun, talk about this point with your realtor – maybe it’s worth getting a home inspection first. If you are one of those self-plumbing- types, you’d want to make sure any changes that required a permit actually got one!

#2 the appraisal – Contrary to popular belief – or unpopular, as the case may be, a realtor cannot talk  an appraiser into a higher price. In fact we’re not even supposed to “talk” to them about the appraisal at all.  The pendulum has swung the other way in the appraising department and BANKS are not even allowed to speak directly with the appraisers.  In fact, I’m pretty sure there’s some clause in the statutes that says the appraisers aren’t even allowed to talk to their husbands or wives about the appraisal – ok I’m exaggerating just a bit, but, gone are the days of unspoken coercion from the banks…“this appraisal had better come in at sale price or we’ll find ourselves another appraiser” wink wink. No, now there’s a middleman in the form of an appraisal management company who hires and manages the appraisers.  The problem is that that appraiser might be from another county and completely unfamiliar with your area. A good realtor will provide comparable properties for the appraiser – just in case he or she might miss something, but who knows if that appraiser will use them to wipe off his windshield after a flock of seagulls has stormed the driveway.  Discuss the solutions to this with your realtor.  If the property does not appraise your buyers cannot get the loan unless they are willing to pay the difference.  In this market they may just be willing to do that.

#3 Underwriting – (said an octave lower and with reverence). These are the elves in Santa’s workshop that actually produce the toys, the wizards behind the curtain that turn your loan application into an actual loan, the oracle in the grotto that… you get the idea. Sometimes, unfortunately, they are human and get a little fussy or annoyed that we pesky realtors keep demanding to close “on time,” when they have 14 other files on their desk and we’ll just have to wait our turn. Just saying …  Talk about getting all your information into your lender (harder if you’re the seller) right away – even though they will most likely ask for more documents going forward, at least you won’t be delaying anything yourself.  For a VA loan, I’d allow more time to close – just because you’ll probably need it!

#4 Acts of God (aka the weather).We hadn’t had that much rain in probably 30 years, but the week before closing, there was a reenactment of the great flood – minus the giraffes, that is.  The inspector had been right, the roof didn’t leak but now water was coming in under the transom of the sliding doors.  I guess that it really was in a “flood” zone.  Our suggestion: get with your realtor and maybe say a prayer …

#5 Acts of less godly conspirators… The day before closing, everyone was anticipating being done with the process, the only things left to do, other than sign, was a final walk-thru of the home – usually, a pretty straight forward activity. When the new buyers walked through the house and out to the pool, they were certain their eyes must be deceiving them.  Little had they known that the neighbor, a disgruntled family member, had decided to jackhammer the pool the night before closing – surprise and welcome to the neighborhood!  You can talk to your realtor about this but it’s hard to make a contingency plan for crazy just be open to solutions!

So what’s the point of all this?  Stuff happens – even when you’re on top of things. So if you don’t have a place to stay and your truck will be all packed with nowhere to go, it’s a good idea to think ahead and have options.  Count on something coming up and plan accordingly but then be pleasantly surprised when it doesn’t!  Here’s to not catching you off guard.

What do you mean, I’ll need to pay another $20K for my home?

Yes, Mr. and Mrs. Smith, another few days and you could wind up paying an additional $20K for your home, but if you lock in that rate today, you can drive this beautiful custom- built, split level ranch off the lot for just 3.5% down plus tax and insurances, and I’ll even throw in a set of white-walls.

Alright, maybe a little exaggeration – I realize most homes don’t need white-walls, but the comparison to the pitch of another somewhat maligned profession can’t be overlooked.

But, it’s true! Now, I’m sure you know that if your interest rate is higher you will pay more for your home, monthly and in the long run. This harsh reality never really struck me until I heard a rather surprising statistic at a home buyer’s seminar about 5 or 6 years ago. I was recently reminded of that seminar by a client who said he was still paying on a $60K loan he borrowed back in the 80s, when the rates were so high they could have been basketball scores.

This simple data from the seminar gave me the urge to run out into the street with a large placard that said, if you don’t buy now, you are completely beyond help…  Fortunately for me, I didn’t do that. And fortunately, since that time, rates have actually gone down even further, but I digress…

The statistic was that for each additional “point” you pay on your mortgage – say for instance 5.5% instead of 4.5% of your loan amount, you will be paying 10% more a month in mortgage payments, and over the life of the loan, on a $100K house, you will pay about another $20K, if that loan is taken to the full 30 year term. On a $200K home, using those same rates, you would pay approximately $44K more.  Is it hitting you like it hit me?

So why are you just sitting there, pick up that placard and hit the street!

Actually, where this really becomes a point of evaluation is when you’re trying to decide whether to buy now or when prices drop,  or more comes on the market. Consider the fact that if rates go up just one point then your purchasing power is 10% less, or put differently, if you could afford to purchase a $100K home, you can now, for the same money, only afford a $90K home, or, if you were going to purchase a $400K home, the same  loan amount at a higher rate (1%) would only purchase a home that is $360K(all monthly payments being equal).

Now math is not really my thing, in fact, I was voted most likely to screw up my checkbook ledger, and there may be those of you out there that “already knew that” and “why is she talking down to us…..etc. etc.”  I get it!  But if you are considering a purchase, even though prices have risen, this is the real estate version of a Black Friday sale!

And that is the good news in all of this.  Rates are pretty much at the lowest they’ve ever been! – but who knows when that will end. And while there is a bit of a mini stampede to buy houses right now, there are still some nice homes available, some  even have white wall tires!