1. They always want “a great deal”.   Translated:  Value.
2. Value.
3. Value.
4. Everyone’s downsizing.  It’s the new chic.  If you have a house with extra square footage to romp in – buyers see it as a minus.  Gone are the days when extra room was a good thing.   Now it’s an extra added expense in utility bills and upkeep. 
5. Value.
6. Updated kitchens and bathrooms.  If they ALL don’t have modern fresh cabinets, counters and flooring – then our price better reflect that.  It’s the SINGLE difference – aside from price – that gets buyers to write an offer.  
7. Value.
8. Our palatial mansion is going to be up against the small shack next door.  In many ways, the shack next door is more appealing, if it’s clean, well-staged and offers the same basic features.
9. Value.
10. Did I mention that it’s all about value?  In a buyer’s eyes – value is price versus what they get out of a home.   They want home to feel good.  Are there just enough bedrooms for little Johnny, Jack and Jill?  Maybe Johnny and Jack can share a room.  Terrific!  Is the back yard big enough for a game of catch?   Maybe it does’t need to be big enough for that swingset -because the park is only 2 blocks away and who needs one anyway?  In challenging economic times why over-extend?    

Gone are the days of bigger, better and bragging.  ‘Rightsizing’ is in.  Right pricing is critical.  And here’s more of the ugly truth – even if our home for sale has all of those things – and is being marketed with the most aggressive plan out there – if we aren’t getting 7 to 10 showings per WEEK or offers - we aren’t at the right price.

Buyers – what say you?  Is there anything we missed here?  Help our sellers out by sharing what it is that’s important to you!

Top 4 Dangers in Buying Foreclosure Homes for Sale In Pinellas County

1. We might not close.  There’s a new dangerous and unscrupulous trend now where banks aren’t getting clear title (from outstanding liens and deed-in-lieu sign offs from Sellers) before listing Pinellas County homes for sale.  We’ve experienced and also heard about this first-hand from several insiders at several well-known banks and closing attorneys that represent these banks.  In other words, they are sometimes offering properties for sale that have no business being on the market!
2. We might not close on time.  Same explanation as above.  We recently represented a wonderful buyer who HAD to be in her new home by a certain date – and the closing was delayed over THREE weeks.  Trust me, the pain she went through due to the delay – not to mention the stress of not knowing IF we would even close - was unbelievable.   I can’t stress enough why it’s so important to have Pinellas Realtors that will go the extra mile for you.  In this case, it took contacting the CEO at a massive firm – and everybody else there – about 10 times a day – every day - to finally get it done.
3. You’ll ALWAYS have to pay extra fees that are paid for on ‘regular’ and short sale properties.  These include normally paid for by seller title insurance, state doc stamps (taxes) and other title fees.   This is a significant extra expense that can be easily made light of by your buyer’s agent and certainly the selling institution.  Make sure you get an estimate of these costs prior to signing any contract.
4. Almost ZERO contract protection.  The standard FARBAR and FAR contracts have ample protections for buyers regarding inspections, property defects, disclosures, clear title, etc.   However, bank REO contracts can not be altered in ANY way.  We have to take what they dish out – and trust us, they are all in the bank’s favor.  

Absolutely, there are great buys to be had buying foreclosure homes for sale in Pinellas County, yet let the buyer beware.  If you have questions about the process, these Pinellas Realtors would be glad to chat with you.   Feel free to contact us with questions. 

By the way, the truth is that a ‘regular’ sale home can often be a better buy than a foreclosure or a short sale – it just all depends!!   We see it all the time and feel free to ask us why.  We’re here to help.

Sand Picture Taken by Accident Somewhere in Florida That Has Absolutely Nothing to Do with this Post!

I just enjoyed a Business Week article by Prashant Gopal.  In it, she (or help me Peach readers is that a “he” name?! – I digress – sorry…) Anyway, SHE OR HE quotes that  Richard C. Davis of the TV show Flip This House as saying

“Everybody made money on the way up.  Then the market turned.  Amateur hour is over.”

It reminded me to remind you that now is when the experienced, serious investors are buying up the homes for sale in Pinellas County.  Because it’s a great time to buy!

Feel free to start your Pinellas MLS search with Realtor access.  Or give us a call at 727-366-0325 and we’ll do it for you!

The FHA was created in 1934 after the Great Depression, and was widely popular until recent years when subprime lenders offered something seemingly better:  artificially low interest rates, no-interest payments and a false dream.  Daily, lender requirements are becoming more and more stringent, and, as a result, FHA loans are once again commonplace and the only vehicle for many to own their Duendin homes.

Advantages of an FHA loan include:

• low 3.5% down payment and closing costs
• gifts from family members, employers or charitable organizations are welcomed
• minimum credit scores are lower than for conventional loans
• lenders will consider payment of rent, utility bills and auto insurance premiums when evaluating the applicant

But Whoa! Hold on, there’s a tiny downside ….

• There’s a 1.75% of the loan amount premium that can be wrapped into the full loan term or paid at closing, regardless of their credit score
• You’ll pay an Annual Mortgage Insurance Premium or MIP.  It’s based on your loan-to value (LTV) ratio, which, if you’re putting 3.5% down, would be .55%.  Example:  $200,000 loan x .0055 = $1,100 divided by 12 months = $92 per month.  Usually this will drop off after five years or when the remaining loan balance is 78% of the value of the property – whichever is longer.
• FHA loans require that a property meet certain minimum appraisal standards.   In other words, if the home needs repairs, it may not qualify for a regular FHA loan.  There are FHA 203K loans that allow for repairs, but that will be the subject of another post!

If you need a referral to a trusted Pinellas Mortgage broker or banker, contact us.   While it’s important to shop for rates and fees, it’s actually equally important to use a representative that can actually get you to the closing table in today’s complex Pinellas real estate market.

There’s great news, however, if you’re in the market to purchase Pinellas Real Estate!  Buyers may now use the credit upfront as extra down payment money, to lower payments, pay discount points (reducing their interest rates), or to supplement closing costs.

The big “BUT” here is that buyers  CANNOT use the first time home-buyer tax credit toward the 3.5% minimum that is required of FHA insured loans.  The buyer still has to present those down payment funds, yet they can be a gift from a relative. 

The Truth About the Misinformation Currently Being Circulated Amongst the Mis-Informed: 

There’s a lot of misinformation out there saying that the $8,000 can be used for your down payment, but that’s just not the case!  It’s a convoluted mess because HUD originally released this Mortgagee Letter 2009-15, later rescineded it (the details as to why are unclear other than they realized they made a mistake), and now it’s up for public speculation as to what’s going to happen with that aspect of it.  For crying out loud, we reported last October that the FHA had just done away with all seller-funded closing costs - now they want to essentially reverse that?!  For the real facts, keep checking back, or better yet subscribe to The Pinellas Peach and you’ll be notified automatically.

Eligibility for the $8000 tax credit can be found on the IRS website.  It is always wise to consult with a tax advisor and a licensed Realtor to discuss your particular situation. At this time the key components to this upfront monetization of the $8,000 tax credit it that:

• it will only be available for FHA loans
• full documentation of income is essential
• low debt-to-income ratios are mandatory
• the buyer is still responsible for the 3.5% minimum down payment

I’m going out on a limb here, and this will probably tick some of you off, but making sure buyers have the discipline to save 3.5% for a down payment is probably a good indicator as to whether or not they’ll be able to keep up with mortgage payments in the event of an unforseen needed repair, life change, etc.  Otherwise we’re essentially back to 100% financing which is what got us all into this pickle in the first place.  100% financing with a rainy day savings account?!  Fabulous.  Otherwise, maybe it’s not time to take the home ownership plunge just yet.

Conventional interest rates had been hovering at historic lows of 4.75% – until this week, where they ended at 5.27%!  It is unlikely they will stay in these low ranges, whether the 4’s or the 5’s for any length of time say most experts.  Mortgage interest rates are tied to the bond market which has begun to take hits due to the state of the economy.  Money.com had this good synopsis Thursday if you want to delve deeper.

So, if you’re waiting for that $200,000 home to fall another $10,000 or 5% – this will take about three months in our current market.  Now its September 1st and you’re going to offer $190,000 and save about $50/mo on your mortgage payment.  But wait!  Interest rates have risen one point to 5.75%.  Now your mortgage payment is $125.00 MORE than it would have been last week.  This scenario has now cost you an additional $75.00/month – for the next THIRTY YEARS!!

$200,000 home with an 3.5% FHA 30 year loan:

4.75% = $1006.78/ mo payment

5.75% = $1126.30/mo

6.75% = $1251.79/mo

Some will say, “not a big deal.”   Really?  A 2% jump in interest equates to an additional $3,000 per year and over $162,000 over the life of the loan.  Hmmm… 

What’s the other boat?  Trying to time the bottom of the market.  A post for another day!