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.
ldquo;Tariffs on goods traded between the U.S. and China have already increased in several stages since early 2018,rdquo; said CNBC. ldquo;Now, President Donald Trump has added a 25 tariff up from his original proposal of 10 on another 200 billion worth of Chinese imports, and China hit back with 5 to 10 percent duties on another 60 billion worth of U.S. goods.rdquo;
Experts say we could be seeing higher prices as a result of this escalation as early as this summer, and that has economists yelling, ldquo;Buy, buy, buy nowrdquo; in order to avoid what a report from Oxford Economics estimates will be an 800 hit to every U.S. household.
There is some question as to how the tariffs will play outmdash;after all, Trump said that China will suffer most of the economic impact. ldquo;Yet experts say the burden will land squa>
So what can you do? Ramp up future spending now, if possible.
ldquo;To get ahead of the next waves of tariffs, University of California, Davis, professor of economics and specialist in international trade Katheryn Russ recommends buying some items now, if possible mdash; such as backpacks and other back-to-school supplies mdash; rather than holding off until later in the year,rdquo; said CNBC. Ditto for things like iPhones; ldquo;The price for an iPhone XS would rise to 1,142, up from 1,000, if the White House implements a 25 tariff on the rest of China imports, J.P. Morgan said in a note to clients.rdquo; Expect a ldquo;similar impact on TVs and everyday purchases, ldquo;where consumers will be harder hit, such as frozen food and paper goods, including diapers and paper towels.rdquo;
Phil Crone, Executive Officer of the Dallas Builders Association, warns of the effect on the housing market. ldquo;From tile to countertops, laminates, lighting, and furnishing, about 450 products commonly found in new homes and remodeling projects are seeing tariffs rise from 10 percent to 25 percent,rdquo; he said. ldquo;According to the National Association of Home Builders NAHB, homeowners and homebuilders nationwide will be paying an additional 2.5 billion.rdquo;
If you spend hours on the internet trying to find your dream home by searching through photos or video of properties, you may be overlooking important flaws in this superficial approach to evaluating real estate.
The big question is: What percentage of time are you incorrect in your decision to discard a property based on a photograph?
Judging a property by its photograph may prove expensive when you discard poor photos without knowing if they represent excellent real estate opportunity for you. Just ask yourself, how many selfies does it take to achieve a great and, therefore, accurate picture of you?
Even when you eventually find photogenic real estate to visit, how many better choices or better bargains did you miss out on because you did not approve their visuals?
bull; Have you studied photography and earned the advantage of knowing how to evaluate second-rate equipment or poor photographic technique that results in failure to present a homersquo;s good bones or reveal a hidden gem worth a closer look? Even a good photo may present poorly as an online image through bad decisions regarding lighting, resolution, cropping, coloration....
bull; What percentage of properties are discarded because the photo is unappealing? Listing photos are not intended as works of art. Was this a drive-by photo where the photographer did not get out the car because they had so many photos to take? Was it raining or snowing that day? Just like people, houses have a ldquo;good siderdquo; and a ldquo;bad side.rdquo; Which side is in the photo?
bull; Do you have a magazine or Instagram pic in mind that you are intent on matching? Houses that are beautiful from the curb earn high-value ratings >
bull; You canrsquo;t live in a photograph or even a video. Ideally, a photograph or short video of a property should reveal all the benefits of the buildings and the land. In reality, most photographic representations fall short of this goal. Some are more successful that others, but none are a substitute for experiencing ldquo;the big picturerdquo; first-hand: the feeling of being there, the volume of rooms, the acoustics of the building, the effects of daylight, the flow through the buildinghellip;the reality of inspecting the property yourself. In addition, street-face photos cannot reveal interiors that are in marked contrast to facades: a house with a renovated, ultra-modern interior may maintain its historic exterior.
bull; What percentage of the time are you attracted by a great photo of a house, which you later discover has ldquo;a lot of uglyrdquo; going on outside the photo i.e. beside the house is a high-rise building, auto body shop, shopping mall, night clubhellip;? Or, did you discard a property which, invisible to you, had wonderful green space around it? Since location is the most important value factor in real estate, how can a photo of a property in isolation enable you to fully evaluate its location value without knowing context?
The above list of flawed reasons for discarding properties based on photographic representations explains how you may allow your lack of knowledge, on many levels, to limit your ultimate success identifying desirable real estate. Select only the ldquo;pretty picturesrdquo; and you may inadvertently eliminate properties that would be ideal and perhaps less expensive purchases for you and your family.
The Smart Approach
Wersquo;re not advising that you view every listed property. Instead, work with experienced real estate professionals whorsquo;ll process listings, visit properties using your criteria, and, therefore, save you time by selecting the best prospects for you to view.
Describe what yoursquo;ll want in a new home and the professional will converse with you to clarify that description for you and for them. Buyers are often surprised when these conversations reveal how much they had not realized about what they thought they wanted and needed.
Search out a professional who makes it their business to know area product from the outside in. Theyrsquo;ll share their insider view, so you wonrsquo;t miss out on what could be your dream home. This informed culling of properties will save you from having to view too many properties that are a poor fit for your needs and dreams.
ldquo;This house was a big surprise inside; from the outside, it looked much smaller,rdquo; is a common buyer observation. Most buyers, particularly first-timers or first-time-in-a-long-time buyers, are not experts at architecture or construction, nor have they inspected as many properties as experienced real estate professionals.
Your secret weapon is your real estate professional who makes it their business to keep up-to-date viewing area listings. They understand the advantages of knowing the whole property and its entire potential, not just its street face. They appreciate the difference between a real estate dream and a home thatrsquo;s a dream to live in.
Professionals are also aware of smart buying strategies based on poor photos or less inspiring facades. For instance, if yoursquo;d like to invest in the best location your budget will allow, there may be advantages to viewing properties in choice neighborhoods with less attractive street faces. When there is value in the location, interior, and backyard, over time the curb view can be improved on, increasing property value in the process.
A jumbo loan is one where the loan amount exceeds current conforming loan limits. Conforming loans are those that conform to standards issued by Fannie Mae and Freddie Mac. One of the many requirements for a conforming loan is the loan limit which is currently 484,350 in most parts of the country. In higher cost areas where home values are much greater compared to the rest of the country, the conforming limit can be as high as 726,525. Beyond that is jumbo territory. When applying for financing to purchase a higher end home, jumbo approvals are issued in much the same manner as other types of loans, itrsquo;s just a bit more difficult to qualify for one.
Conforming loans can ask for a down payment for as little as 5.0 percent of the sales price. With a down payment of less than 20 percent however, private mortgage insurance, or PMI, will be needed. PMI insures the difference between 20 percent down and the actual amount of down payment. with a 5.0 percent down payment, the insurance would cover 15 percent. With jumbo loans however there is no PMI available. That means the loan amount for a jumbo loan should be no greater than 80 percent of the sales price. This equates to a 20 percent down payment, but slightly better terms are offered with a down payment of 25 percent or more. There are some niche portfolio products that ask for a lower down payment but in general this is what you can expect.
Credit score minimums are also higher for most jumbo loans. Conforming loan programs can go as low as 600 or so but jumbo loans need higher scores. Minimum scores can vary from one lender to the next but not by very much. Many jumbo loans ask for a minimum credit score of 700 while a few programs need a score of 680. Better rates and terms are typically available with a credit score of 740. If there are two borrowers on the same application, the lender will use the lower of the two qualifying scores.
Finally, jumbo loans typically require a bit more documentation both from the borrower as well as third parties. For example, a jumbo loan program might need two appraisals instead of just one. Again, if there are two appraisals, the lender will use the lower value for approval purposes. Jumbo loan applications are also fully documented. There are no ldquo;statedrdquo; type loans where income or employment is not verified via third parties. There are a couple of programs out there that review 12 months of bank statements in lieu of paycheck stubs or W2s, but the bank statements must show regular monthly deposits from a verified source.
On these statements, there needs to be sufficient cash to close for the down payment, closing costs and cash reserves. Lenders can separately mail a Verification of Deposit to the financial institution asking the bank to verify how much cash is in the bank as well as an average of recent balances.
Jumbo lenders can set their own guidelines because theyrsquo;re not bound to conforming rules which means qualifying at one lender may be easier or more difficult compared to another. Your loan officer will tell you what types of documentation yoursquo;ll need to provide, but once submitted, your jumbo loan application will be processed just like any other.