Real Estate Information
Displaying blog entries 1-10 of 50
With rising home prices in the South Florida market, we are recognizing the importance of an accurate appraisal that reflects the current market values. In a late 2012 survey by the National Association of Realtors, 11 percent of sales professionals said a sales contract was canceled because an appraised value came in below the negotiated price, 9 percent reported a contract had been delayed and 15 percent reported a contract had been renegotiated to a lower sales price.
These were some of the problems reported in the survey:
- Using lower priced foreclosures as comparables.
- Not adjusting values to reflect changing market conditions, such as rising prices or low inventory.
- Using inexperienced or out-of-town appraisers.
- Long turnaround times by both appraisers and lenders, delaying closings.
What can your professional do to help you in this situation? According to Florida Realtor magazine, real estate professionals can be valued sources of information for appraisers. Providing them with what they need early in the process is important because it can be difficult to challenge a completed appraisal. If an agent wants to request a change, he or she can contact the lender with a written request for the appraiser to reconsider his or her opinion.
In that request, your agent can ask the appraiser to do one of three things.
1. Consider additional, appropriate property information, including the consideration of additional comparable properties.
2. Provide further details or explanation of the appraiser's value conclusion.
3. Correct errors in the appraisal report.
Looking to the future, according to Florida Realtor magazine, discussions are under way on the national level to establish a formal procedure for evaluating an appraisal and requesting a reconsideration of value.
For more information regarding appraisals or the South Florida real estate market, please contact Aaron Novello of The Novello Group today!
According to Inman News, there is good news for potentially thousands of condominium unit owners and homeowner association boards around the country: FHA has backed off a controversial policy that had threatened to force large numbers of condo projects out of compliance with the agency’s certification and recertification rules.
Loss of certification would mean that affected projects no longer would be eligible for low down payment FHA financing on any of their units. As a result, buyers who need FHA loans would be shut out, unit owners would find it more difficult to sell, and property values would suffer. Problems with FHA’s certification rules have been bugging condo associations for more than two years, and have dramatically reduced the number of projects eligible for FHA unit financing — down by more than a third, from 40,000 to 26,652 as of June.
However, last week FHA signaled a willingness to work with the condo industry to resolve the latest controversy by providing a “workaround” covering the agency’s previous demand that thousands of condo board amend their underlying CC&Rs (covenants, conditions and restrictions) to conform with long-ignored language in the National Housing Act regarding “transient,” short term rental of units or face rejection of the applications for certification.
One condo expert said in California alone, one of every three condo communities with current FHA certifications risked loss of eligibility under the policy. That policy targeted commonplace language found in hundreds of association CC&Rs allowing Fannie Mae, Freddie Mac or other mortgage investors to rent units they acquire through foreclosures under short term contracts that provide hotel-like services to tenants.
Contact Aaron Novello of The Novello Group today for more information on purchasing condos in South Florida using FHA financing.
CNN Money recently published an article with eight tips from top experts and money readers on everything from selling a home quickly and winning a bidding war to cutting your electricity bills and prospering as a landlord.
1. Sell your home fast
Underprice it from the start. If you list your home for at least 10% less than it's worth, you'll often sell it for 10% more.
Buyers notice a house that's underpriced. They'll take it by storm and drive up the price with a bidding war.
People worry that setting the price low will deter bidders. That's not the case. If you don't get competitive bids, you didn't truly underprice the house to begin with.
-- Barbara Corcoran, founder, real estate firm the Corcoran Group and panelist on ABC's "Shark Tank"
2. Win a bidding war
Go as high as the maximum price you'd ever be willing to pay -- if someone outbids you, you'll feel confident you gave it your best shot.
Sometimes it's not just about the money. Give the seller some breathing room too. Buyers often signal their interest by offering to close quickly, but that move might backfire in this market: If the sellers haven't found a new place yet, they may be unable to accept your offer.
Instead, propose a seller's residential lease. You close on the house quickly, then rent it back for 60 or 90 days. That gives the sellers a chance to look for a home in a non-panicked way -- and gets you the house you want.
-- Mary Beth Harrison, founder and realtor, Keller Williams Elite, Dallas
3. Protect yourself as a renter
Your landlord or property management company can make or break your rental experience, so look online for negative reviews. Slow responses to maintenance calls and deceptive leasing practices, like advertisements for amenities that don't exist, are the most common complaints.
A first-time landlord is a slightly higher risk. Ask a lot of questions, including where he lives and who will respond to maintenance requests. Before you sign a lease, test everything -- appliances, windows, light switches. If anything needs to be fixed, make sure that's included in the rental agreement. And don't sign anything that holds you responsible for the building's exterior.
-- TJ Rubin, managing broker at Fulton Grace Realty, Chicago
4. Prosper as a landlord
Think like your worst-case tenant -- the one who'll never pay you a dime and never leave. These folks will take advantage of strict laws on when and why a tenant can be evicted. You need to know those laws just as well as they do.
Write your tenant lease to safeguard your rights, like setting community standards for noise, trash and other areas of possible neighborly nuisance. To protect yourself financially, put away a little money from the rent to cover potential legal costs.
-- Casey Edwards, long-time landlord and co-author of The Complete Idiot's Guide to Being a Smart Landlord
5. Boost your energy efficiency
Start with changes that don't cost money, like closing and opening drapes. Switch off appliances you aren't using. Some TVs use more energy in the off mode than when they're on. Plug a TV into a power strip and turn it off.
-- Kateri Callahan, president of the Alliance to Save Energy
6. Take the drama out of a renovation
Don't walk blindly into a major renovation project. Know why you are remodeling, and define what you really need so you don't just pretty up a space that doesn't work for you.
And before you even contact a contractor or designer, take 25% of your renovation budget and sock it away. That way when your contractor finds water damage, you can fix the problem and move on without fighting about how much it's going to cost -- or what part of your plan you have to scrap to stay on budget.
-- Susan Solakian, consultant and author of The Homeowner's Guide to Managing a Renovation
7. Weather the next storm that hits
Because of changes insurers have made in recent years, you may have to shoulder a larger portion of your losses than in the past.
The more informed you are, the better your settlement will be. Don't wait for an insurer to estimate the replacement cost of your belongings: Make your own inventory, and tell the insurance company what you think it owes you.
Keep a journal of every conversation with your insurer. And keep binders with your receipts, estimates, and inventories. You have to be your own advocate.
-- Amy Bach, executive director of United Policyholders, an insurance consumer advocacy group
8. Learn to be handy
"Always Google a home project. You can save hundreds doing it yourself. I replaced the capacitor in my AC unit for $29 instead of paying the AC company $250."
-- From MONEY reader Adam Rubenstein, via Facebook
Mortgage interest rates are rising. According to an article by Morgan Brennan on Forbes.com, on the week ending June 6, the 30-year fixed rate mortgage clocked 3.91% in its fifth consecutive weekly gain, according to Freddie Mac, after hitting its highest level in a year last week. That’s 18% higher than the 3.31% record low set in November of 2012 and almost 17% higher than the 3.35% rate logged in the beginning of May.
Compared to a month ago, the increase translates roughly into an extra $30 per month for every $100,000 of debt accrued. If rates continue their upward march, mortgages will become more expensive.
Since cheap financing has been a notable driver of the housing recovery, could those rising rates derail the momentum? To answer that question, let’s first take a look at what low interest rates have done for housing and why they’re increasing now.
Compared to decades past, today’s rates (even at 3.91%) are unprecedentedly — and artificially — low. They’re the direct result of a Federal Reserve-funded fiscal stimulus plan, better known as the third round of quantitative easing or QE3, aimed at hastening the recovery in housing and the economy as a whole. Through the program the Fed has been buying $85 billion worth of Treasury bonds and mortgage-backed securities per month, a process that has tamped down interest rates, making mortgages more attractive to prospective consumers.
The low rates have enabled qualified home buyers (and owners looking to refinance) to access cheap financing, adding to already-record-high levels of home affordability. It’s helped bolster a surge in both home sales and price increases (since lower rates help make larger principals possible).
Rates are climbing now due to both stronger economic data and to speculation: recently Fed chairman Ben Bernanke suggested that the central bank may start slowing its bond buying within the next several months. The news has caused bond investors to begin selling out of their 10-year Treasury positions, driving yields for these bonds above 2%. Since mortgage rates correlate closely with Treasury yields, they have followed suit, rising about a quarter of a percentage point in just a week.
Many economists believe those numbers will continue to climb, albeit at a more modest, uneven pace throughout the year. Whatever the growth pattern, as rates rise, some markets will be affected more than others.
In April, Zillow found that housing affordability hinges heavily on low mortgage rates — a dynamic masking fundamentally high home price-to-income level ratios. Relative to local median income, which has remained largely stagnant, homes are trading at prices higher than historic (and healthy) norms in 24 of the largest 30 metro areas, according to the Seattle-based real estate site. If rates rise before income levels can keep pace, sales activity could taper and in some areas, prices could again dip down as the market corrects.
The first thing rising rates affect is refinance applications. Refi apps have fallen for the past several weeks, logging a 15% drop (after accounting for Memorial Day) last week from the week before, according to the Mortgage Bankers Association. Mortgage applications have begun to tick down too, falling 11.5% from the week earlier. Yet if rates continue to rise, it might spur qualified home buyers sitting on the fence to make purchases before financing becomes any more expensive, facilitating a short term uptick in home sales.
Rising rates could create a long term benefit for the market as well: slightly looser lending standards. Real estate experts have lamented how exceedingly tight credit has been — even for buyers who on paper qualify for mortgages. Lenders have been overly cautious about underwriting new mortgages in large part because the returns associated with low rates haven’t necessarily matched the level of risk.
Also worth noting: residential real estate investment contributed to gross domestic product in 2012 for the first time in five years. While robust sales activity plays a role, the majority of housing-related economic growth stems from residential construction, or new home building and remodeling.
While interest rates certainly warrant attention, many economists say there more pressing issues that threaten to impede upon the housing recovery. Among them: tight inventory levels and an uncertain regulatory environment.
Tight inventory has led to nascent housing shortages in some areas of the country and impeded upon the number of existing home sales, according to NAR. At the current sales pace, the U.S. has a five-month supply of existing homes for sale; a healthy market supply is six months. The dearth of inventory coupled with a burgeoning buyer base have caused home prices to nationally jump by double-digits, gains that are not sustainable in a healthy market.
In terms of regulation, questions loom over the future of government-sponsored enterprises Fannie Mae and Freddie Mac which, alongside the 12 federal home loan banks, back more than 90% of all mortgages. Concern also persists over the mortgage interest tax deduction, which could be subject to tax code reforms.
According to the National Association of Realtors, approximately 30 percent of realtors reporting on their last sale had a cash sale (32 percent in February). Investors and international buyers typically pay cash. About nine percent of realtors reporting a sale to a first-time homebuyer also reported cash sales, while over 70 percent of reported last sales to investors and international buyers were for cash. This is based on data from the March REALTORS® Confidence Index Survey.
What does this mean?
The first time buyer faces a challenge—particularly given that investors are in many cases paying cash—as are second home buyers and international buyers. The key to success is to work with an agent and lender who have experience in closing many deals. If you or someone you know would like to buy or sell, please contact Aaron Novello at The Novello Group today!
According to the National Association of Realtors, here are the top five states with the highest foreclosure rates.
- Florida: 9.7 percent
- New Jersey: 7.3 percent
- New York: 5 percent
- Maine: 4.4 percent
- Illinois: 4.4 percent
Although we are definitely seeing lower inventories than in the past, these numbers show us that we still aren't out of the hole yet! In our opinion, banks are going to let these foreclosed properties leak out slowly on the market so as to not affect prices negatively. For this reason, here at The Novello Group, we are not predicting large increases in prices this year.
As always, we will keep you posted on the latest Real Estate news. If you have any questions, please feel free to contact Aaron Novello of The Novello Group today!
According to USA Today, here are the top 10 features for which buyers will pay extra.
10. Eat-in kitchen (40% of home buyers are willing to pay more ($1,770)
The people most interested in an eat-in kitchen tend to be in the 35-to-54 age range, with 30% of those prospective home buyers indicating this is "very important" in a house. Meanwhile, just 21% of those under 35 years of age and 20% over 55 feel the same way. More people, especially those who are raising families, want kitchens that look into family entertainment rooms. Some have even made it a family hangout by placing big-screen TVs and other electronics in the kitchen.
9. Home less than five years old (40% of home buyers are willing to pay more ($5,020)
Some people simply want a newer home. For those willing to pay more for a newer home, the median that people would dole out was more than $5,000. Although this is a lot of money compared to most features, that money could be a wise investment in the long run. Maintenance costs are considerably less in newer homes compared to older homes. Newer homes also tend to be much more efficient, attracting people who are environmentally conscious.
8. Stainless steel appliances (41% of home buyers are willing to pay more ($1,850)
Like most features, stainless steel appliances are most important to people between the ages of 35 to 54, with 23% considering them to be a "very important" investment, compared with just 16% of those under the age of 35 and a mere 11% of those over the age of 55. From a cost perspective, stainless steel appliances are not necessarily the best investment. Stainless steel wears out far easier than most other common materials. Also, the children in the house can also get their fingerprints on the appliances, requiring more cleaning. However, people are primarily driven to buy stainless steel appliances because they look more attractive.
7. Kitchen island (48% of home buyers are willing to pay more ($1,370)
Kitchen islands are most important to people ages 35 to 54, with 24% indicating that it is a "very important" characteristic. Just 19% of people under 35 and 13% over 55 considered this feature important.
6. Ensuite master bath (49% of home buyers are willing to pay more ($2,030)
Once again, the ensuite master bathroom tends to be more important to people ages 35 and older. This, along with a walk-in closet in the master bedroom, has become more important in the past 10 years or so. Many people are eager to make their bathroom more "homey" by doing things such as installing televisions on the wall. The fact that many master bathrooms have two sinks is also an appealing option for married couples.
5. Hardwood floors (54% of home buyers are willing to pay more ($2,080)
Some 25% of buyers under the age of 35, and 28% of those between 35 and 54, considered hardwood floors "very important" when looking for a home. Only 17% of people ages 55 and up felt the same way. In previous generations, homes with carpets were considered better in order to conserve energy. Even today, older people are more likely to feel more comfortable with carpeting because the insulation makes the home a little bit warmer. But for younger people looking to have many guests at the house and for people with children, hardwood floors are desirable because they are easier to clean than carpets.
4. Granite countertops (55% of home buyers are willing to pay more ($1,620)
Among homeowners between the ages of 35 and 54, 24% viewed granite countertops as "very important," compared to 18% of people under 35 and 18% of people over 55. Although just one in every five prospective home buyers said granite countertops were very important, 55% of those who bought a home without such a countertop said they would pay extra for it. The granite countertop is more of a style issue than anything else.
3. Walk-in closet in master bedroom (60% of home buyers are willing to pay more ($1,350)
A whopping 60% of homeowners were willing to pay extra for a walk-in closet in the master bedroom, with 44% of people between the ages of 35 and 54 viewing this feature as "very important," compared to just 35% under the age of 35 and 36% of people 55 and older. The walk-in closet is desired for two main reasons: space and status. The space is very desirable for people as they get older and acquire more clothes, allowing people to be more organized. Having a walk-in closet in the master bedroom is also a status symbol.
2. New kitchen appliances (69% of home buyers are willing to pay more ($1,840)
About 69% of homeowners said they were willing to spend more money for new kitchen appliances. Unsurprisingly, people who are looking to buy a new home find this far more important than people who are eyeing previously owned homes. People also do not want to have to deal with the stress of broken appliances.
1. Central air conditioning (69% of home buyers are willing to pay more ($2,520)
Nearly seven in 10 homeowners said they would be willing to pay more on central air conditioning — the same as new kitchen appliances and more than any other feature. Central air conditioning was considered "very important" by more than 60% of people in all age groups. Obviously, in places like South Florida, this number is probably much higher!
Let The Novello Group help you find your dream home with all of the special features you want. Contact us today!
Lenders have been more strict with their underwriting standards the last few years, making it difficult for even buyers with good credit to get approved for a home loan. According to the National Association of Realtors, the Federal Reserve Chairman Ben Bernanke has said that the tightening of the mortgage market “has gone too far.”
Recent data released by Ellie Mae also shows there may be some improvement in the loosening of credit.
In its latest data release, Ellie Mae found that the average FICO scores for approved loans has started to drop — a 767 FICO average for all of 2012 compared to 761 FICO average for all approved conventional loans during February.
More applications for mortgages also were approved — 56.8 percent in February versus 55 percent in January, a small improvement.
Refinancing fell to 68 percent in February, from 73 percent in January, which may indicate that lenders are getting more serious about going after the purchase market.
Still, many in the industry say that banks are being too strict with home loans. Many experts predict that if credit conditions returned to “normal,” there will be a substantial increase in home sales this year.
For more information on purchasing property, please contact Aaron Novello of The Novello Group today!