6 tips to weigh the best resale home improvements

NEW YORK – Sept. 24, 2013 – Homeowners are opening their wallets. A rebound in the housing market has made them more willing to invest in renovations that could boost the value of their homes even more in a rising market.

Spending on home remodeling has picked up over the past 18 months and is expected to rise nearly 20 percent to $151 billion by the fourth quarter, according to a recent report by the Joint Center for Housing Studies at Harvard University.

Many homeowners decide to make upgrades with the idea that the bigger kitchen or finished basement will make their home more enjoyable. But those looking to sell should know that not all home improvement projects boost the value of a home.

Here are six tips when considering investing in home improvement projects:

1. Consider all buyers
The classic example here is installing a swimming pool.

A pool could make your home a tougher sell and it’s unlikely you will recover your expenses, says Richard Borges, president of the Appraisal Institute, a professional association of real estate appraisers.

It may be a deal-killer for buyers who might not want to take on maintenance costs or safety risks for small children. “It’s not going to contribute a full measure of its cost of installation because its utility is so limited,” Borges says.

The principle holds true for other large projects that can alter the structure of the property, such as adding a second garage. In some neighborhoods, they may be a common feature that becomes a selling point. But if it’s not common, it could discourage buyers who don’t have a need for it.

2. Don’t ‘overimprove’
Some home improvements can help lift a home’s resale value, especially updates to features like cabinets and appliances that are clearly dated.

The key is to select finishes and appliances that don’t go well beyond what a buyer might find in similarly priced homes in the area. The term appraisers have for that is “overimprovement.”

Consider a homeowner in a neighborhood with modest homes who splurges on pricey countertop finishes like quartz or marble. They’re not likely to recoup the cost when appraisers look at recent sales of comparable homes that may not have such lavishly appointed kitchens.

This applies to everything from lighting to flooring and bathroom fixtures.

3. Consider risks of expanding footprint
One of the home improvement projects that’s least likely to produce a return on the investment is a room addition that expands the size of a home beyond its original floor plan, says Borges.

Projects that require tearing down an exterior wall often involve moving doors, windows and other features, which can drive the costs higher than, say, converting an attic into a bedroom, which uses existing space in the home.

The more expensive the project, the harder it can be to recover one’s costs.

Also, making major changes to the original structure, even when permitted by the city, runs other risks.

“When you become the oddball, the only home in the neighborhood with four bedrooms, probably the fourth bedroom is not going to be that desirable,” Borges says.

4. Consider cost-to-value
One way to gauge whether a home improvement project is worthwhile is to estimate how much of what you spend will be recovered at resale.

For example, if you spend a $1,000 on siding, and it only adds $500 to the resale value of your home, that upgrade is giving you a 50 percent return on your investment.

Remodeling magazine’s latest cost-value-study, which is based on surveys of real estate agents, can help provide a ballpark reference. You can find it here.

That said, when home prices are rising fast enough, like during the last housing boom, it’s easier to recover costs spent on home improvements, regardless of the upgrade. The alternative scenario also holds true.

5. Prioritize repairs and curb appeal
Making the master bedroom bigger or converting a downstairs closet into a half-bath might seem like good investments, but not if you need to upgrade your roof or fix window seals.

Those fixes may not be aesthetic upgrades, but often make a home easier to sell.

Replacing your front door might cost you $1,500, but it’s the type of upgrade that can make a home attractive to buyers, says Sal Alfano, editorial director of Remodeling magazine.

The magazine says replacing the front entry with a 20-gauge steel door is the upgrade from which homeowners can expect to recoup the most money among renovations that cost less than $5,000. The magazine estimates a recovery of 85.6 percent of the cost.

6. Consult an expert
Before moving forward on a home improvement project, consult with a real estate agent or an appraiser who knows your market.

They should be able to gauge how the upgrade could affect the sales price of your home. That can help you determine how much of your investment you’re likely to recoup.

Almost all appraisers are independent and set their own fees. A consultation could cost between $500 and $1,000.

Real estate agents might be willing to offer their assessment for free, perhaps with the understanding that they might earn your business when it comes time to sell.

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=297366

Shell Museum closing for updates at end of month

September 13, 2013

The Bailey-Matthews Shell Museum will be closed to the public beginning Saturday, Sept. 21 through Sunday, Oct. 6.

It will reopen at 10 a.m. on Monday, Oct. 7.

During this time, the museum is installing hurricane glass in the windows above the Great Hall and Collections area to protect shell collections and exhibits.

The lobby is also being renovated to make it more welcoming and enhance the experience for visitors.

The museum looks forward to seeing all of its island friends and visitors when it reopens.

Once construction is completed, stop by the museum to see the new changes. For more information about the museum and hours. please visit the shellmuseum.org or call 395-2233.

http://www.captivasanibel.com/page/content.detail/id/522361/Shell-Museum-closing-for-updates-at-end-of-month.html?nav=5051

Captiva beach renourishment to begin in October

Locals expected to pay larger share of project

September 17, 2013

By MCKENZIE CASSIDY

Heavy machinery is being mobilized on the northern end of Captiva Island for the start of the beach renourishment project.

The bid for the project was awarded to Great Lakes Dredge and Dock Company, LLC, in August, for $19.5 million, which includes a replenishment of 800,000 cubic yards of sand along six miles of shoreline between Redfish Pass and Blind Pass, as well as the rehabilitation of dunes in northern Sanibel.

Kathy Rooker, administrator for the Captiva Erosion Prevent District (CEPD), updated the community about the project during a meeting of the Captiva Community Panel on Tuesday.

Engineers have been taking pictures of local structures to record their conditions before the project begins, and Rooker said the precondition survey should be finished by the end of the week.

In the meantime, bulldozers and other machinery are mobilizing at the Alison Hagerup Beach Park the northernmost public beach access point on Captiva Island which is closed to the public. It will remain closed until further notice. On Thursday morning, locals living near Jensen's curve will be able to see ships on the horizon as they begin to drop the submerged pipe.

Seismographs will also be installed on the beach to measure vibrations caused by the machinery.

"We're very much on schedule," said Rooker. "We expect to put sand on the beach Oct. 1, if the weather and equipment cooperates. We hope to be off Captiva by the week of Thanksgiving."

Dredgers will leave the area after Thanksgiving, she said, and begin work on Sanibel after the holiday. One of the primary concerns for CEPD was ensuring that the project didn't disrupt the island season.

"We really hope we've done a good job to stay out in the high season," she said.

Members of the Captiva Community Panel were concerned about the costs of renourishment shouldered by local property owners. The U.S. Army Corps of Engineer rescinded their agreement with CEPD in July.

The project is currently funded with $4.6 million from the state and $6.1 million from the Lee County Commission, but homeowners may need to front an estimated $9 million unless additional funding can be acquired from the Federal Emergency Management Agency (FEMA).

The district also has the option of requesting more from the Lee County Commission or transferring $1 million from its reserves to ease the local burden.

CEPD Commissioner Mike Mullins said property owners will contribute roughly 50 percent more than they did in the 2005 dredging, unless another funding source is found.

"I don't think this is quite the same as last time," he said. "I expect everyone will pay more than last time."

Rooker said property owners received a range of costs associated with beach renourishment, and that the current price is within the middle of that range.

"If we do get some FEMA help, that will help us a little more," she said.

The CEPD is project updates on their website, mycepd.com, and brochures are being printed for area businesses to keep people informed.

http://www.captivasanibel.com/page/content.detail/id/522368/Captiva-beach-renourishment-to-begin-in-October.html?nav=5051

New HUD rule could make more eligible for mortgages

WASHINGTON – Sept. 16, 2013 – Federal housing authorities want to make it easier for people who lost their homes due to bankruptcy or foreclosure as a result of the economic downturn five years ago to qualify for a new mortgage – sooner rather than later.

The Department of Housing and Urban Development (HUD) last month changed its rule requiring a three-year waiting period for people who have lost a home due to foreclosure or bankruptcy, opening the door for them to buy another home in only one year as long as they have fixed whatever financial problem caused them to lose the previous home.

“Three years can be a long time for a family to wait for a loan, and putting money into a rental instead of an investment can result in a loss,” said Don Frommeyer, president of the National Association of Mortgage Brokers in Plano, Texas.

“This is an effort to help boost the housing industry, which is a major part of jump-starting the economy.”

At a time when interest rates are ticking up and new mortgage applications are on the decline, the rule change could make more people eligible for mortgage loans, even if their credit was ruined during the Great Recession.

But the Achilles’ heel of the rule change is that banks and other mortgage lenders are not required to abide by it.

The new rule, published Aug. 15, gives financial institutions the option of reducing the waiting time to one year for troubled borrowers. But many are likely to stick to the old three-year waiting period.

“The reality of the new HUD rule is it won’t change anything,” said Tom Hosack, president and CEO of Northwood Realty in Franklin Park. “The lenders actually have more stringent internal requirements than HUD does anyway. Lenders still do not feel comfortable lending to people one year out of bankruptcy and are still requiring them to wait longer.”

He said at the height of the housing boom lenders were more impressed with the value of the collateral than the creditworthiness of the borrower. Institutions had the idea that even if the borrower defaulted, the bank could always get its money back from the sale of the property, which at that time seemed headed nowhere but up.

Now with memories of the housing crash still fresh, lenders have gone back to closely scrutinizing the credit history of borrowers to determine their likelihood of repaying loans.

“Banks are being a little too overcautious,” Mr. Hosack said. “But it is the byproduct of them being too liberal for too long. … People who had a bankruptcy or foreclosure are more likely to have a second one, and banks want to make sure people have their act together before making a loan to them.”

Mike Blehar, principal at Green Tree-based financial services company Fort Pitt Capital Group, said he often works with clients who are either buying a new home or refinancing an existing one, which means he deals with several banks.

Even for affluent clients, buying and refinancing real estate is not always a smooth process.

“Every so often, it is a real struggle for some of them to qualify for a refinance,” he said, adding that one case seemed particularly puzzling.

The client, who is an executive for a major corporation in Pittsburgh, was refinancing his home and had to provide a mountain of documentation to show he was a qualified borrower.

What was striking about the case, Mr. Blehar said, is that on the day of the closing, the mortgage company called his client’s office to verify he was still employed even though they had already checked two weeks earlier.

“These mortgage companies are so worried about getting burned again by making bad loans they will go to extremes to make sure they have a qualified borrower,” he said.

An improving economy could bring more people back into the real estate market although, for now, it seems rising interest rates have caused a slowdown.

The Mortgage Bankers Association reported that mortgage applications fell last week 13.5 percent compared to the previous week, marking the eighth drop in 10 weeks. Since the first week of May, the average rate on a 30-year fixed mortgage has jumped from 3.35 percent to around 4.6 percent.

The decline in applications has led several major banks such as JPMorgan, Bank of America and Citigroup to scale back on their mortgage operations, causing thousands of employees to be laid off.

Wells Fargo & Co., the largest U.S. mortgage lender, announced it expects to make 30 percent fewer home loans this quarter due to rising interest rates.

Meanwhile, the Federal Housing Administration will green-light mortgage applications for people who lost their jobs, filed bankruptcy or saw their income reduced by 20 percent or more for a period of at least six months, as along as they can show that it occurred as a result of the recent recession.

The problem must be fixed, and the borrower must show a record of making at least 12 months of on-time payments on all their credit accounts.

They also will need to complete a housing counseling course and meet all other HUD requirements.

Mr. Frommeyer said every lender maintains what is known as an “overlay,” which is its own lending requirement, used in coordination with FHA’s requirements. For example, he said, FHA actually has no minimum credit score requirements for borrowers, while each financial institution has its own minimum score ranging from 680 to 580.

“This is an effort to lower the standards for mortgage loans, but there is no guarantee banks will participate,” Mr. Frommeyer said.

“Let’s face it. The economy is not where it really needs to be yet. This is a way to try to help borrowers who couldn’t make payments. But it’s not an easy fix.”

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=297034

Floridians support endangered species protections

GAINESVILLE, Fla. – Sept. 17, 2013 – Floridians want to protect endangered species, even if it means fines for violators or restrictions on personal freedoms, a new University of Florida (UF) Institute of Food and Agricultural Sciences survey finds.

In conjunction with the 40th anniversary of the Endangered Species Act, an online survey of 499 Floridians last month found that respondents ranked it relatively low in importance, ranking it 11th out of 15 public issues, and well behind topics such as the economy, health care and food safety.

But respondents solidly supported legal protection for endangered species of all kinds, including fines, restrictions on residential and commercial development, and buying habitat for endangered species to ensure their survival.

Florida is home to 47 endangered animal species, such as the Florida panther and the West Indian manatee, and another 44 plant species, including the Key tree-cactus and pondberry.

“What we found, generally, is that people were most willing to avoid harmful activities such as avoiding buying invasive species or driving slower, than they were to do more active things, like supporting or belonging to an environmental group,” says Tracy Irani, director of the UF/IFAS Center for Public Issues Education, or PIE Center, the research group that led the study.

For instance, 55 percent of survey respondents were “very likely” to avoid harmful activities, such as not releasing pets into the wild or taking care to not degrade endangered species’ habitat; but only 23 percent would be similarly disposed to engage in environmental civic behavior, such as joining a conservation organization.

Other findings

• 66 percent of respondents felt the Endangered Species Act should be strengthened.

• 78 percent agreed or strongly agreed that “the use and development of land should be restricted to protect endangered species.”

• Respondents were more likely to consider plants, fish and mammals worthy of conservation over microorganisms, invertebrates and reptiles.

• Roughly twice as many respondents agreed or strongly agreed that agricultural and industrial chemicals and pollution pose a threat to endangered species compared to those who cited legal fishing or hunting.

• Florida residents considered themselves only slightly or fairly knowledgeable about issues affecting endangered species, but they’re interested: 85 percent said they’re likely or very likely to pay attention to news stories dealing with issues related to endangered species.

“Florida is home to so many unique species of plants and animals, and it is incumbent upon us to do everything we can to protect them,” says Jack Payne, UF’s senior vice president for agriculture and natural resources.

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=297078

Study: Vacation rental performance remains strong

John Petel can help you buy or sell a vacation home in SW Florida! 239-590-4690

AUSTIN, Texas – Sept. 5, 2013 – HomeAway Inc., an online marketplace for vacation rentals, says it saw strong performance for its vacation rental owners during the summer season.

The company’s summer report finds the average occupancy rate for vacation rentals at 77 percent for vacation rental owners who consider summer their peak season. These owners reported an average weekly rental rate of $1,778 ($254 per night) – a 19 percent increase over the same time period in 2012.

Comparatively, Smith Travel Research, Inc. reports the average occupancy rate for U.S. hotels for the summer season was approximately 70 percent – a two percent year-to-year rise – with an average room rate increase of 3 percent.

For the second consecutive year, nearly nine in 10 vacation rental owners (86 percent) report their summer business was about the same or better than last summer. And 95 percent of vacation rental owners said they did not lower their rental rates from last summer – 23 percent increased their rental rates.

One of the top concerns of vacation homeowners prior to opening their homes to travelers includes concern of losing money on the endeavor (23 percent). But the survey found that more than half (51 percent) of the owners who have a mortgage on their vacation rental home were able to cover at least three quarters of their mortgage payment – an increase of six percent year-over-year. Additionally, nearly three-quarters (70 percent) cover at least half of their mortgage payment – an increase of six percent over last year.

Prior to renting, vacation rental owners (35 percent) also worry about managing the home as a rental along with a full-time job or family obligations. The survey found that vacation rental owners spend an average of 8.4 hours per week marketing and managing their vacation rental properties.

“If the owner optimizes the time and effort put into managing their vacation rental, the return on investment is substantial,” says Brian Sharples, co-founder and chief executive officer of HomeAway.

Thirty-nine percent of owners originally purchased their vacation home for personal use. Nearly two-thirds of owners (66 percent) spent up to 28 days in their vacation rental in the past twelve months, and 76 percent cite personal or work reasons for not being able to spend more time in their vacation rental – not guest bookings.

Another 15 percent of owners classify their vacation rental as a future retirement home. The average age in which owners purchased their vacation homes was 48 years old – six years younger than owners in 2012 – and the average age in which owners began renting their vacation homes was 50 years old – also six years less than owners in 2012.

Locations

Traveler demand to fill vacation homes is rising in the Florida Panhandle, with Fort Walton Beach, Navarre Beach and Pensacola/Pensacola Beach leading the country as a vacation destination.

Compared to this same time last year, the growth of inquiries and new vacation rental listings in the Florida Panhandle is rivaled by its neighbors Captiva & Sanibel Island and North Carolina’s Outer Banks region, which shows strong performance from Duck, Kitty Hawk, Corolla, and Kill Devil Hills.

Ski spots Keystone and Durango, Colo., are also peaking, according to Home Away, along with Park City, Utah. Sunriver, Ore., a dark horse in burgeoning vacation rental markets, saw a 77 percent growth in vacation rental listings and traveler demand.

Markets with largest increase in new vacation rental listings

• Keystone, Colo.
• Sebago Lake, Maine
• Outer Banks, N.C.
• Sunriver, Ore.
• Port Aransas, Texas
• Captiva Island & Sanibel Island, Fla.
• Florida Panhandle
• Austin, Texas
• Savannah, Ga.
• Orlando, Fla.

Markets with largest increase in traveler demand

• Sunriver, Ore
• Park City, Utah
• Bryson City, N.C.
• Durango, Colo.
• Isle of Palms, S.C.
• Florida Panhandle
• Gulf Shores & Orange Beach, Ala.
• Clearwater, Fla.
• Newport Beach & Balboa Island, Calif.
• Captiva Island & Sanibel Island, Fla.

Source: http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=296512

30-year mortgage rate steady at 4.57%

WASHINGTON – Sept. 13, 2013 – Average U.S. rates on fixed mortgages held steady this week, hovering near two-year highs. But rates could change quickly next week when the Federal Reserve addresses its bond purchase program.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan was unchanged from last week at 4.57 percent, just below the two-year high of 4.58 percent reached Aug. 22.

The average on the 15-year fixed mortgage held at 3.59 percent. The two-year high of 3.60 percent was hit on Aug. 22.

Long-term mortgage rates have risen more than a full percentage point since May, when Chairman Ben Bernanke first signaled that the Fed could reduce its bond purchases this year. The purchases have been intended to keep long-term loan rates extremely low.

Most analysts expect the Fed to decide at its meeting next week to scale back its bond purchases.

Even with the recent gain, mortgage rates remain low by historical standards. But higher rates have spurred some homebuyers to close deals quickly and could slow the market’s momentum if they continue to rise.

Mortgage rates have been rising because they tend to track the yield on the 10-year Treasury note. The yield has climbed 1.3 percentage points in the past four months as bond traders have anticipated that the Fed will slow its bond buying.

The 10-year note’s rate was 2.92 percent on Wednesday, down from 2.97 percent Tuesday but up from 2.89 percent a week earlier.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage rose to 0.8 point from 0.7 point. The fee for a 15-year loan was steady at 0.7 point.

The average rate on a one-year adjustable-rate mortgage fell to 2.67 percent from 2.71 percent. The fee declined to 0.4 point from 0.5 point.

The average rate on a five-year adjustable mortgage dipped to 3.22 percent from 3.28 percent. The fee was unchanged at 0.5 point.

http://www.blogger.com/blogger.g?blogID=96345794629191408#editor/src=sidebar

Fla.’s housing market continues positive track in July 2013

ORLANDO, Fla. – Aug. 26, 2013 – Florida’s housing market gained momentum in July, with more closed sales, more pending sales, higher median prices and a shrinking inventory of homes for sale, according to the latest housing data released by Florida Realtors®.

“We’re seeing double-digit gains in statewide closed sales, new listings, pending sales and higher median prices,” said 2013 Florida Realtors President Dean Asher, broker-owner with Don Asher & Associates Inc. in Orlando. “And these increases are happening in both the single-family and the townhome-condo markets. July marks the 19th consecutive month that we’ve seen the statewide single-family home median sales price increase year-over-year. Florida’s housing market is growing and that’s good news for our economy.”

Statewide closed sales of existing single-family homes totaled 21,238 in July, up 20.9 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. Closed sales typically occur 30 to 90 days after sales contracts are written.

Meanwhile, pending sales – contracts that are signed but not yet completed or closed – for existing single-family homes last month rose 25.9 percent over the previous July. The statewide median sales price for single-family existing homes last month was $177,500, up 18.7 percent from the previous year.

According to the National Association of Realtors® (NAR), the national median sales price for existing single-family homes in July 2013 was $214,000, up 13.5 percent from the previous year. In California, the statewide median sales price for single-family existing homes in July was $433,760; in Maryland, it was $286,758; and in New York, it was $241,947.

The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that sales of foreclosures and other distressed properties downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Looking at Florida’s year-to-year comparison for sales of townhouse-condos, a total of 9,430 units sold statewide last month, up 16.8 percent from July 2012. Meanwhile, pending sales for townhouse-condos last month increased 20.7 percent compared to the year-ago figure. The statewide median price for townhouse-condo properties was $128,000, up 21.9 percent over the previous year. NAR reported that the national median existing condo price in July 2013 was $209,600.

The inventory for single-family homes stood at a 5-months’ supply in July; inventory for townhouse-condos was at a 5.2-months’ supply, according to Florida Realtors.

“Once again, the market is continuing its steady improvement. There are, however, some straws in the wind that would suggest that the inventory crunch may be easing,” said Florida Realtors Chief Economist Dr. John Tuccillo. “Specifically, new listings have been up, year over year, for all of 2013. This suggests that sellers are more eager to place their homes on the market. In addition, the months’ supply of inventory numbers have remained fairly static for the past three months, suggesting we may be reaching the bottom of the inventory decline.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.37 percent in July 2013, up from the 3.55 percent average recorded during the same month a year earlier.

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=296062

Three lessons learned from home flippers

DEERFIELD BEACH, Fla. – Aug. 29, 2013 – Lex Levinrad is getting phone calls. More than he can handle. His Deerfield Beach, Fla.-based Distressed Real Estate Institute is flooded with requests these days from regular people – teachers, plumbers, paint salesmen – who want to invest in South Florida real estate now that home prices are rising.

Many who attend his monthly seminars around the area are learning the art of “flipping” – buying properties at deep discount, fixing them up and reselling within a few months to traditional buyers.

Levinrad, 46, a South African native who says he’s bought and sold more than 500 homes, shows aspiring investors how to do the math and where to find the deals.

He also counsels them to be careful, to avoid the mistakes that led to the housing crash. He said investors often pay too much for homes and underestimate the cost of repairs.

“They become emotionally attached to the house, get greedy and stubborn and won’t sell unless they make a certain profit,” he said. “That’s how they get stuck.”

Here are three golden rules of real estate investing:

• Don’t buy with the expectation that the home will shoot up in value. During the housing boom, too many flippers got burned by counting on fast price appreciation. When the market tanked, so did they.

“If you buy only hoping that prices are going up, it’s the same as going to (Las) Vegas,” Levinrad said.

Flippers must buy at enough of a discount that gives them instant equity in the home, Levinrad said. That allows them to turn around and sell without having to wait for prices to rise.

Without instant equity, it’s best to hold off – unless investors are willing to become a landlord, he said.

Levinrad and David Dweck, founder of the Boca Real Estate Investment Club in Coconut Creek, Fla., say flippers should buy a home for no more than 65 percent of the market value after repairs. If a house is worth $100,000 after it’s renovated, and it requires $10,000 in work, the maximum price an investor should pay is about $55,000.

Dweck’s advice: Don’t skimp on renovations and save the receipts to show appraisers.

“The biggest challenge right now is appraisals,” Dweck said. “The more ammunition you have to give appraisers, the better. But there is absolutely no guarantee.”

Maher Hanna, a student of Levinrad’s seminars who started investing full-time this year, said flippers – particularly beginners – may have to be satisfied with modest profits.

“There’s a saying: Bulls make money, bears make money, but pigs gets slaughtered,” Hanna said.

• Do your own due diligence. Investors should know the true value of a house without relying solely on outside sources.

Too many novice investors take a real estate agent’s word, Levinrad said. Even appraisals may offer only a ballpark figure, he said.

The best way to determine value: Travel to the neighborhood, attend open houses and see what similar-size homes are selling for.

Also find out how many other homes in the area are listed and for what prices. Flippers should price their renovated properties slightly below market value to attract interest. That will ensure they don’t have to keep the home any longer than necessary, Levinrad said.

• Know your exit strategy. If an investor is planning to buy, renovate and resell, stick to the plan.

Some investors change course and end up regretting it. They may realize they’ll make less money on the deal than originally expected, so they hold the home and rent it instead.

But then they discover they aren’t prepared to be landlords – from the hassles of dealing with problem tenants to the high cost of maintaining the homes.

“Something that was supposed to be a profitable and enjoyable experience turns into a nightmare,” Levinrad said. “If your profit is less than you anticipated, consider it a lesson learned and move on to another property.”

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=296224

Florida leads nation in cash-only home sales

MIAMI – Aug. 29, 2013 – Florida led the nation last month with what one expert called an “astounding” rate of all-cash home sales: 66 percent, a new report shows.

Investor groups, international buyers, landlords and those in the market for vacation homes are fueling a cash-only market that has virtually shut out entry-level homebuyers, who can’t get approved for mortgages.

Lake Mary real-estate agent Tom O’Brien said he recently represented a single mother employed by Valencia College who wanted to buy a house near downtown Sanford.

“The seller said he wanted to hold out for a cash buyer instead of waiting for her FHA mortgage to get approved,” O’Brien said Wednesday. “The first-time buyers are the ones who are really struggling; they’re scraping together every nickel, and they’re competing with the cash buyers.”

The influx of cash continues to grow in one of the country’s most volatile states for real estate: Cash sales made up 57 percent of Florida’s home sales a year ago and 61 percent of all sales in June of this year, compared with the 66 percent reported in July, according to the report released today by the real estate research company RealtyTrac Inc.

“That’s astounding,” RealtyTrac Vice President Daren Blomquist said. Nationwide, only Nevada (64 percent) and Maine (60 percent) came even close to Florida’s tidal wave of cash-only deals.

Among Florida’s metropolitan areas, Brevard County had the highest rate of cash deals: Seven out of every 10 house sales last month went for cash. Next in line was the giant metro area that includes Miami, Fort Lauderdale and West Palm Beach; 69 percent of all sales there were all-cash deals.

One factor tipping the scales in cash buyers’ favor has been the tightening of mortgage requirements following the easy-lending era that preceded the 2007-09 recession.

“The home-loan mortgage market has utterly dried up,” said Mark Soskin, an associate professor of economics in the University of Central Florida’s business college. “The market requires buyers and sellers, [but] if you want to buy a house, you have to have cash.”

Private-equity firms and institutional buyers have been actively picking up Florida’s lower-priced houses, fixing them up, and renting them for some time already, but those buyers are moving on to other states, RealtyTrac’s report shows. During July, institutional buyers drove 22 percent of the home sales in Georgia, 16 percent in Nevada, 15 percent in Arizona and 14 percent in Florida.

According to Blomquist, Florida last month attracted more small-scale investors, as well as buyers interested in buying second homes or paying cash for their retirement housing. He said he has heard from investment groups that they have turned to the Carolinas and other markets that still offer good returns and until now have been below the radar compared with Florida.

Regardless of who has been laying down all the cash in Florida, the trend has helped the market by flushing sales through the system, Winter Park real estate broker Scott Hillman said.

“The good news is that at least they’re buying,” Hillman said. “We’re not waiting on appraisals to come in and make sure it works, because appraisers look at history and don’t look as much at the current conditions, with the depletions in inventory. A lot of these closings needed to be cash.”

Another key shift noted in RealtyTrac’s July report was a strong rebound in the number of short sales – closings with sales prices below the balances still owed on the properties’ mortgages. During the housing-market meltdown and the Great Recession, distress sales had dominated the Orlando-area housing market before receding in the past year or so as prices rallied.

In July, though, short sales accounted for 30 percent of all home sales in the state, 32 percent in the Fort Lauderdale/Miami metro area, and 39 percent in Metro Orlando. That was double to triple the rate of short sales reported a year ago.

Regular foreclosures, meanwhile, have held steady at about 10 percent of all sales throughout Florida, including Orlando and South Florida, during the past year.

With one of the nation’s highest foreclosure rates, South Florida has a large supply of bank-owned properties. Lenders aren’t interested in waiting for traditional buyers to qualify for mortgages, preferring instead to sell to investors paying cash.

“That’s where all the action is,” said Lex Levinrad, founder of the Distressed Real Estate Institute, a Deerfield Beach-based club for investors. “The banks have an urgent need to get these bad loans off their books as soon as possible. They’re willing to sell for 30 percent less to a cash buyer rather than waiting for a buyer with a mortgage.”

Much of the cash buying in South Florida is from foreigners who view condominiums as safe investments. In the past year, large funds have entered the region, buying single-family homes and renting them out for a year or longer. The Blackstone Group of New York and California-based Waypoint Homes are two of the larger funds buying in Broward and Palm Beach counties.

Some industry analysts once feared that a so-called shadow inventory of homes would hurt the housing market. But David Dweck, founder of the Boca Real Estate Investment Club, said there are enough cash buyers here to support any excess supply of properties. “Without a doubt,” he said. “Without a doubt.”

In July, compared with a year earlier, distress-sale prices in the Orlando area were up 16 percent to $110,000 and in South Florida were up 12 percent to $106,450. Conventional-sale prices, meanwhile, rose 16 percent in Metro Orlando and 19 percent in South Florida from a year earlier.

Even with cash-only deals driving up prices throughout the state, Soskin, the UCF economist, predicted that home prices in Florida won’t return to 2007 levels for another 20 years.

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=296212

Scott offers $90M: Elevate road, aid Everglades flow

TALLAHASSEE, Fla. – Aug. 29, 2013 – Gov. Rick Scott proposed $90 million to help lift a section of the Tamiami Trail, which groups such as the Everglades Foundation have called “one of the most prominent dams” blocking the water’s natural flow. The project would take up to three years to complete, with most of the money funded by the U.S. Department of Interior.

Early changes to the Everglades and its feeder systems were done to alleviate seasonal flooding and open new areas to development. However, the law of unintended consequences has caused a menu of problems. A particular hot point for Realtors, however, concerns the St. Lucie and Caloosahatchee river systems, and they, along with homeowners, need relief from problems caused by water flow redirected from its original natural meandering southerly flow from Orlando to the Keys’ Florida Bay.

 “We are already hearing reports that seasonal renters are reconsidering whether they want to spend their winter in parts of Florida impacted by polluted water,” says Florida Realtors Senior Vice President of Public Policy John Sebree, in reference to problems faced by property owners along the St. Lucie and Caloosahatchee Rivers when too much Everglades water is redirected to them on the east and west side of the state.

“Our rental market is getting cremated,” says William Poteet with Poteet Properties Inc. in Naples. The water being pumped toward Naples to avoid stress on the Everglades “is now meeting our saltwater and turning our view from clear, pristine water to a milky brown mixture. It’s just not a pretty picture.” Poteet says the water problem impacts some home sales, but the drop in rentals – and the related impact on local businesses – has had a harsh economic impact on Naples, Fort Myers Beach and other nearby towns.

The governor’s bridge announcement is considered one step to correct current Everglades flow problems, but it’s not considered a solution. Florida Realtors, working with the Everglades Foundation, is currently looking at a few short-term fixes, as well as keeping an eye on changes to help property owners long-term while improving the Everglade environment for wildlife and native flora.

Scott says Florida is “putting forward strategies each and every day to address the water quality issues that are impacting families in our state.” Last week, he also proposed $40 million to help build a storm-water retention area along the St. Lucie River.

Stuart Sen. Joe Negron heads the state Senate Appropriations Committee, and he has already backed a proposal to support up to $100 million in funding for Everglades restoration. His Senate Select Committee also plans to consider a number of short-term fixes to lessen the lake discharges later this year.

A number of Realtors discussed the Everglades problem at the recent Florida Realtors Convention & Trade Expo in Orlando. Coincidentally, it was held at Rosen Shingle Creek, which marks the beginning of the entire Everglades river system.

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=296216

Private real-estate trusts draw interest, scrutiny

ORLANDO, Fla. – Aug. 30, 2013 – Dan Moisand hears from too many people who have lost their shirts in real-estate ventures gone bad. In Florida, it seems, someone is always getting taken by a speculative but dubious land deal, the Orlando financial planner said.

But in recent years, a growing number of the complaints Moisand fields are about a legitimate, but sometimes controversial, financial product called a nonlisted real-estate-investment trust, or REIT.

Those privately traded securities, which often promise sweet dividend payouts, have been attracting conservative investors fed up with the low rates of return on certificates of deposit and money-market funds. But some people are shocked later when independent appraisals, advocated by federal regulators in recent years, reveal that the value of their REITs holdings has fallen – as did much of the nation’s real estate during and after the Great Recession.

“We’ve seen victims who have come to us for help after the values collapsed, the funds got into hot water, and they [the REITs] came nowhere close to paying dividends that were promised,” Moisand said. “So what happened is, people got stuck in them with no option to escape without incurring big losses.”

Complaints about nonlisted REITs – private versions of the more prevalent, publicly traded REITs – have led to scrutiny from government regulators, allegations of misleading sales tactics and multimillion-dollar court settlements. Some of the biggest players in the REIT industry have been sued by unhappy investors.

Yet during the first half of 2013, investors nationwide poured a record $10.7 billion into unlisted REITs and other nontraded, alternative investments, according to Robert A. Stanger & Co., a New Jersey-based investment bank.

Financial experts say private REITs have remained popular because investors consider them less vulnerable to the volatility of the stock market – a point highlighted in recent months by the decline in the share prices of publicly traded REITs, which have fallen along with the broader market amid concerns about rising interest rates.

Florida, with an abundance of retired investors attracted to real-estate-related financial products, is one of the country’s more-fertile markets for both publicly traded REITs and nontraded REITs, according to Stanger & Co.

“Yes, they can work out, but it’s not something that we recommend to any of our existing clients,” said Blair Shein, a certified financial planner for Compass Financial Group in Deerfield Beach. “The risks, in our minds, don’t outweigh the potential reward.”

Critics of unlisted REITs say their central problem is a lack of transparency and share values that are set in near-secrecy. Unlike shares of a publicly traded REIT, which are valued daily on a stock exchange, the value of a nontraded REIT’s shares – and its underlying assets – can remain shrouded for years, they say.

Although nontraded REITs may pay healthy dividends, at least for a while, as currently structured they should be off limits to most long-term investors because of the risk and uncertainty involved, said Susan Spraker, a financial planner and president of Spraker Wealth Management in Maitland.

“By definition, the fact that this kind of REIT is unlisted means ‘investor beware,’” she said. “They are illiquid, which means you can’t cash out for a long, long time. In the meantime, the dividend income can dry up and the valuations of the shares and assets can dry up as well.”

Even reputable players such as Orlando-based CNL Financial Group Inc. have been sued by investors upset with the performance of a nonlisted REIT.

Earlier this year, some investors from Texas and Massachusetts filed a lawsuit in federal court in Orlando in connection with the CNL Lifestyle REIT, claiming CNL officials caused them to lose millions of dollars through a misleading private offering of stock at inflated prices. The suit seeks class-action status and damages of more than $5 million.

According to court documents, CNL Lifestyle conducted a secondary offering in 2011 and part of 2012 to raise as much as $250 million by selling shares at $9.50 each – a price the prospectus indicated was based to some extent on the shares’ fair-market value, or what the open market would be expected to pay for them.

After the offering was over, CNL had an independent appraisal done in August 2012 that valued the REIT at $7.31 a share.

CNL has denied the allegations and says it complied with all federal regulations in disclosing to investors the risks involved and the subjective basis on which the REIT’s shares were priced.

“The August 2012 estimation was in full accord with the regulations of the Financial Industry Regulatory Authority,” CNL stated in a motion to dismiss the lawsuit. “It is important to recognize that the complaint alleges no violations of state or federal securities laws or of securities industry standards. The complaint also does not allege that the directors committed fraud or made any misrepresentations in documents filed with the Securities and Exchange Commission.”

REIT industry leaders, under pressure from regulators such as the SEC, have promised to reform the way nontraded REITs are marketed, sold and managed, to make them more investor-friendly, said Keith Allaire, managing director of Stanger & Co. and a REIT expert.

“The industry is honestly embracing more transparency,” the investment banker said. “Remember, this asset-valuation issue was highlighted after the real-estate downturn in the U.S. – and the resulting losses in value that occurred. Now the industry has promulgated guidelines designed to increase independence and transparency in the valuation process.”

The new guidelines may not be enough to get some financial advisers on board, however.

“Private REITs are really just piggybacking on the appeal of publicly traded REITs but without having the transparency of the publicly traded asset class,” said Kimberly Sterling, a partner in Resource Consulting Group, an Orlando wealth-management firm. “Like any other private investment you go into, they are high-risk, high-fee and low on knowledge for the investor.”

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=296287

Average rate on 30-year mortgage at 4.51%

WASHINGTON – Aug. 30, 2013 – Average U.S. rates for fixed mortgages declined this week but stayed close to their highest levels in two years.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan fell to 4.51 percent. That's down from 4.58 percent last week, the highest since July 2011.

The average on the 15-year fixed mortgage dipped to 3.54 percent from 3.60 percent, also the highest since July 2011.

Rates have risen more than a full percentage point since May when Chairman Ben Bernanke first signaled that the Federal Reserve might reduce its bond purchases later this year. The purchases have helped keep long-term interest rates low.

Mortgage rates remain low by historical standards. But the sudden spike in rates could slow the housing recovery’s momentum.

U.S. sales of newly built homes dropped 13.4 percent in July to a seasonally adjusted annual rate of 394,000, the government said last week. That’s the lowest level in nine months.

Also in July, fewer Americans signed contracts to buy homes for the second straight month, according to the National Association of Realtors. Still, the decline has been modest and the level of pending homes sales remains close to a 6 1/2 -year high reached in May.

Mortgage rates have been rising because they tend to follow the yield on the 10-year Treasury note. The yield also has surged on speculation that the Fed’s stimulus will slow. But the rate on the 10-year note declined this week to 2.78 percent from 2.90 percent last week.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage declined to 0.7 point from 0.8 point. The fee for a 15-year loan was unchanged at 0.7 point.

The average rate on a one-year adjustable-rate mortgage fell to 2.64 percent from 2.67 percent. The fee slipped to 0.4 point from 0.5 point.

The average rate on a five-year adjustable mortgage rose to 3.24 percent from 3.21 percent. The fee held at 0.5 point.

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=296291

Average rate on 30-year mortgage at 4.58%

WASHINGTON – Aug. 23, 2013 – Average U.S. rates for fixed mortgages rose this week to their highest levels in two years, driven by heightened speculation that the Federal Reserve will slow its bond purchases later this year.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan jumped to 4.58 percent, up from 4.40 percent last week. The average on the 15-year fixed loan rose to 3.60 percent from 3.44 percent. Both averages are the highest since July 2011.

Rates have risen more than a full percentage point since May. The latest spike comes after more Fed members signaled they could be open to reducing the bond purchases as early as September. The purchases have helped keep long-term interest rates low, including mortgage rates.

Despite the increase, mortgage rates remain low by historical standards. And recent reports suggest the jump in rates has yet to sap the housing recovery’s momentum.

In July, previously occupied homes in the U.S. sold at the fastest pace since 2009. Sales jumped 6.5 percent last month to a seasonally adjusted annual rate of 5.4 million, the National Association of Realtors reported Wednesday. Over the past 12 months, sales have surged 17.2 percent.

Last week, the National Association of Home Builders said its measure of confidence among builders rose this month to its highest level in nearly eight years.

Mortgage rates are rising because they tend to follow the yield on the 10-year Treasury note. The yield has also surged on speculation that the Fed’s stimulus will slow. It rose to 2.90 percent Thursday morning, its highest level in two years.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage rose to 0.8 point from 0.7 point. The fee for a 15-year loan increased to 0.7 point from 0.6 point.

The average rate on a one-year adjustable-rate mortgage was unchanged at 2.67 percent. The fee edged up to 0.5 point from 0.4 point.

The average rate on a five-year adjustable mortgage declined to 3.21 percent from 3.23 percent. The fee held at 0.5 point.

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=295997