WOW - 2007 - con't

This started as just a comment, but has obviously ended up as much more. Just give me an inch...

Anyway, thanks for all the comments. In regard to the appreciation that Jennifer commented in from the last post, I agree with her. The reason for my stating a higher rate is because this has been typically true in the Greater Orlando market.

Orlando is a destination city & has continually bucked the national trend. Generally, while the nation has normally seen a 6-8% appreciation level, we in Orlando have encountered a typically 10-13% rate.

To make this a little clearer, Orlando was definitely behind in regard to the national median housing price. For many reasons in the past several years this has quickly been adjusted. Unfortunately, we are still mostly a service-oriented area. I won't get on my soapbox here about this rise continually locking more and more people out of purchasing homes.

The powers that be are definitely making efforts to try to change our being a more service-oriented industry market. They are doing so by alluring some high-tech companies to the area and obviously this includes much higher wages.

Another reason for our quick gain, is that many people move to this area from more expensive areas & have been willing to pay more for real estate.

In regard to the median housing price, the Greater Orlando area's median is $250K. Even though this figure see-sawed through 2006, it is still higher than 2005. Maybe not by much, but still more. Many markets cannot say this, unfortunately.

According to FAR (Florida Association of Realtors), "In Sarasota-Bradenton, for example, the median price went to $277,900 from $340,700 during the year-over-year period ended in October." WOW!

Until next time - Marc It Sold!

WOW! – 2007 – What Will This Year Bring Us In Real Estate?

Most of my posts are geared towards the consumer, but the thoughts that are coming to my mind make this agent-oriented.

Well, let’s start out with the fact that the market has ‘corrected’ itself in many locales, but surely in the Orlando area. We are still in a very healthy market. Inventory is on a downward trend and will hopefully continue so. Rates are still very good in the low 6’s. I’ve even noted in my personal business that what is usually a very slow week (the week between Christmas & New Year’s) has turned into a quite busy one. Three buyers have contacted me and I’m in negotiations already, one being on a property that I’ve listed. My office tells me that they have noted that it’s picking up as well.

Many realtors® may disagree that this is a healthy and rebounding market, but I have to beg to differ. I know several realtors® that have had a better year in 2006 than previously. And no, these are not neophytes. Most are seasoned veterans. A lot of people forgot (or especially the newbies who didn’t know) how to work in what many of us consider a ‘normal’ market. Too much was being taken for granted as business was just there for the picking.

It’s a simple fact of back to basics. The business will come to you, but you have to farm & prospect. It’s not just going to fall in your lap like in 2005. I know that I’ve written that clients need to remember that the summer of 2005 is over, but many Realtors® need a wake-up call. The only way a realtor can last in this business is to be adaptable. You need to be able to adapt to a changing market. You need to be able to adapt the changing times. Your prospecting and farming need to be adapted to today, not yesterday’s style.

I’m seeing, as I sure a lot of you have, that there are still wholly overpriced listings being placed on the market. What I’m also seeing, & this really makes me laugh, is a listing with a price reduction. Yes, I know there are many out there that like to disguise this as a ‘price improvement.’ Please, we all know what this is and so does the seller & buyer, so why the sugar-coating. It just looks like you’re trying to disguise something & that doesn’t work in the long run in real estate. People aren’t stupid. They have so much more access to available information. Call it what it is. Believe it or not, you will look better in the consumer’s eyes.

Sorry for the digression, I was mentioning about listings with price reductions. But what I’ve seen while looking further at many of these (more than I would expect to see), is that the property had an increase in price from the original pricing. Do they not know how to properly price properties? I think this is so basic or at least it should be to be a realtor.

I think that we will see a consistent and steady change in 2007. We will probably see appreciation in the neighborhood of 7-13% depending on your market. This is quite normal as most of you should be well aware.

I think that buyers are finally getting over being wary of the marketplace, even though the media did a great job in scaring the crap out of some people. Interest rates are expected to be historically low. PMI is now fully deductible on your 2007 income taxes for households making less than $100K. Existing home sales are expected to increase, while new home sales are expected to slide.

Miami-based Lennar Corp., one of the nation's largest homebuilders, said it expects a fourth-quarter loss, its first decline in at least a decade, as it reevaluates how much its inventory is worth, etc.

Right now builders are giving away the farm, but they have to get rid of inventory. Otherwise, they are going to be paying a boatload of interest on those completed homes for sale. Many are reevaluating their positions. We’ve all read about this.

This all bodes well for the existing home sale market & us in general as realtors®.

I’m looking forward to a great 2007 as you should as well. You need to have a positive attitude in this business, otherwise you are only being self-defeating.

I love what I do & I love Real Estate!

Until Next Time – Marc It Sold!®

Selling Your Home With Pets

Let me begin by saying that I am a pet lover having had many over my lifetime & enjoying those of friends & family. Unfortunately, there are many people out there that are not pet lovers or at least not of many breeds.

Most of us would not think that this is a problem. But, there are many people that will not go into a home with pets that are 'on the loose.' Additionally, there are many people that will spend less time in a home that has pets that are not of their liking. Too many of us this is surprising and may even sound bizarre, but when you put it into perspective it is quite understandable.

So, therefore, we need to take many things into consideration when selling a home with a pet(s). Now, again as I've said, I love most pets. I will usually play with the pet & keep him/her occupied while my clients are viewing the home. This usually works for the pet as well as the prospective buyers. A lot of times, you will find buyers that have no issue with the pets. And, yes, we all know about those loveable, cute pets that just pull at your heartstrings just by looking at you. They can almost sell the home themselves.

But here are some things to possibly remember & some tips for all of us.

1. If it smells... That in itself is probably enough to be said. Sorry, but I've had cats & very rarely did my litter box smell. Guess what? I don't want to smell yours. Neither does anyone else. Clean that litter box & keep it clean or put it out of the way. But those are not the only smells. Most odors come from dander. You need to deodorize your home often & keep your pet bathed and groomed.

2. Stains. Clean them, there are many good products on the market for 'pet stains.' Clean that carpet before listing your home, or if it is that bad, then consider replacing them. Sorry, but smells, stains, etc. are not going to get you top dollar for your home, nevermind, the length of time on the market needed to sell a home in that condition especially when there are so many other available homes to purchase.

3. Keep Pets from Showings. If it is at all possible, take the pet for a walk while your home is being shown. It will make it a much more pleasant experience for the prospective buyer. Loud barking dogs are not always a pleasing sound & may actually scare potential buyers. This only limits your potential pool of buyers. As your realtor, we are constantly trying to increase this pool for you.

4. First Impressions. The old adage is so very true - First Impressions are Lasting Impressions. This not only includes smells & carpet stains, but also possible gnawed moldings, scratches doors & door jambs, holes in the backyard, poop in the backyard, etc. You obviously get the picture & so will the potential buyer that viewed a home like this. I don't care how pretty the home may be otherwise, it is the total picture that has to be taken into consideration. And, yes, first impressions do last & will most likely have the prospective buyer out of your house quickly if care is not taken to these details.

5. It's all about perception! If someone enters a home & it smells & there are stains on the flooring & scratched door jambs, etc. They should also wonder what else this home holds for them. I'm sorry if this seems harsh, but if I enter a home and see this, I do have to wonder what else hasn't been taken care of & kept up. This is only being realistic & I'm not being mean.

We love our pets & there is no reason that they should hinder a sale. Nor do they have to be responsible for lowering a realistic price on a home. It is our responsibility & this can be taken care of without a great deal of inconvenience to all.

Best Wishes & until next time... Marc It Sold!

A Little of This - A Little of That!

Housing costs have risen substantially within the last couple of years. Have wages increased as much? We know the answer there. Now, I'm not going to get on my soapbox. But, we continually each day lock more and more people out of the housing market. Condos are costing in the 100K's; a nice relatively reasonable 3/2 single-family home will run approximately the mid 200's. Enough of that, but it is something that we do have to keep in mind. We should never forget, because that only leads to possibly losing the lesson.

Real Estate has returned to what it was normally. The market is very healthy. We are very lucky in the Greater Orlando area, because we are a destination city. We are also the #2 city in the nation for Conventions, even knocking Chicago out of that position. But, there is a lot of competition out there. There are over 21,000 MLS listings available.

This is going to be a difficult time for For Sale By Owners, unless they are willing to wait, what I would think would be, quite a while. I've even noticed what seems to be more homes going into pre-foreclosure. The summer of '05 is no longer. I'm not saying this for doom & gloom. But this is reality.

In regard to pre-foreclosures, people should speak to their lenders before it is way too late. And by too late, I mean, when they are already starting the papers. It takes several months before a homeowner is served with a pre-foreclosure notice. If you are late, there are some lenders that will allow you to tack on those payments to the end of your loan period. Granted, this will definitely cost you, but what will losing your home cost you? There are also other ways, but you must speak with your lender. You have to understand that the lender does not really wish to own your property. They are not making money on it. They make money from the payments that you send in each month.

Anyway, enough for now. Call me & I'll be more than happy to discuss this and any other topics with you.

Until next time....Marc It Sold!

Tax measure goes easy on the rich

In 1992 in Florida, a property tax break measure entitled, "Save Our Homes," was passed. What this does is take the Tax Assessed Value of your home at the time of purchase and limit this from being increased more than 3% per year for the current owner until the home is sold. The intention of this was to be of assistance mainly to the elderly from being taxed out of their homes. Unfortunately, the wealthy have received a proportionately greater property tax benefits than those intended. Read the complete article at http://www.orlandosentinel.com/orl-sohday206oct30,0,6678504.story

Until Next Time - MARC IT SOLD!

Deducting Interest When You Are Not on Title

The following is an interesting article entitled, "Housing Counsel: Deducting Interest When You Are Not on Title," written by Benny L. Kass & published on Realty Times. I did not know that it was possible to deduct the interest on your taxes if you were not on the title. But read the follow case in point to understand the parameters of which this may occur.

Question: I want to buy a condominium unit for my son. Although he makes a decent living, his credit is not good. Accordingly, the lender has advised that title must be in my name only. My son will live in the property and make all of the mortgage payments.

Can he deduct the mortgage interest on his tax returns?

Answer: The answer is a qualified yes. There are certain rules which you must follow since if the IRS ever challenges the deduction, the burden will be on your son to prove that he is eligible to take the deductions.

We must first look to the regulations which have been promulgated by the IRS.

Regulation 1.163-1(b) reads as follows:

Interest paid by the taxpayer on a mortgage upon real estate of which he is the legal or equitable owner, even though the taxpayer is not directly liable upon the bond or note secured by such mortgage, may be deducted as interest on his indebtedness.

In August of 2003, the United States Tax Court addressed this situation and denied the interest deduction. The petitioner bought a house for his mother and although the mortgage loan was not in his name, he made the monthly loan payments. He argued to the Tax Court that he was obligated to repay his mother and “that his failure to repay would result, upon his mother’s death, in a corresponding reduction in his testamentary share of his mother’s estate.”

But the tax court rejected this argument. Based on the facts which were presented in evidence, the Court determined that the petitioner was neither “directly liable on the note securing the mortgage on his mother’s house, nor (was) he a legal or equitable owner of the property.” (Montoya v IRS, decided August 5, 2003.)

What exactly is required to be an “equitable owner”? Our legal dictionaries define this as ownership by one who does not have legal title.

Let’s look at this example. I own property A; I am the legal title holder to the property. I enter into a contract to sell the property to you. Based on that contract, even though you have not yet taken title, you have certain rights. These rights are based on the legal principles called “equity” -- namely that the courts will do what is fair under the circumstances, rather than strictly interpreting the letter of the law.

Obviously, each case has to be decided on the specific facts presented to the Court. In the Montoya case, the Tax Court determined that the son just did not have enough evidence to prove that he had some kind of ownership in his mother’s property.

Several years earlier, this same Tax Court did allow a couple to deduct the mortgage interest even though they were not on title to the property. In Uslu v IRS, the following facts were presented to the Court.

Uslu had filed for Chapter 7 Bankruptcy relief and was not eligible to obtain a mortgage loan. His brother bought the house, in which the only occupants were Uslu and his wife. The loan was in the brother’s name only, but Uslu made all of the mortgage payments. He also made all of the repairs and improvements to the property. The brother signed a Quit Claim Deed conveying the property to Uslu, although this Deed was never recorded on the land records.

The Tax Court found that Uslu’s mortgage payments “constituted payments on an indebtedness” and thus could be deducted for income tax purposes.

According to the Court:

The Court is satisfied, from all of the evidence presented, that petitioners (Uslu) have continuously treated the ... property as if they were the owners, and that they exclusively, held the benefits and burdens of ownership thereof. On this record, the Court holds that petitioners established equitable and beneficial ownership of the (property), and they were liable to (the brother) in respect of the mortgage indebtedness.

How do you meet the burden? Here are some suggestions:

1. Your son must continuously live in the property. To prove this, his driver’s license, voter registration and utility bills should be in his name at the property address;

2. You and your son should enter into a written agreement, spelling out that he is fully obligated to make the mortgage payments on a timely basis, and that you reserve the right to evict him should be go into default; the agreement should specifically state that you recognize that your son has an equitable interest in the property;

3. Your son must be responsible for all maintenance and upkeep of the property, and

4. You should prepare and sign a Quit Claim Deed, in recordable form, conveying the property to your son. This will not be recorded, but will be further evidence of your decision that this property is, in reality if not legally, owned by your son.

There obviously are no guarantees, but if you follow the guidelines spelled out in the Uslu case, you have a good chance of prevailing should the IRS challenge your son’s deductions.

Until next time - MARC IT SOLD!

Supply of homes on market takes dip?!?

That was one of the font page headlines in today’s, 10/21/6, Orlando Sentinel (http://www.orlandosentinel.com/news/local/state/orl-homes2106oct21,0,349657.story?coll=orl-home-headlines). While this may be so, as reported by ORRA (the Orlando Regional Realtor® Association), I find that it is at the same time somewhat incorrect in that there is a better defining picture of this situation.

Statistics are great. They are the numbers – the so to speak ‘black & white’ of the situation. But at the same time they can be manipulated. That is one basic reason that I do not believe in the CMA (Comparative Market Analysis), because I can take those numbers and manipulate them to my needs. At one time, & I apologize for the digression here, an appraisal was as good as the bible when it came to real estate valuation. But this has drastically changed over the years. Lately, I’ve seen appraisals that were so wholly undervalued & then another appraiser might come in with a greatly different value. The reason that I mention this here is that as good as numbers are, then can be greatly manipulated.

Back to the article in question. While a good article, it states in the second paragraph that the supply of homes in the Greater Orlando market has dipped. And this is true. But in the fourth paragraph, the article mentions the sales drop "in the Realtors' core Orlando market (mainly Orange and Seminole counties)."

Why I say that this is conflicting is because for the past 10 months I have weekly gathered the data on inventory of single-family homes, condos & townhomes that are listed available for sale in the MLS in just Orange & Seminole counties. While I’ve seen a couple of weeks here & there where there has been a drop in inventory, the overall data suggests differently.

Proof in point:As of 10/17 the total inventory, as specified above, is 16,045. On 9/20, this figure was 15,828; and, on 8/22, 15,479. I utilized these dates because they are approximately 1 month apart. This shows you that even though there was a week 9/28-10/4 where there was a drop in available home of 93 units, that we have had a consistent rise in inventory in the core Orlando market.

I am not saying your story is erroneous, but I think that this shows a better picture of what is really going on in the Greater Orlando Real Estate Market, especially in the counties of Orange & Seminole.

Until next time – MARC IT SOLD!